Bits Bucket And Craigslist Finds For May 12, 2008
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So walk away home owners and jingle mail are an urban myth?
A CHANGE IN ATTITUDES? Experts dispute the notion that Americans have become cavalier about financial obligations.
http://www.latimes.com/business/la-fi-walkaway11-2008may11,0,1641820.story
No what the article is saying is that people that can afford their homes are walking away but they have no evidence of that. They are not talking about the vast majority that cant.
The professor in the article nails it cold:
Shouldn’t any competent lender know this about a borrower before loaning money?
I don’t think that’s what the good prof is talking about.
A competent lender is guessing the ability to pay but to ensure payment he insists on skin in the game (downpayment) plus documented income, etc.
The article is about people who presumably can pay but aren’t, and the dude is arguing that it’s hard to draw a hard line between someone who can pay but won’t from someone who can’t pay at all?
He’s right. It’s impossible to draw a hard line. We can all tell the extremes but drawing the line is impossible.
dingdingding! Yes, that should be their “core competency.”
“I’m not sure you could even come up with a definition.”
That is why the lending industry traditional relied on prudent rules of thumb, such as limiting monthly payments on a 30-year-fixed loan to 30 percent of the borrower’s income. This was one way to make sure that borrowers did not default in droves, when many of them discovered that Top Ramen Noodles for dinner gets old after a while.
This is an interesting phenomenon. I am witnessing just such a situation first hand. I hired a financial analyst just out of college in 2005. He was on the job 3 months and bought a house with 100% 80/20 Alt-A financing. I was dumfounded he could get a loan. Even goofier, the 2nd mortgage interest, while a floating rate over LIBOR, only charged 5.5% initially, while the first mortgage was fixed for 5-years at 6%.
This kid paid $420,000 for his very first house. With the second resetting monthly, and now at 8.5% (down from 9.5%, thank you Ben), his monthly PITI is over $3,000/mon. (Of course the loan has no impounds for T & I. That would be too rational.)
Today, his house is worth $235,000. His monthly payment would be $1650 for PITI. If he put 20% down, it would be even less, and he has that in savings. In fact, he was going to put 20% on his first home in 2005, but the lender suggested he save his cash and use 100% financing (hello sub prime and Alt-A rebates, as the lender screws another prime borrower). He could rent an equivalent home for $1450/mon today.
He will not walk away. I have run the numbers with him. He could increase his net worth by the $185,000 in negative equity and drop his living expenses by $16,000/year. I repeat, he will have nothing to do with walking away and mailing in the keys. This decision represents 10-years of his economic life, if he is lucky. He would rather continue to toil for 10-years to break even.
I have tried to explain to him that in many ways, he was a victim of the sub-prime, Alt-A lenders, who gave so much money to everyone, that housing prices went haywire, as credit drunk idiots bid up the market.. It does not matter. He will not walk away. He refuses to even consider it. I jokingly told him his 2008 year end bonus will depend on if he is willing to send in the jingle mail. I don’t think he cares. He is still working on the house most weekends spending money, improving it in many ways.
Why on earth would you not walk away? What is this irrational attachment to an object that can’t love you back?
10 years of economic output for a mere thing? That’s lunacy.
“Why on earth would he not walk away?”
Because the NAR says the bottom is in, and nobody wants to sell out at the bottom.
Maybe the guy is trying to be “honorable?” He said he’d pay it back, and by gum!, he’s going to do it. But gosh, that’s a lot of money just to be honorable, and these loan folks are anything BUT honorable. It would as honorable to walk now, and donate some of the savings to an honorable charity.
But then, maybe he feels guilty for being duped into paying $450K for a house that was obviously not $450K.
I wouldn’t walk away, I come from a generation (1961) where we were taught to honor our debts. If I had made a horrendous mistake like that (which I wouldn’t), I would find a way to honor my debts by any means possible. The way I look at it is “I got myself into this, I’ve got to get myself out of it”. JMHO.
Honor has little to do with anything anymore. I’ll wager on the latter that he knows he got duped so he’ll stubbornly stand by his decision as a way to deny to the world he made a monumental mistake.
Same here. I`m 42 and I would and have paid for my errors. i.e. my boat that I sold last year, lost my arse.
Lane
Still means a great deal to me. There was a time when all I had was my good name. I’ll fight to keep it…
Lane, the two happiest days in a man’s life are the day he buys a boat and the day he sells it.
Since it looks like an effective poll, I’d have honored my loan agreement, as well.
Negotiating a reduction of principal with the lender might be possible, but it might be better to wait until there is solid evidence for where the bottom is likely to be. In this case that house may end up being worth even less than $235k, though inflation is likely to hide that.
I would honor the deal so far as it wouldn’t cause undo grief on my family. If it came down to feeding the banker or feeding my family my honor would get file 13′d.
Now, that being said I would cut back to the bone before I’d walk away from an obligation. You wouldn’t go into my house and see big plasma TV’s, and new boats and cars in the driveway.
He could do the karmic thing and walk away, get a much smaller overhead, and here is the karmic part that won’t get him in the butt,
he could put the difference into Habitat for Humanity homes for those who lost their homes in calamities like Katrina, for people who dont’ have anyplace to live at all due to health circumstances.
Well, at least he would assuage his “guilt” about turning in his keys.
It may not be an attatchment to the object but his word. The fact that he overpaid for the house is his fault. The bank made him a loan that he promised to repay. Some people still honor their word.
There is no such thing as a word. There is a business contract.
The contract contains a termination clause that at any point if the buyer stops paying, the lender can take the asset.
The rest is all feel-good hoo-ey.
“Some people still honor their word.”
Sounds like this is his motivation. There are many people who hold honor as a much higher value than money.
“The rest is all feel-good hoo-ey.”
BINGO
FPSS, I’ve seen this debate before on here (and I admit, it is an excellent point) and I keep meaning to look at the loan docs I’ve signed in the past. I realize the contract includes loss of the asset for nonpayment, but that doesn’t mean repaying vs. taking the asset are equal. If that were the case, then the bank would have no further recourse after taking back the asset if the asset comes up short, which is NOT the case except where such recourse is specifically prohibitted by law (or eventually by bankruptcy). And as a tangential point, just because bankruptcy (or non-recourse laws) gives a legal way out of debt doesn’t make nonpayment any less ethical.
I take a loan, I’m supposed to pay it back. Taking back of the asset gives the lender some legal recourse in the event I don’t pay but the intent of the agreement is that the loan will be repayed.
That is their problem. They should not have loaned the money in excess of what they thought the asset was worth.
That’s what all good lending is about.
If the asset and the cash-stream are not equal, then one party f*cked up, and it will pay the economic price.
Don’t give a sh*t about intent. All that matters is that the two parties contractually negotiated for a deal. The breakup was also contractually negotiated. If the counterparty did not want to do the deal, nobody held a gun to anyone’s head.
As I said, any more than that is just a buncha feel-good hoo-ey. Keep talking about honor and intent if it makes you feel better but it has no merit in a discussion about financial structures.
I would fire the financial analyst on the spot too for not being able to see precisely what he is paid to do professionally.
There are many people who hold honor as a much higher value than money.
If only that were the norm, and not the exception.
P-Cat
No kidding. You think the folks who loaned him the money wouldn’t do the same thing if they had to.
So I looked at the loan docs from ‘98 when my wife and I bought our first house. Let me say that if there is a contract that says “you have the option of repaying the loan or returning the named asset in fulfillment of that repayment” then I would actually be ok with that. In that case the bank is assuming any risk of the value of the asset declining.
Anyway, I’m looking through my old docs, and there is one document titled “Note”. It seems to be the main contract with regard to the loan. It starts off “In return for a loan that I have received, I promist to pay $xxx”. The first clause goes on a bit, but doesn’t say anything about the house, just a promist to repay the loan. There is a clause for the interest, payments, right to prepay, loan charges, and finally a clause for “Borrower’s Failure to Pay as Required”. In that section of the document, there is no mention of returning any property. It just says that if the borrower goes into default, the note holder has the right to require full payment of any outstanding prinicpal plus expenses. It also references a second document, a “mortgage” or “deed of trust” and says that the terms of that document also apply to the Note contract.
Looking through the mortgage (the second document), there is nothing that says that returning the asset fulfills the obligation of repayment in full. There is one clause that says “If Lender requires immediate payment in full under paragraph 9, Lender may foreclose this Security Instrument by judicial proceeding. Lender shall be entitlted to collect all expenses incurred….” The elipses is mine, just talks about collecting attourneys fees, etc. I assume the legal definition of “foreclose” is that the bank has a right to take the property. However, I don’t see how that contractually (or ethically) alleviates the obligation to repay the loan in the event that foreclosure (and sale of the asset) doesn’t get it done.
Anyway, I don’t see in any of those docs where it says that turning over the house fulfills the terms of repayment. I guess my mortgage was goofy like that.
Who gives a flying rats ass what agreement anyone had with a thieving bank??? They’re borrowing at 3% and extending credit at a usurious 20% and when the borrower defaults, I’m suppose to cry the blues and wring my hands in sympathy for the bank???
You’ve lost your mind.
That appears to be an opinion, and opinions are like rectal orifices, everyone has one and they all stink…
The equivalence of the asset and the cash flow is not an “opinion”.
That’s what the lender is paid to assess. That is their core competency, and that’s why they are getting paid interest above the base rate in the first place.
If they get it wrong, tough!
We’re talking about two different subjects here - A financial subject and an ethical one. I really have no interest in the financial one. The ethical one is the subject I’m discussing. Ex’s normative statements are opinions, nothing more. That’s the gist of my post. (that’s my story and…)
i honestly don’t understand how “honor” enters into the contract. the contract is an “if, then” proposition. If you default, then these consequences will happen. If the consequences are more attractive then the the value of the loan, you default.
In fact I think a better case can be made for “honor” laying in the defaulting when it is prudent to do so, because you are helping to price risk in a more reasonable way.
“If they get it wrong, tough!”
yes, and indeed, the only way they can be educated on this core competency is the same way anyone is ever educated about anything, by taking their lumps.
let’s not raise a generation of lenders who never experience a default.
I propose you look at it in terms of pride of ownership - I’ve just spent the morning washing, debugging, and waxing my 8 year old Taurus. It’s not a spectacular car but it’s mine. I take pride in the fact that I maintain it nicely - I don’t have to. I could leave it dirty, unmaintained, and never pay it any mind. However, like my good name the time may come that I REALLY need it. Without proper care, my trusty Tarbaby could fail me in a really bad situation. The same goes for my good name, and by extension my credit rating.
I choose to maintain both for my own sense of pride,honor, and ethics -no-one elses. However, IMO it’s certainly nicer to drive a clean, well maintained car that receives compliments than a dirty hoopdy just this side of total systems failure…
Nope, there is only one subject - the financial one.
It is you who are projecting a false sense of ethics where none need apply. After all, I didn’t recommend torching the underlying collateral, did I? That would be unethical.
There is a contract. The contract spells out what happens under various assumptions. And the lender is being paid mucho interest to assess the risk, and lend appropriately.
There are no ethics here. Just two counterparties to a deal. Nobody held a gun to anyone’s head to reach the deal.
In that case, if it doesn’t work out for one party, irrelevant of which one it is, nobody has violated the agreement that they made in complete openness, and in sound mind. Everyone has been completely ethical, and you are not impose imaginary rules of ethics on these circumstances.
To paraphrase Bertrand Russell, “a bunch of atoms” (which is what your Taurus is) feels neither honor nor pride.
Do not anthromorphize situations which are not anthromorphizable (to invent a word.)
You are maintaining your car because YOU feel proud and/or want to show off to your fellow humans. The car feels absolutely nothing.
You are also maintaining your car because YOU don’t want to end up as a pile of atoms on the side of the road. The car doesn’t give a sh*t.
You can smash your car with a hammer for anyone cares. There are no ethics involved whatsoever.
The only person who feels all this is the human, and I guess I don’t give a cr@p about them.
Exactly, I do it for myself. Did I not communicate that in my post (I also do it for my family, they’d hate to besmashed to atoms :)) ?
I was all for that absolute honor and integrity stuff up until about age 30. What I discovered was that people that don’t have it will use yours to manipulate you.
I will not behave honorably towards thieves. Banks that lent out 12X the money they actually had and drove home prices to an impossible level were simply unsuccessful thieves, and should be treated as such.
“Who gives a flying rats ass what agreement anyone had with a thieving bank??? They’re borrowing at 3% and extending credit at a usurious 20% and when the borrower defaults, I’m suppose to cry the blues and wring my hands in sympathy for the bank???”
Isn’t this innocent banker working on behalf of his shareholders?
Ok…. Be ethical. Slave away for those poor starving banks.
It’s your funeral.
I resemble your comment but I got over myself.
There is an extraordinary amount of value in it but only in the right circumstances. They may be rare but they exist.
Just look at this blog for an example.
The contract spells out what happens under various assumptions.
FPSS, are there notes which state that if the bank forecloses on the property, the debt is forgiven? I have only my own to go by, which makes no such concession, but I doubt that these exist (or at least exist very often).
My main argument is that I don’t think that really exists in most cases. It seems to me that it’s almost like a little urban myth has sprouted up on this blog that a typical loan contract gives the borrower the option to give up the house in fulfillment of the outstanding principal.
Just because the contract includes the option for the bank to take the asset in the event of default, doesn’t conversely necessarily mean that taking of that asset fulfills the repayment agreement.
It used to be be that if you needed a loan, you went to family or friends and closed the deal with a handshake. I would not default on one of those loans. I would find it a lot harded to feel the same way about a bank loan.
Nope, it’s state law thing.
It’s a question of recourse states v. non-recourse ones, and even then there are restrictions on what “recourse” can be taken. It’s a state-by-state thing. There are NO universal rules here.
??? honor?
And if the bank goes belly up, do you think they’ll pay the depositors what is owed? (over 100K anyway, cuz of FDIC.)
Of course, they’re complete up front that they aren’t going to pay depositors over 100K, just like borrowers are completely up front that failure to repay the loan results in foreclosure of the asset (=house).
Your personal honor and ethics are a result of what you do and think, not what someone else does or thinks.
For me it still matters, but the social and political environment over recent history has really not done much to encourage such old fashioned sense of personal responsibility.
It’s a case, however, where the FB’s acting unethically would probably be better for everyone in the long run, ie market clearance. I think that’s why people like me are so tightfisted - we don’t want to be in that situation ourselves.
Count me amongst those that would still repay, at least up to the point of being able to support my family.
There’s a reason why if you default on a loan, then it’s harder to get another one later (recent credit craziness notwithstanding). You made a promise to pay, and you broke the promise. It’s very simple.
Whether or not the lender is a “thief” is irrelevant. It’s a very grey line between thievery and extraordinary investment risk - yes in many cases the lenders were making obscene amounts of money, but this is in exchange for extraordinary risks (e.g. subprime lending). These lenders are now paying the price by going bankrupt. Yes there are people within these companies that made huge bonuses and such - but foreclosures aren’t so much going to hurt them - it’ll more hurt the thousands of frontline people who are losing their jobs.
It’s not simply a matter of “contract” vs. “feel-good” and “honor”.
I’ve negotiated many contracts in my day, and yes, there were always remedies to protect both parties. But the remedies don’t make everything right. There’s the lost opportunity, and other costs of dealing with the other party in default. My point is, if I ever had questions that the other party to the contract did not have the ability or intention of honoring their obligations, I wouldn’t have wasted my time with drawing up a contract unless I had no other options.
Sure, the lenders screwed themselves. But this whole business about the cheapening of contractual obligations all around is not at all a good thing.
It could simply be that he does not understand his options.
He might not understand the costs and benefits of walking away - all of them, not just strictly financial. All of them meaning, impact on credit, how that will impact ability to rent, to get jobs, etc.
He may just be sticking with the devil he knows.
Or, as others have mentioned, he believed the hype about real estate never going down before. He could believe this is just a temporary hiccup and soon the market will come roaring back and he will be upright again, and perhaps have a tidy profit should he decide to sell.
The younger you are, the more rigid is your thinking! As I learned in my ultrasound career - there are 256 shades of gray - everything is NOT neatly black. Or white, either.
Life is a journey where you must pick your way carefully to avoid the schemes of others, and real dangers, too (like going postal)! He may learn, but his stubbornness IS NOT an asset.
Those that blame the baby-boomers should research the generation still in charge - the 70 yr olds, like our VP. The children of the baby-boomers took up careers in marketing, instead of a trade. These are the dangerous carnivores & parasites that we all face today. Plant a garden & keep a few hens. I can live without a big screen, coffee, tattoos, and the fashion world. Just decide to enjoy the natural world, it will last longer than this civilization will.
And this guy is a financial analyst? You should fire his ass based on his refulsal to let the numbers do the talking….
Yeah, I was going to make the same comment.
If you want to leave yourself open for a wrongful termination lawsuit.
that’s why you give him a “severance” and you’re laying him off due to economic conditions, not firing
DUH!!!!!!
And you make them sign a “can’t institute lawsuit” contract if they want the severance.
What is this? Rocket science?!?
“he was going to put 20% on his first home in 2005, but the lender suggested he save his cash and use 100% financing (hello sub prime and Alt-A rebates, as the lender screws another prime borrower)”
I can’t tell you how many times I heard about friends here in the Bay Area being told by mortgage brokers/lenders to go for 100%+ financing because the tax benefits would be greater (greater deductible) than if they put down 10 - 20%.
You’ve got to be f*cking joking!
How does paying $1 to the bank to get back 35 cents from the US Govt. actually benefit you?
Give me $1; I’ll give you back 75 cents instead, and we can play that game all day long.
Faster, I’ve made that same case, word for word with lunatics of all colors…… they don’t get it. Paying interest is for the clueless. I know a couple people who started with nothing and became millionares by lending money/holding paper.
I’m not against leverage, per se.
Leverage is a power tool, and like all tools of that ilk, you have to use it skillfully, or it will take your hand off.
However, paying interest on a depreciating asset is just moronic.
The only benefit is if you would have paid the same dollar (or group of dollars to a landlord for the same house). Then the government is paying your to be your own landlord. That’s pretty much it (and that wasn’t/isn’t true for a decent number of folks today).
But you never do, never ever.
You just build the whole thing into your rent v. buy calculation.
To put it another way, prices for “buying” rose just enough for houses when the law was passed to negate the law.
There was a one time benefit back in the day for home-debtors not for anyone else.
Since then, it’s always been irrelevant.
The only way it makes any sense to borrow more is if you have an interesting alternative for the money.
If you have the cash in the bank, earning 2% or less, you’re paying money to the bank for nothing.
If you take the money and invest it with some cash flow greater than your interest rate, then you are getting positive leverage off of the higher debt load, and you are probably making the wise decision to borrow more.
Few people have investments like that though…commercial real estate? Done well, yes. Not much else that I can think of today.
You didn’t say what state it is. If it’s a recourse state, the lender can go after his other assets, plus his future income. Bankruptcy may not be a viable option for him under the new restrictions.
I’m not a goldbug, but I’ve often thought about being in a circumstance like that and just buying a bunch of gold and burying it somewhere. Sure it’s remotely possible someone will find it and steal it, but it’s 100 percent possible the bank will take it if it’s in your bank account. Also what’s to stop someone from going and buying a bunch of chips from a casino, and saying that they just lost all the money gambling. Of course then there is winnings tax when you turn your chips back in for money if you do it all at once.
That would work until you realized that you were hungry, and went to the grocery store and learned that they won’t trade their goods for your gold. Whoops.
The problem is liquidity. How are you going to turn your gold into cash? Yes, you can sell it, but if you do it in small increments you are getting the short end of the stick, and if you do it in large increments aren’t there forms that reputable buyers will make you fill out that get sent to the IRS? Granted, you could use disreputable buyers, but you’ll get the short end of the stick again.
If you’re just going to hide your assets, why not hide it in cash? Yes, I know it’s losing value over time, but at least it’s liquid as-is.
Why on earth would you hire such a dumbazz azzhat as an financial analyst?
His astounding incompetence is as wide as it is deep.
And as a great man once said, a fool and his money are soon parted.
RE: This decision represents 10-years of his economic life, if he is lucky. He would rather continue to toil for 10-years to break even.
Did you sign him to a 10-year contract?
Anybody countin’ on the status quo for a decade in this crazed world of instability hasn’t been reading the right books.
One job loss, medical calamity, or paternity suit and he’s toast…
Honor is between people, not businesses.
Declaring bankruptcy and starting over is the American way. Slaving away for decades is the English way. I would choose the American. Besides, honor societys suck, which should tell us something.
And you employ him as a financial analyst?
Jingle mail is nothing new. Back in the 90’s bust I knew a few people in SoCal who walked. Of course they all bought the much cheaper replacement house first. OTOH I know one guy who traded up to a much nicer house for the about same price, but who rented the old one out for years until the next bubble arrived, and then sold it for over 100% profit. He claims that he was able to cover the mortgage payment all those years with the rent.
May 12 (Bloomberg) — MBIA Inc., the bond insurer that lost 87 percent of its market value in the past year, posted a net loss of $2.4 billion as the slump in mortgage securities deepened
http://www.bloomberg.com/apps/news?pid=20601009&sid=aaqAyMXQrCAc&refer=bond
But its still AAA rated, which means that it is just as creditworthy as funds stuffed full of sub-prime and liar loans.
Nobody believe S&P or Moody’s anymore, anyway…
Yeah, and ain’t that a shame.
The highest ranking asset they possessed was the reputation they diligently earned over many decades.
And then, POOF, it was gone.
Some very short-sighted morons at the helm, IMO.
Ya gotta love the way Buffett layers his bets.
Buffett trumps bond insurers
By Justin Baer in Omaha
Published: May 4 2008 20:31 | Last updated: May 4 2008 20:31
Berkshire Hathaway’s fledging bond insurer generated $400m in premiums during the first quarter, outstripping all the established, but troubled, operators in the so-called US monoline insurance market.
Many of the 278 contracts the unit wrote were for clients who already held policies from other triple-A rated insurers, Berkshire’s Warren Buffett said at the annual shareholder meeting in Omaha on Saturday. “They’re paying us a [higher] fee to write insurance that will only be paid if the principal [insured party] and insurer didn’t pay,” Mr Buffett said. “It tells you something about the meaning of triple-A in the bond-insurance field.”
I’ve never met Mr Buffett, but I have to say I like him when he comes out with stuff like this. He’s making money and proving that his competitors promises are worth nothing at the same time.
Just more proof, that the analysts who are paid to predict and understand these things are completely clueless. Forecasted range of +.66 to -6.69 per share (more than $7 fudge factor) and even the most pessimistic still missed by a factor of two. I was hoping to buy some more SKF on a pullback this week. Looks like that isn’t going to happen. Or maybe it will — massive losses = market rally, right?
It seems like modern day financial forecasters are like the oracles of yore. In historical times, they would resort to arcane magic, like entrail reading and breathing fumes.
Today’s arcanum are mathematical models that could be built by graduate students, but just as long as John Q. Public doesn’t understand them, they can claim some great insight.
Basically, people want soothsayers. People want to be told what they want to hear. If they are willing to hire people to tell them those things, they will get people who tell them those things.
And lo and behold, MBI up almost 9% this morning. Sometimes this market just makes my head hurt.
I like the way MBIA kept it to an old school loss of around $3 Billion.
Way to be team players, guys!
Taxpayers from Massachusetts to California are paying Wall Street banks to end derivative contracts gone bad as they exit the collapsing auction-rate bond market, with penalties in some cases topping $10 million and compounding the pain of rising borrowing costs.
http://www.bloomberg.com/apps/news?pid=20601109&sid=arigOxlIiRm4
“Citigroup Leads Wall Street Drive to Hurt Taxpayers”
I realize this idea is somewhat novel, but how about if the Fed opens a new auction facility for municipalities to replace the broken auction-rate bond market? They could offer low interest rates to municipal governments similar to the below-market rates they offer their Wall Street banking buddies. And if the Fed disagrees, perhaps Congressfolk with interests in the banking business could conduct a few persuasive meetings back in the woodshed to change their minds?
“They could offer low interest rates to municipal governments”
And cause Warren Buffett to try to live to 120
It’s really time for the FED to open a new auction market for everything.
All financings are at 2% independent of risk or ability to pay.
They should take over Ebay too since they are the resident experts on all things economic.
“It’s really time for the FED to open a new auction market for everything.”
I don’t know what’s going to happen in this election but I’d bet a big chunk of change that 2012 will go to the Dems as by then a majority will be begging for socialist-style assistance.
That’s exactly what I had in mind. I propose the Fed offer the rest of the country the same special deals that it offers Wall Street investment banks. Why limit below-market-interest-rate loans to Megabank, Inc?
Because that’s the whole purpose of the Fed, to benefit the big banks (keeping in mind that it was big banks who architected the legislation that created the Fed in the first place.)
The sad thing is Gov. Spitzer was forcing the bond agencies to fix this when his little escapades did him in.
Too bad, because no one in Government now wants to do anything about it.
Barney? Chris? Ben? Henry? W? No, not a word.
Auction rate wreck - Munis leaving in droves.
http://www.bloomberg.com/apps/news?pid=20601213&sid=agdA6QUanHH0&refer=home
from the article:
When auctions, typically held every seven, 28 or 35 days, fail to draw enough buyers, rates get set at a level specified in bond documents, or one based on a formula pegged to money- market benchmarks.
The $330 billion market, which includes closed-end mutual fund firms and student-loan providers, fell apart when investors shunned the securities and dealers stopped buying bonds that went unsold. Failures amounted to 73 percent of 2,557 public auctions last week, according to Bloomberg data.
“We are actively working with the issuers of these securities to refinance them, which is the ultimate answer,” Merrill Lynch & Co. Chief Executive Officer John Thain said in comments to reporters in Mumbai on May 7. New York-based Merrill was the seventh-largest underwriter of auction-rate debt between 2000 and 2007, according to Thomson Reuters.
question, in lay terms what does this mean? any help understanding would be appriciated.
trouble in paradise:
May 12, 2008 — Homeowners in the some of the toniest ZIP codes in the Hamptons are facing a frightening reality - they can’t afford to foot the bill for their high-priced homes, The Post has learned.
http://www.nypost.com/seven/05122008/news/regionalnews/trouble_in_li_paradise_110497.htm
from that article
Corcoran broker Susan Breitenbach said young Wall Streeters who gobbled up trophy properties in recent years are starting to suffer. She recalled getting calls from Bear Stearns employees desperate to unload their East End homes after the company’s recent implosion.
“These are people who are used to success,” Brady said. “There is a level of denial and embarrassment when I have to call [people] to ask about mortgage problems.”
I really fail to see how people who got million dollar bonuses every year could end up in this situation.
Because they have leveraged up their lifestyle so that getting even $100K less a year leaves them in a hole. They are right on the financial edge.
That, and everyone knew that RE in Manhattan never goes down.
Heheh, ’cause they spent 1.5 mil a year…
Exactly. This is standard operating procedure in Hollywood, too. If you take in 3 million a year, and spend 3.5 million, you are still headed for bankruptcy.
Shirtsleeves to shirtsleeves in ONE generation, not even the three generations it used to take. These are truly the nouveau riches, many of whom can’t even believe they made that much money, but because of dumb luck and gamed systems, they did. There’s no production backing the money they made, so easy come, easy go.
I was thinking at least two generations as I imagine some mighty nice educations paid for by Mom and Dad were behind those new Wall Street positions.
“I really fail to see how people who got million dollar bonuses every year could end up in this situation.”
Only the poor and worthless drowned when the Titanic sunk.
Not true at all. Benjamin Guggenheim went down with the Titanic.
http://www.historyonthenet.com/Titanic/firstclass.htm
I was kidding… ;{ / …they are all in the same boat…French Hilton wannabe’s
Expenses rise to meet income for those who insist on consuming conspicuously.
Thorstein Veblen LIVES!!!!!!!
Charles Dickens lives!
“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
They were encouraged to keep a significant portion of their net worth in stock, and borrowed against the stock for major purchases.
Interest can burn through a lot of income. Leverage, upon leverage, upon leverage, upon leverage gets nasty when values fall. Margin call…
“Really, does the press HAVE to discuss this little unpleasantness - such plebians… They only WISH they had abodes of this value being foreclosed. Mimsy, where are those furs and the family heirlooms? I need to visit Mr Goldberg for a little chat” Make sure and read in your best jawclencher style.
Got a kick out of the fact that one of the folks in trouble is a UBS exec. Also enjoyed the comments about the Bear Stearns folks. But most of all, it was interesting to note that even the merely wealthy become over-extended trying to keep up with the uber-rich. I suppose it’s all relative.
The race to keep up with the Jones’ never ends, except for those who fight the social tsunami and ignore it to start with.
Got a kick out of the fact that one of the folks in trouble is a UBS exec.
UBS - U Been Screwed!
this morning on MSM ‘propaganews’; MC interviewing two ‘entrepreneurs’ touting that the rich are not only continuing to spend, but they are up-bidding their own purchases by making everything “custom”! One of the worst info-mercials I’ve seen in a long time!!!
Subprime sinks the Titanic (”it’s contained)
http://www.bloomberg.com/apps/news?pid=20601109&sid=aL7WMVICQ_pY&refer=home
“…New York-based Genco Shipping and Trading……”
Owned by the Corleone family of New York, Lake Tahoe, Las Vegas, and Havana?
HSBC sets aside 3.2 Billion - “less than expected” How many quarters can they do this?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aLcZGH_UBlcU&refer=home
From the article, HSBC is the World’s 3rd largest bank by market cap. the two larger ones are both Chinese. HSBC is making so much money in Asia and the Middle East that $3bn losses a quarter on US sub-prime mortgages don’t even make them blink.
Heheh, for now. China is next in the “bubble correction” que IMO.
Interesting read on how Chinese low tech is exporting jobs to cheap SE Asia labor markets
http://www.bloomberg.com/apps/news?pid=20601109&sid=atdmXgT8RXdg&refer=exclusive
heck, if we wait long enough, maybe, just maybe, Vietnam may export their low paying jobs to the US.
imho, I would think that this will be the route that manufacturing jobs return to the US.
I would think that it is ironic that the jobs that we outsourced would come back to the US as the result of another country’s outsourcing jobs to us.
If I remember correctly, I first saw/read this in a Delbert cartoon. I laught so hard at the time, now its not so funny.
Sorry for the misspelling,
Delbert=Dilbert
Maybe I am too cynical for my own good, but a lot in this cartoon, looks familiar. I have never worked in IT.
That’s what happens with globalization and commodity inflation. The number of people who can afford manufactured goods starts to contract leaving workers scrambling for the remaining manufacturing jobs. Globilization may be good in the fantasy world of endless natural resources but my guess is it plays out poorly for the average American in the long run.
American’s are in now way better workers than the Chinese or Indians. Why should we get to live any better?
Because we a Americans, and without us, no one would buy the CR@P that our company’s are off shoring to lower wage nations!!!
HSBC issues money. Yes, they print real legal tender, with their name on it. The tender is called Hong Kong Dollars and it says clearly that it is issued by HSBC.
I saw this for the first time yesterday. There are other banks (presumably) authorized to do this as well.
That was when I realized the whole story about the Fed being a collection of private banks wasn’t far from the truth.
From Wikipedia: The Government, through the Hong Kong Monetary Authority, has given authorization to three commercial banks to issue currency notes in Hong Kong:
The Hongkong and Shanghai Banking Corporation Limited;
the Standard Chartered Bank (Hong Kong) Limited; and
the Bank of China (Hong Kong) Limited.
Authorization is accompanied by a set of terms and conditions agreed on between the Government and the three note-issuing banks. Banknotes are issued by the three banks, or redeemed, against payment to, or from, the Government Exchange Fund in US dollars, at a specified rate of US$1 to HK$7.80 under the Linked Exchange Rate system. Banknotes issued by the three commercial banks are printed in Hong Kong by Hong Kong Note Printing Limited.
http://en.wikipedia.org/wiki/Banknotes_of_the_Hong_Kong_dollar
The issuance of currency by private banks isn’t as common as it used to be, but still happens. ISTR that there are several Scottish banks that issue their own notes.
Northeast update-
Went to a family reunion Saturday back home in northern Vt. Extended family from as far east as Franklin and Oxford County, ME across Coos Co in NH and NY/VT border counties attended. According to family, sales of are picking up but prices are down. Keep in mind that what is selling is older stuff in town, and many miles away from decent employment. From what I heard, most of the buyers are displaced locals/natives who were squeezed out over the last 7 years. What they are buying now was priced anywhere from 25-50K 7 years ago, was roughly 130-170k in 2005 and has come off those highs by approximately 15% (not my number). In other words, this stuff is still waaaaay overpriced. I view these buyers as knife catchers.
So, is it a market at work where the 15% reduction and subsequent sale is now the new comp and brace for another leg down? It seems so to me. I just don’t see how $8-14/hr jobs support 140k prices in areas where the major employers have shuttered their doors. In one case of many, a large paper mill shutdown in 2002 dumping 500 skilled employees but RE prices doubled and tripled there in the subsequent 5 years. That makes no sense at all. But the word is, local RealTurds are busy. I’m uncertain how the KC’s (knife catchers) are getting financed but I can only imagine some half-wit in a cubicle farm 1000 miles away that reviews or approves this stuff has no clue to the economic conditions in these areas. It almost seems there is still no lending standards/oversight. Current conditions are eerily similar to early circa 2004 when the market siezed up due to high prices and then skyrocketed again in late 04-06 when sub-prime dollars came to town. The only difference this time is prices are trending down.
“Buy now or be priced out forever.”
Also, inventory continues to grow in all these areas according to OSG. My observations confirm this.
“most of the buyers are displaced locals/natives who were squeezed out over the last 7 years”
I had tried asking this board a couple of times if anyone thought there might be a wave of this behavior in bubble areas. Usually didn’t get a response.
I know I’d like to return to my bubble area which I will always consider home. Course, by the time those prices get back to where they started in that area “home” for every one else in my family will be right where we are.
Carrie, I believe that is exactly whats happening. It is why the lowest price stuff is moving pretty quickly, at least from my observations. I forgot to mention in my first post that new 500k shacks (if you can believe that kind of pricing in northern new england) are taking 150k haircuts. I’m not sure what kind of idiot would by those monstrosities but they’re available at a discount for those stupid enough to buy them.
I saw a commercial on television for an auction on units that I thought looked familiar. It turns out it’s for the converted condos in National City that were formerly a Red Lion Inn. Ben carried the U-T story back in January (2008) touting their affordability:
http://tinyurl.com/6yh8bt
These units are now scheduled for auction this upcoming Saturday, May 17th, with starting bid prices less than one third of the prices of 6 months ago.
http://www.redcrealestate.com/
Brochure with prices and floor plans:
http://tinyurl.com/643vry
Most of these units are tiny, less than 500sf and had prices over $200K ($400+/sf). The largest units were under 1000sf with a price/sf of $700+! This is National City, not La Jolla.
The “kitchen” in even the biggest of these units is smaller than the smallest I’ve had in a studio. It appears to consist of little more than a microwave and a fridge.
Choice comment in March 2007 from the National City Redevelopment Director:
http://tinyurl.com/5z35sd
“They are doing a condo conversion, Bayview Suites, on the southeast corner and and have submitted plans on other property for council consideration for consistency review with the downtown plan. On the northeast corner Pacifica owns a parking structure. They want to build an additional 88 condominiums above the existing parking structure. So they would add a layer of parking and then four or five layers of new condominiums built above that. Because of the success of Bay View Suites, they’re feeling that makes sense. There’s a proposal for a second tower on the Holiday Inn site.”
Don’t successful projects usually not end up in auction?
How fast this has all come crashing down in National City:
- March 2007, condos are still being pushed as the centerpiece of redevelopment efforts.
- October 2007, condos hit market.
- May 2008, condos being auctioned off at two-thirds off
VirginiaTechDan,
What’s your email? If you email me your address, I’ll mail the Crash Proof book to you. I had lent it to some friends. Sorry, I didn’t mean for it to get out of the HBB group. On the positive side, I recruited some new HBB readers. And, the $1 is still in it!!
Too bad it’s only worth 74 cents.
The book or the bill?
Whoops, gone down to 73 in the last few minutes…
VirginiaTechDan, can I get in the queue for it next?
IndyMac swings to 1st-quarter loss, sees no quarterly profits in 2008
http://biz.yahoo.com/ap/080512/earns_indymac.html
The Pasadena, Calif.-based mortgage lender expects losses in each remaining quarter this year, and says it will not post a profit again until home prices begin leveling off.
Will IndyMac last that long? It’s not a commercial bank or an investment bank so the Fed & Treasury are not going to rescue it or its creditors. IndyMac’s only hope is that OTS will sweep it under the rug as the agency can’t afford to lose the annual assessments that IndyMac pays (OTS is funded solely by assessments on S&Ls).
By the way, IndyMac has decided to stop making ADC loans. Just like the builders, the bankers stop too late.
The Jumbo market is still slow, even with raised caps, rates are just creeping down. Those pesky new loan standards HAVE to go. What is it with these folks? Do they really expect a return to 2005? Scary thing is they REALLY do. Talk about cargo cults…
http://www.marketwatch.com/news/story/new-jumbo-mortgage-limits-just-starting/story.aspx?guid=%7B2CC37229%2D5D74%2D4191%2DBE86%2D7F5218ABED27%7D
Bailout = bureaucrat hell.
Ever notice how every time there is a disaster, bureaucrats get bashed by politicians for being to slow to help people in need? Followed by another bashing from the same politicians for allowing fraud?
That’s because you can either rush cash out the door, or make sure every “i” is dotted and “t” is crossed before releasing the money. The latter is slow. The former attracts parasites.
The bailout bill requires the lender to accept 85% of “market value.” What is that? And it requires the borrower not to have committed fraud, and to be paying at least 35% of their income for the mortgage? How many people like that are they? Who is going to confirm all that, and how?
You get the picture.
My money’s on the bureaucrats - they’re one big cushy catcher’s mitt that swallows up the pols’ hairbrained fastball ideas (and sadly some of their good ideas too, but oh well).
I still don’t get it… what about all the people in good ol’ prime 30yr fixed mortgages? Do they get to reduce their prinicpal too? Do I get 15% of my past rent back? How can this possibly happen?
“Do they get to reduce their prinicpal too?”
I think us 30 year fixed mortgage borrowers should collectively start chanting “jingle mail”, “jingle mail” until our point is made.
We got hosed Tommy. But realisticly, I don’t object to paying off my mortgage according to the terms that I’ve agreed to. MY problem is having to bail out the insurance on these mortgages after the (still overvalued) market takes it’s (completely predictable) next step down.
“What is that?”
I thought a primary purpose of the bailout was to avoid discovering what market value is in the post-subprime universe, through artificially propping up prices? Having a provision based on knowing what is 85% of market value poses a conundrum, as equilibrium adjustment to the subprime implosion is still underway.
No, the “beauty” of bureaucratic price discovery vs market price discovery is that they can make it 85% of any value they like…
PB the primary purpose of the “bailout” is to garner votes. It’s simply politicians’ empty promises to give the illusion that they care about something other than their reelection.
It potentially has the added benefit of attracting campaign contributions from the real beneficiaries of the bailout, who are the lenders who get the chance to avoid paying through the nose for foreclosure proceedings, plus get a guarantee that their debts will be repaid, courtesy of the U.S. taxpayer.
Homebuilder Standard Pacific widens losses past expectations. Of course the stock shoots up 2.1% tooooo a whopping - $3.85?
http://www.marketwatch.com/news/story/standard-pacific-1st-quarter-loss/story.aspx?guid=%7BCCB1BBB5%2D534B%2D4BD8%2D9C02%2DA089D556858F%7D&dist=hplatest
Not sure if this posted last night,but just before I went to bed there was a crawler on the news channel that Michael Jackson had dodged BK because an ivestment group had agreed on a price for Neverland ranch.
It’s May, which means thousands of high school seniors across North Texas can almost taste it: their diploma. This month 7,500 DISD seniors are expected to walk across the stage and make their families proud.
But what if we told you that 75 percent of the seniors headed to Dallas community colleges, can’t read above an 8th grade level, and others can’t add or subtract.
http://www.wfaa.com/sharedcontent/dws/wfaa/latestnews/stories/wfaa080509_jh_disdcollege.e5ca60c9.html
all you have to do is look at the credit scores around here and you’d believe anything
I would say that it describes a disturbingly large fraction of the students at my Wife’s campuses… Possibly the majority at some of them.
Well, in all fairness and I really have nothing against community colleges per se, but they are heading for community colleges. They’ll probably show up for a year and then drop out and do something productive with their lives. At least in Houston, you can still get a decent administrative job without a college degree.
Got a neighbor who’s taking a couple of community college computer classes. She’s one of a few students who has:
1. Bothered to show up for class on a regular basis.
2. Done the required reading.
3. Completed the in-class and homework assignments.
“can’t read above an 8th grade level”
Well, that bodes well for Youtube stock.
A high school teacher friend of mine has to tell her students they can’t write their assignments in text message speak!
It would be fun to hear them TALK like that…
Ummm… Lost? They do talk like that.
Welcome to high school English in SoCal.
”It’s very frustrating … for the students who come in here who say: ‘Wait a minute, you’re asking me to do all this? I don’t know how to do this. I don’t have enough time to do this. I’m not used to doing this. I don’t want to do it,’” Dr. Rodriguez said.
And they wonder why they can’t get anything better than a menial job?
Not only do the kids have problems, but the article’s author has a problem distinguishing between “they’re students” and “their students.” While that’s a minor error, it’s ironic that the error is in an article about comprehensive skills. And a $10k bonus only encourages the teachers to teach to the test.
“Testing should not be the end all determiner of whether a child learns or not,” said Kaiser. “Teachers have their hands tied. They’re told we have to succeed; in fact principals are given a $10,000 bonus based upon how they’re students do on TAKS scores. Everything is driven by the test.”
No Child Left Behind.
Ask any teacher and they hate the issue.
Issue is either, teach them to the test, or have your school lose out all federal funding. That funding is necessary.
And yet, it sure would be good if NCLB was dismantled and also that schools could negotiate for books/supplies. Not just have some gov mandated supplier supply outdated junk.
TAKS was the model for NCLB.
When W was governor, I led a workshop for TX middle and secondary social studies educators held in the Governor’s Room of the UT Student Union. The current governor’s portrait hangs behind the head of the table in that room, with previous governors’ around the other walls. The portrait definitely had a smirk on. The teachers mostly recoiled and made negative comments - about the smirk first (they’re sensitive about things like that in their line of work) and about the test-based educational policy. They were by no means all Democrats; some were very conservative and libertarian. These were dedicated people - they traveled and took the trouble to attend a week-long workshop with lots of content when there were easier ways to get their continuing ed credits. Not one had anything good to say about the TAKS system.
So very OT:
But for anyone who wants to debate educational philosophies: A great article from the website GreatSchools on how U.S. schools compare internationally. At they end they get into how homogenous students are in the higher rated countries compared to US school districts, making a point that the many cultural and language differences caused by extremes in immigration are creating problems for success in the classroom.
http://www.greatschools.net/cgi-bin/showarticle/3538?cpn=20080507pa1
Funny how we get hammered on the head with all this “diversity is strength” sloganeering.
Yeah, its hard to be an excellent school when 1/3 of the kids can barely speak English.
Talked to a guy I know saturday. He was talking up how “the wall street journal said we hit the bottom in housing”. I just laughed at him and made a hundred dollar bet it would be 2012 if not longer. He is the biggest FB bought a house in Mentone CA in the IE last year. This guy drank all the kool aid.
Heads he wins (you repay the $100 bet), tails you lose (the bust plays out beyond 2012 and he does not have $100 to repay you)
He’ll only have to pay 85% of the $100, I believe.
Art Garfunkel & Paul Simon:
“A man hears what he wants to hear, and disregards the rest.”
Sucker Rally
http://www.huffingtonpost.com/henry-blodget/the-recent-market-rebound_b_100806.html
No fooling, but a great opportunity for smart fund managers (the few) to unload onto the dumb ones (the many).
They were blaming the replublicans In the comments section below the article.
Alert…FYI
First class postal rates go from $0.41 to $0.42 today, May 12,2008. So if letters to pay bills are sent out today with the old standard 41 cents, they will most likely be returned at some future date for lack of adequate postage.
http://www.usps.com/communications/newsroom/2008/newpricing.htm
The USPS is so jacked up . . . anyone know what it costs to re-sort, re-handle and return mail all to gain another $.01 in postage? If they had half a brain, they would honor 41 cent stamps until they ran out.
That’s precisely why they issued the “forever” stamps.
Forever Stamps should be the ONLY stamp - I cannot see the logic in retooling every few years to change the price printed on the stamp - that cannot be profitable. I also don’t buy into any bizzare fear about people buying a lifetime supply of Forever Stamps at today’s prices.
They never seem to have them at my post office.
I have always bought postage in the 200 or 400 stamp mode. Forever stamps were a great idea. I truly don’t understand the “self expression” in all the stamp designs. Yeah, artist and marketing con people make money, but it is such a waste that us consumers get hit up for, one way or another.
The 1 cent increase is truly stupid. Hit us up for 2-3 cents, and get it over with. What did I read, a $700M+ 1st qtr loss by the USPS. Wait until oil hits $150, then $200-. Junk mail is their life blood, and I bet mailings are way down too.
From the Yahoo! Finance frong page…
Sprint Nextel 1Q deficit widens on charges, customer exodus- AP
IndyMac Bancorp swings to 1st-qtr loss, sees 2008 loss- AP
MBIA slides to huge 1Q loss on hefty charges- AP
And the market is up…everything is a OK
As crappy as Sprint’s customer service is, they would be going down the crapper, even if the rest of the economy was doing great.
Sprint/Nextel……THE….WORST….SERVICE….PERIOD.
There was quite a “hit” discussion on Las Vegas becoming a ghost town soon, however, on contacting the records department at UNLV, the official dollar figures for gambling show at measily 2 per cent decrease for the last 12 months. MGM and Caesars balance sheets are a lot stronger than Citibank and Chase.
Gaming Revenue March-08 $871,896,196/ Feb-08 $865,968,262/ March-07 $889,687,992 /Percent down over 12 months. -2.0%
Have you been to Vegas, lately?
If not, take a trip there and open your eyes to reality.
The number runners @ UNLV are just home-town higher learning shills, nothing more.
I love the term “gaming”. I am quite certain that for them its anything but a game.
Gambling = Gaming = Playing games in the hope of winning BLing.
“If not, take a trip there and open your eyes to reality.”
These fugures are reality. These are the the accountants income reports that the state of Nevada gets so they can collect their taxes. UNLV puts together a monthly report on taxes, employment, housing from official government statistics.
I’m just reporting the facts, you can see what you want to see.
“Statistics are used much like a drunk uses a lamppost: for support, not illumination.”
Vin Scully
UNLV puts together a monthly report on taxes, employment, housing from official government statistics.
There lies the rub. Do we trust any stats from the gov’t these days?
I was there this weekend staying at my condo. Traffic was much easier than in 2004-2007. The strip was very busy but not packed. THe Fashion show mall was very busy (Mother’s Day gift). I would say that Vegas is down slightly but definately not out by any stretch of the imagination. Mother’s day weekend is also not a big Vegas weekend. The big Poker tournaments start in a few weeks and I am told myu condo will be rented for the next 2 months plus.
Be interesting to see how big the “Big” poker tournaments are this year.
Can’t find the link to this, I’m reading the dead tree version:
Aspen Daily News, May 10, 2008
“Retail still Up in Aspen”
“Aspen’s retail industry fared much better in March than local real estate, at least compared with the same month last year.
…
In the same month [March],dollar volume from real estate transactions in Pitkin County dropped more than 68 percent over over March 2007, and 53 percent year to date, according to a report released by Land Title Guarantee Company last month.”
…
So…the rich resort areas are immune, eh?
last week:
http://www.nber.org/feldstein/ft050708.html
Mr. Martin Feldstein
“…I think there’s not much more that the Fed can do to help us in this situation. They’ve used up half their balance sheet setting up credit lines to take on questionable credits from the banks and the securities firms. They’ve brought interest rates down to the point where we have negative Fed Funds rates. So I think the policy shifts to the Administration and the Congress if we’re going to put a floor under these house prices….”
On a rough calculation the Federal Reserve has used up $450B of its $750B balance sheet and has ~$300B left. That is app. $1500/person in the US that has been guaranteed (soon to $2500). The Federal Reserve is going to use up the remaining $300B shortly and has asked (is asking) Congress to allow it to operate in the negative.
We’re toast. I’m going fishing.
Hey, get back here, we need to know how many layoffs everywhere today and other important stuff!
Since when is “putting a floor under…house prices” a proper role of government? Where does Feldstein come up with this crap?
Well “price stability” is their mandate. Where they were when RE prices were soaring 20% per year, that’s what I want to know.
So what does it mean by recourse loans from the Govt in exchanged for a reduced RE loan, debtor’s prison?
“What is missing is action to prevent positive-equity mortgages from becoming negative-equity mortgages. The federal government could achieve that by providing low-interest loans with full recourse that would allow any homeowner to pay down a significant fraction of his mortgage. Homeowners would be in effect giving up the potential to default on their mortgage loans in exchange for lower interest costs.”
Sounds like a dandy idea!! A new TAF–let’s call it a CAF: consumer auction facility. Below-market rates for everyone!
Deficit ensnares another governor
Revised budget plan is coming this week
By Ed Mendel
STAFF WRITER
SACRAMENTO – The famous catchphrase spoken by Gov. Arnold Schwarzenegger in one his action movies, “I’ll be back,” can now refer to his handling of the state budget.
A ballooning deficit like the one that helped the former bodybuilder and actor oust Gov. Gray Davis in the 2003 recall election is pumped up again.
…But at least Californians can take some comfort knowing that Arnold isn’t an economic girly-man….
their legislature sure is
FREE sht for everyone !
“If it bleeds, we can kill it.”
Is a much better quote by Dark Vader, about his handling of the state budget.
If you want to read a really bearish piece, read this:
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/12/ccambrose112.xml
Gulp!
The California city of Vallejo (117,000 inhabitants) has just made history by opting for Chapter 9 bankruptcy, the result of tax erosion from a 26pc fall in local house prices. Half Moon Bay may be next.
“This is the tip of the iceberg: everybody is going to line up for Chapter 9 in California,” said John Moorlach, Orange County board chief.
Are we really in the bottom of the 9th inning, now?
http://en.wikipedia.org/wiki/Curse_of_the_ninth
Better take that trip to Disneyland before the power is shut off.
“…said John Moorlach, Orange County board chief”
Yeah, John would know what’s coming … he tried to warn the O.C. “genius’s” before they went bankrupt in 91-92… Bob “I can’t remember anything” Citron let Merrill & Sachs & wall street boys yank the limp piece of flesh beneath his front pants pocket, while the O.C. taxpayers got to pay for the losses… things like that aren’t possible anymore… because as Sir Greenspent reminds us… we a nation of brilliant “Financial Innovation”
Didn’t OC BK a few years ago?
Wasn’t there something OC did that was hugely unthinkable for a wealthy (repub) county?
Half Moon Bay may be next because of a lawsuit
Half Moon Bay grapples with $36.8 million judgment against it:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/12/18/MNFETSC0H.DTL
US consumers are juggling plastic to put off their day of reckoning. The Fed survey said credit card debt had jumped 6.7pc in the first quarter to $957bn, or $6,000 per working American, despite usury rates near 20pc.
Some of this is due to desprate homeowners trying to hang on and desprately avoide foreclosure. But I’d bet that most of it is due to people simply continuing their spending habits as they did before. There are a large number of people who don’t even realize that they’re living beyond their means. They’re under the illusion that getting a HELOC to pay off their CCs is an example of being prudent, not evidence of profligacy. So far we’ve seen those with suicide loans creating a drag on house prices. We haven’t seen the consumer spending slowdown by the LARGE number of people who can’t HELOC their way out from under their CCs and are suddenly FORCED (by those evil banks) to live within their means by actually matching their outgo to their income.
Democrats Face Rescue Backlash
Some Voters Oppose
Having to Bail Out
Homeowners at Risk
By SUDEEP REDDY and ELIZABETH HOLMES
May 12, 2008; Page A3
Democrats may be risking a backlash at the polls in November by pushing hard to use taxpayer money to rescue homeowners who can no longer afford their mortgages in the face of stiff resistance from President Bush and many other Republicans.
The Democrats in Congress and the party’s presidential candidates frame the issue as doing at least as much for beleaguered homeowners as the government is doing for Wall Street. The White house and most House Republicans counter this amounts to using taxpayer money to reward bad behavior.
AWESUMMMMMMMMMMMM!!!
This race was for the Democrats to lose, and they’re giving it all they got.
They are the world’s leading experts in throwing away a huge political lead.
I dunno about the Whole Wide World (TM) but I agree with your sentiment on general grounds.
Agreed.
I definitely don’t like the way repubs have screwed things up, but I am amazed that dems are giving it all they got to screw things up worse.Sheesh.
So of course, lets vote for Republicans that bail out Wall Street banks. As long as we’re bailing people out, why not send out more rebate checks for all ?
I would rather save money to eventually buy a home of my own, than to pay to keep someone else who has been living large out of foreclosure, thank you. This is not meant to suggest I am whatsoever happy that Megabank, Inc gets free too-big-to-fail insurance from the Fed.
Here’s what’s going on today in Utarrrr (found this on a RE site called http://www.highlandcommercialinc.com}:
“SunCrest Development
Draper, Utah
2,485 acres
Price: Highest Cash Bid
Suncrest is a beautiful large-scale residential development near Salt Lake City, Utah, being sold out of Chapter 11 bankruptcy. Approximately 1,000 homes have been built on this mountaintop property.
This offering of the remaining 2,485 acres includes 59 platted and improved lots and up to 2,346 additional residential units.
Sold by cash auction, subject to sale approval by the United States Bankruptcy Court.”
I hadn’t read the local police blotter in a while - and this weekend I was kinda floored to see several copper thefts and two catalytic convertor thefts just this past week. On a bike ride I saw they even pried off a brass plaque mounted on a rock in the park.
During the boom, a lot of houseowners put up copper and brass fixtures on their SFH - silly yuppies - copper gutters aren’t for the city!
They just did a Sting nearby in Cathedral City (in the desert).
The toyota dealership puts their overage cars in the covered car park adjacent to the Cat City city hall which is behind the police dept. Well, it would seem some numbnuts had swiped some catalytic converters and the police/toyota dealership put up a sting and put the dismantled trucks in front. Well that night the numbnuts came back and were under the cars when the police appeared. The numbnuts were surprised to find NO catalytic converters and surprised to see the police.
They were also surprised to note the police dept was right next to the Carpark area. Whoopsie.
lol
It is illegal to sleep under trucks in the desert?
Had a great story about guys stealing Catalytic converters from Toyota storage area right next to the Cathedral City hall, right Behind from the Police Dept and the STING that ensued…but this site didn’t take the first post.
Oh well, good story.
I was visiting palm springs this weekend and there was a sign by the 111 (road into town), noting that copper theft will be prosecuted. I guess it’s a real problem now
The billboards out there are unreal…miles and miles of subdivision ads, peppered with copper theft billboards.
There was an article in the Dallas Morning News this weekend about historical markers in the State of Texas. I seem to recall from the article there are about 35-40,000 spread all through the state. There apparently have been numerous examples of people pulling them down off the poles and taking them to sell as copper or aluminum (What they are made of).
Who cares - they are just our heritage - we need the money to pay TXU now. (Sarcasm off)
REVIEW & OUTLOOK
The Biggest Housing Losers
May 12, 2008
You may not know it, dear reader, but Congress is playing you for a sap. During the housing mania, you didn’t lend money at teaser rates to borrowers who couldn’t pay, or buy a bigger house than you could afford. You paid your bills on time. As a reward for that good judgment and restraint, Barney Frank is now going to let you bail out the least responsible bankers and borrowers.
I said last week that $2.7 bn estimate was way low.
‘Looking at the details in Mr. Frank’s 45-page first draft of this bill, FIS Applied Analytics estimated that taxpayer losses could reach as high as $27 billion, more than four times Mr. Frank’s estimate. The next draft, clocking in at 72 pages when it passed Mr. Frank’s committee, was miraculously scored by the Congressional Budget Office at “only” a $2.7 billion cost to taxpayers.’
Apparently the CBO never heard of the concept of “opportunity cost,” as their methods of estimating the cost to taxpayers confuse sources of funding with disposal thereof. The cost to taxpayers should reflect how much money will ultimately be spent if this Act is passed, rather than use of one-time gimmicks used to cover up the size of the tab.
OK, Hoz, you’re right, time to go fishing…no point working and paying taxes anymore…
The Journal is on a full-court press to stop flipper bailouts. I don’t remember them being so adamant about the evils of bailing out big banks.
No kidding! But then would you expect them to bite the hand that feeds them?
This Act sounds like welfare for people who willingly chose to live beyond their means, paid at the expense of those who did not.
Also included is this addition to the Home Owners’ Loan Act: “A Federal savings association may make investments, directly or indirectly, each of which is designed primarily to promote the public welfare . . . through the provision of housing, services, and jobs.” Mr. Frank has got to be kidding. Federal savings associations are lenders regulated by the Office of Thrift Supervision, which was created in the wake of the 1980s savings and loan debacle. Despite the sorry state of bank balance sheets, the Congressman is now telling federal thrifts to make investments on criteria other than risk and return.
We can only imagine what else is buried in this tome, which deserves a Presidential veto. But the worst problem remains its invitation for bankers to dump their biggest losers on taxpayers. The Frank plan appears to take care of everyone in the housing market, except the renters and homeowners who lived within their means.
Before this is over, you all will see the light and vote the right way. I don’t mean the Wright way and I don’t mean you, PB.
I’m still voting for Ron Paul, unless the week of the election the polls are telling me it’s close enough for my vote to make a difference. In which case I’ll vote for whichever candidate has promised to make things a bigger mess.
Why? The only way to responsibility is to push this pendulum as far as it’ll swing. We can be as angry as we like, but until everyone is angry, we’re just spitting in the wind.
Watching with amusement as ‘they’ tried to pump the Buck over the weekend with jawboning, and tried to knock oil down. The USD rally faded in the last 2 hours and oil is down less than one fiatsco. Considering that the pols desperately want to push oil down as the summer driving season kicks off, and pretty much every hedgie on the planet is probably short the stuff, we could be setting up for a summer price spike to 150. The Saudis aren’t helping their boy Bush at all, probably because his usefulness is nearing an end.
Ousting a Sunni regime in Iraq and letting Iran’s Shia proteges take over hasn’t endeared W to them either. Saudi has a lot of Shias on the Gulf coast (i.e. the part with the oil) and it’s very nervous about them getting ideas.
A question for you guys that “get” economics. I have trouble dealing with abstract concepts.
We have supply and demand. Now housing supply was being distorted because people were not buying homes as a place to live. But as investments thus you get 1 person own 5+ homes. This economic activity distorted the market into a positive feed back loop, till things crashed.
The housing market having been fueled by wall street money, basically is now tied to the balance sheets of banks. The banks have bad loans but dont want to admit them. Write them down, or relive them. All the banks know there is trouble in the system and as a result they have stopped loaning each other money.
The credit crunch is the lack of credit, banks need to replace their bad or failed loans with good loans, (for example in housing making 20% down 15 30 year loans)
The banks need money to start making performing loans, so the fed lowers the discount etc etc, so now banks have access to capital to help make good loans while they slowly detox from their bad ones.
Only instead of making good loans the banks are loading up in commodities thus making a head ache for everyone.
Do I have this right?
Oh I think the best analogy I heard is the banks all had an orgy and now that someone was found to have HIV they all stopped and are waiting to see who has clean balance sheets or a cause of SIV.
“Only instead of making good loans the banks are loading up in commodities thus making a head ache for everyone.”
Not to say I disagree with this conjecture, but do you have any evidence to support it, other than coincidental timing of a record-breaking commodities bubble with the Fed’s use of special-purpose new lending facilities to reload investment bank balance sheets?
It’s never a bubble, is it, PB, when they’re holding the affected asset.
What do you do about a friend that is about to become a huge FBer? Here’s the situation:
I have a good friend that lives in Marin County. He and his wife have excellent salaries and plenty of money in the bank (I assume based on a couple of IPOs they were involved in during the Dot.com days). They currently live in a small 3/2 but are expecting another child. So, they want to move to a bigger house.
So, they put their home on the market a month ago. They spend a bundle having the home staged, but despite their efforts, no one came to look at their house. They claim that their house is “priced right” at $799,000. Instead of the price, they blame the lack of interested buyers on the current market.
Because they’re committed to up-sizing, they have now decided to rent out their current home and buy a second home in Marin County. They plan to spend $1.1M on their second home.
When I talked to my buddy this weekend, I told him not to make the mistake. I told him to stay put in their current house or, if they really wanted a bigger home, to rent a new bigger house until the market stabilizes. He was perplexed by my reaction. I explained that housing prices could go down another 30% in Marin County — a scenario he finds ridiculous, after all, it’s different in Marin County. If that happens, he stands to love nearly $600,000 in equity between the two homes. He explained that’s he not worried because: (1) the rent they can get for the existing home will more than cover their outstanding mortgage, and (2) they can easily afford the mortgage on the new house they will be buying. Based on this, he doesn’t foresee any problems in owning two very expensive houses even if the market continues to crash.
What’s really frustrating is my friend, who otherwise is a very intelligent attorney, has obviously brainwashed by his Realtor®. During our conversation, he threw out all the classic Realtor® talking points: “It’s different out here in Marin County. Our house is priced right; the market is just slow right now. Real estate is always a good investment in the long run. Rent? Why would I rent and pay someone else’s mortgage?”
In the past, I have been successful at talking my friends and family from committing housing Hari-kari. Those friends are thanking me now that they’re seeing the market tank here in Florida. However, I can’t get this friend to budge mainly because he says I don’t understand the market in Marin County (After all, how could I understand his market when I live in Florida?).
Has anyone else been successful in keeping geographically-distant friends or family from making huge mistakes like this?
Got lube?
Seriously though, what can you say if they are that moronic? As Buffett said, “Money flows from the impatient to the patient.”
He will not be your friend for long. Eventually, he will resent you being right.
Get a new friend.
One of the endearing qualities of Smug is it’s great reluctance to listen to anybody else.
Yes, indeed.
Nobody in Marin County listens to anyone who doesn’t live there.
All the rest of us just don’t get it.
*****
The natives must have missed that median prices in Marin were down over 10% in March versus one year ago - and are down 23% from their high in June 2007.
http://www.sfgate.com/webdb/bayareahomes/?appSession=10776861043272
Just leave him alone. Either it will turn out fine, or it won’t. There’s no way he’ll end up living in the streets, so the worst case scenario (he looses both?) isn’t the end of the world. Look at it as an experiment he is conducting, with a possible lesson to be learned in the end.
Again, just let it go. If you have already “warned” him, you’ve done your duty as a friend. It’s now up to him.
That’s my plan as of right now.
They have enough money that they will not lose either homes, even though, I think they will end up losing $600k or more by making stupid move.
Then again, the reason they have so much money in bank (apart from their decent salaries) is the money they made during the Dot.com craze. I guess they’ll just end up losing the money they made in one bubble in a second bubble. In the end, it will be a wash.
Send e-mails on your friends behalf to a dozen or so house sellers in Marin County and include his phone number, address, etc. Tell them he’s looking at $1.1M homes and is pre-approved for his mortgage. The feeding frenzy will turn him off.
Rent? Why would I rent and pay someone else’s mortgage?
There’s your answer right there. If HE’S not willing to rent and pay somebody else’s mortgage, then why would somebody rent his little 3/2 and pay HIS mortgage?
I’ve rented two different homes since I sold my house in 2005. In both cases, I rented from some one who purchased pre-bubble. In both cases, my landlords have been heavily cash-flow positive. In other words, I have been paying legitimately paying someone else’s mortage with zero reluctance.
Since my buddy bought his Marin house in 2001, likewise, I think he won’t have a problem finding someone who will be rent his place where he’s cash-flow positive.
I really don’t think his reluctance to “pay someone else’s mortgage” is a snobbish thing. He certainly doesn’t look down at me for being a lowly renter. He’s just been brainwashed to think that buying is always financially better than renting.
It sounds like your friend is about to learn a very expensive “life lesson”. Get out of the way, and let him experience it first-hand. The worse he gets burned, the better he’ll learn the lesson…
Marin: 0.16 acre lot bought on 09/03/2004: $175,000. House built 2006: 3 beds, 2.5 baths, 2,095 sq ft
Make Me Move™ Price: $2,000,000
While most of the Bay area is tanking, the “special spots” like Marin and San Francisco proper are still selling. There are easily 1-2 houses for sale on many many blocks here in the city, but also many “sale pending” signs. Folks are buying here in San Francisco, and the new condos and SFH keep getting built.
No panic here in the City by the Bay, but I’m waiting.
My neighbor took his house off the market after 2 months because he couldn’t get his expected $250K in profit (after owning the place for only 3 years!).
Standard Pacific going bankrupt? SPF is down 20%.
Oh shuckydurn — I was only three years early with my puts.
Like the Univ. of Chicago Econ faculty and their short Amazon position at $200.
They were not wrong just early. Unfortunately, they didn’t have the staying power of a certain Julian Robertson who was also early but held on (and made monster money too!)
The economists pooped their pants at $300 ironically marking roughly the top.
NYC Real Estate update.
Went with wife to see some apartments for rent in Forest Hills section of Queens. Found a pretty decent 2BR apartment for which they want $1700 per month. The apartment is small for a 2BR (Dont know the SQFT but it is small, similar to some 1BR we have seen in the area. 1BR prices are ~1200 for decent area), but it is in a nice part of Forest Hills.
I said we (me and wife) guarantee on-time payments, cleanness, etc (we dont smoke and have no pets) but for this i want lower pay - 1500. Realtor said he will ask.
In a few days he sends us a lease contract, for 1700, 1700 brokerage fee and $45 per person credit inquery fee as well as documents required when you try to get mortgage for like 400K (this is a rental). I reply that first of all, i wont go through the process unless he gives me my price. As proof that we are serious i send him some of my bank statements (Showing around 200K overall on deposit).
A day later he replies that the landlord wont agree. Another email 5 minutes later offering to buy the apt @315K (LOL) or best offer.
Another little detail - when we saw the apt, it was being cleaned up, and for some reason still had a Christmas tree. The apt is a COOP building (NYC COOP /sigh). So i reply to him saying this little detail and also saying that apparently the apt has been sitting empty for almost 6 months. I offer 1500 again and also wrote that he can accept lower fee vs. continuing to “carry” the apt empty.
What made me laugh is his reply, posted here in full:
——————————-
The apartment that you saw has only been vacant for about a week. The Christmas tree is from the past tenant, the contractors will be cleaning the apartment out this week and repainting etc., so actually there is minimal loss from vacancy. You are only the second people to see the apartment, these rent very quickly at the market rent.
There is a big difference between now and 1996, the average sales price on 2BR apartments in these buildings now is between 290-320K. I also think that you are a little uneducated as to the New York City Real Estate market, it is by no means comparable to the crisis that the rest of the country is facing.
Good luck with your search, I don’t think that you’ll be able to find any 2BR’s in the Forest Hills area for $1500.
——————-
Yeah, its different out here, LOL. Ofcourse i said good luck to him. BTW he also said the FH is the new financial center of NYC and everyone wants to live here (Not to mention that everyone has $1700 per mo in this area).
Forest Hills? Financial Center?!?
BWAHAHAHHAHAHHAHHHHHHHHHHHHHHHHHHHHH!!!
What next? Ozone Park? Brighton Beach? Flushing?!?
For the Cali-fornicators, this is like calling Gilroy as “Silicon Valley”.
Parker towers is looking for $1950 for a 1 bed
parker towers is the like the middle east no thanks
forest hills needs to get over itself
i will stay a few towns away and pay $1700 for 3 beds 2 baths and no cockroaches
so i have a hike to the train big f’n deal
Dear Lurker100–I live in Forest Hills. Was this co-op you saw on the
2nd story of a building on 76th Drive off Queens Boulevard? If so, I
believe it’s been for sale for years.
The apt we saw was in the COOP building (i think 66-40) 67 Drive (or avenue). Apt # is 6G. The realty is Argo, they have lock on those few building in that block on 108th street. The area is nice, but price is crazy in my opinion. We are currently in a Jackson Heights 1BR @900.
A friend just found a very nice 1BR on Wetherole Street @1200 (Very large, 6th floor, sunny, quiet).
Just got a call from another Realtor(R) in the area - A building right next to my friend’s (Where he has 1BR@1200). Realtor offering 2BR@2150. I said these prices are fantasy to her. She goes, whats your best offer - i say $1500. She goes they wont go lowe than 2000. I said good luck to her as well. Obviously everyone in FH/Rego Park is making over 150K to afford these prices.
Thanks for sharing your story, Lurker.
You are taking the right approach on negotiations. We need more renters to negotiate as well, especially if they are highly qualified & likely to be excellent tenants.
I wish you the very best of luck in your search! Please keep us updated.
I’ve looked at a number of apts shown by the Argo guys and was, shall we say… not impressed by their professionalism…
Top ten Obama Vice Presidential picks
So it’s Obama. But who’s going to fill the second slot on the Democratic ticket?
1) Hillary Clinton
2) Al Gore
3) John Edwards
4) Kathleen Sebelius
5) Bill Richardson
6) Wesley Clark
7) Jim Webb
9) Oprah Winfrey
10) Joe Biden
Bubbles the Chimp? After Neverland, he probably needs a new gig.
Kathleen Sebilius? Give me a break. An empty (pants)suit. The political equivalent of a “Trust Fund Baby”
Jim Webb? Now, that would be interesting……..
I agree,Jim Webb would be a great choice.
11. Mahmoud Ahmadinejad
Proof again that “Politics breeds strange bedfellows”:
“May 09, 2008
Top ten Obama Vice Presidential picks
So it’s Obama. But who’s going to fill the second slot on the Democratic ticket?
1) Hillary Clinton”
Let’s see:
We have a candidate who’s a lawyer who’s married to a bitch who’s a lawyer. He plans to select as VP a bitch who’s a lawyer who’s married to a lawyer.
HMMMMMMMMMMMMMMMMM…
The butcher, the baker and the candlestick maker—-
” Rub a dub dub,
Three men in a tub,
And who do you think they be?
The butcher, the baker,
The candlestick maker.
Turn them out, knaves all three! ”
http://en.wikipedia.org/wiki/Rub-a-dub-dub
Not if Michelle has anything to do with it.
http://www.realclearpolitics.com/articles/2008/05/michelle_vetoes_hillary.html
CATFIGHT!!!!!
OhBOY OhBOY OhBOY - * Grabs the chips and salsa, cold cerveza, and the TV remote * - stare expectantly at blank screen…
Hahahaha!
You are extra-funny guys. And it’s even a Monday.
For Txchick,
Ron Paul on voting for McCann-
Paul Still Running
Not only has Rep. Ron Paul’s ongoing presidential candidacy continued to record a substantial vote against John McCain in primary elections, but Paul advocates also forced an unprepared Nevada Republican Party establishment to abruptly adjourn last month’s state convention in Reno selecting delegates to the national convention. The meeting has not yet been reconvened.
With a majority at the state convention supporting Paul, several national convention delegates pledged to the insurgent candidate were ready to be elected. State Sen. Bob Beers, the state convention chairman, abruptly adjourned the session. He later explained, “We were overtime on our contract for our convention space” and “were paying our stagehands and audio-video technicians overtime.”
A footnote: Paul has made clear on several occasions there is no chance that he ever will endorse McCain for president.
http://www.realclearpolitics.com/articles/2008/05/michelle_vetoes_hillary.html
I guess that if its between McC and O, then maybe its Ralph Nader in Nov.
I know its wasted…Consider it a protest vote…
A vote for what you believe is never wasted. I will vote for Ron Paul, even if I have to write him in.
Ditto. I told a colleague that I would right in RP under a certain circumstance. I was told I was wasting my vote and that my energy should be put to work at the grassroots level and eventually work its way to the pres race.
IMO, while I believe in grassroots activism, what better time to start voting my conscience than right now?
geez, “write” in.
Is Ron Paul the Republican Ralph Nadar this election season?
Im a die hard fiscal conserative with a strong bias towards cultural conservatism.
my great grandmother was full blood choctaw.
and Im pissing my vote away on Ron Paul tonight….just inked the ballot. Im a mailer.
This website screens out people who tend to read the fine print! Wonder if you buy their product for $15, you get put on a list of “special” people looking for investment opportunities.
http://austin.craigslist.org/rfs/677377203.html
Flipper on the run (or dead)
House flipper Frank Guzik disappears and racks up 7.5 million in judgments.
==============================================================
“Mark Guzik says he fears his brother, Frank, who has been missing for more than a month, may be dead.
Business associates of Guzik think he’s neither dead nor missing.
He’s on the run.
The FBI has been questioning associates of the 39-year-old Derry man, who disappeared in mid-March after failing to repay investors millions of dollars from his East Haven Investment Group in Monroeville.
Guzik “flipped” houses for a living, relying on capital from investors, his brother said. He drew investors through billboard and newspaper advertising to buy older homes, remodel them and sell them as fast as he could. ”
http://www.pittsburghlive.com/x/tribunereview/news/westmoreland/s_567027.html
Maybe I am wrong here, however when you are young its “hope over experience” and as you get older this turns into “experience over hope”.
In my case it’s almost entirely: ‘Jubilant iggerance combined with minuscule attention span over…hey? Is that a moth? I like moths, lemme go watch it’.
That’s it.
So far, I don’t know. I guess it’s working out okay.
Got a letter from my dentist. It didn’t take much reading between the lines to tell that she’s one hurting puppy dog these days.
I think I know why. A few years ago, she had the office remodeled and started promoting various cosmetic dentistry services.
For a while, things worked out quite well. After all, this is Tucson, home of one of America’s most real estate-dependent economies. And all of those agents have to make their smiles look the prettiest.
Well, we all know how well real estate agents are doing these days. Hence, less need for all of that high-priced cosmetic dentistry.
But did I mention that this dentist raised her rates for everything else she does? Personally, I can’t help thinking that I’m paying for all of that fancy interior decorating, but that’s another story.
I’ve gotten into some pretty pitched battles with her staff over their insistence on my getting a fresh set of X-rays to keep their files up to date. I haven’t had a cavity in years, but I guess they have to keep the revenue rolling in somehow. My suspicion is that the X-ray machine needs to be financed, and the only way you can keep those payments going is to X-ray a lot of people.
Don’t get me started on dentists. I’m so sick of them telling me they don’t do insurance companies because it costs them money while I’m staring at new flatscreens in every room, while my kids have their option of a selection of video machines while they sit in stadium seating in a special room and then leave w/a bagfull of chotchkees (sp?).
Just take care of my flippin’ teeth please. And if my teeth are perfectly straight, please don’t resort to pushing the bleaching. It took years of caffeine and red wine to get them to look like this!
Lawdy, lawdy, lawdy, I resemble that comment.
Tell me about it. We are considering changing dentists for this very reason. They moved their practice last year to a Taj Mahal building they built (still full of empty space). The new offices are incredibly posh. I have also noticed that his rates are now much more the usual and customary rates defined by our insurance. We are in process of switching to someone who won’t rip us off.
Dentists/Orthodontist- The biggest legal racket in America.
I find it amazing that the human race survived as long as it did with crooked teeth. Especially when you listen to these guys, when they start telling you about all the possible fates you (or your kids) might have, if you don’t get your teeth/jaws in alignment.
I had one tell me 20 years ago of the dire consequences that would happen if I didn’t have my wisdom teeth removed. I said thanks but no thanks. They came in and work just fine.
Freak!
Dentist said that I was an evolutionary mutant. No wisdom teeth. He didnt sound that happy, as I recall.
My dentist, nice guy, hates me. Yeah, I live in SoCal, but that doesn’t mean I want my teeth to look like Chicklets (prounounced “chee clay” in these parts) . I have nice white teeth, had braces as a kid, my teeth have moved slightly back to unperfect. My dentist keeps asking if I want a retainer and teeth whitening. No, sorry. Don’t want my teeth to glow in the dark.
My childhood dentist/sadist would lead to us to a wicker basket full of 10 Cent toys and allow us to select one, after a torture session.
Actually, not a bad idea to be fair.
The kids are not always tuned into the risk/reward game, and they have extraordinarily short memories. This is the same reason hospitals give out toys after child surgery when they are going through a lot of pain. Children are easily distracted, and the toys do help. They are different from adults.
I should know. I fully support this cause.
“The first gold star a child gets in school for the mere performance of a needful task is its first lesson in graft.”
Philip Wylie
Hear, hear. It is a racket. There are some good dentists, but multitudes of “procedure-pushers”.
I had one dental assistant falsely identify a cavity. The dentist who ran the office got annoyed when I dared ask some questions. I voted with my feet, got another dentist. No cavity there. This was about 7 years ago.
Another dentist told me I needed my wisdom teeth out because they were “infected”. This was about 10 years ago. Another dentist said they had no problem like that(but he suggested getting rid of them too).
My current dentist seems reasonably honest and competent (but I haven’t been there in a few years though).
If doctors pulled the nonsense that dentists pull routinely, I think there would be a lot of destitute doctors due to lawsuits.
I have a friend that goes to Mexico for his dental work. So far great! I have gone with him to look at the dental office. No overhead. The dentist does all the work. No big office, no assistant, no furnished waiting room. Just a dentist. The machines and equipment are first class. The prices are very reasonable.
We all joke.
A million Mexicans getting free health care in the US and Americans going to Mexico for affordable health care.
That story is priceless! You win the prize simiwatch!
I’ve had a lot of dental work done in Mexico. Dentistry is an art, and Mexicans are generally better at it than Americans. Cost is about 25% of U.S., slightly less than that even for crowns. Besides the technical proficiency, they also treat you better, are quicker, and will do you favors (such as turning you on to local auto mechanics), so long as you always come with a stack of cash.
Best border town is Progreso, Tamaulipas (near McAllen, TX) although Algodones (near Yuma) is also OK from what I hear.
Prices are generally as cheap on the border as inland and many of the better dentists come there because of the cash clientele and ability to practice English and have access to U.S.
Once you start going to non-U.S. doctors and dentists it becomes very trying to bear the rude and dehumanizing treatment and mindless paperwork in America.
I once had a dentist (new to a practice I had been going to for about 3-4 years) tell me I had FOUR cavities. He also said I “needed” a whole bunch of expensive work (mostly cosmetic stuff that would NOT be covered under insurance). I RAN to another dentist for a second opinion. No cavities, no work necessary.
Apparently a lot of other people ran away too. The dentist lost so many patients he was kicked out of the practice not long after. At the time I was so relieved I didn’t follow his advice, and I found a new practice. In retrospect, I should have gunned for his license.
This may be off base, however I would like to say something about us baby bloomers that is applicable to each generation.
For maybe most of us we have become cynical about hopes and dreams. I suspect that that is normal for each generation, but especially ours. We saw the deaths of great leaders, JFK, RFK, MLK and others.
I guess if we really want to be happy, we need to step away from financial gains and look back to our dreams and desires of our youth. In that search, you can, if you can re-discover them, pursue them in the hope that you may find happiness. This brings up the statement, “that if you are up to your $ss in alligators, you forgot why you were draining the swamp”.
“we have become cynical about hopes and dreams. I suspect that that is normal for each generation, but especially ours”
I grew cynical when after getting great reviews, working 70hours a week while pregnant and working up till the day before I gave birth, I was told by an exec that I didn’t deserve much of a bonus because my job was insignificant to the bottom line.
He really did take all the fun out of it for me.
I can not argue with that. It appears that even the later generations are getting F!
My statement was not meant to indicate that other generations were not screwed, but that my generation appear to have given up their ideal in the search for financial rewards. Money is not the final goal but the means of reaching that goal. If you forgot why money is important, then you lost your soul!
I think I’m goin’ back to the things I learned so well in my youth.
I think I’m returning to those days when I was young enough to know the truth.
the Byrds
“It’s the media - not the economic cycle or high interest rates driving down house prices, say real estate agents.”
http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10509561
Well of course it is.
Roidy
US oil consumption falls for 2nd quarter in a row.
Buying a hybrid is = to buying oil futures for the next 10 years of your energy use with no counterparty risk. MSM reporting that paybacks are as low as 2 years assuming gas prices of 3.67/gallon. Now how many think gas will rise beyond 3.67 a gallon over the next 10 years?
http://www.usatoday.com/money/autos/environment/2008-05-11-hybrids-gas-prices_N.htm?csp=1
A temporary reprieve or the start of something worst! I am not sure how this will play out, however I have no intention of putting money is this market, whether stocks or bonds, foreign or domestic!!!
Money Markets Signal Worst of Credit Market Crisis May Be Over
By Lester Pimentel and Liz Capo McCormick
May 7 (Bloomberg) — The worst of the credit crisis that prompted banks to restrict lending and the Federal Reserve to rescue Bear Stearns Cos. may be over, short-term borrowing rates show.
The difference between the yield on three-month Treasury bills and the rate on dollar-denominated loans in London, an indication of credit risk known as the TED spread, narrowed 7 basis points to 0.93 basis points, the smallest since Feb. 25. The gap reached 2 percentage points on March 19.
“It indicates at least that the worst part is over,” said Theodore Ake, head of Treasuries trading in New York at Mizuho Securities USA Inc., one of the 20 primary dealers that trade with the Fed. “There was a lot of panic built into that trade, which is going to continue unwinding. There was a massive flight to quality.”
Is this because everyone knows that gov’ts around the world won’t let large banks and investments banks fail and that central banks will now take on all sorts of assets including non-performing assets? Case in point being Bear Stearns and the several new Fed and other central bank lending facilities. If so, it’s no wonder markets believe the worst is over, they’re just dumping the crap on the tax payer and then borrowing against this crap at very low rates.
Im goin the other way, massive credit expansion. inflationary signals, its good for the stuff I won during the meltdown(s).
When I go to the auction, I buy at a lower price than I sell in the secondary market. Thats the bond rally….keep runnin home to mama and tell her what I bot.
The gov propaganda machine is in overdrive, and the net censors are now out in force. Check the comments for the following article
http://www.marketwatch.com/news/story/israeli-stocks-chart-prosperous-60-year/story.aspx?guid=%7B238CE28E%2D7F53%2D447A%2DB954%2D5371B5ED4B1C%7D
In anycase you’ll see a lot of comments removes becuase they did not confirm to “market watch guidlines”, I read those comments earlier, none were offensive in anyway, they all however critized market watch for putting out BS story after BS story and accused MW of being Rupert Murdocks/Feds propaganda machine…I guess it’s true, in anycase it’s not working poeple are’nt not buying there 3 percent inflation and were not in a recession garbage…
The Devil spoke Pravda…
OT: Was talking to the manager at the Green River State Park, usually a busy place this time of year (popular boat put-in for the Green River) and he says it’s unusually slow. Wasn’t sure whether it was the unseasonably cold weather or gas prices or both.
And it’s freezing cold here right now in SE Utah, windy and overcast and looks like late October. All’s quiet on the squatter’s front.
People are crazy in California and can’t spell. Proof:
$6000 / 3br - Victorian Ranch House (mendocino county) on large acrage. Plenty of space to grow your own vegitables.
It’s a well-documented fact that most people spending $70,000+ a year on housing in foggy, cool seaside communities with limited sunshine are keen on vegitable gardening.
Way OT, but I was just listening to some jabber on cnn about what Hillary’s motives are right now for staying in the race. “Does she want to get some of her planks into the party platform? Does she want a VP bid? Does she want to get her debt paid off?”
Whoa…so can she actually negotiate to have someone (presumably the DNC) pay off her campaign debt? Ok…no biggie. But this reveals a mystery (to me anyway) about why she would “loan” her campaign money. I couldn’t figure that one out. It seems apparent she might lose, and it’s her money for her own campaign, why would she just “loan” it to herself? This answers it, if it’s grouped under “debt” and part of her negotiation to withdraw is to get her debt paid off then she gets some of her money back. Very interesting. I had no idea that could happen.
She’s doing it so that she can derail Obama, which will result in McCain winning, so that she gets a shot next time around. If Obama wins in ‘08, he will be the default nominee in ‘12, and Clinton is relegated to oblivion.
The fewer the citizens who are paying attention and actually voting, the easier it will be for the staus quo to endure.
the election is a search for good character, and Obama stands a fair chance if mass participation manifests. Its unfortunate that the masses of sheeple have been institutionally trained to be passive.
Im not promoting Obama, nor am I trying to tarnish McCain. Im just observing the things that are so, not only today, but for almost my entire 38 tender years.
see who I voted for.
as above.
so below.
This in today’s Atlanta Journal/Constitution:
http://www.ajc.com/metro/content/printedition/2008/05/12/assess.html
Excerpts:
For less than the price of a decent used car, you can buy a home in Atlanta today. Actually, real estate agents list a dozen choices for $10,000 or less. Step up in price to $20,000 and your choices expand 10 fold… Therein lies the problem for tax assessors… seven of Atlanta’s least-expensive homes are listed on average for $8,800 but taxed at an average value of nearly $93,000. The cheapest, at 336 Adelle Street in the Lakewood area, comes in at $5,900. Tax records list its value at $101,700..The agent said when tax values and true values are way apart, it can keep properties from selling and further depress values… had a $95,000 deal on a duplex fall through recently because it was being taxed at $300,000. The buyer didn’t want to be saddled with taxes at that level… home sold in March 2004 for $305,000 and then in August 2004 for $700,000. It tumbled to $122,900 in a sale last year. It sold recently for $51,000.
I am mailing my Oregon primary ballot tomorrow.
as usual, I waste my vote on good character. Ron Paul got my vote.
I have no skin in the Hilbama game.
Good thing the U.S. stock market (almost) always goes up!
The Short View: Corporate America
By John Authers, Investment Editor
Published: May 12 2008 20:59 | Last updated: May 12 2008 20:59
What is Corporate America trying to tell us? In spite of a strangely positive reception from the markets, the first-quarter earnings season was bad both in absolute terms and relative to expectations. The latest running total from Thomson Reuters suggests that S&P 500 companies’ profits are on course to fall 17.4 per cent compared with a year ago. As the quarter began, analysts had convinced themselves that profits would rise by more than 5 per cent.
it almost always gets better, before it gets worse.
the thingies that most impact me, are going significantly higher.
good thing I already own those “thingies”
Will Bush Join the Housing Bailout Bunch?
May 12, 2008 02:15 PM ET | James Pethokoukis
“They change their minds everyday,” is how one lobbyist described to me the White House’s thinking about whether to veto congressional housing legislation or work on a compromise. Last week, the House, including a fifth of Republican members, passed a bill that would allow some homeowners to refinance loans through the Federal Housing Administration if their lenders agreed to take 85 percent of the amount borrowed. President Bush promised to veto the bill.
I can tell you that many Republicans who were against the bill report getting an earful from constituents who view the measure as a bailout to folks who may have lied to get a cheap mortgage or were just plain financially stupid. On the other hand, Fed Chairman Ben Bernanke—as well as John McCain—has already put his imprimatur on the general idea.
I begin to suspect the Fed is hoping to make it once again look “smart” to buy homes that the buyer cannot afford, in order to capture future capital gains. If they can just flood the economy with enough liquidity so that price appreciation can go back to positive, then discussions of whether the buyer can hope to ever repay their debt out of future earnings can once again become moot…
Also thinking that if Megabank, Inc is handed enough freshly-printed liquidity at below-market rates, with a strong signal that the Fed is fully intent on inflating their way out, it might appear in Megabank, Inc’s interest to directly backstop the housing market indefinitely, selling to a trickle of qualified buyers at prices that most of America cannot afford, and providing incentive for more construction of homes that are a poor fit to end user demand. I only suspect the above scenario because it would appear to suit BB’s utility function better than the dreaded deflation bugaboo.
the utility of function can be applied across a broad spectrum of tradeable positions…
PB, you need to be a bull..when your bull case is made, go long-short, but tell everyone your long. Its a game of cat and mouse.
your post is go-long for a short time frame housing and financials…UBS is 31, I was callin 40. Standard Pacific is dead? BSC and CFC still trading?
Saying “no” to bad legislation is part of the President’s job. It is also part of his job to ignore liberal media outlets like the NYT when conservative principles make it necessary to do so.
Editorial
Saying No to Everything
Published: May 12, 2008
Even before the House passed a new plan last week to prevent foreclosures, President Bush threatened to veto the bill, calling it “overly burdensome.” The bill is not burdensome enough.
http://www.safehaven.com/article-10239.htm
Housing article with charts and observations on the economy, main point is RE bust is NOT over yet.
“Besides speculators, the core driving force behind housing market’s run-up from 1988 to 2005 was the move-up buyers, who had sold their existing homes during that time and moved into either new constructions or better and bigger homes. This was the force that had kept the source of funds from their equities flowing, the inventory churning, and the market booming. Today, the overwhelming number of short-sale and REO (bank owned) properties on the market that comprise of up to 50% of listing inventories in some areas have put so much downward pressure on both the price and the selling conditions that, barring desperations, the real homeowners have perhaps all but given up on putting their homes up for sale.
The absence of this driving force almost guarantees further housing market decline. It’s quite likely that the worst had only just begun.”
This is exactly why the Fed needs so desperately to get housing price inflation back into forward. Otherwise, how will the move-up buyers, who drive prices ever farther out of reach from new housing entrants, be able to contribute to the housing market wealth effect? And how will home price appreciation be able to hide the problem of a severe shortage of market participants with an income stream sufficient to purchase their own abode?
Hang Seng doin fine…no market turbulence from the tremor.
Housing still crashing, but software engineers making six figures with a ding for BK on 9 houses…gonna make it through this “rough patch”
Financials…..pfft…saftey in treasuries?
oil, nat/gas,gold, ag, equities emerging continues…juls gets squeezed, and strong round of wage increases is coming.
Now in one convenient package: marketwatch.com, wsj.com and barrons.com. Why not just pool them into one common web site called financialpravda.com?