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Posts Tagged ‘lobster’

Lobster Prices And Subprime Lending

July 5, 2009 | 11:51 pm | Favorites |

lobster header

This weekend I ripped through a terrific book The Secret Life of Lobsters by Trevor Corson written back in 2004. Even if you’re not a lobster fan, I marveled at how he could take a mundane subject and weave an interesting (true) story on how the lobstermen of Maine have kept the production elevated for the past several decades, despite consistent claims of overfishing. (Incidentally my lobster pots were stolen this weekend, lines probably cut by commercial fisherman, plus we had 30 family members over to our house for the 4th for a lobster/clam bake.)

No one really knew whether cyclical declines in the number of pounds caught were natural or induced by man.

In other words, this is all about subprime lending.

While trying to find my interview on NPR about last week’s market reports (I was unsuccessful) I stumbled upon a WNYC interview with the Trevor Corson last week (the day our report was released) without using keywords such as “lobster,” “fishing” or “Maine”.

He correlated the sharp drop in Lobster prices this year with the collapse of the Iceland banking system via subprime lending. It’s worth a listen.

And here’s his related piece in The Atlantic magazine. Fascinating.

Basically, lobster prices have maintained a high price level for the past decade. A large portion of the catch was diverted to processing plants in Canada keeping supply of fresh lobsters restrained in the U.S. The Canadian plants shipped lobster products all over the world and were mainly financed by Icelandic banks who provided them revolving lines of credit. When the subprime crisis hit, these banks collapsed because of their heavy investment in financially engineered subprime mortgage products. As the lines of credit dried up, so did the processing plants and the excess harvests were stuck in the U.S. driving down wholesale lobster prices.

Sound familiar?

Oversupply of housing driving down prices correlates to the “V-notch” technique to increase the lobster population. I won’t even bring up the V-shaped recovery“, since I’m still full from our lobster bake.

Somehow it all comes back to lobsters.

UPDATE On a side note, the wholesale cost to restaurants has fallen sharply but the consumer is largely unaware of the drop, so restaurants have enjoyed a larger spread between what they charge you and what it costs them. Have you ever noticed how many lobster related items appear on a typical mid to upscale restaurant menu? It seems to be 4-5 items now have lobster in them. Menus used to contain one lobster item, a whole steamed version. Now lobster mac & cheese is a popular favorite. Thank synthetic CDOs for that.

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[Matrix Time Out] 4th Of July, Old Glory, Stars & Stripes

July 3, 2008 | 12:01 am |

Taking a long weekend. Need to gear up for “incoming” (no battle worn, tattered and shot up Old Glory pun intended) family and friends for the annual Clambake Lobsterfest at Chez Miller.

Best wishes to everyone on this holiday.


[Crustacean Update] Matrix Takes A Week Off During Lobster Wars

October 18, 2007 | 8:12 am | Radio |

There has been a lot going on this week, but its been radio silent at Matrix.

Last weekend I caught my first lobster. Investing in four pots, a boat and gas, it was probably the most expensive lobster ever caught in North America. So I threw it back in.

I am still reeling from the rush. Ok, ok, so I am exaggerating a bit. Actually a lot of exciting work is being done at my appraisal firm Miller Samuel and the mothership, Radar Logic.

Its been 24/7 and I haven’t had a day off in about a month (in Lobster years).

A lot is happening in the real estate economy and I am anxious to write about it.

Related reading: The lobster wars [The Economist Magazine]

Be back next week.

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Real Estate Employment: Lower Bar = Faster Response To Market Conditions

September 10, 2007 | 11:45 pm | |

I was on hiatus for no particular reason last week, other than having a little too much going on. Some big announcements coming soon, but unfortunately, my first foray into lobster fishing last week was a bust (translation: no lobsters). It was painful not to enter the Matrix last week, but I think there is something that can be said for taking a break every so often.

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One of the significant effects of the housing boom was the rapid response in employment of real estate agents as well as the surge in membership in NAR in recent years. The barrier to entry and exit is low and makes the profession vulnerable to competition, namely to gains in innovation, as agents move from information gatekeeper to information interpreter. It is incumbent upon real estate brokerage firms to adapt to the growing openness of information available to consumers. Some firms will get it and some will not.

I created the above chart to show correlation between housing prices using OFHEO and NAR membership just for fun. While housing prices are more volatile, the trend is similar over the past 20+ years.

I suspect that with the sharp drop in the number of housing sales across the country, a sharp drop in NAR membership will follow, in fact it already has begun. Actually, I am surprised the membership fall off has not been more significant to date, but I suppose, like housing prices, membership contraction is “sticky on the downside.”

The New York Times article As Housing Market Cools, Far Fewer Become Agents covered the topic quite well. The numbers of licensed agents are falling with the number of transactions. In fact I noticed that the article seemed to focus on markets that saw heavy speculative activity and I’ll bet the run-up in the number of agents was especially pronounced there.

In many ways, the decline in the number of agents is probably good for good agents as well as the consumer. The market has undergone significant changes in the past 2 years, including rising inventory, falling transaction counts and falling prices in many markets.

Agents that are able to adapt to the new market may actually thrive and be able to service their customers in a more professional way. The ability to grab the low hanging fruit of the last five years has resulted in a lot more competition among agents and I suspect the image of most real estate agents making money hand over fist in the past five years was really isolated to the top 5-10%.

I don’t wish unemployment on anyone, but the market ultimately decides.

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[In The Media] Real Estate Weekly Profile Of Jonathan Miller (The I Don’t Know Edition)

September 1, 2007 | 11:59 am | Public |

Last week, a profile article was published in Real Estate Weekly about me. I was surprised at the bold headline: Jonathan Miller: The man who knows but hey, I’ll take it, even though I don’t know how I got into this business. But I did win my NCAA basketball pool last spring so I must know something.

A special thanks to the writer Maggie Hawryluk for getting the story right.

John Cicero, MAI my partner in our commercial valuation firm Miller Cicero, LLC teased me about providing details about my personal interests in the piece but failing to mention our firm. Well I believe I did mention it in the interview, but I suppose the editors thought lobster fishing was more interesting than commercial valuation. Just kidding.

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