ADP Grossly Overstates Job Growth for Last 12 Months by 419,000 Jobs

ADP has announced revised methodology to "enhance" its monthly job reports, no doubt because its prior numbers simply were grossly inaccurate.

Indeed, I stopped commenting on ADP numbers because I thought they were absurd.

Let's take a look at their revised methodology. Here is the ADP Jobs Report for September using the revised methodology.

"Private sector employment increased by 88,200 jobs from August to September, according to the September ADP National Employment Report®. The report, which is derived from ADP’s actual payroll data, measures the change in total U.S. nonfarm private employment each month on a seasonally adjusted basis. Last month’s employment estimate was revised down from 80,000 to 76,400 jobs."

Please note that last sentence. Compare to what ADP actually reported last month:

"Employment in the U.S. nonfarm private business sector increased by 162,000 from August to September, on a seasonally adjusted basis. The estimated gains in previous months were revised lower: The July increase was reduced by 17,000 to an increase of 156,000, while the August increase was reduced by 12,000 to an increase of 189,000."

Got that? September private business sector increased by 162,000 but now we see September was revised down to 76,400 from 80,000 (not 162,000 as actually reported).

Revision Matching

Check out this statement from ADP FAQs.

Using this methodology developed for ADP by Moody’s Analytics, our adjusted historical ADP National Employment Report data dating back to 2001 has a 96 percent correlation with the revised BLS numbers.

ADP revisions match BLS revisions over time. Lovely.

Spotlight on Revisions

ZeroHedge totaled up the ADP revisions for 2012 and concluded ADP "Cancels" 365,000 Private Jobs Created In 2012.

I conclude the same thing. However, things are even worse than Zerohedge states. Here is a chart that I put together of ADP revisions.

Note: numbers in charts and tables in thousands.

ADP Original Vs. ADP Revised Monthly Job Gains or Losses



click on chart for sharper image

ADP was way underestimating job gains in 2011 and way over-estimated gains in 2012.

The net effect was 136,000 jobs over 20 months (about 6,800 per month). However that is a very misleading way of looking at things as the following table shows.

Time Period Analysis

Time Period	Cumulative Miss
2011 Miss	229.0
2012 Miss	-365.1
Last 12 Months	-419.1
Since Feb 2011	-136.1

As you can see, I match ZeroHedge for 2012. However, for the last year, ADP was off by an even higher 419,000 jobs, nearly 35,000 jobs a month for an entire year!

For 2011, ADP was off in the other direction by 229,000 jobs, roughly 19,000 per month. Here is the complete table that I worked from.

ADP Data Points Table

Date	ADP Revised	ADP Original	Revision	Cumulative Error
2011-02	155.3	197	-41.7	-41.7
2011-03	215.9	199	16.9	-24.8
2011-04	174.5	162	12.5	-12.3
2011-05	156.4	47	109.4	97.1
2011-06	118.3	136	-17.7	79.5
2011-07	180.3	125	55.3	134.8
2011-08	122.7	67	55.7	190.5
2011-09	197.5	105	92.5	283.0
2011-10	114.3	142	-27.7	255.3
2011-11	173.2	226	-52.8	202.5
2011-12	293.4	267	26.4	229.0
2012-01	218.9	182	36.9	265.8
2012-02	226.6	228	-1.4	264.4
2012-03	89.7	204	-114.3	150.1
2012-04	130.1	112	18.1	168.2
2012-05	81.2	131	-49.8	118.4
2012-06	115.4	173	-57.6	60.8
2012-07	145.5	156	-10.5	50.4
2012-08	76.4	189	-112.6	-62.3
2012-09	88.2	162	-73.8	-136.1

I note with amusement TrimTabs Says BLS Badly Missing Current Acceleration in Job Growth

TrimTabs Investment Research said today that the Bureau of Labor Statistics’ (BLS) hefty upward revision of its August job growth estimate proves that the BLS missed the important acceleration in job growth this summer because it relies on incomplete surveys that are frequently revised.

Trimtabs said the BLS’ initial estimate for August job growth was 96,000. Today, the BLS revised its August estimate upward 48% to 142,000 new jobs. Meanwhile TrimTabs estimate, based on real-time withholding tax data, said employment growth in August was 185,000.

TrimTabs reported the U.S. economy added 210,000 jobs in September while the BLS reported a job gain of only 114,000. TrimTabs said it expects the BLS to revise its September jobs estimate of 114,000 substantially higher next month.

I did not buy that story then, and I do not buy it now. More than likely, the BLS was catching up to misses earlier in the year, perhaps even 2011 vs. a genuine recent hiring spurt.

Obamacare Employment Analysis

I am sticking to what I said regarding Obamacare, especially Obama Slashes Four Hours Off Definition of "Full-Time" Employment

Additional Obamacare Employment Analysis

• Is Obamacare Responsible for the Surge in Part-Time Jobs?
• Prepping for Obamacare, Olive Garden and Red Lobster Cut Workers' Hours; Are Other Companies Doing the same?
• Mish Obamacare Mailbag: Expect More Part-Time Jobs

By the way, these ADP revisions suggest the stated unemployment rate is blatantly preposterous, something I say in every jobs report.

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

"Wine Country" Economic Conference Hosted By Mish
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Actress Brooke Smith Lists L.A. Abode

SELLERS: Brooke Smith and Steven Lubensky
LOCATION: Los Angeles, CA
PRICE: $1,649,000
SIZE: 2,878 square feet, 4-5 bedrooms, 2.75 bathrooms

YOUR MAMAS NOTES: The other day, as we aimlessly sifted though some of the newer listings in Los Angeles, Your Mama ran across a (somewhat) modestly scaled and urbanely-dressed two story traditional listed with a $1,649,000 asking price that set off all our celebrity real estate bells. A cursory tuck into the property records left us stymied but our freakishly well-informed friend and informant Lucy Spillerguts told Your Mama—and we later managed to confirm with a more careful if roundabout perusal of the property records—that the house in question is owned by television and movie actress Brooke Smith and her arty-farty Russian-born cinematographer husband Steven Lubensky.

Miz Smith might not be a household name like Blackman Cruz shopping romcom/sitcom star Jenny Aniston or pop music matron X-Tina Aguilera but, children, she has a downright proper Tinseltown pedigree. Her mother, Lois Smith, was a beloved, quietly powerful—and retired—Old-School publicist to the stars who—may she rest in peace—very recently died in a freak accident whilst staying in a bed and breakfast in Maine. Her long roster of superstar clients included—as per her recent obits in The Hollywood Reporter and The New York Times—Marylin Monroe, Robert Redford, Meryl Streep, Martin Scorcese, Liza Minelli, Whitney Houston, Rosie O'Donnell and Warren Beatty. This lady was serious Hollywood business, we tell y'all.

The younger Miz Smith, Brooke, grew up in and around New York City and—so the story goes—was once roommates with indie-cult favorite musician Jeff Buckley who drown in a Memphis (TN) river in 1997 at just 29 years old. Daughter Smith—that's Brooke—started up her ladder of Showbiz fame in the late 80s and in 1991 she landed a plum role as the young woman at the bottom of the well in The Silence of the Lambs with that skin-suit sewing and organ eating Hannibal Lector played by a pitch-perfect Anthony Hopkins. Remember that? A few years later she appeared in the splendidly bleak 1994 Louis Malle film Vanya on 42nd Street, which happens to be the very first film Your Mama ever saw in a movie theater in New York City. More recently Miz Smith has had recurring and/or prominent roles on a slew of television programs (Six Feet Under, Law & Order, Crossing Jordon, Weeds and Grey's Anatomy) and will soon be seen in the upcoming silver screen drama Labor Day with Kate Winslet and James Van Der Beek.

Anyhoodles poodles, property records reveal Miz Smith and her Russian hubby paid $1,643,000 in August 2008 for their margarine-colored residence located on a leafy, tree lined street in the Hollywood- and West Hollywood-adjacent Sunset Square neighborhood of Los Angeles. We happen to love this particular neck of L.A. quasi-urban fabric but we've heard more than a few high-nosed real estate snobs we know over-dramatically poo-poo the 'hood as being too, well, 'hoodish. We just roll our boozy eyes at them because—pleeze—this taint the 'hood, children. It's not East Gate Bel Air, but it's hardly Compton, okay?

Current listing information shows the completely updated and upgraded abode sits tightly on a compact, .16 acre lot, was originally built in 1921 and measures a roomy but far from large 2,878 square feet with 4-5 bedrooms and 2.75 bathrooms.

An intimate foyer and stair hall joins the deeply inset front porch to the sparely furnished and internationally flavored "formal" living room that's nicely outfitted with wide-plank peg and groove hardwood floors, a bookcase flanked fireplace and two sets of magnificent floor-to-ceiling French door style windows that—when the curtains are pulled open—expose the room to just about anyone who might be stroll or roll past on the street or sidewalk.

Your Mama is pleased to report that someone had the smarts and took the time and effort to design—or re-design—the main floor living spaces to connect through perfectly aligned double-wide doorways between the living and dining room—where there are more floor-to-ceiling French door style windows—and between the dining room and kitchen. The enfilade-style alignment injects an elegant architectural formality to the decidedly casual and lightly funky but very purposefully curated and decorated main floor living spaces.

The chestnut-colored wood floors in the living and dining room switch to a bright, blood red stain or paint in the galley-style eat-in kitchen. While this isn't exactly our "style" it's none-the-less, by our utterly meaningless estimation, a well-conceived and nicely executed kitchen with beamed and vaulted ceilings, snow white Shaker style cabinets topped with swanky Carrara marble, top-grade commercial style stainless steel appliances and a built-in corner breakfast banquette nicely juiced up with a Eero Saarinen designed Tulip table...or maybe it's the not half bad and considerably less expensive Ikea knock off. Whatever the case...

There's a second built-in banquette in the adjoining, main floor den/library/family room where Miz Smith and Mister Lubensky—and/or their lady or nice-gay decorator—installed a dark patterned wallpaper, played an abstract painting off a simple still life and filled the floor-to-ceiling book shelves with actual books.

A main floor bedroom with direct access to the backyard and easy access to a three-quarter bathroom makes a private guest or domestic space and the four other potential bedrooms upstairs spoke off around a spacious central landing. Two bedrooms—plus a third currently used as an office—share a vintage-style bathroom with black and white diamond-checked tile floor, a single pedestal sink and a white-tiled tub/shower combination.

The Master bedroom itself isn't particularly large but it does have a closet lined and privacy promoting entry vestibule, lots of windows including a Juliet balcony, a bedroom-sized walk-in closet/dressing room and an attached bathroom with marble topped double sink vanity, separate glass-enclosed stall shower and a jetted tub for two set into a window- and sky-blue tile-lined niche with palm tree views.

Several main floor rooms, including the kitchen, open to a T-shaped and bougainvillea draped covered porch that really couldn't be more charming if vine-draped covered porches float your real estate boat. A tree shaded grass patch over looked by a tree house separates the back of the house from a trellis shaded outdoor dining area at rear of the property with built-in brick barbecue station.

The slim, gated concrete driveway that runs up along side the house stops short of the detached two-car garage at the back corner of the property that may or may not currently be used for parking cars.

Where the Smith-Lubenskys plan to decamp—they have two small children—isn't known. Until the lat few years they maintained East Coast outposts but, as far as Your Mama can tell they don't currently own any property in New York and it. In May 2008, right about the time they bought the house in Los Angeles they now have for sale, the couple sold a small property in High Falls, NY to actor Willem Dafoe for $393,000 and in December 2010 they sold a renovated and updated two bedroom and two bathroom co-operative apartment in a dignified pre-war building on Riverside Drive for $1,250,000.

listing photos: Sotheby's International Realty

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Home Prices Turning the Corner: Are You?

Tampa’s premier home builder, Standard Pacific has recently published an article that sheds light on market conditions and trends in our area. The article is based on a report done by Barclays Capital that forecasts home prices rising as much as 5% – 7.5%!

The article also reveals some significant factors that are pushing home prices in an upward direction and how this is being done in two different types of markets. It gives an interesting look into the prime “A and B” markets, and also tells why the “C, D and F” locations will soon become more desirable.

On a local level, we are seeing this first hand. New homes in New Tampa are in higher demand than previous years and inventory is quite scarce. We are constantly in multiple offer situations and sometimes loosing the bidding war due to home buyers submitting low ball offers that do not hold up. Standard Pacific has a great presence in the New Tampa area and will soon run out of homes to sell. Don’t miss out on a home of your dreams because you still think the market is at the bottom..

Prices of New Homes

New Home prices have turned the corner and forces are driving rising prices in the foreseeable future. In this article, we discuss these forces and reveal the trends that are not evident to those who rely only on publicly-available data to form their views on home prices.

The popular aggregate price indices have shown a modest turnaround in home prices, rising nominally in recent months, but these median readings obscure the dramatic cross-currents that are at work underneath the surface. Effectively, there are two housing markets, each exhibiting distinct price trends. One consists of residential developments that are within a reasonable commute of job centers, with developed shopping and entertainment options and good schools. These are the projects that the builders care about, characterized by strong new-home demand and an increasingly scarce supply of homes and lots. The other “market” is the massive collection of remote lots, struggling subdivisions, and mothballed master-planned communities that were developed during the last year of the boom (2005/2006). Projects with these characteristics are almost completely dormant, and have very little impact on the builders.

Factors that will keep home prices rising in the “A” and “B” (good) locations are:

• New-home inventories are so low that builders who have standing or nearly-finished homes can command higher prices.

• Lot scarcities, expected to worsen in 2013, will force builders to raise prices, and the limited supply of new homes for sale means that builders have more pricing power.

• Rising costs (materials, lot prices, permitting/impact fees, and labor) will force builders to raise prices in order to be profitable.

• Pent-up demand re-emerging (people who were doubling up are now finding jobs and forming their own households, and people who were waiting for prices to bottom are now taking advantage of the buying opportunity and record-low mortgage rates). Household formation rates are forecast to increase by 50% over the next three years.

Meanwhile, in the “D,” and “F” locations, plentiful supplies of bank-owned homes for the moment continue to make new home construction a money-losing proposition. If buyers are willing to commute to those areas (‘drive ‘til you qualify’), they can buy homes from banks, at auction, short-sales, or from investors who bought from the banks or the agencies, and they can often do so at a price that is below replacement cost.

The “C” locations are neither good nor bad at present. While not all “C’s” are created equal, within two years many will rise to “B” status. No builder wants to be “below C level.” (very punny). I like Mike Castleman’s (Metrostudy’s CEO) statement during a presentation to a national builder client that builders will soon be “gnawing at the bone of C lot supplies.”

The Housing Market and Available Lot Supply…or…The ABC’s of VDL’s

At first glance at our data, it appears that there are lots of lots. But are there really?

Builders are complaining that they can’t find lots to buy, yet there is a huge 80-month supply of vacant, developed lots in the markets we track. The problem is that the vast majority of the lots are in the far-flung suburban areas that are NOT on builders’ radar, because they are so overbuilt and over-lotted.

Residential subdivisions that are close to where people work and shop, and within good school districts, are talked about as being in the “A” or “B” submarkets. Those that are farther away from the core, or are otherwise in inferior locations, are given lesser grades.

Builders have little use for those “D” and “F” lots, but have a growing appetite for A, B, and C locations, and it calls to mind the lament of Coleridge’s Ancient Mariner: “water, water everywhere, nor any drop to drink.”

This distinction is of critical importance in the hard-hit ‘bubble markets.’ In South Florida, there are 26,037 vacant, developed lots, but only 7,811 of them (30%) are within what Metrostudy has determined to be “A or B” locations. In Phoenix, there are 83,866 lots, but only 15,998 (19%) are in A/B areas. In Atlanta, there are 140,000 lots, but only 18% are in the A/B locations.

The distinctions become even more striking when one ‘drills down’ to individual submarkets. A market might have a 100-month supply of lots overall, but the submarkets where builders are preparing to build homes might only have a 20-month supply.

It should also be remembered that not all of the A and B lots represent available supply. Most of them are owned by builders or other entities. The barriers to entry into these coveted neighborhoods are high.

There is one major reason why the quality of the location matters: pricing power. Builders who have lot positions in the A and B submarkets not only command a pricing spread over the lesser locations, but they are also (in some cases) able to raise prices. Until six months ago, we had not heard of very many cases of builders raising prices. The fact that some builders are raising prices is of great significance; they would not attempt it if they did not feel secure that the higher prices would stick. This speaks to the new confidence that the builders have that demand is strengthening.

By contrast, in the C, D, and F locations, there are no price increases to be had. In fact, prices of resale homes and REO may still be declining in those areas. It will take time, but sooner or later the price levels in the A and B areas will force more buyers to make longer commutes. “Drive ‘til you qualify” is the expression.

This article was shared by Tampa’s premier home builder, StandardPacific. Information gathered for this article was found at the following sites.

http://www.metrostudyreport.com/national-housing-market/prices-of-new-homes http://money.cnn.com/2012/10/12/news/economy/housing-boom/index.html
http://www.metrostudyreport.com/national-housing-market/the-housing-market-and-available-lot-supply-or-the-abcs-of-vdls

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Canada GDP "Unexpectedly" Shrinks; Pollyannas Come Out Of Woodwork

Economists who cannot see anything but the rear view mirror were surprised to learn Canadian Economy Shrinks as Oil, Mining Slump.

The Canadian economy shrank unexpectedly in August, pointing to a sharp third-quarter slowdown in growth from the first half and reinforcing the Bank of Canada's message that interest rate hikes are less imminent.

The surprising 0.1 percent contraction in August from July reflected broad weakness across most industries, prompting economists to revise forecasts down. The Canadian dollar weakened to below parity with its U.S. counterpart.

August's dip was the first monthly contraction in GDP since February. Statistics Canada said on Wednesday it was largely caused by decreased production in the natural resources sector - oil and gas extraction and mining - as well as in manufacturing,

Statscan said temporary maintenance work at some mines and oilfields was partly to blame. But some economists argued that the economy had stalled more broadly.

"There are too many negatives in this report to dismiss the headline weakness as being attributable to just temporary disruptions in some sectors," said Derek Holt and Dov Zigler of Scotia Capital.

Doug Porter, deputy chief economist at BMO Capital Markets, noted that output fell in 10 of 18 sectors. "We can't brush this off as driven by special factors," he said.

Flaherty was more sanguine. "We're going to see some variations, but overall, for the year we are on track with GDP growth," he told reporters.

Flaherty expects 2.1 percent growth this year, based on the average forecast of private sector economists his office surveyed this month.

The Bank of Canada has also suggested the third quarter was an anomaly. Last week it halved its forecast for third-quarter growth to an annualized 1 percent, but predicted a rebound to 2.5 percent growth in the fourth quarter and average growth of more than 2 percent through 2014.

Pollyannas Come Out Of Woodwork

BMO and Scotia Capital analysts may be late to the recession party (or not, I do not know previous calls),  but otherwise, Pollyannas like Jim Flaherty, Canada's Finance Minister, and officials at the Bank of Canada and Statscan are still looking for growth.

Forget about it. This is not an anomaly as suggested by the Bank of Canada.

As I have said repeatedly, the slowdown in Asia is going to hit Canadian commodity producers more than most think.  Moreover, signs suggest Canada's long overdue housing bust is finally underway according to the Canadian Real Estate Association Report on October 15.

Here is the key item: Actual (not seasonally adjusted) activity is down 15.1 % from year-ago levels, with more than half of all local markets posting declines of at least 10 per cent.

The rest of the report staked out a claim that real estate was "balanced", I maintain in the same way that spinning plates in this video can be stated as balanced.


With the US economy slowing, with Asia slowing, and with Europe in a full-blown recession, the odds of Canada and the US bucking the trend is essentially zero.

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

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"Google Law" Yet Another Warped Policy by Hollande; Government Motors French Style

French president François Hollande took two more swan dives into the pool of ludicrous actions in the past few days, first with car-maker Peugeot, quickly followed up with a guaranteed-to-fail proposal regarding search engine giant Google.

Government Motors French Style

Bloomberg reports France Guarantees Peugeot Debt in Exchange for Influence

The French government stepped in to rescue PSA Peugeot Citroen (UG), Europe’s second-largest carmaker, by guaranteeing as much as 7 billion euros ($9 billion) in new bonds in exchange for greater influence over company strategy.

The state and workers will each receive a seat on the board of directors, and an outside committee will be set up with veto power over any “significant” changes in Peugeot’s operations, the French Finance Ministry said today.

“The state will want to see this business run more in the interest of government, rather than in the interest of the shareholders,” said Erich Hauser, a Credit Suisse analyst with a neutral rating on the shares. “The rising debt of Peugeot clearly shows that the core things are getting worse.”

Sheer Madness

I would like to point out how ridiculous this action is, but Pater Tenebrarum at the Acting Man blog beat me to it.  He did a first-class job of making Hollande look foolish in his post Peugeot Bailed Out, More Trouble for the Banks.

The government and workers will receive board seats? Are they sure this is going to work out? We believe that this latest socialistic experiment is highly likely to turn into a bottomless pit for France's tax payers.

Not surprisingly, competing car makers in other European countries are rather unhappy that an inefficient competitor is kept on artificial life support. They are perfectly right to complain. To keep companies that are not competitive artificially afloat harms the economy at large, but it is especially detrimental to more able companies in the same branch of industry.

However, the French government insists that it is actually not providing aid to Peugeot, and will therefore not run afoul of EU regulations that forbid such state aid. It is not giving aid, it is merely providing 'support'.

Hang on, it gets even better. Guess who Peugeot is now in an alliance with to produce new cars consumers will – hopefully – want? You guessed it…. GM, the original  'government motors': Peugeot said today it’s making progress with GM on the alliance and the two have selected four vehicle projects to work on together.

"Google Law" Another Sign of Hollande's Warped Mind

That piece by Tenebrarum is a tough act to follow. Nonetheless, please consider the Wall Street Journal article France Calls On Google to Settle Rift With Publishers

France will consider adopting legislation that would force Google Inc. GOOG to pay for the right to cite news articles online if the U.S. search giant fails to settle a long-running dispute with French news publishers over how to share advertising revenue, the office of France's President François Hollande said on Monday.

Mr. Hollande's ultimatum marks an escalation in the protracted battle pitting news publishers against Google, which has long resisted the idea of sharing ad revenue with content providers.

Google has warned it would exclude French newspapers from its search engine if France implements the proposed law, which would make search engines pay for the right to cite news online.

Leading French newspaper publishers last month called on the government to adopt legislation imposing a settlement in their dispute with Google, forcing it and other search engines to share some of the advertising revenue. Their request follows the German government's approval of draft legislation in August that would force search engines to pay commissions to German media websites.

The new law—sometimes dubbed the "Google law"—has been pitched by French newspapers as a means to help support their business, which is under threat from a long-term migration of advertising away from print media, a trend exacerbated by cuts in advertising as the French economy struggles.

Do A Search For Anything

Just so you know what we are talking about here, please do a Google search for anything. Hurricane Sandy is as good a topic as any.

Here is an image of the results.



Imagine Boston.Com, Bloomberg, the Washington Post, and the Weather Channel all demanding Google share add revenue with them for any ad that appears in those search results.

While you are at it, imagine me demanding ad revenue sharing for those doing a Google search for Mish. Many people find me that way. "Mish" is my brand, and I appear at the top of any such search.

Here is an image of a search for Mish.



Instead of getting some ad revenue when people click on links to French news articles, there will be no links to click on at all if Hollande does what he says (and Google responds the way they have said).

Hollande wants to help struggling newspapers, struggling car makers, struggling students, all with ludicrous actions on top of massive tax hikes. He even wants to ban homework because "It's Not Fair to Disadvantaged".

On June 8, I reported Hollande About to Wreck France With Economically Insane Proposal: "Make Layoffs So Expensive For Companies That It's Not Worth It"

It should be easy enough to guess the company that triggered that last bit of layoff-insanity, but in case you misplaced your thinking cap, the answer is Peugeot.

Prepare for the implosion of France, because it is nearly certain with Hollande at the helm.

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

"Wine Country" Economic Conference Hosted By Mish
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Abdo Envisions Condos for Empty Rhode Island Avenue Lot

You could call it a vindication. Or you could simply say the market finally changed.

Either way, Jim Abdo says he’s got revamped plans for the property he owns at 1427 and 1429 Rhode Island Avenue NW, the only vacant lot on that block and one of the few left in the neighborhood. The Logan Circle-based developer had been planning on erecting a 70-something unit apartment building there, but ran into opposition from neighbors due to its size. As of this past February, he had backed off from the project entirely.

The lot as it currently appears

Now he says he’s got new plans for the lot, which backs up to the P Street Whole Foods Market. Due to a steadily improving housing market and the increased availability of financing for condo construction, Abdo has returned to the plan he says he’d initially envisioned for the property before the economy tanked: a high-end condo building containing just a few units.

“My vision has always been a boutique building with a small number of units,” explained Abdo. “And every day and month I wait, the market comes back in my favor to do what I want. We think it’s a win-win for everyone, and it’s what the neighborhood will embrace.”

Abdo didn’t provide many details about what he has in mind, as the project hasn’t gone far beyond the basic concept stage. But he says he’s imagining a 90-foot high building that contains nine or ten units, each taking up an entire floor and potentially reached by elevators that open directly into the units.

That’s a big difference from the property’s previous iteration, which was an eight-story rental building conceived of at a time when condo financing was almost nonexistent. Although the design earned approvals from the Historic Preservation Review Board, neighbors objected to its density and Abdo eventually withdrew his plans.

The lot with its prior structures, which were knocked down in 2007

“I said, ‘Let’s revisit this thing,’” he explained.

Nothing’s happening anytime soon. The developer, who bought the property in 2001, says the company probably won’t start moving on the project until 2014. At that point, in-house architects will begin putting together design ideas and he’ll reach out to HPRB and the community.

It’s not like the firm doesn’t have enough going on as it is. Besides projects in Brookland and Arlington, Abdo is also planning to develop a spot a few dozen feet to the east: 1400 14th Street, a corner lot at the intersection of 14th Street and Rhode Island Avenue that currently includes a Caribou Coffee and Abdo’s own office (and next to the DCMud office). That project—a six-story building to include ground floor retail, one floor of offices, and some 30 residences—received HPRB approval a couple of months ago. Groundbreaking is set for next year.

That turns the block of Rhode Island between 14th and 15th streets a mini Abdo-ville. The developer owns another property on the block, and developed the two condo buildings framing the empty lot—the Zenith and the Willison—more than a decade ago.

Washington, D.C., real estate development news

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19 of 20 Case-Shiller Index Markets Improve In August

Home value rose to close out the summer, according to the S&P/Case-Shiller Index, a national home-valuation tracker.

Nationwide, values rose 0.9% between July and August 2012 with 19 of 20 tracked markets showing improvement. Only one tracked city -- Seattle, Washington -- showed a decrease, falling just 0.1 percent.

On an annual basis, 17 of the 20 Case-Shiller Index markets improved, led by Phoenix. Home values in the Arizona city are up 18.8 percent from August 2011. The next closest city in terms of home price gains is Detroit, Michigan at 7.6 percent

We should temper our excitement for the August Case-Shiller Index, however. Although it suggests an ongoing U.S. housing recovery, the methodology of the Case-Shiller Index is far-from-perfect. In fact, one could argue that the index is more effective for policy-makers than for actual buyers and sellers of real estate.

There are three reasons for this :

1. The Case-Shiller Index tracks home prices of single-family homes only. Multi-unit homes are excluded.
2. The Case-Shiller Index can be distorted by "discounted" home sales (e.g.; foreclosure, short sale).
3. The Case-Shiller Index publishes on a two-month delay -- data is hardly current.

Beyond the above three points, however, the Case-Shiller Index falls short in another area -- it ignores the basic tenet of housing that "all real estate is local". In using 20 cities to represent the entire United States, the Case-Shiller Index reduces more than 3,100 municipalities into a single "market".

Even within its 20 tracked cities, the Case-Shiller Index fails short as a housing market barometer. This is because -- even with cities -- home values vary. Some Kent zip codes perform better than others, for example, as do some streets within Fairwood. The Case-Shiller Index can't capture markets with that level of detail.

National housing data helps in spotting broader trends of growth but provides very little for today's active buyers and sellers of real estate who need "real-time" data. For that, talk to a local real estate agent.

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Morning Real Estate Fix

Sandy amps up anxiety of home buying (Washington Post)  Delays in settlements can cause headaches, and the shifted liability - as sellers remain liable for storm damage until settlement - can be a cause of litigation.

A look at proposals to limit the mortgage interest deduction (LA Times)  With the deduction saving taxpayers $484 billion per year, numerous proposals to ratchet down the deficits of the last 3 years have the popular credit in their sites.

Constitution Center leases remaining space (Biz Journal)  3 new federal agencies fill the vacant space at the recently renovated building in southwest designed for high-security government tenants.

DC property fared much better than that of NYC (Atlantic Cities)  Parts of lower Manhattan were under enough water to submerge cars.

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Governor Chris Christie Strongly Praises Obama's Response to Sandy; Could Christie's Comments Tip the Election?

Here's a headline story including an interview on Fox news that caught me by surprise: New Jersey Chris Christie Praises Obama, Doesn't 'Give a Damn' about Election Day

The presidential candidates have canceled all campaign events on Tuesday, but Republican New Jersey Chris Christie seemed to be stumping for President Barack Obama by appearing on several networks to praise the federal response to Hurricane Sandy.

In an interview on NBC, Christie called Obama "outstanding" for expediting relief efforts. He also told MSNBC that Obama "deserves great credit. He gave me his number at the White House and told me to call him if I needed anything," Christie said.

The New Jersey governor even took his message to Fox News, saying that Obama had helped "tremendously."

"I spoke to the president three times yesterday," he explained. "He called me for the last time at midnight last night asking what he could do. I said, if you can expedite designating New Jersey as a major disaster area that that would help us to get federal money and resources in here as quickly as possible to help clean up the damage here."

Chris Christie Video



Will Christie's Comments Tip the Election?

New Jersey, Christie's home state is solidly in the Obama column. However, storm-damaged Virginia is in a virtual dead heat. Praise from Governor Christie certainly cannot hurt Obama's election chances.

Mathematically, I do not believe Romney can win if he loses either Ohio or Virginia. Romney certainly cannot win if he loses both of them.

Here is question of the day: Is this genuine praise or is Christie looking to run for president in four years? I suggest both.

Regardless, widespread perception that Obama is doing a good job in response to Sandy, fueled by gushing praise from Christie may be enough to tip Virginia into the Obama column, and the election right with it.

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

"Wine Country" Economic Conference Hosted By Mish
Click on Image to Learn More

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Japan Manufacturing PMI Falls to 18-Month Low

The Japanese economy continues to skid as evidenced by the October Japan Manufacturing PMI™

Key points

• Output and new orders both down at sharper rates
• Employment falls at fastest pace since July 2009
• Average output charges pared to steepest degree since December 2009

Summary

October’s PMI data indicated a further deterioration in the performance of the Japanese manufacturing sector. Orders and output both continued to fall during the month, while evidence of rising excess capacity led to a first reduction in employment for half a year. Manufacturers also intentionally cut back on their stock holdings as order books deteriorated and the outlook remained uncertain.

Production and new orders both fell at similarly marked rates during the latest survey period. Panellists reported that the car industry was a particular source of softer demand. Overseas new orders also fell during the month, the seventh successive month that a decline has been recorded.

As volumes of new orders and output fell further in October manufacturers were again able to make significant inroads into their work outstanding. Nearly a quarter of the survey panel indicated that backlogs were down in October and, with spare capacity seemingly rising, a number of companies also chose to lower their staffing levels.

I have little to add that I have not said before numerous times. The entire global economy is heading South in a major way, and Japan is in serious trouble given its monstrous debt levels.

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

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Ice-T and Coco To Make a Move in New Jersey

BUYERS: Ice-T and Coco
LOCATION: Edgewater, NJ
PRICE: $2,199,000 (list)
SIZE: 4,200 square feet (approx.), 5 bedrooms, 5 bathrooms

NOTE TO THE CHILDREN: In light of the devastating effects of the psychotic storm Sandy, Your Mama thought maybe today we should just give it a damn rest. "Who needs this kinds of stoopid celebrity real estate frivolity at a time like this?" we said to The Dr. Cooter as he scooted out the door at the crack of dawn. For Chrissakes. We can be a real beotch, but we are not heartless. Sometime in the late mid-morning, having touched based with most of our East Coast people who all—thankfully—made it through rattled but unharmed, we grew weary of the non-stop cable news coverage. We needed a break and thought that maybe a little celebrity real estate dish could maybe be a momentary respite for one or two of the children. We sincerely mean no disrespect to anyone who grappled with and/or continues to deal with the destructive seriousness of Sandy. Okay? Onward we go now...

YOUR MAMAS NOTES: Your Mama does not (regularly) watch the reality program Ice Loves Coco but iffin we did we'd know that Grammy-winning rapper-actor Ice-T (Law & Order: SVU, New Jack City), his Showbizzing wife Coco and her SUV-sized backside recently acquired a very contemporary—and still under construction—single family residence just across the Hudson River from Manhattan in the river side community of Edgewater, NJ.

Before we set our celebrity real estate sights on their new digs, let's have some background education and a short go at their current crib, shall we?

The couple legally hitched their life and love wagons in 2001 and in August 2003 they sold Ice's long-time bachelor pad in Los Angeles, a nearly 4,000 square foot roost high above the Sunset Strip on sexy and dangerously curvy Sunset Plaza Drive. Property records show Ice had owned the house since at least the mid-1990s and unloaded it for exactly $2,000,000 to a gentleman who owns—or once owned, we're not sure if he still owns it or not—a high profile nightclub in West Hollywood that caters primarily to homosexuals and those who like to pal around with them and where a whole gaggles of those shade-slinging painted ladies from RuPaul's Drag Race* perform every Monday night at 10:30.

Anyhoo, the sassy, brassy and suh-waggy yet genuinely likable couple decamped for the East Coast—Ice was raised up in Newark and Alpine, NJ—where they settled into a penthouse rental on the Upper West Side with a glorious view of the Hudson River. At some point, we don't really know when because we don't actually know them, Ice T and Coco decided they were ready to plant some real estate roots in the New York City area.

After they decided they could not or did not care to spend the vast sums of money required to purchase a Manhattan apartment of the size, quality and location they desired** the couple shifted their search to the other side of the mighty Hudson River. In September 2005 they found their real estate nirvana and shelled out, according to property records we peeped, $1,500,000 for a 2,161 square foot duplex penthouse atop a boxy and glassy contemporary building in someplace called North Bergen, NJ, between the Hudson River side communities of Edgewater and Guttenberg, the proud home of the insanely amazing Mitsuwa Marketplace.

We have no idea how the tri-terraced penthouse looked at the time of their purchase but we do know from at least one video easily accessible on the internets that they made the decoratively inexplicable decision to cover the Brazilian hardwood floors with plum-colored wall-to-wall carpeting, added custom built-ins for the flat screen and audio/visual equipment and—natch—put in a big ol' fish tank that glows blue at night.

They converted one of the three original bedrooms into a walk-in closet/dressing room for Coco and her extensive collection of high-heeled shoes and kitted out a windowless, bathroom-sized space hidden behind a paneled wall in the living room as an office/music studio—ahem—"man cave" for Ice.

Somewhere in there they installed—brace yerselves, butter beans—a goddamn stand-up tanning booth that ever-tan Coco uses to keep her skin that unnatural tawny tone she seems to prefer. Well, bless her heart. Doesn't she know that a lot of doctors, scientists and researchers surmise that tanning beds might have something to do with the uptick in melanoma rates, particularly with young women? Let's call her warned.

Other notable features of the top floor duplex include a living room area with soaring ceiling and sweeping river and city views, a separate dining space, an open-concept kitchen, a master bathroom with separate shower and jetted tub and a state-of-the-art home automation system that controls the lighting, window treatments and a/v equipment. The boutique building offers doorman services, a residents only fitness facility and on-site parking—there are two covered spots deeded to Ice T and Coco's penthouse, according to listing information.

Although the couple's penthouse does not appear to be listed on the open market, as of early August (2012) it was shown on the the website of the couple's camera-friendly real estate agent as being available for private showings with an asking price of $979,000.

A few quick clickety-clacks of the well-worn beads of Your Mama's bejeweled abacus reveals that even with a full price sale—it could happen, right?—Mister Ice T and his lady Coco are still faced with a jolting loss of $521,000, not counting carrying costs, improvements and customizations and the attendant real estate fees.

The couple have used their reality show to showcase their decision to sell their penthouse and purchase a new and larger residence where they'll have more room for man-caves, shoe shelves and guests, like, say, one of Mister Ice's children or grandchildren. That's right, hunties, Coco is the step-grandmother of two young children. Imagine that! That really takes the cherry off Your Mama's step-grandmother story. Ours was a worldly and wickedly smart, Mercedes-driving professor of economics who happened to deal a little dope on the side. Swear. To. God. Ask Sister Woman.

Anyhoo, last November, Ice and Coco's real estate agent posted on her blog in November 2011 that "Law & Order star, Ice T and his entrepreneurial muse Coco" had "unexpectedly found their perfect home" in a not-yet-completed contemporary under construction on the cliffs of Edgewater (NJ). The blog report showed a photograph*** of a sun splashed open-plan living/dining/kitchen space (above) with fireplace and wall of nearly floor to ceiling windows through which can be seen a slender, negative edge pool and an unimpeded view across the Hudson River towards the always spectacular, sky-scraper strewn New York City skyline.****

According to listing information squirreled out of the interweb plus a few tidbits revealed by their real estate agent on her blog Your Mama surmises that, when completed sometime near the end of this year (2012), Ice and Coco's new crib in Edgewater will sit up a gated—and heated—driveway and have about 4,200 fully customized square feet on four floors with an elevator and a 12-zone geothermal heating and cooling system "plus a 'man cave' for him (a six car garage) and a 550 sqft closet for her, which Ice affectionally [sic] calls the 'bitch cave.'" Now that's, klassy with "k," ain't it?

To be honest, puppies, Your Mama hadn't given any of this Ice and Coco real estate bizness more than a fraction of a second of thought until we heard from those Bizzy Boys at Celebrity Address Aerial who snitched to Your Mama that, after a great deal of research, they managed to locate Ice and Coco's new house in Edgewater, even though the various property records data bases they make use of do not yet reflect their ownership of said house. Listing images still accessible online are, however, a dead match to the one on Ice and Coco's real estate agent's blog. Make of that what you will.

A few minutes additional poking around by yours truly and we determine the couples contemporary new home is well sited for privacy near the base of the palisades that shoot up along the the western shore of the Hudson and was designed as a mirror image (above in rendering) of the one directly across the shared driveway.***** We also discovered the house sits at the tail end of a nondescript, up sloping cul-de-sac lined with—well—let's be nice and say it's lined with much more prosaic, ordinary and less expensive-looking single family houses.

Their real estate agent promises in a November 2011 blog post that the couple's brief property search and their first tour of the house they actually bought will be chronicled on the second season of their show, Ice Love Coco, and Your Mama presumes that should there be a third season, the new house and it day-core will be prominently featured. Well, at least in the hideous aftermath of Sandy we have that to look forward too, don't we?

Back in November 2011 their real estate agent revealed, again on her blog, that Ice and Coco also maintain residences in Arizona and Florida. Your Mama doesn't find any immediate evidence they own any property in Arizona. That doesn't mean Ice and Coco don't own any property in Arizona, only that we could find no evidence of such a thing.

They actually sold their three bedroom and three bathroom penthouse in Sunny Isles, FL—that's due north of South Beach just south of Golden Beach—back in June (2012) for $1,290,000, a significant amount less than the $1,530,000 they paid for the place back in August 2007.



UPDATE (Next day): It seems the couple have yet to move into their new crib yet as Coco posted a video on the YouTube of her (and her colossal cleavage canyon) standing in the wind and pelting rain on the balcony of their Edgewater penthouse as Sandy barreled ashore.

*Neither Your Mama nor The Dr. Cooter will apologize for thinking that the world is a better place with RuPaul's Drag Race in it. It just is.

**We have no information at all about the couple's current or previous financial capabilities and they very likely opted to live in Jersey for any or many reasons that may may not have had anything to do with their pecuniary position.

***It might be a rendering, we're not sure.

****At least it's "always spectacular" to those who feel urban vistas.

*****The two adjacent homes that share a gated driveway and garage apron may or may not be exact mirror images when completed although they appear that way on the online available listings and marketing materials.

exterior photo (North Bergen): Google Maps
listing photos (Edgewater): Liberty Realty via Zillow

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NY Subway May Take Weeks to Restore Service, 5 Million Affected; 80 Flooded Homes Destroyed by Fire; Stunning Flood and Fire Images

Hurricane Sandy has moved on but the damage remains. The following picture of Times Square posted on Gizmodo caught my eye. Fortunately, it does not look real. Lights should not be on and there would be debris everywhere.

However, the Metra chairman did say water was "literally up to the ceiling" at one downtown station, so take this image and use your imagination, adding dead rats, debris, and whatever else suits your fancy.



Bloomberg reports the New York Subway System May Take Weeks to Recover From Flooding.

Restoring service on New York subway lines that have been flooded could take weeks, said Mortimer Downey, a former MTA executive director and current board member of the Washington Metropolitan Area Transit Authority.

“From the New York viewpoint, they’ve got a lot of work ahead of them,” Downey said in an interview. “It’s going to be days and possibly weeks.”

He declined to estimate what the recovery may cost because there’s no precedent for the work that will need to be done.

Previous reports said the New York city subway would remain closed for 14 hours to four days.

Unprecedented Challenges

Reuters reports Sandy leaves unprecedented challenges for New York City subways

The giant storm Sandy wreaked havoc on the New York City subway system, flooding tunnels, garages and rail yards and threatening to paralyze the nation's largest mass-transit system for days.

"The New York City subway system is 108 years old, but it has never faced a disaster as devastating as what we experienced last night," Joseph Lhota, the chairman of the Metropolitan Transit Authority, said in a statement early on Tuesday.

He later said that water was "literally up to the ceiling" at one downtown station.

All seven subway tunnels running under the East River from Manhattan to Queens and Brooklyn took in water, and any resulting saltwater damage to the system's electrical components will have to be cleaned - in some cases off-site - before the system can be restored, MTA spokeswoman Deirdre Parker said on Tuesday.

At dawn, emergency crews were assessing the damage to tunnels and elevated tracks. Restoring the system is likely to be a gradual process, Parker said.

"It's really hard to say which areas will come back first," she said, adding it will likely be a combination of limited subway and bus service. "It will come back gradually."

The storm brought a record storm surge of almost 14 feet (4.2 meters) to downtown Manhattan, well above the previous record of 10 feet (3 meters) during Hurricane Donna in 1960, the National Weather Service said.

ABC Video



Link if Video does not play: Sandy Floods NYC Subway System

80 Flooded Homes Destroyed by Fire

The Huffington Post reports At least 80 Flooded Houses Destroyed By NYC Blaze.

A huge fire destroyed 80 to 100 houses in a flooded beachfront neighborhood Tuesday, forcing firefighters to undertake daring rescues and injuring three people.

More than 190 firefighters contained the blaze but were still putting out some pockets of fire more than nine hours after it erupted.

As daylight broke, neighbors walked around aimlessly through their smoke-filled Breezy Point neighborhood, which sits on the Rockaway peninsula jutting into the Atlantic Ocean. Electrical wires dangled within feet of the street.

Click on preceding link for a video and images of the fire.

The economic losses from Sandy will far exceed the physical damages. Ridership losses on the NY subway alone will be catastrophic.

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

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Greece Coalition Splinters, Austerity Vote Delayed, PM Warns of 'Chaos'; Another Puppet Show or Is This For Real?

In Greece, Prime Minister Antonis Samaras coalition has split. The result is yet another delay in an austerity vote required for the next tranche of loans to Greece, and the PM warns of 'chaos'.

Greece's conservative Prime Minister Antonis Samaras is at odds with the Democratic Left party, a coalition partner, which is threatening to vote against the new austerity measures unless labor reforms included in them are scrapped.

Samaras formed a coalition with the traditional rival Socialists and the Democratic Left after general elections in June. In a statement, the prime minister said he had "exhausted all the available time" to try and reach a consensus.

"The problem is not whether we (introduce) this measure or that measure. On the contrary: It is what we would do if no agreement is reached and the country is led into chaos."

Unemployment in Greece has topped 25 percent, with rapidly worsening poverty that has prompted the Democratic Left to harden its position.

"There are certain issues for us that are fundamental — like labor issues," Theodoros Margaritis, a senior member of the Democratic Left party, told private Skai television. "The dilemma is with Mr. Samaras. Does he want a left-wing party in his government or not? Does he want our consent on certain issues or does he want to proceed alone? If he wants, he may proceed alone."

Cracks in Greece's coalition government are likely to be tested late Tuesday when lawmakers are set to vote on a privatization bill. The new law would give the government broader powers to privatize public utilities, but is facing growing dissent from deputies in the Socialist party and Democratic Left.

Another Puppet Show or Is This For Real?  

Is the inevitable about to happen or is this simply another puppet show for the masses?

Having seen so many puppet shows only to see the leftist puppets succumb to warnings of chaos or worse, I simply do not know.

However, when this coalition finally does splinter to smithereens, the radical left will win the next election and promptly tell the Troika to go to hell.

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

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Pending Home Sales Index Suggests Housing Momentum Into 2013

The home resales is expected to finish the year with strength.

Last month, for the fifth straight month, the Pending Home Sales Index hovered near its benchmark value of 100, registering 99.5 in September.

he Pending Home Sales Index tracks homes under contract to sell, but not yet sold, and is published by the National Association of REALTORS®. The index is a relative one. It compares today's housing market activity to the housing market activity of 2001 -- the index's first year of existence.

The Pending Home Sales Index has averaged 99.1 this year.

Among housing market indicators, the Pending Home Sales Index is unique. It doesn't report on prior market activity as the Existing Home Sales and New Home Sales reports do. By contrast, the Pending Home Sales Index is a forward-looking indicator.

The real estate trade association tell us that 80% of U.S. homes under contract go to closing within 60 days, and many of the rest go within Months 3 and 4. In this way, the monthly Pending Home Sales Index can foreshadow to today's Seattle home buyers and sellers what's next for housing.

Based on September's Pending Home Sales Index, then, we should expect to see closed home sales stay strong through November and December. That said, home sales are expected to vary by region.

Here is how the Pending Home Sales Index broke down by area last month as compared to one year ago on a seasonally-adjusted, annualized basis :

• Northeast Region : +26.1% from September 2011
• Midwest Region : +19.3% from September 2011
• South Region : +17.6% from September 2011
• West Region : +0.8% from September 2011

Often, the last few months of a year are considered to be a "slow" period for the housing market. Based on regional, annual Pending Home Sales Index improvements, though, 2012 may be different. The market looks poised to finish with momentum that may carry home prices higher into 2013.

For today's home buyers, mortgage rates remain low and home prices have only started to climb.

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670,000 Without Power in NYC; Flood Crests 13.88 Feet, Besting 1960 Record of 10.02 Feet; Wall Street Flooded

The good news for New York City is the storm crest has peaked. The bad news is the cleanup will take days, or longer, and much of the city is blacked-out.

Please consider Hurricane Sandy’s Waters Flood Blacked-Out New York City.

Hurricane Sandy sent floodwater gushing into New York’s five boroughs, submerging cars, tunnels and the subway system and plunging skyscrapers and neighborhoods into darkness. Two deaths were reported in Queens and more than 670,000 were without power in the region as of 11:30 p.m. local time yesterday, according to Consolidated Edison Inc.

The company cut electricity to some areas to save its equipment and a transformer exploded at a plant on 14th Street, blacking out others. New York University evacuated its Langone Medical Center when it went dark and backup systems failed.

After the storm’s tide crested about 8 p.m., the East River topped its seawall in the Financial District and flowed up Wall Street in a torrent that turned avenues into canals and intersections into lakes. Flooding took over Brooklyn’s Red Hook neighborhood, submerging cars to the roof, while the Gowanus Canal overflowed and tree limbs plummeted.

A flood gauge at Battery Park, at the southernmost end of Manhattan, registered at 13.88 feet as of 9:24 p.m., beating the modern record of 10.02 feet in September 1960 during Hurricane Donna, the National Weather Service said.

The Metropolitan Transportation Authority was investigating water entering a subway tunnel in Lower Manhattan, said Charles Seaton, spokesman for the largest U.S. transit agency, which stopped its 24-hour system for weather for only the second time in its 108-year history. There’s no way to tell when the system run again, he said.

The Lincoln Tunnel was the only major crossing in and out of Manhattan by about 8:30 p.m. The Brooklyn Battery Tunnel and the Queens Midtown Tunnel both had flooding, according to Ortiz.

Anything electrical that salt water touches is likely ruined. If those subway systems were badly-flooded, there are going to be serious repercussions. We will know more Tuesday morning.

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

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85% of Atlantic City Flooded; New York Subway in Jeopardy; Markets Closed Again Tuesday; Hurricane Sandy Image from Space

As many as 2 million customers are without power as Sandy slammed into New Jersey and New York.

The markets will be closed again on Tuesday but may  resume on Wednesday, the final trading day of the month. New York's mass transit system remains shut and it is unclear when service will be restored.

Here is an Image of Hurricane Sandy from Space from a New York Post Tweet.



Large Nor'Easter on Steroids

Accuweather (Premium) says Northeast Catastrophe Unfolding.

An extremely rare and dangerous storm, "Sandy," has roared in from the Atlantic Monday evening. Inundations have already occurred and will get worse through the first part of Monday night.

According to Expert Senior Meteorologist Steve Wistar, "Sandy is unfolding as the Northeast's Katrina in terms of impact."

There is the potential from the central New Jersey coast to New York City and western Long Island have some of their worst coastal flooding on record with Sandy tracking into New Jersey.

High Winds, Power Outages and Downed Trees



Sandy will not be your typical hurricane as it moves in from the southeast. Hurricanes are small and compact. Damaging wind gusts will reach from Boston to Washington, D.C., and inland to the central Appalachians.

Sandy will be more like a large nor'easter on steroids. It could have the impact of a Category 2 hurricane in some locations.

85% of Atlantic City Flooded

The Wall Street Journal reports Flooded Atlantic City Feels the Early Brunt.

"This is the worst-case scenario for us," said Tom Foley, Atlantic City's director of emergency management. "In 28 years, I've never seen weather this bad."

Officials called for a mandatory evacuation of the entire county, closed the casinos, closed county and municipal roadways, installed a curfew of 6 p.m. to 6 a.m. and summoned the National Guard to assist with a rescue effort in Atlantic City that grew increasingly urgent as the storm bore down.



Agence France-Presse/Getty Images

About 3,000 of the city's 40,000 residents people stayed, Mr. Foley said. One woman had a fatal heart attack as she tried to evacuate, Gov. Chris Christie said. Her name wasn't immediately released.

New York Subway in Jeopardy

Please consider Salt Water Puts Subway 'In Jeopardy'

Before Hurricane Sandy was expected to make landfall Monday, the Metropolitan Transportation Authority worked to seal off openings that could allow corrosive salt water to sweep into the system and incapacitate trains into the coming weekend. Still, the threat of an extended shutdown loomed over a system that carries 5.2 million passengers a day and is essential to the city's economy.

The subway system is "in jeopardy," MTA Chairman Joseph Lhota said Monday. "Our subway system and salt water do not mix."

The MTA closed down its entire regional network of rails and buses on Sunday evening and expect it will remain dark at least until Wednesday morning. Agency officials couldn't say how quickly the subway could be brought back into operation if the storm left the system awash in water from what were predicted to be surges as high as 11 feet. They said a timetable would depend on the amount of water that actually reached the 14 subway tunnels under the Harlem and East rivers, where the system is most exposed to catastrophic flooding.

Klaus Jacob, a research scientist at Columbia University's Lamont-Doherty Earth Observatory, wrote in a report last year that it could take as long as 29 days to pump out a full inundation of the tunnels.

"You can't order a part from Westinghouse or General Electric GE that is 100 years old," Mr. Jacob said. MTA workers will have to clean and test flooded equipment, "then you cross your fingers and hope that it works," he said.

Broken Window Fallacy Yet Again

With every catastrophe comes some economic illiterate talking about the stimulus benefits of it all. Presumably they have not read about the Broken Window Fallacy.

For a discussion of the broken window theory, please see Government Bailouts and the Stock Market - The Seen and the Unseen.

With the broken window in mind, please consider some complete economic nonsense in the Reuters article Economy may skirt direct hit from Hurricane Sandy.

Economists say some of the impact caused by businesses closing will be offset by reconstruction efforts, and point to catastrophic storms like Katrina, which devastated New Orleans but did not deal lasting damage to the national economy.

Peter Morici at the University of Maryland estimates that Sandy will cause about $35 billion to $45 billion in losses and damages but then be followed by as much as $36 billion in recovery spending.

Evan Gold, a senior vice-president at Planalytics, a Philadelphia consulting firm that advises businesses on weather-related matters, was more realistic as was Mark Zandi at Moody's.

Zanzi estimates regional GDP is $2.5 trillion and the cost to the region is about $10 billion a day if the region's economy grinds to a halt.

Evan Gold states "If consumers in this part of the country are spending hundreds, if not thousands, of dollars to buy things like generators, or after the storm, to do clean-up, that is likely going to cut into budgets that people might have for their holiday shopping".

Broken windows and floods have a net economic cost, not a benefit.

In general, it is never of economic benefit to have productive assets destroyed. It is also never of economic benefit to waste money on stimulus programs that have no realistic payback.

Keynesian clowns still have not figured this out.

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

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Maroon 5's Adam Levine Buys in Beverly Hills

BUYER: Adam Levine
LOCATION: Beverly Hills, CA
PRICE: $4,380,000
SIZE: 6,539 square feet, 6 bedrooms, 7 bathrooms

YOUR MAMAS NOTES: Its no surprise to anyone in the celebrity real estate gossip game that tatted-up and famously promiscuous model-squiring Maroon 5 lead singer turned televised singing contest judge (The Voice) has been on the hunt for new digs in Tinseltown.

Back in early September, in fact, our trusted informant Butty Butterlips tattled to Your Mama that Mister Levine was allowing one of Tinseltown's more successful real estate agents to quietly shop his house—a low-slung, contemporary art-filled one-bedroom bachelor pad perched on a private hillside above Bronson Canyon in the star-studded Los Feliz area—with an asking price in the high three millions and back in March 2012 the property was featured in a glossy and adoring article in Architectural Digest, often but not always a sign a celeb-owned home is or will soon go up for sale.

What did come as a bit of a surprise, at least to Your Mama, was an covert communique we received today from an inside source who snitched that Mister Levine has already quietly acquired up a new crib in the Benedict Canyon area of Beverly Hills. Redfin agent Corina Galen says, "Benedict Canyon in Beverly Hills is a great area for celebrities. There are a lot of homes with spectacular views and plenty of privacy, which makes it a hot spot for high profile clients."

A quick perusal of property records confirms that Mister Levine, through the same trust that shows up on the deeds and documentation for his home in Los Feliz, paid $4,380,000 for the so-called Benedict House, a 3.66 acre gated estate on a canyon view ridge in a small, gated enclave high above Bev Hills called Wallingford Estates.

Listing information shows the sprawling, single story ranch house was originally built in 1940, measures in at 6,539 square feet and contains a total of six bedrooms and seven bathrooms. Although "meticulously maintained," listing information suggests there's more than enough room to custom build a monstrous 20,000 square foot house. As he did with his previous home, Your Mama fully expects Mister Levine will bring in Mark Haddawy—or some other equally skilled and well-compensated lady or nice-gay decorator-designer—to doctor up transform the undeniably deluxe but decoratively anemic ranch style residence into something more befitting a sexed-up rock star. However, we don't have any reason to think he'll knock the house down to make way for a behemoth Beverly Park-style faux-French chateau or massive mock-Tuscan extravaganza. That just doesn't seem his style but, then again, what do we know? Nuthin', that's what.

Anyhoo, a long, gated driveway adds to the property's serene sense of privacy and seclusion as it sweeps across the property to a large motor court partially girdled by the main house, attached two car garage and separate studio space suitable for conversion to a screening room, guest house and/or music studio.

Pegged wood floors in the small, lackluster entrance hall continue into the formal living and dining rooms as well as into a spacious den/office complete with a fireplace and a wide bank of windows that reach from the floor almost to the ceiling.

The open plan informal living space(s) include a roomy center island kitchen with granite counter tops, ordinary white raised-panel cabinetry, a pair of dishwashers and a freakishly expensive range. A high breakfast bar separates the kitchen from a wood-floored family room with vaulted sky-lit and wood-beamed ceiling, a built in entertainment center, fireplace and French doors to the outdoor entertaining areas. An adjoining home office/craft space has a wrap-around built-in desk and cabinetry.

The back of the house opens to a tree-ringed backyard with multi-level, brick-accented stone terracing, a flat grassy pad, a vaguely piano-shaped swimming pool spa and an elevated circular spa. Set mostly out of view below the driveway towards the front of the property, a lighted championship-sized tennis court overs over the canyon in the tree tops.

As of today, based on a quick study of various property record data bases, Mister Levine continues to own his Los Feliz area residence that is not listed for sale on the open market.

listing photos: Rodeo Realty via Redfin

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Hurricane Sandy Update: First $100+ Billion Storm in U.S. History?

Sandy is classified as a Hurricane 1 status, a low-grade hurricane. However, don't let that fool you in terms of impact. It's not the absolute magnitude of the hurricane, but rather the magnitude vs. what the infrastructure can handle that matters.

Barometric pressure is 27.76, the lowest pressure recorded for a storm in the Northeast. Sandy is unprecedented in size as well. The hurricane is likely to reach shore with a full moon high tide raising storm surges several more feet.

Accuweather notes "The storm surge will reach generally 5-10 feet with up to 15 feet possible in a locations along and to the north of where the center makes landfall. When a 2-foot tide this evening is combined with 10- to 20-foot wave action, water will reach more than 30 feet above sea level in places. ... Total damage from Hurricane Sandy may well exceed Katrina's $96 billion. This could be the first $100+ billion storm in U.S. history."

New Jersey, New York, Washington DC, West Virginia, Pennsylvania, Maryland, Vermont, and Connecticut have all declared states of emergency. Parts of New Jersey are under mandatory evacuation. At least 60 million people will be affected.

As Sandy Barrels Toward New Jersey Coast, the hurricane remains on track to become a historic storm for the mid-Atlantic and southern New England.

New Jersey and New York City face very dangerous conditions and catastrophic damage. As of 2:40 p.m. EDT Monday CNN, nearly 300,000 customers are without power in seven states. New Jersey has the most at 92,000. Over 7,000 flights have been cancelled.

Damaging and life-threatening impact from the giant, powerful storm will reach as far inland as the central Appalachians and will span the coast from North Carolina to southern New England.

The record tide gauge in Atlantic City New Jersey is 9.0 feet. Sandy is at 8.25 feet now, and a near-lock to surpass the previous high, perhaps by many feet. Moderate to major flooding is already occurring in the Chesapeake Bay.

The Chesapeake Bay near Kiptopeke, Va., is at major flood stage of 5.95 feet, less than one foot below the record high of 7.1 feet set on March 7, 1962.

The Chesapeake Bay Bridge Tunnel, Va., is at 6.71 feet. This is also only 1 foot below the record flood stage of 7.5 feet set on Sept. 18, 2003.

In the Appalachian mountains, blizzard whiteout conditions with as much as two feet of snow are expected.

You can follow the Path of Hurricane Sandy on Accuweather.

You can also follow the life threatening storm on Weather Channel.

The Weather Channel reports peak tide levels may top those from both Hurricane Irene by 2 feet and  the previous record from the Dec. 1992 Nor'easter and Hurricane Donna in 1960.

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

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