The Wall Street Journal writes that Soros recently said “The markets are breathing a sigh of relief but the fallout in the real economy is only now beginning.” Soros does not even bother to say that there is any light at the end of the tunnel.

SocketSite, San Francisco's property evaluation blog, reports on the $115 million record sale price for a new 193-unit luxury apartment complex in the new Mission Bay, valuing the units at $730/sq.ft. More interesting is the comment stream of readers trying to justify why the purchase was made - examples:

What many of you seem to overlook is that UDR is a publicly-traded, investment grade REIT. Check their public filings - they recently borrowed $200MM at LIBOR+85. That's 3.6%. If that's the cost of capital on this project, it may well pencil out of the box.
(According to this GlobeSt article, the cap rate is in the mid-4% range)

If the developer can only sell those units individually for $600/sqft, why would they offer $730/sqft?

They understand that rents are going to rise around here for the foreseeable future. Note that the sellers had planned for a 9-month lease-up but they were able to get all 193 units into contract in just 4 months.

If Bear had failed, one or two other investment banks would probably have collapsed within a few days, he said, adding that Bear had roughly $14.5 trillion of derivative contracts outstanding the day after it was bailed out.

"The parties that had those contracts would have had to establish the damages that they could claim against that estate very quickly," he said. "Imagine the damage of everyone trying to unwind those contracts," Buffett said. "That would have been a spectacle of unprecedented proportions. It would have resulted in another one or two investment banks going down in a few days."

To put this in perspective, the 2008Q1 US Gross Domestic Product is about the same as the value of Bear's derivative contracts - $14.2 trillion. And I agree, a panicked run on $14.5 trillion could have taken out a few banks along the way.

Derivatives let holders bet on or guard against gains or declines in an underlying asset without having to own the asset. They can be tied to things ranging from gold to cocoa, with most based on interest rates and currencies. Swaps, agreements to exchange types of interest payments, make up the largest portion of the market.

The market for derivatives, contracts based on underlying assets, is more than five times as big as global gross domestic product for 2002 as measured by the World Bank. Of the world's largest 500 companies, 92 percent use derivatives to insure against moves in borrowing costs, currencies or commodities, according to the International Swaps and Derivatives Association.

Only a month ago, such sages as George Soros and Alan Greenspan were shouting from bullhorns that the 2008 global financial mess was the worst since World War II.

Only a month ago, the only argument among nearly all journalists, pundits and leftwing politicians was whether the U.S. economy would stop at a recession or tumble all the way down the tubes to a 1930s-style depression.

Very few challenged the recession presumption. Now, if your definition of a recession is the traditional one of two consecutive quarters of negative growth, then those very few contrarians are correct. There is no possibility now--zero, nada, zip--that the U.S. will suffer two consecutive quarters of negative growth in 2008.