Hype, Fluff, Optimism, Greed, Avarice, And Fraud
The Naples News reports from Florida. “In Marco Island, existing single-family home sales rose 27 percent to 415, up from 328 a year ago, according to the Florida Association of Realtors. In Fort Myers-Cape Coral, they grew 43 percent to 8,217, up from 5,753 in 2007. Last month, Fort Myers-Cape Coral had 1,064 single-family home sales, up 146 percent from 432 a year ago. The median price dropped 50 percent to $106,900, down from $215,200 last year. Homes that sold for as much as $300,000 a few years ago in Cape Coral are now going for less than $100,000.”
“‘There are some real bargains out there,’ said Bruce Barron, general manager for Century 21 J.B. Novelli in Fort Myers. ‘The price ranges are totally different than they were two or three years ago.’”
The News Press. “Buyer Mike Dascoli, 23, of East Amherst, N.Y., recently worked with Valerie Busic, a Realtor with Busic, Chesser & Associates, to buy a foreclosed home in northeast Cape Coral as an investment property. Dascoli paid $83,000 for a home that sold for $240,600 a little more than three years ago.”
“‘I’ve got it rented out and it’s doing well,’ Dascoli said. ‘I will probably turn a little cash flow on it and when the market turns around, even if it is five years from now, I should be in good shape.’”
The Herald Tribune. “The December median price hit $160,000 in Sarasota-Bradenton, harking back to April 2002. December’s median was a drop of $82,000 from where it may have been under a projection developed by the Herald-Tribune, one aimed at determining where prices would be with a generally accepted 6 percent annual appreciation rate and no three-year housing boom.”
“The median in Charlotte County-North Port was $102,400 last month, up 4.8 percent from $97,700 in November, but down 37 percent from $163,200 a year ago. The $97,700 figure was on par with June 2001. The foreclosure phenomenon is having one positive effect, said Joel Ament, a broker with Port Charlotte-based ERA Advantage Realty, which manages more than 300 rentals. The fourth quarter saw a 35 percent increase in annual rentals when compared with a year ago.”
“‘The city that we’re dealing with the most right now is North Port. It’s very hot for rentals,’ Ament said. ‘It was ground zero during the boom, so a lot of those homes are coming back around as rentals. You can get some pretty good deals.’”
“A 1,400-square-foot, three-bedroom, two-bath home in North Port can be rented now for $850 to $900. During the boom, that same house would have commanded $1,200. ‘There has been a lot of downward pressure, and these rentals are very aggressively priced,’ Ament said. ‘They have to be, because there’s so much inventory out there.’”
“‘We had one hell of a party for a lot of years. Guess what? Now we’re dealing with the hangover,’ said Dennis Black, a Port Charlotte-based appraiser. ‘And there’s only one thing that will cure the pain — that’s time.’”
From Florida Today. “A day after Mercedes Homes Inc. filed for Chapter 11 bankruptcy, subcontractors emerged Tuesday to voice concerns about unpaid work and other Brevard-area builders assessed their own finances amid the troubled economy. Almeida Enterprises of Brevard Inc. is owed at least $70,000 for soffit and gutter work done on Mercedes’ Brevard homes, according to Dawn Almeida, who owns the small Palm Bay company with her husband.”
“She said Mercedes representatives continuously reassured her that business was simply slow and that the company was on solid financial ground. Almeida said she and her husband now face having to file for bankruptcy if that money isn’t forthcoming.”
“‘We’d been asking them for months, ‘Are you going to file for bankruptcy? Do we need to slow production?’ Almeida said. ‘They told us there was nothing to worry about. I am just livid.’”
The St Petersburg Times. “In the Tampa Bay area, 23,615 homes sold last year at a median price of $169,580. Local home prices have crashed 39 percent since topping out at $239,600 in June 2006. Tampa real estate broker Jim Knetsch said foreclosures make up close to half of sales in some areas. He expects a further wave of foreclosures to hit the market as banks find agents to list homes they’ve already repossessed. Until more homesteaders appear to suck up the surplus, Knetsch expects home prices to remain strained.”
“‘It’s just a race to the bottom right now,’ Knetsch said. ‘Where the bottom is, I don’t know.’”
The Orlando Sentinel. “Lake Buena Vista Resort Village & Spa is hoping the lure of permanent U.S. residency will eventually persuade well-heeled foreign investors to help it expand near Walt Disney World. The condo-hotel resort received government approval several months ago to serve as a ‘regional center’ for foreign investment. Under federal immigration policy, an approved foreigner whose investment is supposed to create 10 full-time jobs in the U.S. can get a conditional visa to live here — and can ultimately secure a regular ‘green card’ good for permanent residency.”
“So far, it has no takers for its million-dollar-visa offer. The recession and global financial turmoil have taken ‘a bit of a bite’ from the program’s potential, said Larry Behar, an immigration lawyer working on the project. ‘There seems to be less interest of people immigrating to the United States,’ Behar said. ‘When you compound that with a million-dollar investment, it becomes complicated.’”
The Sun Sentinel. “Sales of existing homes in Broward County skyrocketed last month, but it wasn’t enough to offset the worst year for housing in South Florida in more than a decade. Broward sales jumped 52 percent in December, as buyers rushed to take advantage of falling prices, the Florida Association of Realtors said. The county’s median price of an existing home last month was $217,700, down 34 percent from December 2007.”
“Mortgage rates have plummeted to near 5 percent and sellers are offering major concessions, but many potential buyers still are holding off. Some can’t qualify for mortgages, and others fear for their jobs. There’s also the belief that prices will keep falling.”
“Ed and Bobbi Miller want to move to the Ocala area, so they put their two-bedroom house west of Boynton Beach on the market in November. Their real estate agent, Bob Melzer, says the property is competitively priced at $289,000, and it gets plenty of showings, but they’re still waiting for a buyer.”
“‘Everybody walks in and says, ‘Your house is immaculate and wonderful, yada, yada’ and then I never hear back from anybody,’ Bobbi Miller said.”
“Another factor that could hammer housing this year: Two weeks ago, lender Fannie Mae imposed new requirements on mortgages for Florida condominiums. Fannie says, for example, that it won’t approve loans for buyers in a condo building where more than 15 percent of the owners are delinquent on association dues.”
“That’s likely to include many buildings in South Florida where the housing bust has ravaged the condo market because of the investor-led buying frenzy during the boom years.”
The New Times. “His thin, 81-year-old frame draped in a tan suit, his sharp eyes shaded by wraparound sunglasses, Tibor Hollo stands before a rusted fence bearing a spray-painted ‘No Trespassing’ sign. Beyond the chainlink, strewn with weed-choked bottles and crushed cans, two of the finest acres in Miami stretch to the edge of Biscayne Bay, where turquoise water laps against a concrete barrier and Fisher Island swims on the horizon. Hollo has just given it all away. For three years, the city gets the land for $1 a year and the promise to maintain a public park there.”
“No moment better captures the Zeitgeist of the South Florida condo bust than this, the legendary developer handing over land that his competitors would have killed for a few months ago. It’s now nearly worthless, sunk by a burst bubble so profound that entire 30-story condo buildings rise dark above the bay and more than 25,000 units languish on the market.”
“South Florida has seen more than $14.2 billion worth of property foreclosed in the past year alone — an all-time record. Owners sold a laughable 3 percent of more than 22,000 condos on the market in Broward County in the last months of 2008. Statewide, banks foreclosed on more than 261,000 homes last year.”
“In places such as West Kendall and Miramar, whole blocks sit empty, spray-painted plywood slapped over windows and saw grass creeping over driveways. Squatters and prostitution rings have moved into vacant homes. Companies hired to clean out abandoned residences pile belongings in front yards, letting neighbors pick through remnants of someone else’s life.”
“Condo owners and developers, desperate to get the cash flowing to keep mortgages and construction loans intact, are trying everything: giving away Lamborghinis and Mini Coopers with purchases, slashing prices in half, selling units in bulk packages to vulture firms or equity groups. Condo owners who bought at the top of the market, meanwhile, steam while their neighboring units are rented out at pennies on the dollar and their condo associations struggle to scrape together enough cash to keep basic services such as garbage collection and maintenance.”
“The ones most at fault in this bust, Hollo says, are the inexperienced and the unscrupulous who flocked in droves to the region during the middle of this decade as subprime loans, lax oversight, and outright fraud pumped America’s housing bubble to increasingly absurd heights.”
“‘There are lots of professional developers in the industry, and some of them are very good,’ Hollo says. ‘But there are also lots of what I call ‘dentists from New York’ who don’t know a damned thing. They could see people were making money here, so they buy land and they jump into business without knowing anything.’”
“‘You know those animals in California who can sense an earthquake coming before it happens?’ asks Tibor. ‘This is the ninth time I’ve been through this cycle, and back in 2006, I got that feeling: Something is not right here.’”
“‘It was the perfect storm of hype, fluff, and optimism, coupled with greed, avarice, and fraud that artificially inflated values and produced this overdevelopment,’ says Jack McCabe, a real estate consultant and researcher.”
The New Times article is a great read, BTW. Thanks Jack, for sending that to me.
Also:
‘Buyer Mike Dascoli, 23, of East Amherst, N.Y., recently worked…to buy a foreclosed home in northeast Cape Coral as an investment property. Dascoli paid $83,000 for a home that sold for $240,600 a little more than three years ago.’
‘I’ve got it rented out and it’s doing well,’ Dascoli said. ‘I will probably turn a little cash flow on it and when the market turns around, even if it is five years from now, I should be in good shape.’
Yeah, that’s what I want. A 23 year old landlord who lives in NY. The press thinks this flipper is a sign of a rebounding market? We’ll see.
At $83K hardly a risk. That is probably the price it should have always been. Most people in Florida work in low paying service jobs so there is a huge market for lower priced housing.
$83k is a lot of money right now. I could introduce you to a few small business people who would agree.
Here’s a small business person that agrees. And this part of his quote also bothered me:
“I will probably turn a little cash flow on it…”
Um, dude, don’t base your purchasing decisions on the words “probably” and “a little.” To this small business person, those three words smell like a recipe for trouble.
$83K
Ask azlender if she would buy at 83K.
No, it’s not. Not in that area.
Here’s a thought: a small 2/1 in good shape in the Coral Gables around 95 would have sold for around 115K-140K.
That’s Coral Gables, FL.
Not the boonies. There are no jobs there, no economy
Muir I gave the guy a B on his buy. I’ve been watching Northport and Lehigh Acres(miles from nowhere, reclaimed swamp and orange groves, NoWhereLand) for 18 months now and circa 2005 shacks are down to 70k. Cape Coral, where the FB bought as noted in the article is a suburb of Fort Myers. Isn’t work to be had there?
exeter I’ve heard on the grapevine some investors are buying in Fort Myers. The entire area is badly hit.
Maybe I am biased against the area because I do not like it.
But my guts tells me that this is not a great investment.
Now, if someone lives in Fort Myers and can manage it himself or, better yet, wants to live in Fort Myers; can’t find fault with the latter and maybe a local landlord idea works.
Yet, as I write I remember my last drive through.
Cape Coral, they will have empty houses there for many years.
Here’s something: lots owned just North of there by Sarasota County (not the city) went on auction and never found buyers in the early 2000s, now that gives me the sinking feeling in the stomach.
Other than public-sector jobs and the propagation and servicing of retail and housing sprawl, there never has been much work in Ft. Myers, which was a cow town three generations ago. A five-figure house price sounds great compared where we’ve been, but that whole metro area has the potential to be the Sunbelt equivalent of Flint, even though I will admit that the beach on Sanibel Island is one of my favorites.
Amen Ben.
Leigh
I have quite a few coworkers with 401K money buying properties and trying to cash flow with them.
Some are paid for in cash and I think those will do OK.
Some of the others are a struggle to rent and cash flow positive and bleed money into mortgages. Not sure3 how they arranged this. These are not quite REIT situations either.
In all the cases I’ve heard of, it doesn’t sound like they get enough money to mantain the houses. In a decade or so when new plumbing, roofs, carpets will be needed a lot of the profits will be gone. They are collecting somewhere between 3% to 12% ROI. I think when they get burned for repairs it will drop them into the below 5% range. Maybe some losses.
Not sure how this will work out. Have a feeling that good buys are available in various locations where the houses are undervalued and look to cash flow positive. Hard to get a feeling on how certain areas will shake out.
In a lot of the midwest areas, its just cheaper to find new space and throw up a new factory. So, places like Flint are just abbandoned. Long term deflation there. I feel that Detroit is suffering a similar fate. Still you are talking about getting houses and negotiating on the taxes with the locals. Seems like a lot of effort for not that much of a return.
RE: I have quite a few coworkers with 401K money buying properties and trying to cash flow with them.
In a country where its’ government is contemplating legislation which will allow an appointed judge to overturn the age old basic tenants of contractual law, I say good luck to being a future landlord.
Best be collectin’ a lot of monies up front-because that’s all you might ever see.
Remember, all these deatbeats dumpin’ their home’s, are your future tenants. And if they can beat the bank, WTF are you as a lousy landlord.
Problem I see is that these kinds of areas end up
becoming the ghettos in the future. A mixture of homeowners and landlords are needed to keep the balance in a neighborhood Let’s check back in 5 years and see what the investment is worth then…
Yes, 80K will buy you almost 1/3 of XTI Biopharmaceuticals. (XTIB)
Chuck
“I will probably turn a little cash flow on it ”
Tells me he still overpaid. If a property isn’t significantly cash-flow positive, at these interest rates, then what would it sell for if interest rates creep up?
And, in his cash-flow positive, I doubt he is accounting for damage done by renters, periods of vacancy, loads (fees charged buying and selling), or the horrid… someone just decides not to pay and you have a legal battle to get tehm evicted.
As Ben mentioned above, this is a 23 year old landlord from the Buffalo, NY area, only about a thousand miles away.
And what if rents fall due to the oversupply of vacant housing units, increasing unemployment, and falling incomes? A guy who works for me is facing that situation with rental units in Bozeman, MT, where rents have fallen 25% so far. So much for “I can ride this out.”
“‘You know those animals in California who can sense an earthquake coming before it happens?’ asks Tibor. ‘This is the ninth time I’ve been through this cycle, and back in 2006, I got that feeling: Something is not right here
“Something is NOT right here”
Wow…Profound !…So that’s WHAT all of those shaking and quivering CA house monkeys who bought in 2005 with ZERO DOWN are SCREAMING and shouting ABOUT
mikey,
Right, and I think I’ve had about enough of the glorifying of these developers “skills”. In my estimation there’s no real reason this couldn’t be handled quite well by “dentists from New York”.
Also all little worn thin by the assessment that “it’s ‘all’ the johnny-come-lately’s that screwed up the market!” In the end, how much sq. footage can be attributed to these players ( especially if they are in fact nickel-dime players? )
Buy now or be priced out forever…ya right.
RE: Something is NOT right here”
California Dreamin’…RIP
http://boston.craigslist.org/gbs/rnr/1011472433.html
hd74man,
Well written! I’m only disappointed he left out the “Sailors and Dogs Keep Off the Lawn” attitude. For the years I spent there in SoCal ( as a younger man ) I always thought “Falling Down” w/ Michael Douglass was the most accurate portrayal.
Anyone that’s ever tried to get around L.A without a car, will surely know what I mean.
I get around LA without a car all the time. I ride a motorcycle. It’s the only actual rapid transit system in the city.
I think hd74man would agree with me, tho our opinions on what’s a great bike probably differ a bit.
Reads like the nutty dude who just killed his entire family.
Florida is getting back to normal. I’d say, it’s there. I’m not saying this is a bottom, but I’m guessing $83k is in line with local incomes and affordability. Many places prices are 30% of what they were at peak.
No, you are wrong, sorry.
From 1999-2000 many places more than doubled in price in FL.
And now some places are down more than 40% from peak.
Of course, if you believe that this is the bottom, you can make a fortune by betting against the crowd in Case-Shiller options in the Miami market. Yeap, you’d make a fortune.
If prices went up 100% and then down 40%, wouldn’t it mean that prices were only 20% higher than they were in 1999?
If you assume 2% inflation over 10 years prices would be about equivalent.
But with the economy in the crapper, unemployment shooting up, and gross oversupply of housing units… I wouldn’t count on a return to 1999 adjusted upward for inflation.
According to Muir, Miami has already returned to 1999 adjusted for inflation.
Florida city/country governments must be getting really really nervous.
Ok, let’s see.
Case-Schiller:
Miami currently at 169.35 down from 280.87. (at peak)
Isn’t that 40%?
Go to Standard and Poors for data.
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Now on your reading skills: you flunk.
“From 1999-2000 many places more than doubled in price in FL.”
Notice the word “more” and the words “many places.”
Example: I bought in the Gables at $140 psft and sold at +$350.
So, no, were not at 1999 prices.
Guess would be at around 2003.
But that’s my guess, Schiller says Nov 2003.
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I actually, unlike you that want’s to make fun, know this stuff for my area, first hand.
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Do you live here?
‘I’ve got it rented out and it’s doing well,’ Dascoli said. ‘I will probably turn a little cash flow on it and when the market turns around, even if it is five years from now, I should be in good shape.’
Yeah, and as any experienced homeowner knows, all it takes is an “unexpected” maintenance/repair expense, and there goes Dascoli’s “little cash flow”.
Who cares??
He’s young enough to recover even if the market tanks further. $83k is nothing to the younger generation who think nothing of paying $200 for a pair of jeans! Yes, even in Florida! Hell, he could have inherited all the money for all we know.
Cynics, all of you.
And how much was his downpayment? Hey, you can get almost anything to “cashflow” if you put 90% down. What kind of mortgage did he get? “The rent will bring in enough to pay PITI on an 80% loan if it is 100% rented and nothing breaks,” still sounds like we haven’t hit bottom to me.
“I will probably turn a little cash flow on it”….
Probably??? A little??? Should?? Nice business plan.
If you read most of the comments on here it actually sounds like you can never own real estate and succeed. Even though I agree with all that right now is not the time to go “all in” it must be noted that 90% of all millionaires in this country are from real estate…not stocks….not bonds etc. yes this is a historic down turn but eventually owning real estate will once again be king.
Yeah, right, 90%, certainly must be noted. Glad you reminded us.
I think you got lost on your way to the Pulling-data-out-of-you-a$$ website.
Nice smackdown Paulie!
Hey Numbnuts…. My S&P shares bought in 1982 is up 815% and hasn’t cost me a penny. Hows the ROI on that rusty old shack?
Luckily your a genius..right up there with warren buffet. The fact remains is that the people who have cash and can scoop up the remains of this carnage will be the future winners
I think he’s referring to a study I heard about on the radio today. The brief summary stated that 90% of all millionaires invested in real estate. To me, that means they own a home. Lies, damn lies, and…
…90% of all millionaires in this country…
Baabaabooie, exactly from what creditable source
did you obtain those statistics?
TIA!
Deep recessions and depressions have this odd habit of eating “paperwork” millionaires alive and most recently, a few “paperwork” billionaires
The only viable model I see right now is to buy old, distress sale condos/converted apartments in the 30-40K range (yes, they can be had at that price with some looking near where I live) and renting them out for $500-600K/month to people with a low but established income, e.g., welfare, drug dealing, or social security. A lot of work for not much return, but with a good bullet-proof vest and a rudimentary knowledge of plumbing, it can work. It won´t be easy to turn a buck now that The World As We Know It is ending.
Renting trailers in calif would follow same pattern.
Tenants, same story.
Don’t forget the other part of the equation about when the ‘market comes back’.
Most of these investors think that their shack will be worth 2005 prices real soon…yeah…right…
It makes me shudder to think of the carnage when these morons realize that their houses will not appreciate.
my brother has been a land lord in central Florida for 20 years, he has been picking up trashed houses in the 20K-35K range. with 20K in rehab he is certain these houses will positive cash flow now and in the future.
BTW he only buy within 10 miles of his oun house in case he needs to show up to repair or collect rent
Someone who has been in the business 20 years probably knows what it really takes to cash flow. Sounds like he will do alright.
Hey guys, thought you may enjoy an update on this article. My name is Michael Dascoli, now 28 years old and I have owned this house (mentioned in the article) along with 7 other homes in Cape Coral for a few years now. I am not a flipper and never have been, I am an investor. I have started a few small businesses from the time I was 17 and invested profits and earnings in real estate and have been a landlord since the time I was 19 years old, with real-estate holdings in both NY and Florida. I purchased this house pretty much at the bottom of the market, and saw an opportunity to acquire a few more investment properties in the next couple of years. A few were 200 square feet smaller for $65,000, all in which originally sold between $200,000-$220,000. First let me start by stating that on each of these investment homes, none were bought in cash, therefore my down payment to acquire these houses were not very substantial, between $13,000 to $17,000 per home. Leaving me with a mortgage payment ranging between $265-$339 per month based on a 30 year amortization at an interest rate of 4.5%. When projecting out annual income and expense reports on these homes there was substantial room for cash flow, but more important there was even more room for a high cash to cash return. When the reporter asked me and I stated that there should be a little cash flow, I was trying to be modest and not come off the wrong way. Based on my projections, receiving $900-$995/month in rent (which I currently do), and projecting out all expenses including an additional percentage subtracted out for vacancies and reserves I am left with a $600-$650 NOI per home per month. If you subtract the roughly $300 mortgage out (which is slowly being paid off by the tenants rent) there is a cash flow of roughly $300 per month which totals $3,600 for the year; which may not seem like a lot however on a $13,000 investment (the down payment) it is a 27% return on cash to cash value per home. Now that is pretty good, but the numbers get more substantial when we figure in the appreciation, which all along was where I thought there was substantial money to be made. The home that was purchased for $83,000 was just appraised in November of 2013 for $125,000. Leaving me with $42,000 in appreciation on this one home, which I only put $17,000 of my own money down on. The appreciation accounts for around two and a half times the amount of my original investment alone, not to mention the rent and NOI I have collected over the years on this house. Now on a few of my other homes the returns were even better. My least valuable home (in my opinion) that I purchased for $65,000 was appraised in January 2014, the appraisal came back at $116,000. Now on this home alone I have an appreciation amount of $51,000 on only a $13,000 investment almost quadrupling my original investment. That is a 400% return on just the appreciation side, again not to mention the NOI that has been collected for years. Looking back five years later I am very thankful for getting involved in the SW Florida market. It is one of my most lucrative investments I have made in my lifetime and I would not have changed a thing. When people see others success some people won’t hesitate to say that it is just luck, and maybe part of it is; but I think you can make your own luck, through hard work, dedication and what I like to call the “double B’s”; brains and balls(excuse my expression). You have to be willing to take a risk now a days; nothing comes easy and if you are smart about your investments you too can make a nice honest living. Luckily one of my family members followed my lead on this as well, and has found himself with approximately $525,000 worth of appreciation in just four short years. Here is as simple as a tip as you will ever receive; never buy high, never sell low, but more importantly never be FORCED into doing either. When you have time and flexibility in your investments you can make some substantial money. For what it is worth, I believe there is still money to be made in this SW Florida housing market, maybe not 400% like I have experienced but maybe doubling your money in the next few years doesn’t sound bad.
Hi Everyone, It’s Michael Dascoli again, now 32 years old. I thought it may be nice to update everyone again. Those houses that I mentioned in my previous comment are all now worth around $165k to $185k per house and rents are around $1,300 to $1,400 per month per house. So everything is going great and the numbers have dramatically gotten better yet again. I hope some people took my advice from a few years back and invested in the SWFL real estate market! I am sure if you did you are happy with your returns; my small $13k downpayments have turned into great investments for me and I hope it has done the same for many others. I hope everything continues to go well and I am very grateful for the opportunity SWFL has given me!
Hi Everyone, It’s Michael Dascoli again, now 35 years old. I thought to update everyone again. Those houses that I mentioned in my previous comments are all now worth around $220k to $250k per house and rents are around $1,500 to $1,700 per month per house. Therefore the numbers have dramatically gotten better just from a couple years ago. My small $13k to $17k downpayments have returned me a minimum of $155k in appreciation and in a few instances up to $180k in depreciation in just 12 years. Additionally I have made a lot of cash flow each year and paid my mortgages down greatly. Only owing about $40k on houses that are worth $250k. These turned into great investments for me to say the least!
$180k in *appreciation in just 12 years
Its Mike again, giving another update, just a short 7 months after my last update I have determined that 2021 has by far been the most lucrative yet. Rents are up to around $2k a month, my least valuable houses are around $280k, with my more valuable houses being valued around $310k. This doesn’t come as a surprise as real estate throughout the country has appreciated tremendously! On my one property alone my $17k investment has turned into $230k in appreciation. The cashflow has been great aswell!
Latest update: Houses are worth between $350k to $380k. Rents are up to $2,500 per month.
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The title, “Hype, Fluff, Optimism, Greed, Avarice, And Fraud,” describes America of recent years quite well. America’s economic and political problems can be summarized by:
Americana: Evil Government, Rogue Economists and Thoroughly Doped Population
The evil govt of America doesn’t know its proper role when it comes to the single most important economic variable—DEBT
Jas
‘evil govt of America’
Alright, I’ll just let that one hang out there for a while…
I don’t think they are evil. I think it is a mix of incompetance, short-sighted thinking, and pandering to the lobiests that gain the most from the bubbles.
Everytime a solution to a problem is looked for, first they have to ensure they aren’t cutting into the profit margins of their main campaign contributers.
What is wrong with healthcare? Malpractice insurance is too high? Nope, that is not good for the lawyers that make campaign tontributions. Profit margin on new drugs too high, and new drugs overperscribed when generics are just as good in most cases? Nope, that is bad for the drug companies that make large campaign contributions. Too many people using the safety net as a hammoc? Nope, those people vote for our party.
Oh, the problem must be that too many young, healthy people choose to take the risk of being un/under-insured. We need the revenue stream from them to spread the cost so that we can bring down the cost on the sick and elderly without actually cutting the profit margin of our contributers….
Oh, and we can’t allow people to just buy the services they want. We have to force them into a single payer system so that if they can afford to pay extra, they are forced to pay extra to make up for the losses on people that can’t afford to pay.
While I’m not sure if it’s “evil”, I think if we don’t do the right thing, our Nation will collapse.
Think of the unfairness.
Honest businessman “A” has had a profitable business for the last 10 years, and will not show a profit this year. What promises is he getting from our Government? An increase in payroll tax, and more requirements for employees.
Dishonest businessman “B” tried to get rich quick by flipping houses. What does he get? Cramdowns and tax breaks worth hundreds of thousands of dollars! (How many pre-tax dollars would you have to earn to cram down your principal $100,000?)
If instead of paying $1 Trillion dollars bailing out banks and FBs we gave each small business a $5,000 tax break plus a $5,000 handout, we’d probably do more for our economy for 1/10th the price.
reuven,
You’ll get no argument from me. The more I learn about “the package” the less I like.
Never attribute to malice that which can be adequately explained by stupidity.
I put a lot of blame on Wall Street/Lenders and Big Business for the mess that the economy is in . Of course the people went along with this debt society ,or they were sold on it .
The government allowed these Market Maker players to gain to much self-serving power and regulations where put aside in favor of self-regulation of the Business World . The check and balance system failed and enforcement of law and order seemed to
be absent during the boom times . Everybody sleeping on the job
and everybody saying that they couldn’t see it coming . By the same token you had the average Citizen who got in on the bandwagon of the real estate frenzy to the point of absurdity .
I place most responsibility on the so-called Lenders who had a
duty to underwrite the loans ,not simply pass them on to Wall Street, to pass on to investors trusting bogus ratings . I can’t excuse borrowers that were willing to commit fraud either ,just because there was a belief that real estate was a sure
bet .
Greenspan kept the rates to low for to long and the REIC were the set up artist for much of the fraud that took place ,but the borrower and lender conspired to commit the fraud or submit the bogus loan application . Also the teaser loans were not sound loans and should not of been made based on a event happening in the future that would make them less risky . A appraisal and a loan risk is only as good as the day they are made and cannot be determined by a future event such as real estate going up . Wall Street putting aside all risk factors with lending is a great crime in my book and the Politicians voted in some of this lack of regulations and of course the government was pushing liberal lending for people who were not credit worthy .
The Politicians are influenced by lobbying ,but who would of thought that Wall Street would shoot themselves in the foot by their faulty lending and reliance on a myth that real estate always goes up . Who would of thought that Politicians would of thought it was sound to give loans to people who didn’t really qualify .Are politicians really qualified to determine who should get a loan ,or is the risk taker the one that should determine risk ?
‘evil govt of America’
I can agree with that, just don’t know what that has to do with Florida Real Estate bubble news.
If one assigns cause to the ‘evil govt of America,’ then most conversations are pretty short, i.e. “health care is….” oh, yeah, that’s the ‘evil govt of America’ or “accidents on roads…” well, the answer to that is the ‘evil govt of America.’
It’s not that I disagree with Jas, I do agree that government has been evil, it’s just I think we gotta dig a little further, see if any opportunities are present, etc.
I mean, I’m a manic-depressive given to suicidal thoughts, if I woke up every morning and looked at the government as being the cause of my misfortunes….
Muir,
I’m “there” when we just as quickly assign the term “Ponzi” to anything that goes wrong, and involves more than (1) person.
By that definition, multi-car pile-up’s ( assuming all participants were *not narcoleptics ) should be prosecuted as “Ponzi schemes”.
–
“I can agree with that, just don’t know what that has to do with Florida Real Estate bubble news.”
The whole housing bubble was fanned by three evildoers — Greenspan, Bush and Bernanke — for their personal gain of power. I said so in a 2006 editorial.
“If one assigns cause to the ‘evil govt of America,’ then most conversations are pretty short…”
It is the backdrop of the American econo-political system. One must always keep the backdrop in mind, or in the forefront, no?
The US govt was not always evil; it is a recent phenomenon whereby Bankrupters and Fraudsters took control of the govt beginning with the Greenspan appointment to head the Council of Economic Advisors in 1983 and then to head the fed in 1987. Things have gone downhill since then and the two largest bubbles of their kind in US history had everything to do with Bankrupters and Fraudsters having the control and exercising it. Anyway, that is my explanation of America’s problems.
Jas
You forgot to heap blame upon the following:
The CFR
The Bildebergers
The Trilateral Commission
The Illuminati
Skull & Bones
The NWO
Freemasonry
The Knights Templar
TGOTWKLAMF (That Guy Over There Who Keeps Looking At Me Funny)
Jas,
We could both take strolls about in full daylight, each with a lit lamp held forth in front of our faces, looking for an “honest man.”
Like Diogenes, we both might end up with a sunburn and still our search would be fruitless.
-
And the result would be a better explanation than the one you present.
-
This is not a facetious reply.
I too see the backdrop and 1983 does have meaning.
Yet, DinOR’s reply was very apt and eloquent.
Muir,
Well I don’t know about “eloquent” but thank you. Even though I like to harp on The Tax Act of 1997 ( sheesh do I ) it’s getting to be further in the distance every day.
There were any number of detours and alternate endings that were considered, bantered about and either adopted or in some form rejected. Nothing happens in a vacuum. Landmark, stage-setting events… sure, but when you meander too far down that path you can begin to sound like a Cubs fan and “the curse” ( or BoSox fan if you prefer? )
–
“Jas, We could both take strolls about in full daylight, each with a lit lamp held forth in front of our faces, looking for an “honest man.””
This is a ridiculous way to argue. THERE IS A GRAND CANYON BETWEEN A PERFECTLY HONEST MAN AND AN EVILDOER.
The US govt was never honest but far from evil, even a good one on a relative basis.
In human affairs, it is the degree that matters! Those who cannot judge the degree of human conduct are either ignorant or have some other motives.
Jas
All but the most advanced and enlightened of us are Man A one day, Man B the next, then Man C, and so on. Your blame-assigning and personality-characteristic-defining arguments are overly simplistic.
–
Yes, indeed, I am simplistic and you are “sophisticated.”
It is quite an experience arguing with people on this blog and some others. I am sure that the feeling is mutual.
Jas
Jas, I said “honest man” not “perfectly honest man.”
Actually, Diagenes was looking for a “human being” but found none, only immoral men. I toned it down.
My point was that the “evil” you assign only the government is to be found in all men. And, in all places.
Furthermore, my original point is that it served no purpose to assign cause elsewhere but in ourselves, otherwise no action is possible.
But, if you notices, I never disagreed with you, my objections were more nuanced.
Poor Jas…
“The US govt was not always evil; it is a recent phenomenon whereby Bankrupters and Fraudsters took control of the govt beginning with the Greenspan appointment to head the Council of Economic Advisors in 1983 and then to head the fed in 1987.”
I think Jas was never a qualifying member of the Nixon “mandatory” draft…nor does he thus remember the elimination of the “gold standard” i.e., “it is a recent phenomenon” Come on Jas, come clean…you’re in my “hood”
“evil govt of America”
Oh please. Since when are incompetent and/or short sited evil?
Nice drama though.
–
“Oh please. Since when are incompetent and/or short sited evil? ”
You are WRONG about incompetent and shortsighted part. IT WAS ALL DELIBERATE ACT TO DEFRAUD THE PUBLIC. I saw it more than ten years ago and have been pointing out some of the specifics from time-to-time.
The US govt is controlled by Financial Nazis. Economists are among their propaganda agents.
Jas
O.K… this is just gettin’ weird.
Was facing jail time all part of “the plan” too?
As my father one told me (I’m parapharasing here), “Never argue with a fool. To bystanders you both look like fools.”
“The US govt is controlled by Financial Nazis. Economists are among their propaganda agents.”
O.K., now let’s talk about India & China…
Sorry, but I have to agree with Jas here.
There is no way in heck that we HBBers saw this coming, but the PTB didn’t. No f’ing way.
Seriously, we’ve got mechanics, bus drivers, housewives, teachers, dentists, doctors, writers, and other assorted “average” Joes with absolutely NO formal training in economics on here…and we predicted almost exactly what would happen.
Do you honestly believe that people who created and control this system know less than we do?
That is painfully naive.
That $83,000 house in Cape Coral will never be worth any more, in 5 years or 20 years. More likely it will be worth about $65,000 in a year or so. As long as he has no lapses in tenancy perhaps he might be cash flow positive. But I doubt the low return makes the headaches worth it. He is counting on appreciation that will never happen.
And I’ll bet he’s never been a landlord before. Boy, is he in for a learning experience.
He’d make more money (illegally, of course, but that never stopped a houseflipper!) by claiming he lives there, registering his car, etc, down there, but actually working in NY. The amount saved by beating NY taxes would be well worth it. He could still rent it out under the table, but even leaving it empty might still be a win!
To his credit, he’s not doing that. His East Amherst address is the “owner of record”. But The Cape Coral property search shows something funny going on.
His property
http://www.leepa.org/Scripts/PropertyQuery/PropertyQuery.aspx?FolioID=10132799
But there are 4 other properties listed under Michael A Discoli
http://www.leepa.org/Scripts/ParcelSearch.asp?STRAP=&OwnerName=Dascoli+M&SiteNumber=&SiteStreet=&SiteZIP=&submit1=Start+Search
(He is Michael T Discoli.) So it looks like this houseflipping business is a father-and-son thing. Of course, when he loses money, his business will get bailed out (while mine won’t!)
what happens if he can’t find any “cash flow positive” tenants? what happens if he loses his “cash flow.” As long as the law favors the ones that don’t pay their billsl who in their right mind would want to be a landlord?
If that house drops to 65K, then he’ll have trouble finding tenants. Anyone with enough integrity to pay his rent probably makes enough $$ to buy their own 65K house. You can afford that even on a single income shelving books at Borders.
• Fed set to hold rates near zero in bid to kickstart economy
this “headline” is getting old already
>turning Japanese
TONIGHT !!!!!!!
The Sarasota declines are of interest to me, because I have a retired snowbird relative trying to unload a cookie-cutter 3/2 golf-course condo east of I-75. He has not dropped his ridiculous wishing price in over twelve months. I am going to visit this spring and I’m sure I’ll be asked for my opinion, which will be in sharp contrast to that of other family members. I’m thinking about practicing it before a mirror beforehand because I know I can be irritating.
Print out a copy of todays postings for FL and take with you for relative to read others insights.
Maybe he might consider lowering his price.
snake charmer,
While you’re in front of the mirror, you might want to practice confronting him with why he “needs” to sell to -begin- with!? Not to involve myself in family matters ( and I’m sure you’re not alone ) but I would ask him why he even bought the damn place to begin with?
What were his plans, his motivations and expectations. Let’s get these people thinking again!
If it’s not selling, the price is higher than buyers are willing and or able to pay. Someday they may be willing to pay more than they are today, but SO MUCH housing has been built in Florida that IMHO many areas will be like Detroit, where prices are below construction costs for an extended period of time.
“Under federal immigration policy, an approved foreigner whose investment is supposed to create 10 full-time jobs in the U.S. can get a conditional visa to live here — and can ultimately secure a regular ‘green card’ good for permanent residency.”
And to think how many foreigners are on the hook for what they thought were investments but were actually just empty promises in exchange for a past consumption binge?
“…an approved foreigner” lol
Step 1: Personal Interview with Cheney
Step 2: Paperwork returned “approved” from Homeland Security
Step 3: Demonstrate ability to swim from the Statue of Liberty, rub the balls of the bronze Bull on Wall Street, and then do the breast stroke back to Ms. Liberty statue within 1 day regards of weather conditions.
Step 4:
I see so many folks coming into the US that
are Visa Waiver people, and then we always
blast the “illegal immigrants” meaning those
mexicans etc, when in each and every airport
there are hundreds upon hundreds every single
day coming into our country. Bringing in relatives
that they will “sponsor” and then you guessed
it, we will be the Sponsors.
Last time I spoke with 1 of 8 Chief of Customs
in this one airport, he said, the computer system
is so antiquated …I took that to mean, we
don’t know half the folks coming into our country
OR we will surely lose track of them.
Ben, you omitted this gem from the New Times article:
“Condo boards have a hard time keeping vagrants out of the stairwells of half-empty buildings. Some landlords have become so desperate that they’ve taken to renting out luxury units to porn film crews at daily rates just to keep the lights on.”
How would you like to hear that activity in the unit above or below yours? All those fake moans would have me laughing after about ten minutes, although I guess I could get used to it as ambient noise.
Make sure you laugh loud enough to mess up the audio track in the film.
Wow…”Debbie does the REPO man”, I can’t wait
I was waiting for someone to suggest a title, within the bounds of taste of course. I was thinking “Tap Those Assets,” “Condo-Sized Unit,” or “Withdrawal from Equity.” I do recall reading that one of California’s more infamously-successful realtors during the bubble was a former adult film actress, so “Realtors Gone Bad” also is a possibility.
You are like a freakin’ genious!
Great titles, snake charmer!
Well now we know what kind of research Suzanne was doing.
Theose moans are NOT “fake” ! All girls make them!
I bet your hate Santa too snake charmer
Here’s a good one fresh of CNN:
“In Delaware, Manoj Philip, 24, said he had a full-time job in 2007 with Agilent Technologies making about $55,000 a year, including all the perks and benefits that came with it. But in July 2007, he quit that job to pursue a career in real estate.
“I knew it wasn’t going to be easy, but I didn’t think it would be this tough,” he said.
By September 2008, Philip needed a second income because of the withering housing market. He picked up a full-time contracting job and continues to do real estate about 20-30 hours per week.
It was a shock, he said, to return to full-time work while putting his real estate dreams on hold. “It took a lot for me to change that mental outlook. Because before I would’ve thought of it as something holding me back,” Philip said. “But I don’t look at it like that anymore.”
He’s since learned the value of living within his means, budgeting and making every dollar he spends count for something. “These are really important lessons to learn. I’m glad I learned it at such a young age.”
Quits his $55K job in July’07 (!!!) to start a real estate career. Genius at work!
Mike In Miami,
Wow. We had discussed just yesterday the whole “Rich Dad” mentality and it looks like this kid bought it hook, line and sinker?
The thing that should irk his parents ( that are really -kicking- themselves for having sent this kid to college ) is that RE needn’t be a F/T venture anyway! It’s nothing that he couldn’t have pursued while keeping his day job.
His parent sound like illiterate losers anyway. Naming a kid “Manoj”? What did they expect?
Is “Manoj Etwah” part of his heritage?
Only his Mom knows for sure.
O.K, that was good.
You have to wonder if this isn’t more of that “I’m a STAR” upbringing we keep hearing about? I realize not ‘all’ parents will want to name their son after (1) of the 12 Apostles but you wouldn’t believe… some of my daughter’s friend’s names from HS!
Even if it were a commonly pronounced name the spellings were just, out there.
Manoj (also spelled Manose) is probably a Nepali or Indian name.
It’s an Indian (subcontinent) name.
He might have been a private college kid…with an MBA, other than that, I cannot defend him
“Another factor that could hammer housing this year: Two weeks ago, lender Fannie Mae imposed new requirements on mortgages for Florida condominiums. Fannie says, for example, that it won’t approve loans for buyers in a condo building where more than 15 percent of the owners are delinquent on association dues.”
We saw this one coming. Not only does the price of the units have to fall low enough that people can afford them, it has to fall low enough that a group of people can get together and buy the whole building. Otherwise, you could be bankrupted by the HOA free riders.
Some of the updated lending requirements are as follows:
1. Up from 51 percent, FNMA will now require that at least 70 percent of the total units in a condominium project must be conveyed or be under a bona fide contract for purchase to principal residence or second home purchasers.
2. New and established condominium projects may have no more than 15 percent of the total units in a project be 30 days or more past due on the payment of their condominium/association fees.
3. New and established condominium projects with more than 20 units will be required to have fidelity bond/fidelity insurance. It was formerly only required of new condominium projects.
4. Borrowers must obtain a “walls-in” insurance policy unless the condo development’s master policy provides the same interior unit coverage.
5. No more than 20 percent of the project’s total square footage can be used for non-residential use.
6. No more than 10 percent of the total units in a condominium project may be owned by a single entity (the same individual, investment group, partnership or corporation).
—
Hope I made a couple of peoples day
By the way, this is very big news for South FL real estate.
This effectively kills the condo market in ALL of South FL!
This is not hyperbole.
If you look at the New Times article (very well written) you’ll see that a lot of buildings are under the 70% sales.
No FNMA for under 70%
But look closer, the new rules also kill bulk buyers!
Yes, they can buy with cash and then what?
If they own +10% then nobody else qualifies as far as FNMA goes. Therefore, any buyers after the bulk buyers, must themselves, be cash buyers.
And how’s this one: “4. Borrowers must obtain a “walls-in” insurance policy unless the condo development’s master policy provides the same interior unit coverage.”
-
This is big.
U DID!
Tell me about it. We have a constant problem with the HOA freeloaders in my neighborhood. Unfortunately, the state won’t let us turn off their water or post a ’shame’ list of the deadbeats.
“In the Tampa Bay area, 23,615 homes sold last year at a median price of $169,580.”
The 23,615 homes sold last year is less than the total number of foreclosures for the entire area. With foreclosures outpacing sales, it will be years before the inventory is depleated. The number of properties that did not sell are being rented at a loss by the owners and this “hidden inventory” or shadow market is very large and most certainly will put a downward preasure on home prices in the Tampa Bay area.
” Lake Buena Vista Resort Village & Spa is hoping the lure of permanent U.S. residency will eventually persuade well-heeled foreign investors to help it expand near Walt Disney World. So far, it has no takers for its million-dollar-visa offer. ‘There seems to be less interest of people immigrating to the United States,’ Behar said. ‘When you compound that with a million-dollar investment, it becomes complicated.’”
Oh, OK. As if, there are legions of “well -heeled foriegn investors” milling around homeless in the Sargasso Sea or Timbuktu just waiting for a chance to spend a million $$$ to be close to Mickey and Goofy.
So when do you just say is was a stupid idea that was bound to lose money from day one? That’s not complicated.
You know, I wonder why with Muggy or Palmetto or others haven’t posted about a couple of things.
One is red tide.
With all the talk about Cape Coral, Naples… Sarasota, nobody mentions just how nasty this stuff is to breath.
Yet, the area is marketed to retirees who should be the last ones to breath this stuff.
Then there’s potable water or the future lack thereof.
And lastly, how many people here know that Fl has deep well “injection” sites for raw sewage?
That’s right, they pump the ____ deep, thousands of feet under the limestone layer.
Of course, an environmentalist I know who does deep cave dives laughed and said they don’t know how porous caves are.
Anyways, it was supposed to take centuries for the ____ to creep back up…..
We covered red tide in the summer of ‘06, which was about the last time I remember it being bad. I went to Anna Maria Island and I could barely breathe.
As for potable water, I roomed with a chemist in college who was prepping for dental school. He studied all the fountains in our doom; he found that they were the nastiest in the morning after the load settled overnight. Anywho, one of my “must haves” was living as high above sea level as possible. That combined with britta makes my tap water fine. The last place I lived it was awful - did the water bottle thing.
I would like to lean more about these injection sites.
hear that song ?
turning Japanese
• Fed will keep key interest rate near zero for quite ’some time’
BAD/SIV idea getting a lot of play today.
My questions
1. Who pays?
2. If US gov, is this a program that will have to go through congress??
3. If it doesn’t where does the money come from??
If it has to go through congress, I expect to see the financial press filled with stories of armagedon to get those congressmen to vote before they think.
1) Who Pays?
No one. The government will buy these assets at their “real” value, not the artificially low value set in today’s illogical market. With the government’s ability to borrow low, and their ability to hold these assets until maturity, tax payers will actually make money.
2) Will it have to go through congress?
Well, they can start the buys with some of the second half of the TARP…. Not much mind you as most of it is already spoken for. But some, just a seed to get it goin.
Then, yes, congress will have to approve more money.
3) Stories of armagedon?
Why? We’ll make money on this.
BTW: I don’t believe any of this. The government will end up buying $5T+ of crud from banks, insurance companies, pension funds, etc. etc. ALL at grossly high prices. Then, the taxpayer will eat $ trillions in losses.
That sums it up nicely, darrell.
Sucks, doesn’t it?
Regarding the New TImes Article and Tibor Hollo. Interesting that a life-long developer who experienced 9 busts did not “sense something wasn’t right” until 2006? How can that be?
He’s also planning a 1,000-foot condo tower to be Miami’s “signature building,” as if the city was Dubai, last year anyway. Of course, he disclaims being motivated by ego.
I find all these mega-skyscrapers interesting. Back in medieval Europe, communities competed to build the tallest cathedral, under the theory that God was thereby glorified. Who’s supposed to be glorified here?
Please… Glorified… Pishtosh…
It was about attracting pilgrams, that would make contributions to the church.
It is ALWAYS about the money.
Back in medieval Europe, great big castles were a
good housing idea too.
Well, until some other guys got really mad and got the idea of shooting them full of holes with their little cannons
Constructing the ‘world’s tallest building’ has a funny way of coinciding with jumping-the-shark, economically speaking.
NYC built the Empire State Building and many others just as the Depression hit. Sears Tower topped out just as Chicago went into economic crisis in the 70s. Malaysia’s Petronas Towers finished during the Asia crisis of 1997.
Now Dubai is building the world’s biggest/best of everything just as petrodollars are evaporating with the crash in oil prices and the global financial crisis.
Be very carefull folks, we are nearing a bottom. My millions were made being astute.
Pg,
Bottom of ‘what’? A cesspool?
I did hear good quote from a wholesaler today and in a way ( it kind of made sense? ) He said; “Equities have become strictly Blue-Collar”, and I have to kind of agree?
Purely the stuff of 401k’s ( which we kicked under the bus long ago ) and ETrade accounts. Great stuff.
None of us knows where the true bottom of the Re market is. But if you take a look at prices in various parts of the country we are beginning to see 2002/2003 prices which is a very good thing.
BIG DEAL.
Yes, where at 2003 prices in Miami [yawn]
Poke me with your forearm when we are at 1999.
-
You can make another fortune on Case-Schiller if you think we’re at bottom.
“None of us knows where the true bottom of the Re market is. But if you take a look at prices in various parts of the country we are beginning to see 2002/2003 prices which is a very good thing.”
My humble abode has lost about $30,000 according to Zillow. Of course, I bought it to have a decent place to live, not as an investment so I’m not too worried.
Zillow is worthless. You should use the County Assessor’s Office, or other data points online.
True, Zillow isn’t exactly accurate. I just think it’s interesting that for all the realtor happy talk of “It’s different here” we seem to be experiencing the same haircut as the rest of the country. But as I said, I bought my place to have a nice home, not as a quickie investment so I’m not too concerned.
“My millions were made being astute.”
If Ben had an ignore switch you’d be on it. Your phantom anonymous internet millions mean nothing, ie slightly more than your prediction of a bottom with no justification.
Sheesh…ANOTHER cyber millionaire peddling RE bottom advice/ and or propaganda for FREE.
Ben can’t you keep the riff raff out ?
How sad you have been sucked in by the press, and the various parties.
Oh you mean the “press” that was still struggling with whether or not there was the presence of a bubble ( potentially? ) in 2006!?
THAT press?
mikey,
No that’s fine, he can stay. Who will be here to tell us when prices will reach 1992/1993 levels?
mikey,
We need people like Pg so we can practice our skills of eviscerating the propagandists for real estate.
Pg must be a realtor and needs idiots to fund Pg live style.
Yar, SFgal. Agreed. He’ll have to do, ’cause all the lovely trolls we used to get here have now gone away.
Sigh. I miss the trolls.
So many smelly fingers. You want to back up that claim with any data, or is this a hunch?
WASHINGTON — The new chief of staff to Treasury Secretary Timothy Geithner was a top lobbyist for Goldman Sachs Group Inc. until last year, and will have to recuse himself from some government duties under new White House ethics rules.
The appointment of Mark Patterson runs into an executive order President Barack Obama signed to limit the ability of officials to move between industry and government. The order, part of a campaign promise to curb the influence business, allows lobbyists to join the administration as long as they don’t work on the subjects they tried to influence for a period of two years.
Before Mr. Patterson left Goldman in April, he was vice president for government relations, and was registered to lobby Congress on legislation including energy tax credits and Indian gaming, according to disclosure forms filed with Congress. Mr. Patterson monitored other issues moving through Congress that Goldman never took a position on, including foreclosure-prevention measures and shareholder votes on executive compensation.
what you do not remb
what you do not recall from three years ago I suggested you all buy Wrigley. what happened? bought out by Mars with Buffets help. How much more can a guy do?
Ooops!…Our bad, we all thought you meant Wrigley FIELD and we all ran out and bought a ticket and some POPCORN
You have the gift. Pick another one now.
Falling Down (1963)
Bill Foster: I helped build missiles. I helped protect this country. You should be rewarded for that. But instead they give it to the plastic surgeons, you know they lied to me.
Sergeant Prendergast: Is that what this is about? Is that why my chicken dinner is drying out in the oven? You’re mad because they lied to you? Listen, pal, they lie to everyone. They lie to the fish.
mikey,
That’s so funny you would paraphrase that? I just referenced it in response to hd74man’s post above! It links to a Best of Craigslist post that’s truly funny. I’d suggest anyone w/ an interest/disgust w/ SoCal check it out.
Don’t get me started DinOR.
I told Olygal that I found her cat last week. She reported me to Ben and I’m on triple secret probation…again
http://www.craigslist.org/about/best/fay/938646501.html
Pg may be right about the bottom….
Or… maybe not.
http://www.cnbc.com/id/28898377
“Apparently about 70 percent of foreclosures in its[RealtyTrac's] database have not yet been listed on the MLS.”
Banks are still sitting on 70% of the properties they have taken. RealtyTrac believes it is because the banks simply can’t afford to book the loss.
Does this indicate a bottom is at hand?
(Or, it could be they do not intend to use a Realtor. A house that was foreclosed on my street 6 months ago, now has a new owner, and as far as I can tell, was never listed in MLS.)
I got a feeling most banks with lots of properties will avoid using realtors or any independent agent whenever possible. Why pay that commission?
The one bank REO dept i’m familiar with uses an “asset liquidation company”, whatever that means, to list and act as the bank’s agent. Far as i can tell all they liquidate is real estate owned by that one bank through auction or sale. I’d expect heir cut has to be less than retail with a volume sales agreement.
They expect buyers to have a buyer’s agent, but it’s not required.
I was listening to NPR tonight. They were doing a story on a homeless advocacy group that went out and found bank owned properties and then moved homeless people into them. They notified the banks that they were doing this and of 7 families placed so far no bank or neighbor has complained. They are just happy someone is preventing the houses from falling down I guess. I suspect that this is the start of a giant tidal wave. We’ve talked about squating before but organized squating is new. They even had a lawyer working for the group in case any of their tennants gets arrested. It really makes me want to go rent free for a while but the wife won’t let me.
Robert Rubin, who quit his post as senior counselor at Citigroup Inc. this month, said an accounting rule forcing companies to mark down assets every quarter to reflect market value has “done a great deal of damage.”
“I spent my whole life at Goldman Sachs believing in mark- to-market accounting, and having said that, if you look at the experience from the last two years, I think mark-to-market accounting has led to terrible vicious cycles in asset prices,” Rubin, the former U.S. Treasury secretary, said during a discussion at the 92nd Street Y late yesterday.
Companies including Citigroup and American International Group Inc. say mark-to-market, also known as fair-value accounting, doesn’t work when few buyers are willing to trade assets like subprime mortgages.
Yep when you spend a decade or two inflating crappy assetts fair value accounting really hurts. Now if you weren’t fraudulant prior to fair market accounting then it wouldn’t hurt so much. The next line in the article
Rubin joined Citigroup in 1999. Earlier this month, he announced he won’t stand for re-election to the board. Rubin, 70, proposed that a “reserve” accounting standard be adopted, which drew applause from the audience.
Yep if you don’t like reality use fantasy pricing. I’m sure that everyone in the audience made their living stripping wealth off of the fantasy profits that these large financial institutions made. Let’s put him in front of a lot of people who lost money on MBS, securities ect because of this and see how many applause he gets.
“made their living stripping wealth off of the fantasy profits”
Well said! Nicely done. And don’t think for a minute those of us in the industry ( but farther down in the food chain ) haven’t noticed? I guess this is why Richard Fuld of Lehman had his home transferred to his wife’s name for a hundred bucks.
Will love to see these guys doing the perp walk. It IS coming.
I have a really hard time believing that he’s trying to hide anything.
If “they” even think you’ve transferred assets or tried to hide something in order to escape some lawful debt, yer toastier than you woulda been if you didn’t go to the trouble.
And for him to do it so transparently means he’s just totally ignorant or a Darwin-Award-Candidate fool, or both.. I find this unlikely as well.
There are numerous legitimate reasons for transferring ownership between friends or family or changing ownership status, like when setting up a trust or similar, where some small token dollar amount may be required by law.
“I have a really hard time believing that he’s trying to hide anything.”
I have a really hard time believing you don’t work for a bank.
When you need a root canal, everyone looks like a dentist. Do you need a loan?
‘Robert Rubin, who quit his post as senior counselor at Citigroup Inc. this month, said an accounting rule forcing companies to mark down assets every quarter to reflect market value has “done a great deal of damage.”’
Not enough damage, IMO — isn’t Shitti still in business?
Does that mean they won’t mark asset prices **up** if the market goes in their favor?
Fair’s fair, right?
“Pg researched this!”
DinOR says:
“I’m “there” when we just as quickly assign the term “Ponzi” to anything that goes wrong, and involves more than (1) person.”
A Ponzi is a finincial scheme where the new investments are handed out to previous investors, but also creditied to the accounts of the new investors. It works only as long as the amount of money coming in from new investors is greater than the amount going to to previous investors.
Social Security is a Ponzi. I’m putting contributions in, and every year I’m sent a statment telling me how much I’ve put in and how much I should (but I don’t) expect to get back. It works only as long as there is more being payed in tha collected. There isn’t actually a pig pile of money sitting somewhere that I’ll be paid back out of. As soon as the collections stop rolling in, nothing left to pay last contributers.
Housing was a Ponzi. When someone bought a house, the money was paid out to the former owner, but the new buyer was also told they had the home equity. It works only as long as there is some new greater fool coming along to overpay by more. As soon as the new money stops, no wat to get out.
Ditto stocks. You can’t eat, spend or seek shelter in stocks. Okay, over time they will pay back in dividends… some anyway. But in the recent booms, the price was not based on fundamental value. Price of stocks was set by the flow of money in and out of markets with all new money coming in being paid to those going out, but the value also recorded in the account of the new buyer. To get that value that is in your account, there has to be someone willing to bring new money into the market.
Darrell,
Love ya’ like a brother, but… “I” happen to think you’re wrong on all counts. Firstly, just applying common sense tells us that -nothing- is ever ‘that’ simple. But if it helps you to understand things, then just label it a Ponzi and call it good!
By most definitions, you need “40 Qualifying Quarters” to be eligible to draw SS. ( Ted Kaczinski won’t be getting any, among a LOT of other self-employed that didn’t contribute and countless others that have never filed a tax return )
From 1776 to 1996 housing *wasn’t a “Ponzi”
Remember in any situation in the stock market, there are always smart people on BOTH sides of the trade. They’ve done their research and want to see it come to fruition. Profits can be made and losses realized *without the introduction of -any- “new” money ( or suckers in your interpretation )
The unabomber was a college teacher in Michigan and should get some Social Security(he also was a professor in California and he should get retirement money from CALPERS).
“…Remember in any situation in the stock market, there are always smart people on BOTH sides of the trade.”
So, is there any room for “stupid & lucky & “not so pretty” ” ?
I think I can name names…
I’m pretty sure that at times I was a NOT smart person participating in a trade.
It is a pity that the insight only comes after the trade is executed.
Housing becomes a Ponzi when it gets overpriced where it becomes impossible for the buyers to get their value back without selling to a greater fool.
Buying a house that could be rented for $1000 a month, at a prace that results in a $1000 a month payent isn’t a Ponzi because the buyer can get the value back.
Buy the house that can be rented for $1000 a month, at a price that results in $2500 a month, means it is impossible to get the value back without new money coming in.
As for stock trades always being between 2 smart people that have researched… 2 words. Jim Cramer.
How could anyone that is smart or informed watch that, and trade on his advice.
At 2000 and 2007 peaks, there was no way to get your money back out of stocks without a constant supply of new money coming in.
An aside… I had a friend that was a former long-haul truck driver turned fiber optic cable puller. In 1999-2000, he was playing the IPO market with money he pulled out of his house as a HELOC. Lost his shirt, so took what was left and threw it at Cisco. I asked why that stock… Oh, it is the biggest company in the world. Based on what?, I ask. Ummmm… he says… Revenue. Nope. Comapany I was working for had 1/10th the stock price on 10x the revenue. Ummmm Profitability? Wrong. Again, the company I was working for had much higher profit and even higher operating profit %.
So, what?, he asks. Market cap I say. What is that?, he asks. Number of shares x price per share…. It is the MOST EXPENSIVE company. If it is not the best company but is the most expensive, what does that tell you?, I ask. He says, that the stock will keep going up because everyone wants it.
Of course, I knew the tech wreck was coming so got almost all my money into a nice safe utility. A former employer of mine that had real revenue, real profit, real assets, etc… MCI. Oh, it had been bought by WorldCom by then…. but it was still a very profitable company. Right?
Darrell_In_Phoenix,
Firstly, thanks for commenting. I just wanted to establish, we’re ALL frustrated here! I -know- that. Not to “pull rank” but it strikes me as my life has (2) very distinct and seperate chapters.
My Life -Before- Bubbles and… My Life AFTER Bubbles.
( I definitely prefer the former ) But just throwing our hands in the air in disgust and promplty announcing that e-v-e-r-y “thing” and e-v-e-r-y “body” is nothing more than a Ponzi ( let’s a LOT of people off the hook! )
Bernie Madoff and a multitude of others don’t seem to want to share… much about what -exactly- it IS that they were up to!? So they simply “plead Ponzi” and we… never get to the bottom of ANYTHING! I’ve no doubt that there wasn’t an element of pyramid scheming there, but to let it go at ‘that’ means we’ll never have the forensic evidence to identify and prosecute this brand of fraud in the future. In short, -another- Achilles Heel just waiting for us to be applied when the NEXT Bubble surfaces.
In all facets of society, we rely on a certain level “participation”. ( Even if it was just growing crops in the not-too-distant past ) So in that regard, you’re right! What we ’should’ be seeking however is quality, non-exploitive “participation”.
Jan. 28 (Bloomberg) — The global economy will slow close to a halt this year as more than $2 trillion of bad assets from the U.S. help sink economies from Russia to the U.K., the International Monetary Fund said.
Bank losses worldwide from toxic U.S.-originated assets may reach $2.2 trillion, the IMF said in a report released today, more than the $1.4 trillion that the fund predicted in October. World growth will be 0.5 percent this year, the weakest postwar pace, the fund said in a separate report.
The reports signal that writedowns and losses at banks totaling $1.1 trillion so far are only half of what’s to come and that contractions may deepen. Losses on that scale would leave banks needing at least $500 billion in fresh capital to restore confidence in their balance sheets, the IMF said. ”
What only US banks? IMF is this real ecomonics or more political ?
$2.2 trillion? Residential mortgage maybe, but wait until commericial gets rolling, corporate bankruptcies get cranked up, then credit card defaults start hitting…
if you can beleive what you read on Blogs
this from the SDICA
“We are buying. Have been picking up 10-15 houses a month. Did over 100 houses last year. Have over 20 properties on MLS Active and 11 in escrow this week. Since the week before Christmas I have noticed way more people looking at and bidding. It is so competitive people are paying too much. There are probably more active investors now than any time last year. Anybody has any deals send me a PM. ”
its your town professor what do you think ?
IMHO, they are correct. I’m seeing lots of “investor” activity in San Diego.
Just guessing, but would say anywhere from 25-40% (perhaps more) of our sales activity is speculative. This is the first wave, and I anticipate these people will end up being the next round of foreclosures in 2010-2011.
Still too much speculation and not enough end-users. These sales will be tomorrow’s inventory. They are waiting for the great real estate rally to pick up where 2005 left off.
The decoupling dream is dieing
Jan. 29 (Bloomberg) — Indian exporters have shed as many as 1 million jobs, more than 15 times a December estimate, amid the most protracted decline in overseas sales in a decade, the commerce ministry said.
“The job losses are very substantial and are likely to be of the order of 700,000 to 1 million, including temporary staff,” Commerce Secretary G.K. Pillai told Bloomberg News in an interview in New Delhi yesterday. Exports fell 1 percent in December and any recovery “is likely only by June,” he said.
Governor Duvvuri Subbarao this week lowered the Reserve Bank of India’s economic growth forecast to a six-year low of 7 percent as a global recession pummels Asia’s export-dependent nations.
Let’s see growth at 7% yet unemployment is exploding. Hmmmmm I see accounting magic.
Actually, growth at 7% and exploding unemployment is possible. The working population merely needs to increase more quickly than 7%.
A few minutes with Google suggest I need to sit and carefully study population distributions …. which I don’t care to do.
The population of India is growing slowly, but there are lots of young people.