[Bill_McBride]

Income inequality has grown substantially in the last 30 years.  Doesn't that decrease the pool of available private club members?


Then why did the demand grow so rapidly during that same time frame ?  ?  ?
[/b]

We are seeing some positive signs in our commercial construction business, although some of it has come through reinvention, i.e. finding different types of clients.  I hope everyone else is seeing some of the same.

I tend to hope for the best, but prepare for the worst.

That sounds prudent to me.

Demand grew because a lot of people became wealthy as the income distribution began to skew over time, but but that group has been taken care of and those at the margin are dropping in large numbers as the economy has turned sour and there are fewer wealthy people.

Am I making myself clear or muddying the water?  ??

[Jud_T]

Guys,

Most of the supposed rich guys that everyone loves to bash as the bad guys in all of this are doing just as badly or worse than the average guys post financial crisis.  Sure the super-rich are immune, but everyone else is taking a hit.  Most of the guys I know in finance are solid, very hard-working folks who were just as levered and their incomes have dropped 50-75% with little hope of ever recovering.  I know of exactly 1 guy personally in the business who is doing as well or better than he was 5 years ago.  Maybe you think it's funny or poetic justice for a guy working around the clock with zero job security to go from making 1mm to making 250k, but until you walk a mile in his shoes, watch where you cast stones.

Ian,

I think you hit the nail on the head.  Just as after the depression we will have a whole generation who have been irretrievably burned by the concept of risk assets or debt.  A private club, particularly a pricey one with all the fixings, will be anathema to their bruised psyche, even when the economy's running full-tilt again.

[mike_malone]

Jud,

   I, for one, don't begrudge risk takers making a fortune because they can lose it as well. Even those who took no risk and made a fortune aren't bad ; it's just that we had regulations that were too loose for those with government guaranteed deposits.

    The combination of families with less free time, uncertainty in the economy,and more golf options is a bad cocktail. I have had conversations with several members who all ask "are you thinking of leaving?". So, I think the social act of leaving is very likely.

[Sean_A]

Guys,

Most of the supposed rich guys that everyone loves to bash as the bad guys in all of this are doing just as badly or worse than the average guys post financial crisis.  Sure the super-rich are immune, but everyone else is taking a hit.  Most of the guys I know in finance are solid, very hard-working folks who were just as levered and their incomes have dropped 50-75% with little hope of ever recovering.  I know of exactly 1 guy personally in the business who is doing as well or better than he was 5 years ago.  Maybe you think it's funny or poetic justice for a guy working around the clock with zero job security to go from making 1mm to making 250k, but until you walk a mile in his shoes, watch where you cast stones.

Jud

Hmmm, I'm too worried about a guy 250K.  Making a million a year he should have secured his future already.  So no, not much sympathy from my corner.  Ian says it all.  Some folks aren't worried about assuming unnecessary debt and some are.  No point in feeling sorry for the risk takers.  Which should feel sorry for the non-risk takers.  It is these folks who had to bail out the risk takers.

Ciao

[Jud_T]

Sean,

Nobody's looking for sympathy.  Let's just not paint Wall Street as the sole axis of evil.  We were all complicit to some extent, particularly the government regulators who had plenty of power to oversee the mortgage market and the ratings agency sponsored ponzi scheme.  The street just did what it is designed to do- make as much money as possible within the letter of the law...

[Sean_A]

Sean,

Nobody's looking for sympathy.  Let's just not paint Wall Street as the sole axis of evil.  We were all complicit to some extent, particularly the government regulators who had plenty of power to oversee the mortgage market and the ratings agency sponsored ponzi scheme.  The street just did what it is designed to do- make as much money as possible within the letter of the law...

Jud

But Wall St would have gone into melt down without intervention so something doesn't add up.  I don't blame Wall St entirely, but the system doesn't work like it was intended anymore.  The risk takers are so huge and unproperly regulated that they make risk takers of everybody who has any stake in the economy.  The concept of supporting a business with sound products and good management in the hope of making money has flown out the window to just incorporate the last bit of the formula.  Not good my friend. 

Ciao   

[Jud_T]

Sean,

2 points:

1.  If they hadn't let Lehman fail overnight and freeze the interbank market and had done a proper workout the damage would have been far less severe.    

2.  A clearinghouse for all standard derivatives would have gone a long way in diffusing the situation.  Clinton failed to force this when he had the chance in the late '90's.

[David_Tepper]

"Small Business Optimism Hits 3-Year High In January"

http://finance.yahoo.com/news/Small-Business-Optimism-Hits-atlantic-675178558.html?x=0&sec=topStories&pos=5&asset=&ccode=

[mike_malone]

 David,

   All the way back to previous recession lows------will it last ? I say no way. Small businesses continue to say lack of sales is the number one problem at record levels.

   I can't figure how to get the chart over here. But there is a great site for updated economic charts www.calculatedriskblog.com.


   Let's be clear here. During The Great Depression there were quarters and years of massive gdp growth; more than twice as much as this one has displayed. I find myself saying " Is that all you got?"

    If we remove massive government/Fed intervention and then the economy begins to show some real zip then it would be different.

    Unfortunately, we have decided to substitute long term malaise for short term massive pain.

[David_Tepper]

Mike -

Here is a direct link to the article on the Atlantic website:

http://www.theatlantic.com/business/archive/2011/02/small-business-optimism-hits-3-year-high-in-january/70937/

Time will tell just how sustainable this recovery will prove to be. Only a fool (or in this case Pat Mucci) would argue that virtually all the economic indicators are not much improved from where they were 6-12 months ago.

DT

[Craig Van Egmond]

For what's its worth, my wife's small retail store has grown 30% each of the last 2 years and is on track for another great year. Its not something I thought would thrive during the recession.

That said we have adjusted our standard of living downwards and our expectation is that will continue.

[Rob Bice]

Sean,

2 points:

1.  If they hadn't let Lehman fail overnight and freeze the interbank market and had done a proper workout the damage would have been far less severe.    

2.  A clearinghouse for all standard derivatives would have gone a long way in diffusing the situation.  Clinton failed to force this when he had the chance in the late '90's.

One of my favorite quotes leading up to the housing bust:

"For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership."

Any guesses?

[jeffwarne]

Sean,

2 points:

1.  If they hadn't let Lehman fail overnight and freeze the interbank market and had done a proper workout the damage would have been far less severe.    

2.  A clearinghouse for all standard derivatives would have gone a long way in diffusing the situation.  Clinton failed to force this when he had the chance in the late '90's.

One of my favorite quotes leading up to the housing bust:

"For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership."

Any guesses?

those pesky details-like having cash for a downpayment and available income for the payments.

[Mike Cirba]

Jeff,

I think "Travel Team" sports for 8-14 year olds is the biggest joke that our generation has foisted upon themselves.

My brother travels around to different states every weekend with his kid and his schedule is absolutely insane.

The chances my nephews are going to make a professional living in said sports, or get some other additional benefit?

Zero.

[Bill_McBride]

Mike -

Here is a direct link to the article on the Atlantic website:

http://www.theatlantic.com/business/archive/2011/02/small-business-optimism-hits-3-year-high-in-january/70937/

Time will tell just how sustainable this recovery will prove to be. Only a fool (or in this case Pat Mucci) would argue that virtually all the economic indicators are not much improved from where they were 6-12 months ago.

DT

Was it Karl Rove who said everybody has their facts but he had the factual facts? 

[Jud_T]

Sean,

2 points:

1.  If they hadn't let Lehman fail overnight and freeze the interbank market and had done a proper workout the damage would have been far less severe.    

2.  A clearinghouse for all standard derivatives would have gone a long way in diffusing the situation.  Clinton failed to force this when he had the chance in the late '90's.

One of my favorite quotes leading up to the housing bust:

"For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership."

Any guesses?

Alan Greenspan

[Rob Bice]

One of my favorite quotes leading up to the housing bust:

"For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership."

Any guesses?

Alan Greenspan

It is actually from "The National Homeownership Strategy: Partners in the American Dream" that was developed by HUD Secretary Cisneros under Bill Clinton in 1995, yes 1995.  The report included the following actions steps:

Action 11:  Removing Barriers to Mortgage Financing for Starter Homes
Action 29:  Alternative Approaches to Homebuying Transactions
Action 35:  Home Mortgage Loan-to-Value Flexibility
Action 36:  Subsidies to Reduce Downpayment and Mortgage Costs
Action 44:  Flexible Mortgage Underwriting Criteria
Action 45:  Public-Private Leveraging for Affordable Home Financing

By 1996, HUD directed Fannie Mae and Freddie Mac to provide at least 42% of their mortgage financing to low-income borrowers and 12% of their portfolio to "special affordable" loans.  The GSEs with essentially no capital requirements.

This was all done with the intent to take home ownership from the mid 60% range to the high 60% range.  Home ownership as reported two weeks ago is about where it was 10 years ago - 66.5%.  What a ride.

[Patrick_Mucci]

Time will tell just how sustainable this recovery will prove to be.

Only a fool (or in this case Pat Mucci) would argue that virtually all the economic indicators are not much improved from where they were 6-12 months ago.

I never stated that.
That's a misrepresentation on your part.
You attempted to paint a rosey picture, indicating that all is well again, when nothing could be further from the truth.

[Bill_McBride]

Time will tell just how sustainable this recovery will prove to be.

Only a fool (or in this case Pat Mucci) would argue that virtually all the economic indicators are not much improved from where they were 6-12 months ago.

I never stated that.
That's a misrepresentation on your part.
You attempted to paint a rosey picture, indicating that all is well again, when nothing could be further from the truth.

Sorry, but I think David's quotes hgave all been to show things improving, not "rosey."  That's your mischaracterization.  Things are improving but we're a long way from out of the woods.  It's still better than 2009, the worst year I can recall.

[David_Tepper]

Pat Mucci -

Please, you have repeatedly distorted my comments.

I never attempted to paint a "rosey" picture. Please point out where I ever used the word "rosey" or implied that "all was well again" with the economy. I dare you to.

I have offered credible comments, facts & figures from reliable and knowledgeable sources that lend credence to the notion that the economy is slowly turning around from the abyss of the worst financial calamity in the last 60 years. In no way has any of the information I have offered stated or implied otherwise.

On the other hand, you have offered little more than half-baked, subjective observations based on country club gossip and chi-chat

DT     

[Patrick_Mucci]

Pat Mucci -

Please, you have repeatedly distorted my comments.

I never attempted to paint a "rosey" picture. Please point out where I ever used the word "rosey" or implied that "all was well again" with the economy. I dare you to.

I have offered credible comments, facts & figures from reliable and knowledgeable sources that lend credence to the notion that the economy is slowly turning around from the abyss of the worst financial calamity in the last 60 years. In no way has any of the information I have offered stated or implied otherwise.



But, you've only offered one sided reports, reports that reflect your position that everything is coming up roses.

Not once did you offer any of the negative reports.

I'd say that puts you in the camp of presenting a rosey picture.[/b]

On the other hand, you have offered little more than half-baked, subjective observations based on country club gossip and chi-chat

If you consider the opinions of Presidents, CEO's and CFO's of New York Stock Exchange companies and the Senior Executives and owners of privately held companies, "country club gossip and chit-chat", then you're as misguided as the opionions you've offered which portray everything coming up roses.[/b]

[David_Tepper]

But wait, there's more:

"The Economy - Turning The Corner"

"A surge of good omens, apart from jobs"

"Real final sales surged ahead at a 7.1% annual rate in the last three months of the year. That was the best quarterly performance since 1984"

"For the first time in this recovery, the underlying economy looks independently strong, unaided by government stimulus or cyclical factors"

http://www.economist.com/node/18070567?story_id=18070567

[mike_malone]

 OK David , you certainly have shown that many economic indicators are improving. But that's not the issue. The issue is the long term attitude of consumers, investors, and businesses. This attitude is , at best, sour. This negative attitude will be what hurts golf clubs the most.  Belonging to a club is a long term decision and the tide has turned negative for long term decisions.

[David_Tepper]

Mike -

As I think I mentioned earlier, I believe a number of the issues facing many golf clubs (and the game of golf as a whole) are separate from the issues facing the general economy. No doubt the rather severe recession we are (hopefully) now recovering from has made the situation worse.

1) As several other posters have mentioned, the demands of modern family life and work have limited the time many adults raising a family have available to spend at a 4 or 5 hour clip to playing golf.

2) There appear to be far more quality daily fee options available for golf than there were 20 or 30 years ago.   

3) We live in a society that is far more mobile and transient than it likely was 20, 30 or 40 years ago. How many people spend their whole lives living and working (and playing golf) in one city or town any more? Why should someone commit to joining a golf club if there is a chance they will be moving in 3 or 5 years?

4) As I think almost every one one on this board will agree (even Pat Mucci!), the overheads of far too many golf clubs have become bloated beyond any practical financial sense. Instead of competing on offering VALUE to their members, too many golf clubs are competing on the glitz, glam, bells and whistles they provide for their members. The cost structure at too many golf clubs is way out of whack and, as Warren Buffett says, "it only when the (economic) tide goes out that you see who is and is not wearing a bathing suit." 

It would be interesting to know how play and revenue at Bandon has held up over the past 3 years. It certainly appears Bandon has done a far better job of managing its cost structure than many resorts (Sea Pines anyone?) and it is very much better off because of that. While golf at Bandon is not cheap, I think most would agree the overall experience there offers good value.

5) Lastly, my guess is that many golf clubs are facing a demographic issue regarding an aging membership. It would be interesting to know how many golf clubs have 1/4 or 1/3 or more of their membership over the age of 70 or 75. While it is true people are staying active longer and living longer, we all know what happens in the end. Will there be enough 30 and 40 year-olds interested in playing golf coming along to replace the generation that will be departing over the next 5-10 years?   

If levels of employment are a lagging indicator in an economic recovery, the general level of interest in joining a golf club is a double (or even triple) lagging indicator.

DT     
 

[Mike_Duffy]

Pat Mucci -

Please, you have repeatedly distorted my comments.

I never attempted to paint a "rosey" picture. Please point out where I ever used the word "rosey" or implied that "all was well again" with the economy. I dare you to.

I have offered credible comments, facts & figures from reliable and knowledgeable sources that lend credence to the notion that the economy is slowly turning around from the abyss of the worst financial calamity in the last 60 years. In no way has any of the information I have offered stated or implied otherwise.

On the other hand, you have offered little more than half-baked, subjective observations based on country club gossip and chi-chat

DT     

The many "rosey" and upbeat recent reports seem to adroitly side step around the issue of America's current accumulated debt. At the end of 2010 it stood at $14.13 trillion. The USA's Government Accountability Office has stated on a number of occasions that the debt and the increases thereto are fiscally unsustainable.

Your President has forecast annual deficits of $US1trillion right through to 2019 which will result in an accumulated debt of 23.3 trillion at that date.

With that sort of mind-boggling insurmountable mountain of debt, I cannot envisage how the USA can confidently predict that the good times will roll around again.

The national debt of America is the elephant in the room and the terms of the trade deficit is the gorilla knocking on the door.

I see no way out of the morass of debt and accumulations thereto. I don't post very often, so I wish  that this rare contribution had more positive vibes rather than the gloomy statistics aforementioned.

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