Archive for December 2nd, 2008

Who Killed Jdimytai Damour?

New York Times Freakonomics blog examines the circumstances behind Jdimytai Damour’s death in Long Island.

People started lining up at the Valley Stream store at 9 p.m. on Thanksgiving night. Some people were there because Black Friday has become a free-standing holiday tradition. There’s a certain esprit de corps to standing in line with your fellow shoppers. (I confess I do not share this feeling: Years ago when our first child was born, my beloved spouse took me to a 10 percent-off layette sale at a local store. The store was so mobbed and unpleasant that it hit me I’d prefer to go to a 10 percent-on sale to reduce the crushing throng and the cutthroat competition.) But other shoppers get out of bed early the day after Thanksgiving because of special early-bird prices. When we don’t ration scarce goods by price, Econ 101 says they will be rationed by having people queue.

To say that the low prices were a but-for cause of this man’s death is not to say that Wal-Mart should be legally or morally culpable for low prices. Indeed, there may be so manycontributing causes to this tragedy that it is difficult to assign individual blame.

I’m particularly troubled by reports that police are thinking about charging individual members of the crowd. When people behind you start pushing you forward, there is often nothing you can do. And there’s a real fear that if you try to resist, you too will be trampled. Part of the tragedy is that there are undoubtedly people in that crowd who know they stepped on something that day, or who, in their excitement, spurred on the surge. These thoughts may haunt them for many years.

AmREIT to Privatize

AmREIT, a small retail REIT that develops and manages a portfolio of more than 70 properties totalling 3.4 million square feet, has opted to privatize. Like most other retail REITs, AmREIT’s stock is down considerably from its 52-week and all-time highs. It’s currently trading at $2.85 per share. It’s 52-week high is $8.40 per share and it’s all-time highest close was $9.10 per share back in February 2007–around the time that most REITs hit their peaks. The company’s plan is to cease trading on December 19.

CMBX Indices Still Stressed

Took a quick look at the CMBX indices and spreads are still extremely high. They blew out when Henry Paulson changed his mind on how he was going to use the funds from TARP. When it became clear the government was going to buy troubled assets–which would have included CMBS bonds–spreads expanded. They seemed to recover a bit, but yesterday REIT stocks got pummeled losing 20 percent of their value. Simultaneously, CMBX spreads are rising again.

Here’s a chart of just one of the components–the CMBX-NA-AAA 5–to give you a sense of what the spike looks like. Keep in mind that the AAA piece is one of the least risky parts of the index. The spread is 783 basis points–up from a low of about 100 basis points. On some of the BB indices spreads are over 4,500 basis points.

CMBX