September 11, 2010

Bits Bucket For September 12, 2010

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Comment by Carlos4
2010-09-12 00:03:15

Well its semi-official now. Zillow says I’m under water; they just dropped my home’s “value by $7000. Biggest one month drop since the general decline started. This gives me a whole new perspective on things: to pay the mortgage or not, free to move…or squat, who to vote for….or against. Like I dont have enuff to keep me up at 3 AM. Hmmm. Maybe I’ll be able to afford my prescriptions this December after all.

Comment by butters
2010-09-12 00:11:09

Has Zillow been accurate in your area? It’s quite off from my experience. If I were truly underwater substantially, I would personally chose strategic default.

Comment by Itsabouttime
2010-09-12 00:19:28

But it only matters if you are planning to sell (or extract phantom equity). If you bought the house as an investment, well . . . sometimes you win, sometimes you lose.


Comment by Carlos4
2010-09-12 00:58:19

Historically it was on the money until the downturn. Lagged 20 to 50 percent for a long time in many areas; now it seems to be getting closer, but, still at least 10 percent high. Some “urban” homes are 50 to 80 percent over the going prices. People are just not interested in trying to prove to banks that they can afford to make 30 year payments on a dump when they dont know if they’ll have a job next month. Depression mode.

Comment by Professor Bear
2010-09-12 04:34:28

By “lagged,” I meant with respect to time; i.e., if Zillow says prices in your area dropped by 10 percent over one month, would that be referring to the period from, say, mid-August to the present (the “no-lag” case) or, perhaps, during the period from mid-May through mid-June (the “three-month-lag” S&P/Case-Shiller case)?

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Comment by Carlos4
2010-09-12 08:16:57

My development “lagged” the true market by about 4-6 months before Zillow started to drop in earnest; when they did, they ignored the short/foreclosure/reo sales totally. Now that secondary buyers’ (falling knife catchers) inventory has/is being sold/offered they cant ignore the real numbers being spit out in county records. Example in my development: 3/2 brick ranch house for sale at 224K ….reduced to 195….goes into foreclosure… takes back at 185….bank sells at 160…new FB puts in 20K, lists at 195….sits 8 months….sells at 165. Neighbor to this house, 3/2 1/2 brick ranch lists for 222K….sits for 6 months, sells for 180K two months ago. Zillow now starting to take notice but still shows these homes at 190K or higher. Numbers are what you want to make of them.

Comment by rms
2010-09-12 09:44:39

“Neighbor to this house, 3/2 1/2 brick ranch lists for 222K….sits for 6 months, sells for 180K two months ago.”

What’s median income in your area? Unemployment climbing or steady?

Comment by Carlos4
2010-09-12 18:14:52

Median income about 55k, median household income about 70k, older demographic,bedroom community, some light industry, 1 hospital, average unemployment but like other N Ohioans severely underemployed, reluctant to leave; 70 percent of last year’s college graduates living at home. Many Kasich/Taylor signs for governor popping up. That means the Obloviator (you missed that one, below) will be making many more trips to make sure we all vote GOP this time.

Comment by Professor Bear
2010-09-12 03:58:44

Does anyone know whether Zillow’s estimates are up-to-the-minute, in the sense of using the most-recently available sales transactions, or do they include a lagged effect, like S&P/Case-Shiller, which is (supposedly) three months out of date when released?

Comment by rusty
2010-09-12 05:02:48

I also use cyberhomes and trulia as well to get numbers. Not that any of them are perfect, but more is better!

Comment by potential buyer
2010-09-12 12:10:12

Try this one too:
Their prices come in different than Zillows, so different algorithm.

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Comment by Rental Watch
2010-09-12 22:43:19

I think the problem is the “up to the minute”. To my understanding, they use publicly available information, and different municipalities report later than others. So, even if they are using the most current information available, it may be 60 days old (or longer).

Comment by alpha-sloth
2010-09-12 04:14:53

Hmmm. Maybe I’ll be able to afford my prescriptions this December after all.

Is this a great country or what?

Comment by rms
2010-09-12 09:48:30

+1 Nice to start the day with a good belly laugh. Thanks!

Comment by combotechie
2010-09-12 07:08:40

I’m going to change my name to Zillow so I can render an opinion that will keep strangers awake ’till 3 AM.

That’s power, baby.

Comment by ecofeco
2010-09-12 12:36:46


Comment by potential buyer
2010-09-12 12:11:25

Now that’s sad. House payment or health.

Comment by ecofeco
2010-09-12 12:37:52

Them and several million others.

Comment by JimJamesh
2010-09-12 20:11:59

When you are down 20% off what you paid, then it is time to ask those questions. Or if you dont like the place… go for the 14 months free living plan with no PI payments.
THE GOP will put us into the Depression, guarenteed. They got us here, vote for them to finish the job. The gov need to keep spending until jobs are created. SPend with in USA, this time.

Comment by X-GSfixr
2010-09-12 00:06:48

Oh goody, I get to go first!!!!!!

Democrats suck. Republicans suck. Independents suck.

They only differ in the degree of suckiness, depending upon your personal viewpoint and experiences.

Discuss. :)

Comment by X-GSfixr
2010-09-12 00:08:27

Missed it by 3 minutes……..crap. :)

Comment by mikey
2010-09-12 06:42:06

Throws a frozen duck into X-GSfixr’s brand new jet engine…at 32,000 feet.


Comment by Professor Bear
2010-09-12 07:48:18

Your points are still well taken.

Comment by chilidoggg
2010-09-12 05:46:51

Did you mean to say “disgust?”

Comment by palmetto
2010-09-12 05:57:23

John Boner (misspelling intentional) is gearing up for a stint as Speaker of the House. Can we propose legislation to have his tanning bed taken away?

Comment by evildoc
2010-09-12 17:13:00

Following misspellings also intentional.





Thanks for the impetus, palmetto, for a constructive issues-oriented discussion

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Comment by pressboardbox
2010-09-12 06:19:11

In my opinion, anyone who wears a suit and tie is trying to steal from me. A uniform for a theif, so to speak.

Comment by saywhat
2010-09-12 08:20:55

Right on!

Comment by LehighValleyGuy
2010-09-12 06:38:03

Democrats suck. Republicans suck. Independents suck.

POLITICS sucks. The idea that merely by winning pluralities of votes, a small minority of people can tell the rest of us what to do and what not to do, and take as much as they want of their money, is what really bites the big wazoo.

People need to stop worshipping the government, take back control for themselves and realize their own potential.

Comment by combotechie
2010-09-12 07:11:12

“Tune in, turn on, drop out.” - T. leary

Comment by saywhat
2010-09-12 07:17:52

That is probably where it is heading, as sleepy heads are woken from their comfortable slumber when things like jobs, prescription drugs, being able to provide education for their children, and having some type of decent prospects for retirement are take away. I am not looking forward to when zombies who are still half asleep and dis informed decide to take their rage out on each other; completely missing the knowledge of what/who the real target should be and how to effectively respond.

Comment by Happy2bHeard
2010-09-12 11:13:41

What would be an effective response?

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Comment by ecofeco
2010-09-12 12:40:30

Every zombie elimination manual I’ve ever read says go for the brain.

Comment by Thud
2010-09-12 15:19:44

Congress stymies the zombie hunters with a magnificent and futuristic brain-cloaking device.

Comment by bill in Los Angeles
2010-09-12 10:40:18

Agreed, but plenty of people even on this blog, still worship the big G. Disgusted with Americans 2010, a totally different breed than Americans 1880 (post-slavery). People today want to be told how to live, how to $hit, and what to refrain from.

Comment by Diogenes (Tampa, Florida)
2010-09-12 07:09:02

Democrats suck. Republicans suck. Independents suck.

While I agree with your general premise, I am told the Republicans have promised to suck less this year. I am going with the party that will suck less than the other parties.

Comment by howiewowie
2010-09-12 07:37:07

Of course just a few short years ago it was the Democrats who promised to suck less. See how that turns out? Remember when the Democrats controlled congress for like 40 years? The the GOP for 12 years. Now the Dems again for 4 years? How much shorter can it get?

Comment by Happy2bHeard
2010-09-12 11:15:33

2 years would be the minimum

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Comment by mikey
2010-09-12 07:43:08

“While I agree with your general premise, I am told the Republicans have promised to suck less this year. I am going with the party that will suck less than the other partiesd ”

Not meaning to be unkind about your though processes but isn’t it about time that you stop, think and analyze things by yourself for a change, rather than just being “TOLD” what to think and do ?

It could be really exciting.


Comment by ecofeco
2010-09-12 12:42:11

People’s heads to tend to s’plode when they do that.

Then they turn into zombies.

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Comment by AmazingRuss
2010-09-12 08:59:29

They promise to suck less every time. They lie, every time. Every election is like Charlie Brown, Lucy, and the football.

Comment by rms
2010-09-12 10:26:47

“Democrats suck. Republicans suck. Independents suck.”

Noam Chomsky: The Political System in the USA

Noam Chomsky: Big Business Dictates the Presidency

We actually have a one party system, The Business Party. Try framing political events this way, and after awhile it makes perfect sense.

Comment by ecofeco
2010-09-12 12:43:37

GOWS - Grand Old Wall St.

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Comment by CA renter
2010-09-13 02:40:19

We actually have a one party system, The Business Party. Try framing political events this way, and after awhile it makes perfect sense.

Hit the nail on the head.

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Comment by bill in Los Angeles
2010-09-12 10:42:27

I refuse to take the chance of being fooled again. Like the Lehigh guy said, all politicians suck.

Comment by Happy2bHeard
2010-09-12 11:17:18

So Bill, you will let the greater fools elect your representative.

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Comment by saywhat
2010-09-12 11:40:59

To believe that we actually have representatives in itself is crazy belief and the further we go with that line of thought the further we’ll go from really understanding anything that is happening.

Comment by Happy2bHeard
2010-09-12 12:04:19

And yet, elections determine who writes our laws. I would rather have laws written by thinking people than ideologues. If I disagree with a thinking person, I may be able to persuade them.

And banding together into organizations has been effective for some groups, like the AARP, teachers, farmers, unions. And before the tirades start about unions, they grew in influence because workers needed to counterbalance the power of corporations. And they have been effective in increasing the safety of workplaces.

Comment by bill in Los Angeles
2010-09-12 12:13:38

The fewer the number of participants in this charade, the faster the system will be radically altered. Guns or not. The demopublican machinery has control of the outcome and the vote is no more than sanction of the machinery.

Comment by saywhat
2010-09-12 12:16:36

I always get a real kick from people who go on tirades about unions, especially when the individual in question enjoys all the benefits that have been shaped and developed as a result of working people getting together such as set hours, hourly wages, vacation pay, holiday pay, etc, I mean do all those well meaning “free country” believing people think that some schmuck running a slave/sweat shop type of business as most were in the back of the day, got up one day and said “it’s time to take care of these people and show them I really appreciate what they are doing here for this business of mine”.

Comment by Exeter
2010-09-12 13:05:45

And along those lines of thought, it’s those same wage slave dopes you refer to who wave the stupid flag for US Treasury robbing tax breaks for the wealthiest.

Comment by CA renter
2010-09-12 16:58:13

Thank you, saywhat.

Comment by Marko
2010-09-12 19:34:17

See the latest issue of TIME concerning what’s wrong with our education system. It pained the editors to no end but they had to admit the problem is primarily the teacher’s unions and tenure.

In the teacher’s defense, my first guess would have been that parents are responsible.

Comment by CA renter
2010-09-13 02:41:35


It has nothing to do with teachers’ unions, and everything to do with demographic shifts. We’re just not allowed to say that in public.

Comment by aNYCdj
2010-09-13 09:08:55


I’ll say it we need a massive infusion of English in our educational system….and i mean to the American born peeps no more ghetto rap and hip hop..

Even if that means no summer vacations to those who refuse to cooperate.

Comment by Rental Watch
2010-09-12 22:47:15

I’m voting for gridlock. Then, no matter which party is suckier on any particular issue, their suckiness is tempered somewhat.

In fact, I think I may vote for gridlock from here on out…

Comment by Lip
2010-09-12 07:22:48

Lets just say that the “typical” politician sucks in that all they really want to do is get re-elected, feather their nest egg and to help those that will help them get re-elected.

Here in AZ we have an interesting race for govenor happening. Our Republican candidate, Gov Brewer, totally screwed up her presentation in a debate when she had a brain fart. I mean nobody expected her to do much but she has handled the SB1070 debate pretty well [IMO] and that has served to help her in the general public’s eye.

The Dem challenger is a well known state politician that is smoothe, fairly well spoken and is pretty liberal [again my opinion].

Well after the brain fart in the debate fiasco, her polling numbers went up about 3 points!!!.

The reason? IMO the people of AZ are tired of the smoothe talking political types, we don’t appreciate the US Govt’s attempt to beat us down and we like SB1070. McCain would be in trouble if any of his competitors would’ve been worth the risk, but they weren’t so we’re going to be stuck with him for another 6 years.

Comment by aNYCdj
2010-09-12 08:50:36

This is why public financing of elections is mandatory now to save this country.

Only the self financed should be exempted since they can do what they want with their hard earned $$$.

Go ahead let Bloomberg spend a Billion….for whatever you think of him he has given away a chunk of his money every year…to needy causes in nyc.

Lets just say that the “typical” politician sucks in that all they really want to do is get re-elected, feather their nest egg and to help those that will help them get re-elected.

Comment by bill in Los Angeles
2010-09-12 10:50:35

Problem with public financing is that the demo publican machinery would shut out financing to third parties and ensure more of the same bull.

But if each political party received the same amount of campaign money it would strengthen third parties such as the libertarian party and weaken the demo publican party. So this won’t be allowed.

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Comment by Happy2bHeard
2010-09-12 12:17:03

Public financing would not stop the spending of PACs and would probably increase their influence.

It might be better to have each party elect representatives in proportion to their share of the electorate. Minority parties would at least have some representation. And as the parties moved too far left or right, a moderate party might grow.

Presidential and gubernatorial elections wuld have to be excepted.

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Comment by aNYCdj
2010-09-12 17:33:45

There would be no PAC’s…..and nobody can donate except the $3 on your tax form……

and Everybody would participate in at least 1 debate even the socialists and the right to life parties….

the total election season would be 3 months max.

So yes 3rd parties would hopefully get some seats and play a pivotal role in making better decisions

Comment by Housing Wizard
2010-09-12 00:51:47

I can’t help but thinking that a artificial excess supply RE market that was the result of faulty lending can really be considered a valid market . I’m looking at some of these prices that houses are selling at in some areas and
these low prices aren’t really market value . It’s really a epic foreclosure market in which the foreclosures are eventually sitting the price ,while at the same time you have low demand in spite of really low interest rates .

You have so many different prices on the same house in a tract ,but the foreclosure price is sitting the price . How can appraisers even determine a fair market value when it’s a black swan market ? It doesn’t matter what
local incomes are, it doesn’t matter what building costs are at this point ,it only matters that you have excess supply with no demand .

Comment by Itsabouttime
2010-09-12 01:19:35

HBBers long said there would be an overshoot past the fundamentals when the decline. However, I don’t know where you are, HousingWizard, but everyplace I know anything about has a long way to fall to reach the fundamentals. First off, the boom was gigantic–bay area affordability, even after the funnyrealtormath, was at 8%. The house price declines we’ve had so far would not have completely corrected that, let alone pushed past it. Alas, that’s not the only issue–just as prices have fallen, economic conditions have fallen faster.

So, just as was predicted here many years ago, prices are chasing fundamentals down. With that kind of dynamic, yes, those low prices are probably the upper end of the market price. At least, that’s the story around my area.


Comment by CA renter
2010-09-12 04:03:25

In our area, prices are still way too high. We’re only down about 15% in many areas.

Comment by salinasron
2010-09-12 08:17:53

CA renter:

Let’s talk price/sq.ft. on the way down to get realistic. What are true building costs for new construction vs wishing prices vs rent or buy.

Many costal wishing prices are $300 to $1400 sq. ft. for a piece of crap. People still have their heads buried in the sand while others are trying to unload albeit at wishing to save some equity. If they don’t have gold or PM’s to sell they have to get money somewhere. 2011 will definitely be a new saga to watch.

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Comment by Exeter
2010-09-12 13:00:23

“Let’s talk price/sq.ft.”

Thank you.

When estimating the price of an existing property, all items need to be assigned a value. Structures, wells, septic, dirt, etc. My rage towards realtors directly relates to their CMA/BPO estimates. They know NOTHING about estimating, construction costs so will someone please tell me how the @#$% these scumbags come up with a BPO? You can’t possibly look at and take a walk around a dump for 5 minutes and come up with actual replacement costs less depreciation.

Comment by Rancher
2010-09-12 15:01:01

Sq footage costs are bogus. Take two homes
with the same square footage, 1,600. One
home is 40X40, the other is 20X80. Linear walls on the first is 160, the second is 200.
Every time you have a corner or a nook, your
linear cost per foot just went to X3.

Comment by exeter
2010-09-12 18:28:13

“linear costs per foot”? lmao.

40×40 has four elevations thus four corners.

20×80 has four elevations thus four corners.

I’ve been in the construction management business for decades now and perform take-offs everyday. I have yet to see four elevations with more than 4 corners…

Comment by jane
2010-09-12 19:09:30

Again, request some insight.

Exeter, if you please - what the Sam Hill is an ‘elevation’ and what does it have to do with a ‘corner’?

I tried to Google ‘building elevation’ but kept getting topo maps.

Thank you.

Comment by exeter
2010-09-12 19:27:35

Building elevations are merely the four sides of a structure shown on architectural drawings indicated as north, south, east and west elevations based on project north.

Rancher is correct in that your linear footage of materials goes up once you move from a perfect square to a rectangle but it has nothing to do with corners. However, he takes it to an extreme. What archy draws up 20×80 or 20×60 structures? Typically they’re laid out 32×50 and 30×40 nominally. Using those dimensions, the increase in linear footage over a perfect square doesn’t amount to much.

Comment by RioAmericanInBrasil
2010-09-12 20:45:59

In general, in construction, corners and angles do cost more. I just built a city house requiring an air/light shaft and 90 degree offsets to allow windows to face other’s property lines to code.

It cost a lot more money than a box.

Comment by Rental Watch
2010-09-12 23:02:57

The walls are only a small part of the cost. Think plumbing, foundation, electrical, roof, flooring, fixtures, etc. My understanding is that hard costs per foot for new production product (Lennar, KB, etc.) at about $45-$50 psf. Add about $10-$15 psf for soft costs. We haven’t yet covered land and infrastructure. Call infrastructure $20 psf (about $50k per lot, unless you have a flat piece of land immediately adjacent to existing homes). Let’s round down on the lot to $40k for a 2,000 square foot home.

So, that 2,000 square foot home that is trading for $150,000, would cost about $170k to build…if the land was free, and entitled, with KB/Lennar type finishes.

We will continue to see new home starts fall until home prices rise. It’s simply not economical to finish raw land to build homes.

Comment by Housing Wizard
2010-09-12 09:13:38

Ca Renter …..If your only down 15 % in your market than you don’t have as many foreclosures .Better locations are going to
go down slower .I’m just saying that in these excess supply markets
where the foreclosures are numerous the prices are below value because they have to much supply of these foreclosures .

In other words ,how can you base value on a Black Swan event in which lenders have to unload properties because lenders fraudulently made loans and they are unloading the byproducts of those original crimes .Its a unload excess supply market and until the excess supply of foreclosures are unloaded you will never have a true market .

Also, if you have a market where the seller is just holding the property because their mortgage or equity loan exceeds current market price and they can’t really market their property without bringing funds into escrow than you have a trapped sellers markets .
None of these current market forces I mentioned above would make it possible to have a real market .Also, depending on how much fraud was committed in a given area will determine in the long run the crash potential of those prices .Borrowers that are bailed out or borrowers that are just camping out without
paying their mortgage are all supply that would be on the market now without the interference .

The true supply of homes that would be on the market because of the fraud market of the boom would be so high in numbers
that prices would go to 10% of boom values ,or lower.
I grand you that some markets still have some demand because of the location but if the true supply was released and weak hands really had to sell those markets would crash way below value also .

‘I’m just saying that this isn’t a real estate market in terms of anything that resembles normal principals and it can’t be because
of the crimes committed during the boom period .

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Comment by CA renter
2010-09-12 15:01:30


I’d contend that the prices of 2005 were not “real” market prices, either. Those prices were based on the sales made to borrowers with loans they could never pay off — so they bid prices up well beyond their fundamental values.

Foreclosures are the unwinding of these fraudulent loans. The places where foreclosures were allowed to take place (the lower half of the housing market crashed before the govt was able to intervene — they slowed down the foreclosure on the high end with their “foreclosure moratoriums” and foreclosure avoidance schemes.

It’s the prices that we see AFTER the foreclosure have been allowed to take place that are the true market value. In the areas where the govt has prevented foreclosures from occurring, we still see the **artificially high** prices from the bubble. Those are not at all “real” market prices, IMHO.

Comment by CA renter
2010-09-12 17:00:15

BTW, I don’t think the bursting of the bubble was a “Black Swan” event. It was as predictable as the sun coming up each day.

Comment by Professor Bear
2010-09-12 04:21:22

“With that kind of dynamic, yes, those low prices are probably the upper end of the market price.”

I had a lengthy visit this afternoon with an area UHS whose family name matches the family-owned business for which he works (not sure if he is the owner, but he is a blood relative), who knocked on our door as he strolled around our neighborhood in search of prospects. He said he grew up right across the street from where we live.

Our chat suggested that he is tuned in to the massive overhang of shadow inventory in SoCal, and to the government’s efforts to work with banks to release it very, very slowly. He expressed hope that they continue this slow-release of inventory, in order to not crash the market again. The fellow seemed untroubled by my question about whether this reflects top-down collusion among banks; maybe this is how it always works in San Diego?

He also seemed to have a good grasp of the ARM reset issue, and how it is likely to play out for several more years, though he had never heard of the Ivy Zelman chart, and seemed quite fascinated by my explanation of the staggered impact of subprime ARM resets (mostly behind us already) versus Alt-A, prime- and other high-end ARM resets (ongoing and scheduled to continue at high levels through 2013).

Most tellingly, he acknowledged that we had made a decision to rent and made no effort to pressure me when I explained it would probably be at least a few more years until we consider buying. He mentioned friends of his who bought in 4S Ranch back in 2006 whom he recently helped execute short sales because they were too far underwater to hang on to their houses.

I kept his card and told him I would send anyone thinking about soon buying his direction.

P.S. I don’t think he noticed the HBB T-shirt I was wearing today. ;-)

Comment by palmetto
2010-09-12 06:00:04

“Most tellingly, he acknowledged that we had made a decision to rent and made no effort to pressure me when I explained it would probably be at least a few more years until we consider buying.”

Sounds like a smart guy who knows what’s really going on, what the game is and knows who and who isn’t a prospect.

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Comment by CA renter
2010-09-12 15:14:47


I had an agent tell me the other week that he was talking with some BofA reps who said that they had gotten some sort of “authorization” to sit on empty homes for five years. He said they were going to board them up and maintain them, and keep them off the market for five years.

When I asked him why they thought things were going to be better in five years, he shrugged and suggested something along the lines of, “real estate always goes up.”


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Comment by awaiting wipeout
2010-09-12 16:09:01

CA renter
That might tie into the “Property Preservation Specialist” hiring BofA is doing right now. One ad I read said the workload was 500 homes. Holy Moly! I’m educated, prompt, fast and accurate, but that’s a lot of properties to handle.

Comment by CA renter
2010-09-12 17:02:33

Interesting, Awaiting.

If you hear more about this, please post it here. As always, we have to rely on each other to get real information, as the MSM will never manage to get this information out to the masses. Instead, they’ll keep spouting the nonsense that, “the market is getting better, and foreclosures are dwindling.”

I wonder how these properties are being held? Maybe in some off balance sheet vehicle? This would be good info to find out.

Comment by aNYCdj
2010-09-12 17:35:57

Isn’t that Ben’s real job?

Property Preservation Specialist

Comment by awaiting wipeout
2010-09-12 18:13:08

I went to ICSC/U San Diego Management School in the 80’s and worked for a REIT.The BofA position knowledge is 1st hand knowledge. Not only are the banks in heaven with Mark To Market, our nefarious govt gave the banks Rule 157, so the banks can pad their financials (even more) and the bigwigs get bigger bonuses. Don’t even get me started on what’s going on. I’ll blow a head gasket. I’ve been interviewing SS and REO Depts.

Comment by CA renter
2010-09-13 02:46:23

Job hunting? Let us know how it goes.

Best of luck, awaiting! :)

Comment by awaiting wipeout
2010-09-13 05:54:25

Thanks, Ca Renter. I fell like the R E firm I worked for, sucked the life out of me and left my carcass on the ground. All the events, I had no time to attend. (When I come back, I plan on being tall, blonde, beautiful and rich. That ought to fix everything.Oh, and I promise not to be a dingbat.)

Comment by rms
2010-09-12 20:25:44

“P.S. I don’t think he noticed the HBB T-shirt I was wearing today.”

So ‘ya forgot the falsies?

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Comment by Carl Morris
2010-09-12 09:15:11

HBBers long said there would be an overshoot past the fundamentals when the decline.

HBBers long ago assumed an underdamped system, if you think of a classic engineering system with springs and masses and dampers. Normally our economy has acted underdamped which means that you hit it with a stimulus, and the mass will overshoot and then go back and forth a few times before the dampening/friction finally brings it to rest in it’s new location. By trying to slow the process way down (at great expense) the government is attempting to convert the system to overdamped, where there will be no overshoot at all…the mass will just slowly slide to it’s new equilibrium point with no overshoot and therefore no opportunity for bubble sitters to make big bucks by timing their moves just right. That money was already spent “saving” the system (making sure the money found its way to its “rightful” owners).

Comment by Jim A
2010-09-12 09:33:02

The problem is that the for the most part, damping is applied in one direction only, which isn’t as effective.

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Comment by DennisN
2010-09-12 10:50:36

What the should aim for is critical damping, not overdamping.

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Comment by Carl Morris
2010-09-12 14:00:12

But critical damping would still allow one overshoot, and that just won’t do.

Comment by warlock
2010-09-12 18:26:08

The more fundamental problem with the damping analogy is that the system is actually based on with flows.

Comment by flg_az
2010-09-12 22:41:22

closed loop control system, if you increase gain you risk instability. Wonder if the monetary system has any kind of anti windup compensation… because the input has been saturated for 2 years.

Comment by mikey
2010-09-12 07:27:35

I believe, and fogive me, that RE agents are still right about 3 things and only 3 things in this market and housing bust.

Location, location, location.(translation this time — jobs, business and LIFESTYLES)

I am looking at a fairly nice 1983 4/3 3,768 sq ft ranch in excellent condition in a small town in Wisconsin. My low-ball bid is at 54 sq ft. Jobs are tight and low-mid paying and the main 3 legs of the community are agriculture and two businessses which could see recession pressure. The town should still survive with a little midwest austerity and belt tightening. They are fairly used to these cycles and live accordingly.

For instance, there are well paying jobs in San Francisco, NYC or Washington DC and they are fairly economically well diversified cities dispite relying on finance, tech or the gov’t.

Yet the problem is, you’d pay at at least well over a millon dollars plus for the equivilent house I’m trying to buy in sunny CA, the big Apple or Foggy Bottom, DC… if you could find it. You’d also be in a world of hurt if you lost that high paying job which is necessary to support that million dollar house in either place.

IMHO, location, jobs and lifestyle are going to be major factors in this bust.


Comment by aNYCdj
2010-09-12 09:06:19

This is why I am grateful for a great landlord who paid off his house 20+ years ago…he could get a few hundred a month more then what we pay, but then he trusts us to take care of the property and pay on time…..

No kidding I had a real redneck LL in South Carolina who scared us one Sunday morning the 1st banging on the door at 6 30 am needing his rent money to buy beer cause he and his bud were goin fishin with the boat hauled on his rusted out pickup

IMHO, location, jobs and lifestyle are going to be major factors in this bust.

Comment by DennisN
2010-09-12 10:10:23

Heck that SC LL sounds like a real salt-of-the-earth type. Probably more down to earth than having BofA or Wells Fargo being your landlord.

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Comment by CoSpgs4
2010-09-12 12:04:56

I would agree with this statement.

Rednecks versus Elitists. Which is more the Con Man?

Funny the extent of class-bias among people living on the upper East Coast and all along the West Coast. But not racist. To all the proud anti-racists on this board: do you realize there are black rednecks, too?

Comment by RioAmericanInBrasil
2010-09-12 20:53:25

Rednecks versus Elitists. Which is more the Con Man?

Which one has health coverage?

Comment by hip in zilker
2010-09-12 11:51:09

You can buy beer in South Carolina on Sunday morning?

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Comment by ecofeco
2010-09-12 12:49:20


Comment by aNYCdj
2010-09-12 17:40:19

If you KNOW where to go sure you can

and Dennis:

yes they are down to earth but also..but also very arrogant you know I am the King of my castle………like I am supposed to jump out of bed at 630 on a Sunday morning pay the rent so he can get drunk?

Comment by SUGuy
2010-09-12 09:32:07

I agree with your comment. A good friend of mine bought a house 3/2 built in the 1920’s for a bargain price of 975K in Rye NY. He and his wife both commute to NYC to pay of their mini castle. When he showed me the house I kept my mouth shut as I was saying to myself after paying for this house for 30 years what do really have? He bought the house in 05 and btw works for AIG. This same house would sell for maybe 90K in Syracuse NY. The bad part of Syracuse NY is the taxes. Look at some examples below.

Look at these pieces of crap houses and check out the taxes below on the right side. Taxes 16K

This owner is fibbing about the size of the house. It is about 4000 sqft. The taxes are 25K Taxes 24K

Comment by evildoc
2010-09-12 12:46:25

Speaking of which, where is that funny critter Eddie, who doubted that Syracuse could have 20k Tax on 800k house?

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Comment by Exeter
2010-09-12 13:11:07

heh…. Those links are *Exhibit A* proving the complete delusion of sellers and taxing authorities in the state of NY.

There isn’t a house north of Westchester County worth $200k.

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Comment by evildoc
2010-09-12 17:09:40

Some might see quite the opposite. Nothing downstate is worth 200k but costs 800k. Many upstate houses are actual… houses… for 200k, not just bathrooms, which run $200k downstate. Heh

Comment by exeter
2010-09-12 18:20:43

Based on the secular economic deterioration circa 1977-current, I’ll stand by my statement that there isn’t a house in all of upstate NY worth $200k.

Comment by evildoc
2010-09-13 04:37:51

based on reality, I note most houses costing more than $200k upstate are more “worth it” than houses costing double downstate

Comment by exeter
2010-09-13 05:36:13

Keep telling yourself that.

In the meantime, the fact remains that chronic under employment, falling real wages and long term chronic unemployment doesn’t support $200k housing prices anywhere. But I’m a native of the post-industrial decay in the northeast, what could I possibly know….

Comment by jane
2010-09-12 15:57:59

Please inform the unenlightened (err…that would be me).

What on earth is there to DO in Syracuse that would cover a monthly nut of $4200 excl heating and utilities?

All of the heating up there is oil. A house that size will require 500 gal/mo in October, November, December, January, February and March. That’s another $600/mo before you turn on the lights and fill the frig. How on earth do people manage to actually LIVE?

I went to grad school in Rochester. I know whereof I speak about that heating nut.

Am I working in the wrong location? Can I really make that kind of bank in SYRACUSE?

Thank you.

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Comment by evildoc
2010-09-12 17:11:02

Physicians on average earn far more Upstate than in the NYC area.

Comment by jane
2010-09-12 19:32:05

OK, I can release the sour grapes. I’m not a doc.

Does this income inequality reflect the ‘expense’ portion of income and expense? I can’t think of anything in lower NYS that would hit that hard other than insurance. As a counterbalance, the pharma kickbacks and residuals from equipment referrals would be a LOT higher in NYC. The phantom billings to Medicare and Medicaid are likely to be a wash.

Just think. All those poor doctors up there ministering to one another, and to ghost towns. Maybe trying to flag down the last hearse in an attempt to give the deceased one final MRI. Just to make sure, you know.

Doesn’t bode well. Service providers - docs and lawyers and accountants - ministering to one another in a hermetically sealed bubble. I guess required periodic injections of new money being are from the government by way of increasing Medicare billings on a declining population.

Comment by SUGuy
2010-09-12 21:16:38

I own and run a manufacturing/ franchising company. There are plenty of buildings to buy at low prices, cheap lazy employees, decent highways to dump your manufactured goods 4 hours away in markets such as Ottawa, Toronto, Montreal, Boston, Philadelphia, NYC. The consumers around 4 hour drive have the tons of money. It’s also cheap to pick up used Dairy industry equipment have it modified and use in the chemical industry. The NY state dairy industry got hammered and there is plenty of expensive equipment to be had at pennies on the dollar. We get some short term decent employees from the nearby universities again at bargain prices. We live in Syracuse NY but very little of our income comes from NY state. It’s better to be a big fish in a little pond that way the bankers kiss you’re a$$ a lot.

Comment by SUGuy
2010-09-12 16:20:50

Exhibit B: This is not a very nice house that has been on the market for at least 4 years. Taxes on this house are $31, 500. To heat this baby will cost you around 900 per month on a budget. If you figure an average of $200 per month for snow removal or landscaping. The grand total without a mortgage for this house is 31,500 + 10,800+2400 = 47,700.

So if I divide 47,700 by 365 the number of days in a year. I will get around $125.00 per day to check into your own paid off house. Boy do I love NEW YORK. These types of houses are not selling very often so they sit on the market and some of them end as distressed sales.

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Comment by aNYCdj
2010-09-12 17:44:18

The First one…with 20% down the taxes are as much as the mortgage…

Interest Rate: 6.0 %
Monthly Taxes: $1,287.92
Monthly Insurance: $120.83
Monthly Mortgage Payment:
(Principal+Interest) $1,390.96

Estimated Monthly Payment:
(Principal, Interest, Taxes, Insurance) $2,799.71

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Comment by Jim A
2010-09-12 07:44:46

Well theoretically the standard is “typically motivated buyer and seller.” In a normal market, it does make sense to pay much less attention to the prices of foreclosures because they represent an atypically highly motivated seller that a typical buyer is unlikely to encounter. At some level, the 20% downpayment or MI is supposed to protect the lender from most losses in the event of a default. But in todays market, foreclosures are common enough thay a buyer is likely to find a foreclosure that meets their needs. One would anticipate that the prices for distressed and non-distressed sales would be converging. However this doesn’t seem to be the case.

Comment by CA renter
2010-09-12 15:18:13

But the prices that we saw during the bubble were driven up by “highly motivated” buyers (with zero-down mortgages). Free call options on housing!

How can anyone think *those* prices were “real”?

Comment by Will
2010-09-13 01:00:52

Foreclosures are not setting the price. The market is setting a price that clears. Foreclosures are just the ones most willing to accept the market price and make the sale. ANY house will sell if the price is right.

Comment by CA renter
2010-09-14 01:57:33

Exactly, Will.

Comment by DennisN
2010-09-12 01:51:23

I might actually like this new fellow….

Indeed, for many Americans, literally every line they fill out on their tax return is information the I.R.S. already has. (If you don’t believe it, try not filling out the “wages” line on your tax return next year and see what happens. You’ll receive a notice that states your wages — and assesses a penalty for not reporting them.)

And yet these same people are forced to spend hundreds of millions of hours and several billion dollars each year preparing and filing their taxes….

With a small adjustment in processing procedures, the revenue service could send you a tax form already filled out with the information it has for you — a Simple Return — rather than a blank tax form. You would simply check the numbers against your W-2 and 1099 and then sign it. That would be it. If you didn’t want to participate, you could just throw the Simple Return away and do your own taxes the old-fashioned way.

- Austan Goolsbee in a 2006 NY Times editorial

Comment by alpha-sloth
2010-09-12 04:24:56


He is also a frequent guest on the comedy news shows. On August 11, 2009[26] and February 1, 2010,[27] Goolsbee appeared as a guest on The Daily Show with Jon Stewart. He also appeared in Daily Show segments on November 11, 2009[28] where he was interviewed by Josh Gad about whether the Cash for Clunkers program had ruined demolition derby and on March 17, 2009[29] where he said that executives at AIG deserved the “Nobel prize for evil.” On June 15, 2009, he appeared as a guest on The Colbert Report.[30]

Comment by Professor Bear
2010-09-12 04:50:51

“Nobel prize for evil.”

They have plenty of stiff competition.

Comment by Professor Bear
2010-09-12 04:29:44

Let’s hope he remains that sensible now that he has a high-profile DC post, and also that, as a Chicago guy, he reintroduces the notion into policy discussions with others who prefer Soviet-era command-and-control economic governance that there is a decentralized real estate market out there in local markets with a welfare-enhancing invisible hand. All real estate should be local.

Comment by polly
2010-09-12 08:08:20

He wasn’t all that low profile a few months ago when he was part of the council, when I stood up next to him during an over crowded ride home on the DC Metro. It was around 7, and there were some serious issues with the red line that evening. If ever a person on the inside would have wanted to take advantage of perks of the office to escape an unfortunate commute, that would have been the day (it was hot as Hades too), but he was standing in an under air conditioned sardine can with the rest of us.

PS - I knew who it was because his id tag had slipped out of his shirt pocket, which is where the executive office building men generally hide them. I don’t know the man on sight.

Comment by ibbots
2010-09-12 04:49:01

This would be okay for non-itemizing W-2 wage earners with no dependents.

The IRS does not have data on things like charitable contributions, medical expenses, unreimbursed employee expenses, child care costs, Sch. C income/expenses, Sch. D capital gains transactions, Sch. E Rental property income/expenses, etc…

The W-2 wage earners who do 1040A’s are not “forced to spend hundreds of millions of hours and several billion dollars each year preparing and filing their taxes”.

His suggestion sounds good in theory, but is more window dressing than substance.

Comment by chilidoggg
2010-09-12 05:53:24

You failed to mention the 6-page form I need to file when the 1099 from my brokerage shows $3.00 Foreign Tax Paid…

Comment by Diogenes (Tampa, Florida)
2010-09-12 07:25:10

Let me simplify this for you. What was your gross income last year?
Multiply that by 10%. Send it in.
No deductions. No credits. No “income brackets”. No difference from “source of income”. Just one tax for everyone. Period.
That’s simple enough.
Now, give the plan to Congress, so we can start giving out exclusions and exceptions. Then you go from a single page to 40,000 pages of how to divvy up the money.

Comment by joeyinCalif
2010-09-12 08:20:09

Mom ‘N Pop’s grocery store grossed $1,000,000.
Profit margin was 4%.

With no deductions for business expenses, a 10% flat tax means they lost $60,000 that year.

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Comment by In Colorado
2010-09-12 08:46:04

My understanding is that in the world of biz that “gross income” == “operating income” and not “revenues”.

Net income is “operating income” minus expenses that are not directly linked to cost of goods sold, lie interest expense.

Comment by joeyinCalif
2010-09-12 09:17:45

ok… well..

Mom and pop had a fight, closed the store and split up.

Mom got the two kids and rents a house.
Dad got nothing and moved back in with his parents.

They both found jobs that pay $20K a year.

Mom makes barely enough to feed and clothe the family while dad’s expenses are near zero if you ignore all the partying he does..

Should those two have an equal income tax burden?

Comment by X-GSfixr
2010-09-12 10:03:20

“…’s expenses are near zero……”

Not meaning to sidetrack the discussion, but there is this little thing that the government came up with……It’s called “Child Support”.

Like it or not, government/political parties uses the tax code to promote certain behaviors/actions.

Comment by joeyinCalif
2010-09-12 10:38:00

speaking of child support..

mom protests and dad has to pay $5,000 a year child support. It’s not tax deductible, so dad pays a 10% tax on that earned money.

Under current law, mom doesn’t pay tax on child support she receives. But that $5,000 is income (or isn’t it?) and she would pay 10% on that money. If it’s deducted, it’s a deduction, and we can’t have that..

It appears that the same $5,000 would be taxed twice under a simple flat tax with no deductions.

Comment by polly
2010-09-12 13:26:44

Child support is not deductible to the person who pays (just like the money you spend to feed your kids isn’t) and is not taxable income to the person who receives it. Just like the noncustodial parent doesn’t pay tax on what the custodial parent spends to feed the kids.

Comment by joeyinCalif
2010-09-12 14:06:28

yeah polly but I’m just going by what Diogenes proposed:
That there be No deductions. No credits. No “income brackets”. No difference from “source of income”.

Saying the child support mom gets “is not taxable income” seems to suggest it is income… and would be taxable no matter if she earned it or got it from her ex or found it in the street.

Comment by polly
2010-09-12 14:44:11

That may be what Diogenes meant, but the interpretation leads to double taxation on money meant to support children of unmarried couples because he would pay taxes when he earns it and she would pay taxes when he pays it to her.

Comment by polly
2010-09-12 08:30:55

Calculating gross income is easy for people who earn their money as wages, interest and dividends.

Everything else (capital gains, 1099 income that has to be offset with espenses of running a business, etc.) is much, much, harder. Because if you say gross income and actually mean gross *revenue* for businesses, then I think you are going to have a fight on your hands.

There is nothing difficult about a few deductions and credits. It is tedious, but not hard. I’ve done it with friends who were eligible for a lot of them. It would be a disaster if you didn’t speak English well, but other than that, the fear is more an issue than the difficulty. Graduated marginal rates add NO complexity to the tax code. Most people read their final income tax amount off a chart. The rest do a subtraction problem, followed by a multiplication problem, followed by an addition problem. In both cases, the complexity is the same no matter what their marginal rate is.

My taxes are almost trivially easy. I do them by hand each year in a few hours and it only takes that long because I have to do state/county taxes as well, redo the math 5 or 6 times and use it as an opportunity to check through other end of year finanical things.

Look, it is time for a new round of tax simplification. It has been nearly 25 years since the last time (which was 1986), and it is not a bad idea to take a new look at that sort of thing 4 times a century. But to imply that you can just tell everyone to “write down their gross income” and multiply by 10% and that will fix things? Very, very naive.

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Comment by Happy2bHeard
2010-09-12 12:41:01

Polly, a few days ago I proposed an idea that has been wandering through my mind for about 30 years. I am wondering what you think about it.

In addition to filling out a tax return reportng income and expenses, have a section of the return to designate how tax money is to be spent. So much for military, health, education, transportation, etc. Maybe a certain percentage that would by default go to administration, such as the IRS that nobody would choose. It might increase compliance. And those wealthy folks who choose to hide income or overstate expenses would find their influence decreased.

Comment by polly
2010-09-12 14:20:15

This sort of thing happens in large charitable organizations where donors can designate part or all of their donations to particular purposes. But this only works for organizations that have a large general fund so they can buffer waves of popularity of particular causes. For example, the whole thing where the Red Cross fund for victims of disasters got a huge influx of funds after September 11th, but then they really didn’t need it - too many of the victims were dead, not injured. Boy, did they get in trouble when they tried to divert some of the donations to a reserve fund for future disasters.

So, you have the issue of the mismatch of where people want to put their funds, vs. what is actually needed. If you get around that by diverting a percentage to unpopular activities (like the IRS) then you have a population that thinks it should be able to direct its tax money and finds out that only a bit of it gets to where they want it. It won’t do much to increase compliance in that circumstance. You have the issue of how small to make the bands. Do you say just “military” or do people get to designate particular weapons systems? What if Northrup tells all its employees to desinate their taxes to a system that Congress is just about to cancel because the DOD has finally managed to convince them it is not needed?

And then you get the perverse incentives. Government departments are supposed to root out fraud and waste. This happens and it is a good thing. Can you imagine a department actively telling the world that they have found $x millions of fraud and are correcting the problem right before April 15th? They would lose a huge chunk of their funding. It is hard enough to convince Congress that fixing problems is a good thing, without managing communications to the whole country.

Plus there is the PR that would go on. Great for media - the farm lobby buying ads on American Idol to get people to designate farm subsidies as their tax support choice. Just another way for big money interests to throw around their influnce.

Oh, and then there is the Constitution. The House of Representatives is the only location where budget legislation can originate. I’m not sure they would be allowed to put in clauses that push around money based on what the people want to pay for. You might be able to get a version that would pass Constitutional muster, but it won’t be easy.

And what happens to people who receive significant money from the government? If you are a farmer and pay $10K in income taxes but receive $50K in farm subsidies, do you get to make an election? Why? What else counts? What if you live in an area that is getting a huge federal grant for public schools? What if you live in that area but send your kids to private school?

Honestly, the only way it would work is if enough is kept “aside” to make sure there is no actual influence on spending. If that is the case, enough people will understand that so that it won’t help compliance at all.

Oh, and Mr. Goolsbee’s suggestion of sending people an already filled out form? Public relations nightmare. If you send it out and someone receives a late 1099 that wasn’t included and they don’t add it to their 1040 before sending it in, the IRS would have to send out a letter asking for more taxes from someone who used the *government approved* form. Imagine what the press will do with that one.

Comment by Happy2bHeard
2010-09-12 15:05:31

Thanks, Polly! Well thought out.

I had considered the constitutional question. That would probably require an amendment, unless the law stated that Congress was delegating its responsibility to the taxpayers. Even then, it might not pass constitutional muster and would probably be challenged.

I hadn’t considered some of the other issues, which is why I asked for your opinion.

Comment by joeyinCalif
2010-09-12 04:54:06

hmm.. Skull and Bones at Yale..

At 41, i think that can be described as premature male pattern baldness. But he’s got a fine sense of humor, and I doubt the stress of the job will accelerate the process…much.

Comment by Jim A
2010-09-12 07:52:51

It works well for people without any hidden income that the IRS may not know about. I have an account at a bank that earns less than the minimum reporting ammount, meaning that I go the bank every year and ask how much interest I’ve earned. The lady at the bank seemed to be of the illusion that because THEY were not obligated to report it to the IRS, I was not. Having a signed form where people have declared their income is important to charge them if that turns out not to be the case.

Comment by polly
2010-09-12 08:43:31

My recollection is that the reporting threshold is something like $10. It made a lot of sense for a bank not to have to report that amount when doing it meant someone with green eyeshades and an adding machine had to do all the figuring. With computers and batch processing, I seriously don’t see why that threshold amount isn’t reduced to less than a dollar and the rule conformed so that you don’t have to report it on your taxes at that same level. It wouldn’t be hard to figure out if people were splitting their savings into accounts at hundreds and thousands of different banks to get the amont of interest below a reporting threshold of $0.99.

JIm, I bet you would be fine by just adding up the interest amounts ($0.38, $0.42, etc.) that you see posted to your account during the year. No need to bother the bank employee - unless, of course, you enjoy it.

Comment by Jim A
2010-09-12 09:36:31

Well it’s less troble for me to bother them than it is to add up statements. And of course 8 times out of ten, it makes zero difference because it gets rounded out when you apply the tax tables.

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Comment by DennisN
2010-09-12 10:23:14

My brokerage (TD Waterhouse) puts cash into a MM account paying something stupid like 0.00007% interest. Naturally I’ve linked mine to a real MM elsewhere and do EFT on deposits of dividends soon after they are posted. At least TDW posts the few odd cents paid on your electronic account although obviously not on any 1099.

Comment by bill in Los Angeles
2010-09-12 10:55:24

You all are glorifying a command economy guy. Unbelievable.

Comment by CA renter
2010-09-12 04:08:11

Totally off-the-wall question, but did anyone happen to TIVO or record CNN (I believe) Friday night between 9-11 p.m.?

With my tin-foil-hat strapped tightly to my head, I could have sworn that a clip of George Bush standing in front of a bunch of kids soon after hearing about the plane crashes has him say something to the effect of, “I have to go back to Washington, but Secretary Robert Gates and [unknown] will take over the podium…”

Robert Gates didn’t become Secretary of Defense until 2006.

Anyone else see this?

Comment by CA renter
2010-09-12 04:27:11

Just to add…I wasn’t focused on the program, it was on in the background, but saw him standing in front of children and mentioning Gates. When I asked my DH when that supposedly took place, he said it was 9/11.

Comment by CA renter
2010-09-12 04:30:19

Can’t find the particular moment, but it was part of this speech, from what I could tell:

Comment by alpha-sloth
2010-09-12 04:41:35

IIRC, after being told of the second plane, he just sat there dumbfounded for about five minutes while the schoolkids plodded through some book about a monkey. Then he gives them some boilerplate about how great they’re doing and how important school is, then his security crew finally hustles him off. There was no podium, just him sitting in front of a small classroom.

Comment by alpha-sloth
2010-09-12 04:47:35

Yeah , go to youtube and punch in ‘Bush reaction to 911′. If there was a conspiracy, Bush must not have been part of it, unless him coming across as a clueless moron was part of the master plan. (Some will say it was, of course.)

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Comment by Sammy Schadenfreude
2010-09-12 07:43:29

I’m going to go with “genuinely clueless moron.” And putty in the hands of his neo-con handlers.

Comment by Beachhunter
2010-09-12 09:28:47

What he did was what we all did… Moron or not.. I’ve seen worse….. What would BO’s teleprom…said

Comment by Itsabouttime
2010-09-12 09:48:59

The real question is what would Reagan have done. Do you think Ronald Reagan would have sat there with the country under attack, reading a kid’s story? I don’t. And, no real president would have done that. Further, no self-respecting American would defend that dereliction of duty.

This isn’t about partisanship. It’s about moving immediately to protect the country when it is under attack. I certainly hope that is something we all agree we want the president to do.


Comment by Sammy Schadenfreude
2010-09-12 12:26:45

Do you think Ronald Reagan would have sat there with the country under attack, reading a kid’s story? I don’t.

242 US Marines got blown up in Beruit on Reagon’s watch, and he didn’t do a damned thing about it. The Reagon mythology even in here is downright cloying sometimes.

Comment by ecofeco
2010-09-12 12:57:29

The Raygun mythology is pathological.

Comment by Exeter
2010-09-12 13:15:03

“and he didn’t do a damned thing about it.”

Yes he did do something. He ran like like the coward he really was. He ordered a full evacuation of Lebanon and then began negotiating with terrorists in earnest.

Those are facts.

Comment by Professor Bear
2010-09-12 14:10:48

“The Raygun mythology is pathological.”

Also mythological.

Comment by Itsabouttime
2010-09-12 14:22:44

Look, I just picked a president. What do you mean “Didn’t do anything about it”? I mean, what would you want him to do?

But. Look. Name a President, ANY President, who, with the cameras whirring, would have stayed sitting in an elementary school classroom, reading a first grade or kindergarten story, while the nation was under attack? I’m definitely no fan of Reagan, but I am certain he would have gotten up immediately to deal with it. I believe Bush I and Clinton would have gotten up, too. I believe Carter, Ford, Nixon, Johnson, Kennedy, Eisenhower, Truman, and FDR would have left the stage immediately as well.

This is no partisan issue. This is basic to the office of president. Defending the inaction is just, well, basically, its treason.


Comment by Carl Morris
2010-09-12 14:28:14

There’s a lot of power in telling people what they’re dying to hear, no matter which side of the political spectrum you’re on.

Comment by RioAmericanInBrasil
2010-09-12 21:05:18

Do you think Ronald Reagan would have sat there with the country under attack, reading a kid’s story?

Is ketchup a vegetable?

Comment by CA renter
2010-09-12 05:15:48

Right, that’s what I remember, but there’s some footage I posted (held up in the spaminator) from a speech where he announces the attacks on the WTC. He’s standing in front of a bunch of kids.

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Comment by potential buyer
2010-09-12 08:31:50

You can’t actually blame folks for wondering if our Government was involved. Both Rove and Wolfowitz, to name a few, were involved in
a think tank that has documents online touting invading Iraq as one of the ways to ensure America’s future.

I noticed that their names are no longer on the site. No, I’m not a conspiracy theorists, but just sayin”…………….

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Comment by joeyinCalif
2010-09-12 05:08:09

Bush entered the second-grade classroom of Sandra Kay Daniels where he introduced the class to Education Secretary Rod Paige and shook hands with Mrs. Daniels, then he and the teacher sat down facing the seated students to read The Pet Goat.

Secretary Rod Page.. Secretary Rob(ert) Gates..

Comment by CA renter
2010-09-12 15:29:28

Thank you, joey!

The script from that day:

Remarks by the President After Two Planes Crash Into World Trade Center
Emma Booker Elementary School - Sarasota, Florida 9:30 A.M. EDT
THE PRESIDENT: “Ladies and gentlemen, this is a difficult moment for America. I, unfortunately, will be going back to Washington after my remarks. Secretary Rod Paige and the Lt. Governor will take the podium and discuss education. I do want to thank the folks here at Booker Elementary School for their hospitality.
Today we’ve had a national tragedy. Two airplanes have crashed into the World Trade Center in an apparent terrorist attack on our country. I have spoken to the Vice President, to the Governor of New York, to the Director of the FBI, and have ordered that the full resources of the federal government go to help the victims and their families, and to conduct a full-scale investigation to hunt down and to find those folks who committed this act.
Terrorism against our nation will not stand.
And now if you would join me in a moment of silence. May God bless the victims, their families, and America. Thank you very much.” -White House (9/11/01)

Comment by joeyinCalif
2010-09-12 18:05:53

wow.. you found the freakin transcript??

yeah.. see.. i’m a little hard of hearing (power tools) and have been for a long time… and the first thing that popped into my head was you probably misheard the TV.

I can make out the vowels (like the soft “o” in Rod or Rob, and the long “a” in Paige or Gates) but the consonants get muffled, especially with female voices.

I was surprised when i looked it up and saw the name Rod Paige… a perfect example of what I experience all the time.

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Comment by CA renter
2010-09-13 02:59:04

Guess I need to order a hearing aid now. ;)

Thanks for your help. I thought I was losing my mind, and spent hours trying to find out why he said “Secretary Robert Gates”.

(Getting old is FUN!) ;)

Comment by mikey
2010-09-12 07:53:28

Nope, but I did see old Poppy Bush and boy George yucking it up BigTime with Kennyboy Lay in Enron: The Smartest Guys in the Room last night.


Comment by alpha-sloth
2010-09-12 04:09:50

OMG- Sounds like the Big Guy is Keynesian!

There is that scattereth, and yet increaseth; and there is that withholdeth more than is meet, but it tendeth to poverty.

The liberal soul shall be made fat: and he that watereth shall be watered also himself.
—Proverbs 11:24–25

Comment by Professor Bear
2010-09-12 04:57:37

Here I had thought all along that he was Austrian:

25 And Joseph said unto Pharaoh, The dream of Pharaoh is one: God hath shewed Pharaoh what he is about to do.

26 The seven good kine are seven years; and the seven good ears are seven years: the dream is one.

27 And the seven thin and ill favoured kine that came up after them are seven years; and the seven empty ears blasted with the east wind shall be seven years of famine.

28 This is the thing which I have spoken unto Pharaoh: What God is about to do he sheweth unto Pharaoh.

29 Behold, there come seven years of great plenty throughout all the land of Egypt:

30 And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt; and the famine shall consume the land;

31 And the plenty shall not be known in the land by reason of that famine following; for it shall be very grievous.

Genesis 41:25-31

Comment by alpha-sloth
2010-09-12 05:45:57

How is that Austrian? The Austrians would just sacrifice a golden calf at the altar of Free Markets, and we’d immediately have endless fat years. (After a very short period of ‘finding our true bottom’ and ‘dusting ourselves off and getting on with it’.)

Comment by Professor Bear
2010-09-12 07:56:32

“How is that Austrian?”

The Big Guy is into creative destruction. There is no mention I can detect in the passage of Joseph’s dream about how manna from heaven will come to save the Egyptians who did not save for themselves. Turns out it was the visionary prudent saver, Joseph, to whom the Pharaoh turned for economic advice, as no Keynesian stimulators were to be found back then.

Why don’t you provide a little reference for where Austrian economics promises ‘endless fat years’ once we ’sacrifice a golden calf at the altar of Free Markets.’ Otherwise we will know you are blowing smoke into our eyes.

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Comment by alpha-sloth
2010-09-12 08:26:01

Find me a reference where Keynes is against creative destruction. Or are you still incapable of understanding him?

And if I’m not mistaken, many an Austrian schooler around here, and elsewhere, will assure you (as they have assured me) that recessions/depressions/7 thin years would be unknown under their system, for they are caused by central planning/banks/etc- we’d only have ‘panics’, which are short-lived and quickly surmounted.

Which they mistakenly think was how it was back in the Good Old Days, a plethora of contradictory evidence notwithstanding.

Comment by OCBystander
2010-09-12 09:01:21

The difference is the austrian economists think they have found a way to borrow a fatted calf from the future during the seven lean years.

Comment by alpha-sloth
2010-09-12 09:09:38

Why don’t you provide a little reference for where Austrian economics promises ‘endless fat years’ once we ’sacrifice a golden calf at the altar of Free Markets.’ Otherwise we will know you are blowing smoke into our eyes.

from wikipedia:
“All Austrian theorists consider the unsustainable expansion of bank credit through fractional reserve banking as the driving feature of most business cycles.”

There’s a reference for ya! Get any smoke in your eyes?

It’s a basic tenet of the Austrian School that recessions/depressions/7 lean years are caused by central banks and the like. They believe that we will no longer have a boom/bust business cycle without the ‘economic misinformation’ that such central control creates.

Therefore any smoke getting in your eyes must be coming from the burning golden calf, sacrificed at the altar of free markets, ensuring endless fat years. Just like their priests promise us.

Comment by ecofeco
2010-09-12 13:05:55

“Creative destruction”

Another one of those great oxymorons that people bought in to.

Comment by chilidoggg
2010-09-12 05:57:57

IIRC, Joseph’s solution sounds a whole lot like economic central planning… 7 year plans…

Comment by Lip
2010-09-12 07:32:55

Alpha sloth,

I would suggest that God honors a “liberal” giver, one that spreads his wealth around to those that are in need, because he will increase that person’s ability to help others by continually supplying that person’s needs.

The government’s method of being liberal becomes a problem in that it fosters “slothfullness” or laziness, which the bible doesn’t support.


PS: Did you know that one of our state parks, Karchner Caverns near Sierra Vista, AZ, has a prehistoric ground sloth that was found inside the caverns. Pretty interesting. I guess he got lost and never found his way out.

Comment by mikey
2010-09-12 08:54:00

“The government’s method of being liberal becomes a problem in that it fosters “slothfullness” or laziness, which the bible doesn’t support.’

I see, so your poor prehistoric ground sloth perished because he didn’t have a flat-top, a little white shirt, got lazy and lost his way because he didn’t read the bible ?


Comment by Exeter
2010-09-12 13:18:00

“The government’s method of being liberal becomes a problem in that it fosters “slothfullness” or laziness, which the bible doesn’t support.”

The bible doesn’t say *anything* about it.

Don’t go there.

Comment by combotechie
2010-09-12 07:33:00

“OMG - Sounds like the Big Guy was Keynesian!”

The “Big Guy” you are quoting is King Solomon. The Book of Proverbs is a collection of Solomon’s quips of wisdom and observations.

Comment by alpha-sloth
2010-09-12 07:45:49’s.

Next you’ll be telling me we can’t stone to death our sassy kids.

Comment by Diogenes (Tampa, Florida)
2010-09-12 07:41:45

The liberal soul shall be made fat: and he that watereth shall be watered also himself.
—Proverbs 11:24–25

I am amazed at the twisting of scripture to try and make some type of points. I also not the highlighting. I assume you are trying to suggest that governmental parasites that liberally take my money and cast it about to other people are somehow justified by God.
This passage is most particularly talking about what a man should do with HIS own field. and his own seed. and his own water.
Reading your follow-up passage, I assume that you wish to transfer this to the role of government, as an extension of the man.

Whatever governments do, it must be good if it is liberally applied somehow?

I also note that governments in scripture are “kingdoms”, not radical fascists. Perhaps you see no difference.

Comment by alpha-sloth
2010-09-12 08:08:41

Render unto Caesar what is Caesar’s. (JC himself says to pay your taxes!) Mathew 22:21

And, yay, it shall be found, that the poor and needy are scattered with the winds, and the ancient system of providing for them, having been found wanting, shall be replaced with a central power, in concord with the will of the people, that shall taketh a portion of the proceeds of the blessed, and distributeth it to the needy- such that their need is lessened, and all are richer for it. And the economy falleth not into a deflationary death spiral, and the people rejoiceth in the gifts liberalism hath bestowed upon them, one and all. Excepteth the stingy amongst them, who search in vain for righteous claims to keeping all, and giving none, when much hath been given unto them. Verily! They shall taste the flames of the pit, for ever and ever. Amen.
Apocrypha 4:20 :wink:

Comment by CA renter
2010-09-13 03:03:10

Amen! :)

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Comment by Sammy Schadenfreude
2010-09-12 07:49:34

Okay, Alpha, time to get Biblical on your a$$: “The heart of the wise inclines to the right, but the heart of the fool to the left.”
–Ecclesiastes 10:2, NIV

Comment by In Colorado
2010-09-12 08:57:33

I doubt that “left” and “right” had the political meaning back then as they do today.

In ancient times being left handed was considered to be sinister. In fact “sinister” means being left handed.

Comment by mikey
2010-09-12 09:42:53

All those little left hands were sinister because the idiots hadn’t invented Charmin yet…and that’s a fact Jack.


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Comment by Sammy Schadenfreude
2010-09-12 10:56:03

No, God speaks to me. He hates liberals and can’t wait to throw them into sulfurous burning pits.

Lefties are still dodgy in my book.

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Comment by alpha-sloth
2010-09-12 09:29:34

Aw, they just hated left-handed people in the Good Old Days. They didn’t fight right.

Lemme ax you this: Is heaven free market or communist?

Comment by DennisN
2010-09-12 10:33:38

And it was this same Melchizedek to whom Abraham paid “tithes”; yea, even our father Abraham paid tithes of one-tenth part of all he possessed.

- BOM Alma 13:15

Comment by DennisN
2010-09-12 10:37:41

And the thief, male and female: cut off the hands of both, as a recompense for what they have earned, and a punishment exemplary from God; God is All-mighty, All-wise.

Koran, The Table 40

Comment by RioAmericanInBrasil
2010-09-12 21:18:34

I got one..

Then he went up from there to Bethel; and as he was going up the road, some youths came from the city and mocked him, and said to him, “Go up, you baldhead! Go up, you baldhead!” So he turned around and looked at them, and pronounced a curse on them in the name of the LORD. And two female bears came out of the woods and mauled forty-two of the youths.

2 Kings 2:23-24 NKJV

Comment by ecofeco
2010-09-12 13:18:28

There’s no trick to being a humorist when you have the whole government working for you.

-Will Rogers

Comment by LehighValleyGuy
2010-09-12 17:36:22

OMG- Sounds like the Big Guy is Keynesian!

You’re really scraping the bottom of the barrel here, alpha. I’m still waiting for you to explain which “40 some odd” year period proved that Keynesian economics worked wonders– and why you’re ignoring all the decades when it didn’t.

Comment by alpha-sloth
2010-09-12 18:36:06

O generational viper, straineth thou at a sloth? Verily, I spaketh of the period known as 1940 to 1980, a time of plenty- amply shared by the mighty and the commoner alike. Til the dark lord, Ronald Wilson Reagan (six letters hath each name), swepteth away the covenants that kepteth the moneychangers righteous, and instituteth the period know as the Looting.

Comment by LehighValleyGuy
2010-09-12 19:18:27

So, the 1970s were the land of milk and honey, economically speaking. And so was WWII. And we’re going to ignore the endless Keynesian interventions of the 1930s that only made things worse. And the economy was terrible in the 1980s (actually, that decade could be used to argue your point, because the economy was booming and Reaganomics was based partly on deficit spending, for which it has been endlessly, and rightly criticized). And all the bailouts and government deficits worked just fine in the 2000s.

Forget it. There are so many problems with your theories, this is not even a challenge any more.

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Comment by alpha-sloth
2010-09-13 05:46:46

Perhaps if you boned up on the difference between Keynes’s theories and monetarism, you’d perceive an element to my theories that you apparently are missing.

Comment by jeff saturday
2010-09-12 04:31:29

This is like the prudent standards that were needed to have enough life boats for everyone after the Titanic sunk.

Tighter Lending Rules Needed: FDIC’s Bair

Published: Thursday, 9 Sep 2010 | 7:03 AM ET

“I think we should all be concerned about the type of exposure that the government is taking on through guaranteeing so many mortgages right now, and make sure that we do have some prudent underwriting standards, and especially documented ability to repay,” Bair told CNBC Wednesday.

Policymakers were trying to balance the need for prudent underwriting with a need to support what is still a very distressed housing market, she said. - 116k -

Comment by jeff saturday
2010-09-12 05:56:14

Navin R. Johnson: Ah… It’s a profit deal.

“With the regulated rate that financial institutions can borrow from one another at almost zero, banks are paying savers next to nothing.”

Shelia Bair
“Banks are in a better position now because loan quality has improved considerably over the last few years, and so I think they’re in a better position to withstand it if we have another downturn,” she said.

Navin R. Johnson: [bleakly] I’ve already given away eight pencils, two hoola dolls, and an ashtray, and I’ve only taken in fifteen dollars.

Frosty: Navin, you have taken in fifteen dollars and given away fifty cents worth of crap, which gives us a net profit of fourteen dollars and fifty cents.

Navin R. Johnson: Ah… It’s a profit deal. Takes the pressure off. Get your weight guessed right here! Only a buck! Actual live weight guessing! Take a chance and win some crap!

Comment by Professor Bear
2010-09-12 04:37:39

Anyone in the market for a San Diego County golf course?

LEISURE: Golf courses on sale amid rough conditions
Local duffers seize upon discounts as play increases

By PAT MAIO - North County Times - Californian | Posted: Sunday, September 12, 2010 12:00 am

RAMONA —- It isn’t the exclusive La Jolla Country Club, where gentle sea breezes blow in and waves from the Pacific Ocean are heard crashing ashore from the parking lot.

But at Mt. Woodson Golf Club, about 31 miles to the east, a golfer can pay less than $50 to get a cart and play an 18-hole round of golf. For $6, you can buy a hot dog, a bag of chips and a soda and pretend you’re sitting under the pagoda with La Jolla club members such as developer Doug Manchester or Qualcomm founder Irwin Jacobs.

A big difference between the two courses, however, is that the idyllic Mt. Woodson quietly slipped into foreclosure and ended up in the hands of Textron Financial Corp. about two years ago. Sale price: $4.75 million.

Seeing golf courses for sale or sitting on the market seemingly forever has become nearly as common as signs of housing-market distress in neighborhoods across the United States.

Locally, despite the turnover of some of the region’s 90 courses, the rounds played are holding up well compared with slumping national levels of play. And softness in the market has created opportunities for golfers, as courses substantially discount their fees. This has resulted in golfers getting to play on challenging courses that they once couldn’t afford —- like Mt. Woodson, located just off of Highway 67, about six miles southwest of downtown Ramona.

Comment by In Colorado
2010-09-12 08:51:50

Ramona’s problem is accesibility. It’s a nice place, but its out in the sticks and to make it worse you have to drive a twisty road to get there (unless a new highway has been built since we left.

Comment by CA renter
2010-09-13 03:07:55

It’s still that twisty road (that makes me car sick). :)

Comment by Professor Bear
2010-09-12 04:41:12

Time for strong hands to snap up prime San Diego commercial real estate at fire sale prices:

* SEPTEMBER 8, 2010, 8:04 A.M. ET

BioMed Realty Trust Acquiring San Diego Portfolio For $132.9M

BioMed Realty Trust Inc. (BMR) has agreed to buy five San Diego life-sciences properties for $132.9 million, increasing the rentable area of its portfolio there by 29%.

Commercial real-estate investment trusts in general have been hurt as the economy exerts pressure on tenants, leading to higher vacancies and lower rents. BioMed in July posted a steep drop in funds from operations–a key measure of REIT profitability–though revenue rose. It has been in acquisition mode, adding more than 500,000 square feet in the first half of the year.

Comment by Professor Bear
2010-09-12 04:49:31

I am afraid my loverly wife pitched our dead-tree edition copy of this article before I had a chance to read it, but this looks like a useful comparison of different housing price metrics. Thanks to the SD Union-Tribune editors for moving away from real estate cheerleading, and back towards the proper role for a newspaper of providing objective information. Since for the longest time, I took the impression the U-T was in the business of deliberately adding to the confusion about the housing situation, it is great to see them make an effort to clear it up somewhat.

What do housing price reports mean?
We help you reconcile the jumble of conflicting reports about the housing sector

By Jennifer Davies, UNION-TRIBUNE
Wednesday, September 8, 2010 at 7 p.m.

Keeping track of the local housing market in these uncertain economic times can be more than a little crazy.

For every headline that says “Home prices rise,” there seems to be another one that announces “Home prices plummet.”

It’s enough to make your head spin. The problem is that there are dozens of housing reports and each has its own methodology and time frame so the snapshot of one report can look entirely different from another.

That’s all well and good, but you just want to make sense of all the confusing numbers. Here is our U-T primer on some of the most prominent real estate reports and what they all mean.

Comment by awaiting wipeout
2010-09-12 06:45:26

As usual, great and informative articles this morning. Thank you.

Comment by DennisN
2010-09-12 10:41:04

the proper role for a newspaper of providing objective information.


Comment by Professor Bear
2010-09-12 05:03:37

Here is a glimpse into why Wall Street is so short of prophetic visionaries these days. At least there is no mention of death threats, at least so far as I have read in this article.

The Loneliest Analyst
Melisssa Lyttle for The New York Times

BankAtlantic accused Richard Bove, a bank analyst, of defamation after he wrote a critical report. He received little support from his peers in the industry before the suit was settled.

Published: September 11, 2010

Alan Levan, center, leads BankAtlantic’s holding company, while his son, Jarett, right, is the bank’s C.E.O. Executives often complain about an industry analyst’s critical report, but few have gone as far as Alan Levan and sued.

RICHARD X. BOVE is a bank analyst who likes to take what he calls “extreme positions.” He occasionally moves the stock market, which has earned him a certain amount of prestige and notoriety — but has also gotten him fired several times.

One recent Tuesday morning, for instance, Mr. Bove opined from his bright-orange home office, in this town just north of Tampa, that new government rules would curb mortgage profits and, therefore, bank profits, too.

It wasn’t a particularly extreme pronouncement, by Bove standards. Yet shares of Wells Fargo, the nation’s largest mortgage lender, started to drop, and his phone lighted up.

“That’s what makes the game fun, right?” he says.

But for the last two years, Mr. Bove has been engaged in a lonely legal battle to retain his ability to say whatever he likes, an ordeal that he says has been anything but fun. BankAtlantic, a Florida bank, sued him, accusing him of defamation after he wrote a report about the banking industry in July 2008, just as the financial crisis was starting to boil over. The bank contended that the report falsely suggested that the institution was in trouble.

The case was settled three months ago , and Mr. Bove didn’t pay a dime to BankAtlantic. Still, it was hardly a resounding victory for Mr. Bove or, for that matter, freedom of speech on Wall Street, where some say the need for independent, probing voices has never been more apparent.

Although Mr. Bove is among the best-known analysts on Wall Street, most of his colleagues deserted him after BankAtlantic filed its suit. None of the professional associations that represent analysts or the securities industry rallied to his side, and his employer ultimately abandoned him. And Mr. Bove, 69, is stuck with nearly $800,000 in legal fees.

“Even though from a legal standing I won, from a real-world point of view I lost big,” he says.

Comment by WT Economist
2010-09-12 05:50:27

“Even though from a legal standing I won, from a real-world point of view I lost big,” he says.

That is true of anyone who challenges the Powers That Be.

Comment by joeyinCalif
2010-09-12 06:12:07

well.. If you make it your business to go around poking lions with a sharp stick.. who’s fault is it when you get eaten alive?

Comment by Nudge
2010-09-12 15:41:36

Let the rule of law go to the highest bidder, right? Sounds like the “let Mr Market handle it” meme being applied where it oughtn’t be.

well .. If you make it your business to go around poking lions with a sharp stick ..

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Comment by Diogenes (Tampa, Florida)
2010-09-12 07:57:13

That is true of anyone who challenges the Powers That Be.
I believe that is only true due to the nature of the legal system here.

LOSER PAYS. That fixes the problem.
If you sue me, and I need to spend a fortune in legal fees to defend myself, if I win, YOU PAY all the bills.
That typically doesn’t happen here, except when counter-suits can be filed. If someone is suing you for “defamation”, what recourse do you have? I think none. You must defend your actions.
However, if the complainant loses, meaning he has no grounds, should he not be forced to pay the bills that you were forced to incur based on his actions.
In a just society, which includes much of the western world, I would say yes.
Our Current system, which lets you take people to court without recourse, encourages lawsuits. It is primarily why the US has the highest number of lawsuits annually than any other country, bar none. It needs to be changed to LOSER PAYS.
Unfortunately, the lawyers like it just the way it is.

Comment by CoSpgs4
2010-09-12 12:16:50

“Unfortunately, the lawyers like it just the way it is.”

Are you actually saying that our media-glorified Legal Eagles may not be as just as they themselves proport? Say it ain’t so!

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Comment by CA renter
2010-09-13 03:12:08

Agree with your “loser pays” position.

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Comment by palmetto
2010-09-12 06:02:44

Reminds of the realtor here in Florida who tried to blow the whistle on Lennar Homes regarding construction defects.

Freedom of speech doesn’t exist in the face of deep pockets, machetes, fatwas, etc.

Comment by Itsabouttime
2010-09-12 08:57:07

I don’t know. This isn’t a freedom of speech issue. He said what he wanted to say. It’s a “stand behind what you say issue.”

The man admits he likes to stir things up. Shares bounce up or down on his every word. Therefore, he is hardly some small guy struggling against the powers that be. No, he’s just one of the powerful who has a niche that he must protect by continually publicizing controversial positions. If he has enough money to convince some lawyer to keep working long enough to accrue $800,000 in legal bills, I’d say he is not one of the weak defenders of freedom.

If someone likes to stir things up, they’d better be able to back it up. Otherwise manipulation of financial assets will be even more rampant than at present. And the more manipulation there is, the worse the economy, because the confidence necessary to sustain an economy would weaken even more than it currently is. Doubt this is not possible? Look at some poor countries for examples of how bad it could get.

I agree it should be “loser pays” in the court system. But, this wasn’t a freedom of speech issue. You don’t have the freedom to say anything you want on Wall Street–at least, not about anything that’s regulated. I know they didn’t enforce this rule in the recent past. And, how’d that work out for people?


Comment by LehighValleyGuy
2010-09-12 17:29:55

Yes, the financial crisis is certainly caused by not having enough restrictions on free speech. And it’s fine for megabanks to sue people for speaking out, and force them to spend $800K on legal fees, because anyone can easily afford that. Unbelievable.

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Comment by ecofeco
2010-09-12 13:23:33

“…independent, probing voices has never been more apparent…”

This was/is supposed to be the job of the SEC.

Comment by LehighValleyGuy
2010-09-12 17:31:29

Of course, only government should have free speech. The rest of us should just shut up and fall into line. Isn’t that what we all learned in civics class?

Comment by Itsabouttime
2010-09-12 17:52:12

It is apparent you didn’t learn anything in civics class. Free speech means the government cannot restrict speech. There is nothing stopping a private entity from restricting speech. Or, do you think anyone with anything to say can demand “equal time” on CBS.



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Comment by LehighValleyGuy
2010-09-12 19:05:30

Uhh, the problem here is not that Bove didn’t get equal time on CBS– it’s that a GOVERNMENT chartered megabank used the GOVERNMENT court system to harass someone for speaking out. Kapish?

Comment by Professor Bear
2010-09-12 05:29:22

Will the introduction of new Basel rules put Wall Street gunslingers at a disadvantage?

* SEPTEMBER 10, 2010

Tough Bank Rules Coming
Global Group Prepares to Limit Risk-Taking; Cost of Loans Could Rise


Regulators from 27 countries are hammering out a deal that would force the world’s banks to hold much larger reserves against potential losses, the centerpiece of a sweeping set of new rules that is meant to stave off a repeat of the financial crisis of 2008.

Convening in the Swiss city of Basel, the officials are hoping to cinch a deal this weekend. In one of the most far-reaching steps, the current proposal would require global banks to maintain basic levels of capital equal to at least 7% of their assets—much more than existing standards of roughly 4% for large U.S. banks.

The effort would transform banking, potentially forcing banks to take fewer risks, make less profit and face more government scrutiny. It comes nearly two years after the chaotic bankruptcy of Lehman Brothers convulsed the global economy and led to taxpayer-funded bailouts world-wide. U.S., European and Asian officials hope an accord will create new global standards designed to firm up the foundations of large international banks.

For banks, the rules could require them to raise capital, shrink balance sheets and dump business lines deemed too risky. They’ll likely have to keep in reserve more earnings to protect against potential losses, which will leave them less money to pay investors and employees.

For consumers, the rules could cut both ways—potentially driving up the rates they receive on deposits but also raising the cost of loans and crimping their availability. “Everybody is going to feel the impact a little bit differently, but everyone is definitely going to feel the impact,” said Mary Frances Monroe, vice president of regulatory policy at the American Bankers Association trade group.

Comment by ecofeco
2010-09-12 13:25:53

“…dump business lines deemed too risky….”

Tough call there considering all business is risky… if you don’t have government backing up your mistakes.

Comment by CA renter
2010-09-13 03:19:36

Comment by Professor Bear
2010-09-12 05:29:22
Will the introduction of new Basel rules put Wall Street gunslingers at a disadvantage?

* SEPTEMBER 10, 2010

Tough Bank Rules Coming
Global Group Prepares to Limit Risk-Taking; Cost of Loans Could Rise


The effort would transform banking, potentially forcing banks to take fewer risks, make less profit and face more government scrutiny. [Oh no, the horror! -CAR] It comes nearly two years after the chaotic bankruptcy of Lehman Brothers convulsed the global economy and led to taxpayer-funded bailouts world-wide. U.S., European and Asian officials hope an accord will create new global standards designed to firm up the foundations of large international banks.

[Will they stop repeating this lie that the "crisis" began when Lehman Brothers failed? The failure of Lehman was due to the crisis that occurred during the 2001-2007 period when loans were being made to people who had neither the ability nor the desire to ever pay off the loans. -CAR]

For banks, the rules could require them to raise capital, shrink balance sheets and dump business lines deemed too risky. They’ll likely have to keep in reserve more earnings to protect against potential losses, which will leave them less money to pay investors and employees.

For consumers, the rules could cut both ways—potentially driving up the rates they receive on deposits but also raising the cost of loans and crimping their availability. [Finally! After waiting for this for almost a decade! -CAR] “Everybody is going to feel the impact a little bit differently, but everyone is definitely going to feel the impact,” said Mary Frances Monroe, vice president of regulatory policy at the American Bankers Association trade group.

I’ll believe it when I see it.

Comment by Jess
2010-09-12 06:09:15

We have in our local city In upstate SC what may be a future in Custom Homebuilding . A local 29 yr old builder has honed his Mid sized houses to Around $95. a sq. ft . while his competition is 40% higher .
He has his own little network of subs who are paid well (by the job only) if they do good work . And almost none of them speak spanish , is the real kicker here . The builder is honest to a fault, which is a very rare thing in this industry . I don’t think he has much money left , but he’s still young ,he’ll do well if he keeps this up .

Comment by Bill in Carolina
2010-09-12 06:32:02

“I don’t think he has much money left…”

Maybe his profit margin is a bit TOO low.

Comment by joeyinCalif
2010-09-12 06:55:53

i was thinking the same thing.. it’s a common mistake.

you want to take advantage of what you think are your low business expenses, and your superior skills and brains, so you cut your price to the bare bones in the hope of stealing some business from the big boys..

Comment by ecofeco
2010-09-12 13:28:02

….and eventually you go out of business.

You’re right. I’ve seen this happen too many times.

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Comment by CA renter
2010-09-13 03:21:15

I’d love to see him (and others like him) succeed.

Let’s hope he adjusts his margins a tiny bit, and manages to maintain his apparent integrity.

Comment by Walt
2010-09-12 06:50:33

I’m in Raleigh, NC as the result of new job here, the market seems in total denial here. I have seen crap boxes on the market in excess of 400 days. Of the 3400 or so single family houses on the market, 1200 plus seem to be in a stage of foreclosure. Many homes are empty. I wouldn’t dare venture into this market here.

Comment by Red Beach
2010-09-12 07:36:37

There seems to be a whole ‘nother round of noobs and lurkers posting these days. Introduce yourself, right on!

Comment by Itsabouttime
2010-09-12 09:00:48

FYI, I was posting here back in 2007 and 2008, took a hiatus for personal (non-real estate) reasons, and am now back. I think I predate you Red Beach. Not sure, though.


Comment by Exeter
2010-09-12 13:21:59

Welcome back IAT.

I haven’t seen ItsFecalTime! around in a while.

Comment by Lenderoflastresort
2010-09-12 15:18:22

I remember your moniker. I can vouch for that.

Comment by aNYCdj
2010-09-12 17:58:44

and what ever happened to ATE-UP? He was going back to his legal job he quit

hope he is ok….he had some serious nose candy problems years ago..

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Comment by Carl Morris
2010-09-12 18:48:40

Has he been around since Oly has been gone? I figure that news might be more dangerous to him than the rock.

Comment by CA renter
2010-09-13 03:22:51

He came back a while after Oly passed, and found out about what happened. He seemed very upset about it (as most of us were), and he seemed to disappear after that. I do hope he’s okay.

Comment by Professor Bear
2010-09-12 08:01:03

I keep seeing signs that the housing market has pretty much recovered and is hence ripe for the remaining government feeding tubes to be removed in order to allow it to stand on its own two feet.

Local home sales inch up in August
By Jennifer Davies, UNION-TRIBUNE
Sunday, September 12, 2010 at 6 a.m.

The number of homes and condos sold in San Diego County increased slightly in August from July, says a new report from the San Diego Association of Realtors.

Sales of single-family homes rose more than 1 percent in August from the previous month whereas attached-properties like condos and townhomes increased by almost 3 percent. It’s important to note that July was an especially slow month for the local housing market.

When compared to August 2009, single-family home sales decreased by 2.6 percent while sales of attached properties dropped by 4.3 percent.

Still, so far this year, home sales are outpacing 2009 sales. Single-family home sales for the first eight months of 2010 are up 4.5 percent compared to last year while condo and townhome sales are up 2 percent.

The number of days on the market it took to sell a single-family home in August increased to 75 days up from 69 days a year ago — an almost 9 percent jump. For condos and other attached properties, days on the market in August increased to 69 days from 67 from a year ago.

The median sale price for single-family homes in August rose to $385,000 from $375,000 a year ago. For condos and other attached properties, the median sales price in August decreased to $220,000 from $226,575 last year.

Mark Marquez, president of the San Diego Association of Realtors, said the uptick in August sales was an encouraging development.

Even though median sales prices didn’t change drastically from the previous month, it continues to hover around 10 percent higher than last year, which is a positive sign,” he said.

Comment by mikey
2010-09-12 08:16:23

August home sales dip 37%
Sales so far this year are down nearly 4% and expected to stay low
By Paul Gores of the Journal Sentinel

Sept. 10, 2010 |(31) Comments

Sales of existing homes in the metro Milwaukee area fell for the third consecutive month, dropping 37% in August and dragging totals for the year into negative territory - a place a local industry leader says they may reside until the job situation improves.

Realtors sold 946 homes last month, compared with 1,500 in August 2009, according to data released Friday by the Metro MLS Inc. Sales plunged in all four counties - Milwaukee, Ozaukee, Washington and Waukesha - in August, with Washington County posting the worst percentage falloff at 54.5%.

Home sales were down 2% in June from a year earlier, and 45.3% in July. For the first eight months of 2010, sales of existing homes have decreased 3.9%, Metro MLS figures show.

The drop in sales was expected because last summer, more buyers were being drawn into the market by a first-time homebuyer federal tax credit of up to $8,000. At that time, home shoppers believed the credit would expire Dec. 1. However, the incentive was extended and expanded by Congress to April 30 of this year.

Home sales have declined this summer since

Thar’s some real hungry RE agents out thar !

Comment by Professor Bear
2010-09-12 14:07:49

“August home sales dip 37%”

I know how to fix that problem: Lower the prices, and more home sales will happen. It’s as easy as pie!

Comment by Rancher
2010-09-12 08:06:20

I couldn’t make up this story if I tried.

Lost in the images of aircraft dropping giant red plumes of retardant on a Colorado wildfire this week is the fact that the practice may not be legal under federal environmental laws.

A federal judge in July declared that the government’s current plan for dropping retardant on fires is illegal, and he gave the U.S. Forest Service until the end of next year to find a more environmentally friendly alternative.

The aerial assaults have become a permanent fixture of television and media coverage of wildfires in recent years as planes and helicopters drop big loads of red chemicals over blazes. But environmentalists say the efforts are essentially public relations stunts that can send millions of gallons of hazardous chemicals into waterways while doing little to contain fires.

The fire retardant used to battle wildfires is 85 percent water, and the rest is made up of fertilizer and an anti-corrosion chemical meant to protect the air tankers that carry it. It also contains a red dye to help fire crews see the drops as they fall to the ground.

When mixed with water, the fertilizer component helps deprive wildfires of oxygen. But when dumped or dropped in a creek or lake, it can kill fish and plants.

“Just as any farmer knows not to drop liquid fertilizer in a creek or they’ll go to jail … retardant should not be dropped into a creek with a threatened or endangered species,” said Andy Stahl of Forest Service Employees for Environmental Ethics, which brought the lawsuit that led to the judge’s ruling earlier this year.
U.S. District Judge Donald W. Molloy in Missoula, Mont., wrote that government analyses of the practice violated the Endangered Species Act by failing to put any real limits on firefighters from calling in retardant drops.

Comment by In Colorado
2010-09-12 08:48:01

I guess we’ll have to let the forest burn to the ground in order to save it.

Comment by Itsabouttime
2010-09-12 09:03:20

Wonder how they fought fires before airplanes. Or, did every fire burn every forest to the ground?

Geez, some people.


Comment by combotechie
2010-09-12 09:30:28

“Or, did every fire burn every forest to the ground?”

Just the forests that were never allowed to burn.

Burning a forest now and then is a good thing in that the dead stuff that burns gets recycled back into the soil. If the dead stuff is allowed to build up then the forest fire is especially fierce.

In this respect a forest fires has the same effect on a forest as a recession has on an economy.

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Comment by In Colorado
2010-09-12 12:21:24

“Or, did every fire burn every forest to the ground?”

They did, it’s just that back in the good old days nobody lived near those fires. Now we’re 300 million+, with a lot more living in the arid western US. If you live east of the Mississippi you probably don’t understand what its like to walk out your front door and be able to smell ashes in the air.

As I type there is a fire 5 miles from my house. I have a friend in San Diego whose house burned to the ground in a wild fire. Now I know these things don’t happen in the damp, humid east coast, but it’s very common out here in the dry, dry west.

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Comment by Ol'Bubba
2010-09-12 14:48:09

It may be my imagination, but it seems to me that wild fires are happening a lot more frequently than they were 30 or 40 years ago. Or perhaps they’re being reported more.

Comment by Itsabouttime
2010-09-12 15:06:46

Unclear which it is. But, you can’t stop fire. If you suppress it for 30-40 years, you only get more massive fires when they do happen.

Also, I do not believe the court case concerns urban fires. I am not sure. But, do they really have fireplanes dropping fire retardant in neighborhoods? I don’t think I’ve ever seen that. Maybe at the urban-wilderness interface, but not in downtown San Diego.


Comment by Rancher
2010-09-12 15:30:19

“It may be my imagination, but it seems to me that wild fires are happening a lot more frequently than they were 30 or 40 years ago.”

It’s not your imagination. This is a direct result of Smoky’s fire prevention program
instituted decades ago by the USFS. The
result is a tinder box of dead trees, fallen
limbs, dieing underbrush that, when ignited, fuels the fire until it becomes a crown fire.

Before Smoky, when you had a lightning strike, the fire was naturally contained to
the ground as there wasn’t that much fuel.
Repeated fires kept the ground clean and you rarely had a Crown fire.

You can look up old photos of the Mogollon
Rim in northern AZ and see what it looked
like in the 1870’s; almost park like with
grass growing between the widely spaced

Before the 1940’s, crown fires were the
rarity. Now, they’re commonplace. Think
Yellowstone fire.

Right now, both the BLM and USFS are
contracting out ground brush cleanups
efforts to thwart this type of fire, unfortunately, it’s a dollar short and an
hour late.

Comment by RioAmericanInBrasil
2010-09-12 21:28:58

It’s not your imagination. This is a direct result of Smoky’s fire prevention program
instituted decades ago by the USFS. The
result is a tinder box of dead trees, fallen
limbs, dieing underbrush that, when ignited, fuels the fire until it becomes a crown fire.

Only you can prevent minor forest fires…

Comment by joeyinCalif
2010-09-12 10:47:56

question from a few days ago:
How does one define prosperity for a whole country?

If a country can afford radical environmentalism, it’s prosperous.

Comment by CoSpgs4
2010-09-12 12:53:18

Yes. If you can afford to burn down several hundred homes to save a guppy, then I’d have to agree.

Comment by Itsabouttime
2010-09-12 15:09:17

Guess you never read Collapse. Methinks a nation is never wealthy enough to ignore the environment. For object lessons, see the many examples of moderate non-environmentalist societies that failed in the book above.


Comment by joeyinCalif
2010-09-12 17:57:11

Maybe a nation is never wealthy enough to ignore the environment, but it certainly can be so poor that it must ignore it.

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Comment by ecofeco
2010-09-12 13:30:11

Like a wildfire is environmentally friendly. :lol: :roll:

Comment by joeyinCalif
2010-09-12 14:19:07

Some pine cones must burn before they will open, releasing the seeds.

While we think we know everything there is to know about nature, there may be one or two billion things we have yet to learn.

Comment by Professor Bear
2010-09-12 08:06:45

Knee-jerk economics lessons:

1) If you subsidize something, you get more of it.

2) Nothing that happened in 2009 can fairly be blamed on Obama, as the recession started on Bush’s watch (Paulson’s failed obfuscation efforts notwithstanding).

US poverty rate expected to post a record increase
Overall number could reach 15%, demographers say
By Hope Yen
Associated Press / September 12, 2010

WASHINGTON — The number of people in the United States who are in poverty is on track for a record increase on President Obama’s watch, with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty.

Census figures for 2009 — the recession-ravaged first year of the Democrat’s presidency — are to be released this week, and demographers expect grim findings.

It’s unfortunate timing for Obama and his party just seven weeks before midterm elections in which control of Congress is at stake. The anticipated poverty rate increase — from 13.2 percent to about 15 percent — would be another blow to Democrats struggling to persuade voters to keep them in power.

Comment by Bill in Carolina
2010-09-12 10:04:55

The War on Poverty started in 1965. It’s been going on for 45 years now and we’re back to square one.

Yeah I know. If we had just spent a BIT more money.

Comment by Itsabouttime
2010-09-12 10:12:16

The war on poverty started in 1965. The war on the impoverished and the middle class has gone on considerably longer.


Comment by bill in Los Angeles
2010-09-12 12:22:13

Well over $1.5 trillion has been spent on this least successful war in history. The biggest scam. All those programs must be abolished.

Comment by Exeter
2010-09-12 13:26:18

Well over $50 Trillion has been spent on the military murder machine. The biggest scam. This program must be abolished.

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Comment by Itsabouttime
2010-09-12 14:25:05

You talkin’ ’bout the Wall Street bailout, their war against Main Street? I’m all with you.


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Comment by RioAmericanInBrasil
2010-09-12 21:37:43

Well over $1.5 trillion has been spent on this least successful war in history.

1.5 Trillion??? For a decades long holding pattern? While education became out of reach and middle class jobs have vanished. Is that all it took?

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Comment by RioAmericanInBrasil
2010-09-12 21:33:38

The War on Poverty started in 1965. It’s been going on for 45 years now and we’re back to square one.

Maybe it’s like the Korean war. Square one was good there right?

Comment by CoSpgs4
2010-09-12 12:24:49

Is the poverty rate calculated based on pre-tax or post-tax income? Anyone know? For if it’s the latter, we might expect the government to begin calculating poverty rates based on the former.

That’d be one way to fight poverty - change the inputs in your favor!

Oh - I guess the gooberment also could include government handouts, entitlements and deductions as “income”, thereby dropping the poverty rate for the upcoming year.

Is this a great country or what?

Comment by DennisN
2010-09-12 13:30:32

I hate articles like that - they leave out any definition of what constitutes “poverty”. Couldn’t they at least add “defined by the government as below gross income of $X for a family of four”?

One problem is that the $X figure is a moving target and I’m sure it changes from year to year.

If on the other hand “poverty” is defined as being in the bottom 15 percentile of income, then “poverty” is by definition stuck at 15% of the population.

Thunders the demogoge: “Fully half of the people in this country live at below the median income level!” :lol:

Comment by ecofeco
2010-09-12 13:56:56

“No Banker Left Behind”

Comment by Ol'Bubba
2010-09-12 14:50:39

What we need is a war on Congress.

Comment by DennisN
2010-09-12 10:55:41

From the SF Chron:

In 2006, Arthur Brito, a self-employed Bay Area landscape designer, and his wife were prequalified for a $625,000 home loan. After being priced out of the housing market by inflated values, they started looking again last year, but quickly learned that the mortgage crisis had changed their fortunes: They now qualified for a loan of only $280,000.

So this poor schmuck waited until prices got lower, then couldn’t get a loan. I’m not sure what you can get for $280K in the SF bay area these days.

Comment by Prime_Is_Contained
2010-09-12 11:35:29

He should consider himself lucky. Being approved for only a lower loan amount may just save him from catching a falling knife.

Comment by potential buyer
2010-09-12 12:07:38

A very small condo

Comment by CoSpgs4
2010-09-12 12:08:42

“So this poor schmuck waited until prices got lower, then couldn’t get a loan. I’m not sure what you can get for $280K in the SF bay area these days.”

Answer: Not screwed.

Comment by Kim
2010-09-12 12:16:08

Even $280,000 may be a bit of a stretch. To stay within three times income he’d need to be making north of $90,000/year. He says his income hasn’t changed, which seems possible, but unlikely (unless wife also works?) in a field (landscaping) closely related to and dependent upon housing.

Comment by Kim
2010-09-12 12:17:43

I didn’t read far enough down:

“As a result, his wife’s modest income as a nurse at a nonprofit clinic was the primary basis for the couple’s $280,000 loan limit.”

Comment by DennisN
2010-09-12 12:36:16

Just like “sanitary engineer” is newspeak for “garbageman”, is “landscape designer” newspeak for “gardener”?

Comment by Poor Doc
2010-09-12 11:04:59

I’m a physician and I can’t afford any of the houses within 20 miles of Boston that’s not in the ghetto.

I look at median household incomes in these towns and they’re like 1/3rd to half mine. So who are these magical rich people that bid up home prices to absurd levels and what do they do?

Comment by DennisN
2010-09-12 12:34:22

Chances are they bought decades ago when things were cheap.

One of the oddest things about RE is that many if not most people who own their own home could not afford to purchase it in today’s market.

Comment by CoSpgs4
2010-09-12 12:39:54

How is this odd? Given the Grand Ponzi that was established between 1913 and 1965, the current scenario shouldn’t be viewed as odd.

Rather, it should be viewed as “Expected”.

It’s easy to become well off if future generations are paying your tab.

Comment by Professor Bear
2010-09-12 14:04:04

“…most people who own their own home could not afford to purchase it in today’s market.”

That is one of the key signs we remain in an unsustainable price bubble. Unless investors and banks keep it propped up forever at these levels, price discovery will eventually bring home prices back in line with the prices of other consumption goods.

Comment by CA renter
2010-09-13 03:34:04

Exactly. We are still very much in a (now govt-induced) bubble.

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Comment by Professor Bear
2010-09-12 14:01:58

“So who are these magical rich people that bid up home prices to absurd levels and what do they do?”

Presumably bankers and real estate investors, since, as you duly noted, the end user community could not possibly keep the bid propped up any where near its current level in the Bean Town vicinity. Living as we do in San Diego, I can feel your pain.

If you want a big house, you might consider moving to the Wasatch Front; my BIL, also a doc, lives in a $500K home that would cost north of $1m in Coastal Cali.

Comment by DennisN
2010-09-12 14:33:44

Job security is being a pediatrician in Utah or Idaho…..

Comment by Carl Morris
2010-09-12 15:20:51

Yup, even if nobody has any money you’ll always have plenty of people looking to trade food and their services for your services. You will never starve.

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Comment by JimJamesh
2010-09-12 20:20:01

My friend listed his house for $729k in Dana Point last month. He had 3 parties fighting over it and it went for $750k in a week. Built in the 70’s. Buyers wanted it as a 2nd home!?

Comment by Rental Watch
2010-09-12 23:34:59

Massive supply constraints…I’m guessing there are not a lot of new homes being built, or existing homes for sale…

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Comment by B. Durbin
2010-09-12 18:20:54

Huh. I mentioned last week that we fixed our sprinkler system. Ten days in… who knew our lawn could turn green?

(Still have significant dead areas. One of them is caused by a mass of tree roots from three trees that we’re planning to remove. Not particularly looking forward to trying to get rid of those… I think I might wait until I can afford to have the sprinkler guy come in and just rent an earth-mover to rip that area out, and re-do the pipes to the system on the other side…)

Comment by B. Durbin
2010-09-12 18:29:48

On the subject of doomed areas: There’s a street near my neighborhood called Lujan Crest Court (in Elk Grove, CA, if you want to look it up.) We looked at a house there that required more work than we had the ability to compass. That one was sold to a contractor, then upgraded and resold to someone I know from church.

That’s one. There’s another house on that block that went up for sale recently and sold. That’s two. There’s also a house on the corner that was up for short sale for a year or two before we started looking in 2008; it’s been in foreclosure for a long time now and has been listed by multiple agencies. (Talk about chasing the market down; IIRC this 3/2, 1300 ft^2 property was listed near or above $300K when it started and has followed the market ever since. Wood paneling inside. Yeesh.) That’s three.

I drove past today and saw two more sale signs up. That’s five. Keep in mind that this court has maybe a dozen homes at best and you wonder what the heck is going on? The overall neighborhood has an average of one sale sign per three streets (plus another no-sign, unoccupied property for the same amount.) Five out of twelve seems a little out of proportion.

Comment by Professor Bear
2010-09-12 23:14:42

I got me a little piece of all of these post-Lehman asset classes (bonds, gold and emerging markets) — except for the bonds and the gold, that is. :-) I guess I lack faith in investments which seem like completely obvious choices.

* SEPTEMBER 12, 2010

A New World Since Lehman’s Fall
Bonds, Gold, Emerging Markets Have Gained Favor Over Past Two Years, While U.S. Stocks Remain Depressed


Two years after Lehman Brothers Holdings Inc. collapsed into bankruptcy, the impact of the financial crisis can be seen on almost every market around the globe.

The preference of investors for reliable income streams from bonds of all types has led to big rallies in both safe-haven U.S. Treasurys and risky “junk” bonds, even amid a chorus of warnings about a “bond bubble.”

But many stock markets, most notably in the U.S., haven’t reclaimed losses suffered since Lehman filed for bankruptcy on Sept. 15, 2008. The Dow Jones Industrial Average remains more than 900 points below its pre-Lehman level.

U.S. financial stocks, at the epicenter of the crisis, remain nearly a third lower than where they were two years ago. And since August 2008, investors around the world have pulled $203 billion out of developed-market stock funds, according to EPFR Global. That is 8.5% of the $2.4 trillion that were in developed-market stock funds at the time.

Instead, investors are gravitating toward emerging markets. That isn’t because they want to take on risk. Those economies, with lower debt levels and strong outlooks, are now seen as having taken on the role of driving global economic growth from the hobbled developed economies.

Comment by Professor Bear
2010-09-12 23:19:05

Can anyone explain to me what is wrong with this guy’s face?

Geithner says China has done “very little” on yuan: report
Posted Sunday September 12, 2010 6 hours, 33 minutes ago

U.S. Treasury Secretary Timothy Geithner makes a statement listens to a reporters question after making a statement on financial reform outside of the Treasury Department in Washington July 15, 2010. REUTERS/Molly Riley

Article courtesy of Reuters

BEIJING (Reuters) - China has made “very, very little” progress on letting the exchange rate of the yuan reflect market forces, Treasury Secretary Timothy Geithner said in remarks published in the Wall Street Journal on Monday.

In an interview conducted on Friday, Geithner was asked if he was satisfied with China’s progress on the yuan. He replied: “Of course not.”

Comment by Professor Bear
2010-09-12 23:22:34

Who gets to pay for blanket mortgage finance (aka Pimco) guarantees and how?

Highlights: Geithner pushing housing policy change

* PIMCO’s Gross: government mortgage guarantee “essential”
Tue, Aug 17 2010

WASHINGTON | Tue Aug 17, 2010 11:39am EDT

WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner said on Tuesday fundamental change is needed in the housing industry but appeared to back some mortgage guarantee.

Following are highlights from the Obama administration conference on reforming housing finance:


“Fixing this system is one of the most consequential and one of the most complicated economic policy problems we face as a nation.”

“Alongside the many broader failures that contributed to this financial crisis, there are several that directly involved the government sponsored entities Fannie Mae and Freddie Mac. Amid the general race to the bottom in credit standards across the private sector, Fannie and Freddie lowered their underwriting standards, providing guarantees for increasingly risky types of mortgages, without charging enough to cover the risks.”

“This administration will side with those who want fundamental change. It is not tenable to leave in place the system we have today. We will not support returning Fannie and Freddie to the role they played before conservatorship, where they fought to take market share from private competitors while enjoying the privilege of government support.”

“I believe there is a strong case to be made for a carefully designed guarantee in a reformed system with the objective of providing a measure of stability in access to mortgage finance even in future economic downturns.”

Comment by CA renter
2010-09-14 02:04:05

Great! A govt-backed CDS market (essentially). I guess that private-market CDS “counterparty risk” was a bit too much for the timid souls who peddle mortgages. Best to get the govt to take the losses — no more counterparty risk! Hooray!


Comment by Professor Bear
2010-09-12 23:30:34

Monday morning quarterbacking is much easier than Sunday afternoon quarterbacking. Especially if you can hedge your plays by considering alternative plays without ever having to commit to any decision about which is best.

Was the Great Panic of 2008 preventable?
By Robert J. Samuelson
Monday, September 13, 2010

“I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers,” Paulson said. Indeed, his position initially drew praise as standing up to Wall Street. Bernanke gave similar justifications. Testifying to Congress on Sept. 23, he said that “the troubles at Lehman had been well known . . . [and] we judged that investors . . . had had time to take precautionary measures.” In truth, an informal consensus had formed against using government funds to save Lehman. Harsh criticism of the earlier rescue of Bear Stearns — done with Bush administration support and Fed money — had left a deep scar. The Financial Crisis Inquiry Commission has published e-mails reflecting the mood. On Sept. 9, Treasury chief of staff Jim Wilkinson wrote that he couldn’t “stomach us bailing out lehman. Will be horrible in the press.” Given this bias, there was no Plan B once Barclays withdrew its offer.

Paulson, Bernanke and Geithner later performed commendably in preventing a wider financial collapse and restoring confidence that, arguably, averted a second Great Depression. Though their measures (TARP, government loan guarantees and Fed lending facilities) were unpopular, they ultimately calmed markets. But the lingering question is whether Paulson & Co. were cleaning up a mess they helped create. Even now, it’s unclear whether Lehman lacked sufficient collateral to justify a loan. There was a “senseless panic,” argues William Isaac, former head of the Federal Deposit Insurance Corp., in a book with that title.

Or perhaps not.
Maybe saving Lehman would merely have postponed panic and requests for broader powers to deal with a weakening financial system. Citigroup and Bank of America, among others, needed help. The nature of crisis is that people are surprised and overwhelmed by events, and in that sense, the mistakes made in dealing with Lehman might have been unavoidable. One way or the other, the first draft of history is still being written — and it remains very rough.

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