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alstry (35.12)

Headlines Getting More and More Misleading!!!!!!!

Recs

14

June 27, 2009 – Comments (7)

Bloomberg Headline:

Global Economy Displays `Convincing Signs' of Recovery, FSB's Draghi Says

the headline went on to read: FSB's Draghi Says

 

Article Contents:

“We observe signs of improvement here and there,” Draghi, who is also a member of the European Central Bank council and governor of the Bank of Italy, said in Basel, Switzerland. “Still, the fragilities of the economy and the financial system are there.”

Is the above "convincing signs" to you?

 

Now here is a little reality from our buddy CalculatedRisk:

Unfortunately, based on today’s market values, we estimate that none of these hotels have any equity remaining. The unprecedented decline in room revenues (California is down 21.5% year-to-date) combined with the jump in cap rates has resulted in a massive loss in values. We estimate that values are currently 50-80% lower than at the market’s peak in 2006-2007.

Hotel values DOWN 80%!!!!    Just a 20% additional drop and some hotels will be worthless.  At that point, Alstry will be the first to call a bottom.  Just like Alstry's projection for land, The Institute of Alstrynomics projects we will reach a point where many shopping centers,  hotels, and office buldings have zero to negative economic value.

It is not the end of the world.....simply preparation for change.  Revolutionary Change.  A change Alstry is beginning to embrace;)

A change Alstry will soon be blogging about.

HOWEVER, we are still in the deconstruction phase of the process.  It has at least a year or two to play out before we reach bottom.  Much of what we currently place value on will be valuless in the reconstruction phase.  The oportunities will be incredible and exciting as we move forward. 

In the meantime we must deal with the reality of the present, the DECONSTRUCTION PHASE.  In this phase, many of the companies we currently discuss about in CAPs will not exist in the reconstruction phase.  The key now is to determine which lives and which dies, which wilts and which thrives.  Never before has there been greater opportunity......or risk.

Welcome to Alstry's World.  The World of Alstrynomics......the fusion of facts and common sense to Economics. Where those without vision simply vanish while The Insititute of Alstrynomics applies perspective and insight to set the foundation for its mission......being right.

7 Comments – Post Your Own

#1) On June 27, 2009 at 8:31 PM, Varchild2008 (83.63) wrote:

How are these HOTELS going to keep existing with near zero to zero revenue combined with a CAP and TRADE tax on their heating bill?

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#2) On June 27, 2009 at 8:46 PM, dickseacup (66.47) wrote:

In the meantime we must deal with the reality of the present, the DECONSTRUCTION PHASE.

There is a monstrously huge difference between Schumpeter's "Creative Destruction" and the "destructive destruction" that is going on right now, Alstry. You should do an entry comparing/contrasting the expected results of each.

 

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#3) On June 27, 2009 at 10:10 PM, oshiri (< 20) wrote:

Anyone seen the rates for Vegas hotels?

My God Sempai Alstry, I must get two or three fantastic offers a week from ailing, failing hotels and casinos in Sin City.  Even the high-end resorts like The Wynn are offering near $100 rooms with $50.00 or more food credits.

Hey . . . who's up for a gentlemen's weekend in Vegas? :^D

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#4) On June 28, 2009 at 11:44 AM, cthomas1017 (91.72) wrote:

Alstry,

I wholeheartedly agree with your statement, "The oportunities will be incredible and exciting as we move forward."  I'm curious about your thinking with 3 questions:

1) Can you give some examples of opportunties that will present themselves?

2) How does one prepare if they have the capital resources to invest today?

3) What advice would you give to young people (or those who do not have the financial resources right now) to prepare?

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#5) On June 28, 2009 at 12:14 PM, alstry (35.12) wrote:

ct,

I am not sure exactly how the opportunities will present....as they will be new paradigms likely conforming to a new "greener" technological age.

As far a capital resources, it is still unclear what will be defined as capital in the future

Since the definition of capital is in question, my advice to young people is to take something they are passsionate about and become the best at it......the most important skill for the future is an ability to learn and excel.....you can transfer that skill into any discipline in the future.

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#6) On June 28, 2009 at 12:19 PM, PSU69 (90.52) wrote:

Just enjoyed a week (actually 8 days) in a five star hotel in Barcelona for 101 Euro a night with FREE breakfast (elegant breakfast).  Hotel has a SPA and they gave us one FREE day, usually 12 Euro daily.  They are down over 50% from prior year, per the asst. mgr..  Spain is especially hard hit.  Walking back to the Metro from the concert at Musica we witnessed young men digging food out of trash cans and neatly stacking it to transport it.  Dining on a cafe near one of Gaudi's buildings a beggar holding a baby came right to the table to beg for cash.

Count your blessings.

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#7) On June 28, 2009 at 12:50 PM, alstry (35.12) wrote:

PSU,

You just got back from my favorite city in the World.....and I have been to a few.  It doesn't take much for Alstry, a cup of coffee at a outdoor cafe on Las Ramblas, tapas in the Barri Gotic, and a good cigar.....life don't get any better.

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