Today is another day. Strib was descriptive, not particularly analytical. There is not much to analyze in one day's trading. One big pension fund exiting a holding might cause an individual share to devalue, during the trading day.
On the world markets, Strib noted the dollar is slipping relative to the yen, and the injections of "liquidity" are worldwide.
The biggest local news was Strib, on ResCap. Residential Capital is a single family mortgage house, large scale, partly [largely] owned as a General Motors subsidiary, within GM's financing subsidiary operations via GMAC. The rating agencies downgraded ResCap's most senior bonds, to junk bond status. Presumably this is due to the market segment ResCap is in, more than a downgrade over any company risk specifics. The firm has two successive quarters, most recently, of solid loss, but in that segment no firm has prospered.
Strib said:
More mortgage fallout: ResCap debt cut to junk
The actions by the Moody's and Fitch credit-rating agencies will make it difficult for the Bloomington real estate firm to borrow additional money.
By Thomas Lee, Star Tribune
Last update: August 16, 2007 – 9:31 PM
Two of the country's top credit-rating agencies cut Residential Capital's debt to junk status Thursday as worries over bad subprime loans continued to send shivers throughout the markets.
Moody's Investors Service reduced the senior debt of Bloomington-based ResCap, one of the country's largest real estate companies, to Ba1, or junk, from Baa3, saying a weak U.S. housing market could complicate the company's efforts to restore its profitability.
"These rating actions reflect the continued, significant funding and valuation volatility in the single-family mortgage market, coupled with ResCap's challenges in restructuring its residential financial group," said Philip Kibel, a Moody analyst.
Fitch Ratings also cut its rating on ResCap debt to BB+ from BBB, citing "an unprecedented disruption in the capital markets" that has made money scarce for new mortgages. ResCap's bonds and credit default swaps have been trading at so-called distressed prices, indicating investors are concerned that the company will default on its debt.
The rating downgrades represent a major setback to ResCap, which only last week cited progress in ridding its books of bad subprime mortgages.
The firm lost $263 million in the second quarter, compared with a profit of $289 million during the same period a year ago. Still, ResCap's performance was an improvement over the first quarter, when it lost $910 million.
But ResCap's junk rating makes it very difficult for the company to borrow additional money.
"We're clearly disappointed," said Gina Proia, a spokeswoman for GMAC Financial Services, which operates ResCap. "We remain focused on turning around the real estate finance business in this challenging environment."
ResCap officials say the company still has access to plenty of money, with more than $105 billion in cash and loan facilities. General Motors and Cerberus Capital Management, which jointly own ResCap, could provide additional funds. GM has already injected $1 billion into ResCap to stabilize its business.
"We feel that we have sufficient liquidity," Proia said.
Nothing locally out of line with recent news, nothing earthshaking. But ResCap is restructuring. What that means for residential single-family loan availability, especially at the low end of the lending spectrum, likely is that money will be scarce except for solid-goal credit risks. In line, Symphony at Town Center has a big sign up - not billboard size, but big - from $140's and up - something like that. Mid-hundreds. Touting the low-end price is not the "up-scale" that John Feges had touted. Who ever really believed that, however? The talk of the high end of the spectrum - $400,000 shared wall Town Center offerings - seems to have fallen silent.
Good.
It was at best "speculative" to ever talk about Town Center as high-end [except for the lavish public-paid palace none of us had a referendum's chance to decide on].
Some might say "high-end" or "up-scale" Town Center talk was pure smoke and mirrors from the get-go. Forecasting the future is inexact. An unprincipled person can take advantage of such a reality, and deliberately blow smoke. Who is to say what motivates another to speak as he does? It is circumtantial inference, and while knowledge of the circumstances is not uniform, neither is the weightings people give to the same known set of circumstances. Ultimately, it is judgment and opinion.
Whether NorthStar happens or not; and whether it happens with a stop in Ramsey; is speculative, and a matter of guess, judgment, and opinion. And whether that would be good, bad, or largely indifferent a factor for our total 2008 Comprehensive Plan views and prospects, is something I have an opinion on, which might not be the same opinion held by some city council members, and might not fit well with what some Met Council people still would desire. Fix Highway 10. Then worry about NorthStar. At its very best, NorthStar would be incremental, not pivotal. An ultimate first rate transit grid for the entire metro area is a sound goal. We are billions and billions of dollars in investment away from that. And with a collapsed key highway bridge, the public transit pup will continue to be wedged outside to marginal feeding.
It may not be wise to keep primary focus on roadways. Now with the bridge collapsed arguably might be a time to rethink transportation priorities before oil production peaks and declines, and the price per gallon of gasoline in ever-cheapening dollars becomes prohibitive; but with that scenario, the truth will be Oberstar pumping emergency money to rebuild the bridge, played out parallel to neglect for other transit alternatives. Given that, we had best think Highway 10, not NorthStar, unless we prefer fictions and pipe dreams to common sense reality and prioritizations in line with priorities being set on larger stages than Ramsey/Anoka County.
Some of the most misleading talk I have seen about NorthStar was here, talk of going to Twins and Vikings games, or taking a [casual mid-day] trip to Mall of America.
"Residents could walk to the station, hop on the train and go to work or to a Twins or a Vikings game and not even have to fight the traffic. In downtown Minneapolis they could change from commuter to light rail and go to the airport or Mall of America - again, all this only walking distance from their door in the town center."
As if nobody else would be using those tracks. There all the time for commuter rail? Unlikely. Meet folks 24/7 at the airport, and conveniently rail it all back from there to the other end of metro, with NorthStar? Very unlikely.
That is one of the busiest BNSF commercial tracks; and millions of dollars are being required to purchase rush-hour rights of usage - purchased from the railroad - with its aim to bolster its bottom line as much as feasible. The notion that a nationwide railroad coordinating freight movement on that scale would allow discretionary interventions to aid Zygi's and Pollad's profiteering schedules seems fanciful, even if not an intentional misstatement of realities. Giving the benefit of doubt, let us go with irresponsible and fanciful speculation, as motive.
***************UPDATE****************
The above was written, arguing that if highway-paving is everyone else's priority, NorthStar was/is less attractive an option and less likely to become a reality than if public transit is being comprehensively planned [by Met. Council, who else] with NorthStar an integrated part, but where Ramsey/Anoka County residents have a transit option's chance consistent with their "workshed" or "commutshed" patterns.
Those work-and-commute vizualizations are available and reviewable online, now, although the availability is not being loudly publicized, almost as if the Met Council and other planners want to keep it close to the vest for themselves; while wanting us to generally not see it as part of the discussions we have, and the thinking we, citizens, do. See, slides 9 -11, here, and I probably will post more, in the near future about how the entire metro commuting data is online, easily visualized.
The Anoka County Watchdog has posted reporting of how rail transit is being discouraged as part of the thinking about what rebuilding an I-35 bridge should entail and the discouragement of thinking about including transit-rail in the plans is not only from TIM [not the governor named "Tim" but an acronym for "That Idiot Molnau" our iron-headed pudding-brain head of MnDOT, under the Guv named "Tim"]. Watchdog also posts an interesting KSTP analysis, here. I had not kept current with Watchdog in writing the above post, hence the *UPDATE*.
Peter Bell, Head of Met Council (and Ms. Steffen's boss under Guv Tim), is part of that "rail-transit-off-the-table for the I-35 bridge rebuild" crowd. Per the article Watchdog posts.
The article seems a dealth knell for NorthStar, since it would be a route to nowhere useful, without a full, comprehensively planned grid so that it could be used for workers commuting from Ramsey to get to where they work. And that would cost billions, and if it is being planned it is being hidden from us, because of the Taxpayer League zealots who are knee-jerk reactionaries, against any tax, rather than against unjustifiable waste, which is where I stand when critcizing the new overelegant city hall and the Town Center debacle now on ground. Pawlenty used those zealots to get and stay where he is. Now he's married to them. For good, or bad, better or worse.
There is a difference them and me. I am not against comprehensive but expensive sane transit planning. I favor it, and differ from Watchdog's opposition. With Watchdog, I am quite strongly against piecemeal mish-mosh, with NorthStar perhaps not the best next transit piece for funding, by any good measure. There is hence some coincidence about NorthStar, but not about transit being a sound goal, in general.