Bits Bucket for September 10, 2011
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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Here is a “New” listing on Realtor.com purchased with an 80/20 loan from CHASE in Jul-2005 with LP filed 10/3/2008 where the Victons ( yes I know that is an n not an m) have just vacated their frugal 4 1/2 year living arrangement. If house prices in this decent neighborhood are allowed to dip much below this $260k number even the “responsible” homeowners who only took $100k equity out of the houses they purchased for $150k in the mid 90s will be underwater. This is also the case in many neighborhoods in SE Fla. What happens when the Dam bursts?
11774 Banyan St Palm Beach Gardens, FL 33410
$259,851
Days on site 11 days
Palm Beach County Property Appraiser
Sales Date
Jul-2005 18892/1780 $427,500 WARRANTY DEED ALBANO MELANIE
Clerk & Comptroller
Type: MTG
Date/Time: 7/12/2005 14:26:03
Consideration: $342,000.00
Party 1: ALBANO MELANIE
Party 2: CHASE BANK USA NA
Type: MTG
Date/Time: 7/12/2005 14:26:03
Consideration: $85,500.00
Party 1: ALBANO MELANIE
Party 2: CHASE BANK USA NA
Type: LP
Date/Time: 10/3/2008 15:37:03
CFN: 20080365432
Book Type: O
Book/Page: 22891/466
Pages: 1
Consideration: $0.00
Party 1: CHASE BANK USA NA
Party 2: ALBANO MELANIE
CHASE BANK USA NA
ALBANO SPOUSE
Not just Obama but ALL of them.
“The Obama administration should enforce immigration laws, not look for ways to ignore them,” said Rep. Lamar Smith, Texas Republican. “The Obama administration should not pick and choose which laws to enforce. Administration officials should remember the oath of office they took to uphold the Constitution and the laws of the land.”
West Palm Beach man, 21, arrested after having sex with girl, 11, he called his ‘girlfriend’
By Cynthia Roldan Palm Beach Post Staff Writer
Posted: 12:42 p.m. Friday, Sept. 9, 2011
WEST PALM BEACH — A 21-year-old West Palm Beach man was arrested on Thursday, after police learned that he had a consensual sexual relationship with an 11-year-old girl.
Victor Yoc Perez is being held this morning at the Palm Beach County Jail without bond. He is charged with sexual assault by a person of 18 years of age or older on a person under 12 years of age.
According to the probable cause affidavit, West Palm Beach Police learned of the assault after the 11-year-old was taken to a health clinic this week after complaining of abdominal pain.
The girl, whose name is withheld in the report, shared at the clinic that she had sex with Perez a few days earlier when she had gone missing, the affidavit stated.
On Thursday, the girl’s mother placed a controlled call with the detective to Perez. He later admitted to having sex with the girl twice, after the 11-year-old told him during the call that she had told her mother “everything,” according to the affidavit.
Perez was taken into custody after he was spotted in a truck by the 11-year-old on her way back home from the police station.
After his rights were read, Perez admitted to police that he’d had sex with the girl twice and identified her as his “girlfriend,” the affidavit stated.
http://www.palmbeachpost.com/news/crime/west-palm-beach-man-21-arrested-after-having-1831572.html - -
I recently read something regarding the underage sex phenomenon which said that basically, when you see one of these pre-pubescent girls with budding breasts at an inappropriate age (like 11 years old), it is often a sign (not always, but often) that some man has been at them. And not necessarily someone from outside the family.
On another note, here’s a couple of links as to what we can expect in the US if we don’t do something about it. Jim Goad’s column from Takimag:
“We are entangled in a toxic situation with an insane, primitive, innately brutal nation that has ceased to function and can only impoverish, rather than enrich, us.”
Read more: http://takimag.com/article/legalize_dope_deport_the_illegal_dopes/page_2#ixzz1XZJPVoh4
Here’s Linda Thom’s column from Vdare regarding the offspring of illegals:
“Detective Joe Gagliardi, of the King County Sheriff’s Department, states in the article, “They’re second- and third-generation gang members,” and the majority “are U.S. citizens who were born and raised in Washington.”
Readers, once again: second and third generation gang members!”
http://www.vdare.com/articles/in-the-sunny-salinas-valley-a-long-weekend-in-occupied-america
And Brenda Walker’s column on the drunk driving illegal from Ecuador who murdered an American citizen, in the sanctuary state of Massachusetts, where illegals are a protected class and citizens are sitting ducks:
http://www.vdare.com/posts/milford-mass-sees-community-anger-at-preventable-death
Palmy:
Its just like the Jerry lee Lewis
In a 1978 People magazine interview Lewis stated “I was 14 when I first got married. My wife was too old for me; she was 17.”
“Detective Joe Gagliardi, of the King County Sheriff’s Department, states in the article, “They’re second- and third-generation gang members,” and the majority “are U.S. citizens who were born and raised in Washington.”
This is what happens when there is no attempt, whatsoever, by those in charge to verify who employers are hiring. Every single farm and nursery in WA should be raided. It’s a despicable situation. These second and third generation gang-bangers are the offspring of illegal immigrant labor which should have never been here in the first place.
Testify, brothah! We have many of these despicable, subhuman characters around these parts. One guy I know owns a home across the street from one of the local tomato packing plants. He’s been broken into a number of times. Illegals and their offspring have a very poor sense of property when it belongs to someone else.
“This is what happens when there is no attempt, whatsoever, by those in charge to verify who employers are hiring.”
This is the huge Agri-Business running things. These illegals are now seen as vital to U.S. agriculture because indigenous citizens refuse to work in the fields because it’s below them, and the states appear to agree giving them regular welfare support.
No…they refuse to work in the fields for the wages illegals will accept. If the jobs paid well there would be no problem filling them with locals. Sure, some of the couch potatoes would wash out, but there’d be plenty more in line…
I enjoy going to u-pick farms in the summer time and getting my berries really fresh. I once calculated, based on my picking efficiency, that I would be paid $3 per hour. If I were able to double my rate, I would still make less than minimum wage.
Some of the native folks I talk to say that they used to do field work in the summertime when they were teenagers. I guess even then it wasn’t a living wage for someone with a family. They would be picked up at a central location and bussed to the fields.
My guess is that it became cheaper to hire Mexicans who did not have to adhere to child labor and minimum wage laws.
Picking efficiency depends on how good the picking is. If the picking is really good, I can pick 3 pounds of raspberries an hour. That sells for about 9 dollars at the store.
Berries are about the least efficient agriculture out there.
The ONLY way for labor-intensive farming to be profitable is to receive government subsidies. Imagine taking the wheat subsidies and applying them to berries or apples.
Ten years older, Greenwich children who lost a parent approach 9/11 differently
Lisa Chamoff, Staff Writer
Updated 10:43 p.m., Friday, September 9, 2011
“I think of my dad every day, usually something always reminds me of him, whether it is a picture or a comment someone makes,” Megan said, “but on Sept. 11 it is comforting and supportive to know that the whole world is remembering with me.”
http://www.greenwichtime.com/news/article/Ten-years-older-Greenwich-children-who-lost-a-2163472.php - -
I was on a flight that morning, originating from one of the D.C. area airports. Early news reports didn’t identify the flight numbers of the hijacked planes so my wife was thinking the worst.
Our flight made it to its first destination, which was where I was going. But passengers traveling on to the west coast were stuck. While we waited for a gate to pull up to, we all started using our cell phones and the news spread very quickly through the plane.
After a fairly short wait we deplaned and I got to the rental car lot. There was a long line out the door. It turned out that most of the rental agencies had been told by their management to not let any cars out, even to those with reservations. One exception was Avis, which was where I had my reservation. Their response was, “take any car you find out there; we’re renting them until they’re all gone.” You can guess which company gets first shot at my business now.
Two days later, not knowing when the airlines would be allowed to fly again, I drove that car on a 2-day trip back to the D.C. area airport where my car was parked. The flags were already on the highway overpasses. And our lives had changed forever.
Bill
Thanks for sharing that chilling story. 9-11 has a special meaning to your family, I’m sure.
I bet that day forward, you’ve haven’t taken anything or anyone for granted.
“It turned out that most of the rental agencies had been told by their management to not let any cars out.”
let me guess, to hoard them?
I remember flying out of Newark several times. This was before TSA blue uniforms at the checkpoints. There were still checkpoints and x-ray machines to go through. One of the workers “protecting us” from terrorists was in Muslim garb, a female, with a head covering. I was shocked. Even though I have been around enough Muslims to know that not all of them are wanting to rip our guts out (my ex girlfriend is Muslim, but wore normal clothes).
“Ten years older…”
But the real question is, are you any wiser?
Try a Google Search: “What motivated the 9-11 hijackers?”
Realtors Are Liars®
ALL of them.
Every last one of them.
The fish smells from the head down. The head is the “employing” Broker.
Imagine if you will…
The game board from Risk
Monopoly money
A script written on the economy based on Darrell and Combotechie’s trade imbalances ideas
Edited with ahansen’s gift for narrative
A meet up somewhere to film a YouTube video
People from the HBB sending links to it to everyone they know
Another Texas miracle?
North Texas home sales jump 27 percent in August.
http://www.star-telegram.com/2011/09/08/3347877/north-texas-home-sales-jump-27.html
Most areas saw huge jumps but I would note that the new high rent district of downtown condos and townhouses were down. Prices were generally flat. No break out on cash deals, of distressed sales.
Texas climate blues.
The Texas wild fires have destroyed well over 3000 homes and hundreds of thousands of acres since spring of this year. The latest long range forecast says next year will be dryer than normal too. I have watched some of my landscape literally die from heat exhaustion this year. On top of this our water supply is becoming contaminated with all types of weird compounds, many related to the extreme levels of drilling and fracking. I use an extremely sensitive device to monitor water quality and my meter registers so high I can’t mix up my hydro plant food with it anymore. I bought a reverse osmosis unit this spring but it wastes 6 gallons for every 1 gallon of filtered water. There must be a better way.
Meanwhile the arctic ice mass (total estimated volume) hit a new record in Aug. and ice extent is likely to fall below the 2007 levels.
http://nsidc.org/data/seaice_index/images/daily_images/N_stddev_timeseries.png
http://neven1.typepad.com/blog/2011/09/historical-minimum-in-sea-ice-extent.html
So fire reduced Tx bloated inventory by 3000. How many Realtors said to themselves, “this is a good thing”?
And now they’re hoping and praying for a Cat 5 tornado to flatten all of Florida.
Texas volunteer fire departments were hosed with a budget that cut state funding from $30 million to $7 million. To make matters worse, most of Texas is protected by volunteer firefighters — a good 879 volunteer departments cover much of the state of Texas, as compared to the 114 paid departments and 187 departments that are a combination of both.
I wonder how many of those homes were paid off and insured? Most of the stuff I saw pictures of were well over 10 years old.
Texas volunteer fire departments were hosed with a budget that cut state funding from $30 million to $7 million.
Peon-volunteer-worker collateral damage from Preacher Perry’s Tayho$-Job$ “Miracle!”
Here, in full, is the answer to the thermodynamics question from yesterday: is it better to fill your freezer with gallons of water and will that help during a power outage?
Unfortunately, he only answered the power outage question and referred to refrigerators instead of freezers. Short answer: YES.
—————–
This seems to be close to material that was included in the CHEM 538 book. If I am not wrong about things (as I am oftentimes, regardless of the need to appear infallible in class), this has to do with heat transfer mechanisms. We have cold stuff in the refrigerator. The refrigerator just stopped working. We have warm air outside the refrigerator. How is it going to warm up the contents? (The idea is that if you have vacuum around your fridge, the contents will never warm up.) There are three answers: Conduction, convection, and radiation. We can forget about radiation, because I do not think that a lot of infrared radiation can penetrate through the walls of the refrigerator. This leaves convection and conduction. Significant convection will probably occur only when you open the door of the refrigerator, because the other openings are quite small. Conduction is certainly a factor, because even modern refrigerators are cool to the touch on the outside, which indicates that the walls are not perfect insulators. (To save energy, one simple measure would be to add insulation, but then the refrigerators will be more bulky).
The rate of heat transfer, q, can be expressed as q = A(To – Ti)/R, where A is the surface area perpendicular to the heat flow, Ti is the temperature inside the refrigerator and To is the temperature outside, and R is the overall thermal resistance to the heat flow. Thus, if you have two identical refrigerators, one full and one half-empty, then after a while To is the same for both of them and Ti is the same for both of them.
Now, both stop working. Initially, q must be the same regardless according to the heat transfer equation, regardless of the fact that one is full and one is half-empty. However, q= mCDT, where m is the mass of the contents, C the specific heat (assumed to be the same if the nature of the contents is similar, e.g., if we use both refrigerators to store your blueberries), and DT is the temperature rise due to a heat flow q. Since we concluded that q is the same for both refrigerators, this means that the half-empty refrigerator, for which m is one-half the mass of the contents of the full refrigerator, will have a DT which is twice as large as that of the full refrigerator for the same rate of heat flow q,. Therefore the half-empty refrigerator will warm up twice as rapidly as the full one. Therefore, if you expect an outage. It makes sense to fill the refrigerator, and ice is better than almost anything else because it has such a large heat capacity that it again depresses DT for a given q.
——————–
That was an entertaining exchange yesterday, but it leaves a few questions:
Is your refrigerator half full or half empty?
When the power goes out, where do you get the ice from?
Who forgot to put the vacuum around the refrigerator?
If you put boiling water in the refrigerator, will it freeze faster?
Can a Thermo prof answer a simple question in 10 words or less? Will his answer actually be about the question?
Was RAL the only person there who actually got it?
I think I wasn’t far off with the heat capacity and the imperfect insulation.
Oxy, it was the most pleasant exchange, but you were capsized on the heat capacity.
Was RAL the only person there who actually got it?
(y’all were killing me yesterday)
IDK, but eyes only knows what eyes see’s in the Coleman ice chest down by the tree house:
x8 1 gallon frozen water jugs don’t “completely” melt for x3 days @ 4,500 feet in 95 degree heat. Iffin’s you can find something to supplement the “beers-are-calorie-food-drinks” that are strategically placed on top for rapid retrieval you might be able to survive from starvation fer a least 72 hours.
Details:
(said ice chest is in the shade, with a beach towel on the lid & 30lb granite rock keeping things non-scientifically sealed)
1.Does amount of body fat have consequences for survival-time duration beyond the first 72 hours?
2. Is sterno heated-soup food?
Yes but I’m not about to argue natural law.
So if the power goes out, I should put my vacuum cleaner on top of the fridge?
LOL!
If you put boiling water in the refrigerator, will it freeze faster?
I’m no genius (except for Mensa at 17), but I do not think our refrigerator is capable of freezing anything!! -
If a two-step process, surely so, but what is the difference in net energy used by going from boiling to refrigerator to freezer vs. direct from boiling to freezer?
Where/when does the breakeven occur? I’m an MBA, not a physicist, so I honestly do not know.
Years ago we visited an environmental science display during a summer fair and rodeo. While there were many interesting hands on experiments the best was a stationary bicycle-generator wired to a light bulb; visitors could appreciate the amount of mechanical energy required to energize a single bulb.
Go on take the money and Run……
—-
I wonder how many of those homes were paid off and insured
Today Houses: Inside the Beltway…
House 1: funky driveway (close to spanish by immesion land)
http://www.zillow.com/homedetails/6804-Conley-Rd-Adelphi-MD-20783/37520336_zpid/
1952 3/1.5 looks like a detached rowhouse, but looks livable. Small lot and an “enclosed porch” which I would likely tear down.
Dec 2003: Sold $170
May 2011: Listed $240K
Jul 2011: Listed $125K
Prices are coming down.
House 2: The over-renovation
http://www.zillow.com/homedetails/2013-Lansdowne-Way-Silver-Spring-MD-20910/37318594_zpid/#{scid=hdp-site-map-bubble-address}
It’s a lovely 1937 4/3 Tudor, totally redone on the inside, maybe $100K worth of work. There are a few pix, but you have to “view virtual tour” to see the good stuff, and it really is gorgeous. It’s the kind of thing I would do, but I would leave out the fancy finishings in the kit + bath.
But it has only street parking, it’s RIGHT NEXT to the Beltway wall, and good god, they’re awfully ballsy about the pricing.
Nov 2010: Sold $235K
Aug 2011: Zestimate $341K
Aug 2011: Listed $550K
The problem was that housing prices dropped, not that they previously became ridiculously overvalued.
Regulator says mulling wider mortgage support
WASHINGTON | Fri Sep 9, 2011 2:57pm EDT
(Reuters) - The regulator for Fannie Mae and Freddie Mac said on Friday it is reviewing existing mortgage relief programs in an attempt to work with the Obama administration to expand efforts to help troubled borrowers.
The Federal Housing Finance Agency said in a statement that it is attempting to reach more borrowers and help them take advantage of record low interest rates. The regulator said it is looking to see if more borrowers can change the terms of their loans under the existing Home Affordable Refinance Program, also known as HARP.
“FHFA is carefully reviewing the mechanics of the HARP program to identify possible enhancements that would reduce barriers for borrowers,” the agency said in a statement.
President Barack Obama said in a speech to Congress on Thursday that a refinancing initiative “would put more than $2,000 a year in a family’s pocket and give a lift to an economy still burdened by the drop in housing prices.”
“FHFA is carefully reviewing the mechanics of the HARP program to identify possible enhancements that would reduce barriers for borrowers,”
If they are already not paying anything, how are you going to lower their payment?
OK, you have not made a payment in three years so we are going to lower your payment to $1,400 a month.
Quietly transferring Wall street MBS debt to the GSEs.
That’s right. The next move will be to quietly transfer the GSE debt to some combination of current and future American creditors, by creating some kind of newfangled Resolution Trust Corporation bonds.
Privatize profits, socialize losses lives on!
The next move will be to quietly transfer the GSE debt to some combination of current and future American creditors, by creating some kind of newfangled Resolution Trust Corporation bonds.
…at a seriously discounted rate.
http://www.reuters.com/video/2011/09/09/home-sellers-turn-to-rental-market?videoId=221403607&videoChannel=5
Home Sellers Turn to the Rental Market
I love how the realtor in this video says sellers are thinking they’ll wait out the slowdown but this market is not coming back. (paraphrased)
That’s the thing…so many people are “waiting for the market to come back,” when what they’re really hoping for is the bubble to come back. Ain’t gonna happen, IMHO.
Jury awards West Palm Beach parents of child born with no arms, one leg $4.5 million
By Jane Musgrave Palm Beach Post Staff Writer
Posted: 12:28 p.m. Friday, Sept. 9, 2011
WEST PALM BEACH — After nearly nine hours of deliberation over two days, a Palm Beach County jury today awarded a West Palm Beach couple $4.5 million to care for their son who was born with no arms and one leg.
With the heartbreaking image of the small boy etched into their minds, jurors found Palm Beach Gardens obstetrician Dr. Marie Morel, OB/GYN Specialists of the Palm Beaches and Perinatal Specialists of the Palm Beaches responsible for not detecting the boy’s horrific disabilities before he was born. The amount they awarded is half of the $9 million Ana Mejia and Rodolfo Santana were seeking for their son, Bryan.
The teary-eyed couple said they were overjoyed by the verdict. “I have no words,” Mejia said in her native Spanish. Both agreed the award will make a huge difference in their son’s life.
The jury of four men and two women found Morel 85 percent and an ultrasound technician 15 percent negligent for failing to properly read sonograms that would have alerted the couple of their son’s disabilities before he was born in October 2008.
Attorney Mark Rosen, who represents Morel and the clinics, said they would appeal.
During a roughly two-week-long trial that ended Wednesday, Mejia and Santana claimed they would have never have brought Bryan into the world had they known about his horrific disabilities. Had Morel and technicians at OB/GYN Specialists of the Palm Beaches and Perinatal Specialists of the Palm Beaches properly administered two ultrasounds and seen he was missing three limbs, the West Palm Beach couple said they would have terminated the pregnancy.
Instead, they went to the hospital in October 2008, believing they would have a healthy son.
“They went from the heights of joyous expectations to the depths of despair,” their attorney Robert Bergin told the jury during closing arguments Wednesday.
While the jury is being asked to award the couple money for their pain, he said they don’t want any money for their suffering.
“Ana and Rodolfo Santana know their mental anguish and their emotions are not important,” Bergin said. “The only thing that will help make up for their mental anguish is to know Bryan’s life plan is fully funded.”
The plan, that would cost $9 million, will cover prostheses, wheelchairs, operations, attendants and other needs he will have during his estimated 70-year life, Bergin said. “It will give piece of mind to these people that no matter what happens to them, their son will be all right,” said Jason Weisser, who also represents the couple.
Without discounting Bryan’s enormous needs, attorneys representing Morel and the ultrasound clinics insisted their clients weren’t negligent.
“There is nothing Dr. Morel wants more than for Bryan Santana to have a happy, healthy life,” said attorney Mark Rosen. “That doesn’t mean they’re responsible. Is it fair to blame physicians for acts of nature?”
He argued that the couple rejected amniocentesis, which might have revealed the abnormalities. The couple rejected it because they were told that there was a 1 in 500 chance that removing amniotic fluid for testing would cause a miscarriage.
Mejia testified that a genetic counselor she saw after an ultrasound detected a possibility Bryan would be born with Down’s Syndrome told her there was a 99.9 percent chance he wouldn’t have the form of mental retardation. Rather than needlessly risk losing the child, she and her husband decided not to have amniocentesis.
In doing so, Rosen said, the couple decided that they would rather give birth to a child that might have a physical or mental disability rather than risk losing it. That, he said, is contrary to their claims that they would have aborted their unborn son.
“No one is happy about what happened to Bryan Santana but Ana Mejia made the decision in 2008,” he said.
Weisser countered that the couple was told the risk of Down’s Syndrome was slight. While other abnormalities might have been detected by amniocentesis, the prospect of having a child who was missing three limbs was never discussed with the couple.
“There’s not one shred of evidence that they were ever told there was an issue with one of his limbs, let along three,” he said.
In fact, according to the second ultrasound, all four limbs were intact. “That, ladies and gentleman is impossible,” Weisser said. “It didn’t happen.”
http://www.palmbeachpost.com/news/jury-awards-west-palm-beach-parents-of-child-1831553.html - 99k -
A great example of why OB/GYN liability insurance is so costly.
Legitimate accidents shouldn’t be penalized. Gross negligence or blatant incompetence should be.
So which was this?
Good for them. I would not want to bring a kid into the world with no arms or legs. They deserved to win the lawsuit. Wonder if the OB/GYN folks are those religious nuts.
I bought Esselstyn’s book; anyone here been using his food guidelines for any length of time?
I went to a birthday party at a CDD (community development district) in Pasco County today. It was pretty amazing. I like the exurbs of Tampa, before it gets Deliverance rural.
Their pool/play area was unbelievable. It also makes a huge difference when there aren’t billboards and huge signs everywhere. Very pretty.
Palmy, helluva shootout in your area last night.
Hmm…Now that you mention that, I have seen very few billboards around here. I am in northern Hillsborough Cty and very close to the border of Pasco Cty.
Not having Billboards is a great thing. Nothing on Fletcher between I-75 and Bruce B Downs. But Fowler west of 56th is full of billboards.
Signs, too. Every arterial street in Pinellas and Hillsborough has gaudy, in your face, view-cluttering business signs. I can’t remember that last time I chose a business because I could see their sign 400 yards away. The upside is that occasionally these things catch fire and drip melting plastic/fire all over the place. I have seen this 3 times in my years here. It’s doubly entertaining after dark.
I just read up on CDDs. What a joke. I won’t say stunning, but the community I went to was very nice… but that all comes at a price. A CDD just transfers the responsibility to the owners. It’s municipal musical chairs. Very weird.
“Palmy, helluva shootout in your area last night.”
I’m tellin’ ya.
LIFE & CULTURE
SEPTEMBER 10, 2011
Who’s the Real Illusionist?
Penn Jillette on how modern politics resembles a Vegas magic act
By PENN JILLETTE
I’m a Las Vegas magician. One thing you learn doing magic tricks for a living is how close every performance of every magic trick is to disaster. There are no robust magic tricks. They’re all hanging from a thread—sometimes literally.
Now, I don’t know jack about politics or economics. But what’s starting to worry me is just how much what I do resembles American politics and maybe all government. Let me teach you a bit about magic here, and see if you can’t see some similarities.
…
How I reveal the card is how you’ll describe this trick, but once I have your card on top, the reveal is easy. My sneaky work is done. You’ve really shuffled the deck, you’ve had a real free choice, you think you’ve put the card back anywhere you want. But now I know it’s on the top. There are lots of good reveals, and I’ll use any one of them.
You’re not going to touch the cards again. My body language and tone will tell you that your card is still lost in the deck, and now I’m going to do the magic. It seems like I don’t care if you touch the cards again. I do care, but I know that you won’t. You just won’t. I might even put the deck on the table between us and let it sit there within your reach. I know that if you grab the deck and give it a shuffle, your card really will be lost in the deck, and Mr. Magic will fail. But you’ll just see the deck there and won’t touch it—and I’ll do a miracle for you.
Is our entire political system built on this unwilling suspension of disbelief? We don’t really have a choice, so it’s sure unwilling. We know somewhere in our hearts that our political saviors are not really magic, but we so want them to be. We could bust every one of them if we just broke the rules for a moment. It’s all hanging by a very hard-to-see little thread.
We don’t pretend they are real kings; we watch our politicians with a certain amount of skepticism, but always within the conventions of the show. We don’t run up on stage during a presidential debate and put our hand in the Social Security lock box—it would get bitten off by the real wild animal of our ignored long-term budget problems.
When the politicians give us their 89-point plans to fix the economy, they know we won’t grab the cards and shuffle. We play along enough that we can feel for a moment that they might have a little real magic up their sleeves. Even though we know there’s no such thing. There’s always an angry tiger hidden somewhere.
It’s bothersome that my best analogy to all of this drama is a cheesy magic trick. But I try not to worry about that too much: To a guy with a hammer, everything looks like a nail, and I’m a guy with a deck of cards.
—Mr. Jillette is the larger, louder half of Penn & Teller. His most recent book, “God, No!,” was just published by Simon & Schuster.
Penn & Teller rocked.
Housing investor mistake number 1: Catching themselves falling knife investing properties.
GETTING GOING
SEPTEMBER 10, 2011
Six Mistakes Housing Investors Make
By KAREN BLUMENTHAL
Traditional investments are delivering low returns, and home prices are at bargain levels. Is it time to consider buying some rental housing?
Investing in real estate right now can be surprisingly profitable, if everything goes well. Rents are climbing in many areas, and more properties may be coming on the market. Last month, the Obama administration asked for proposals on how to convert at least some of Fannie Mae’s and Freddie Mac’s bulging inventories of foreclosed homes into affordable rentals.
Investors used to aim for rents that were 1% of the purchase price, or $1,000 a month for a $100,000 home—an annual gross return of 12%—says Michael McCreary. His firm, McCreary Realty, manages about 300 properties in the Atlanta area. Today, he says, some of his investors are getting as much as 2% of the purchase price.
In general, though, average returns after expenses are far less, more like 5% to 6% of the property value, says Ingo Winzer, president of Local Market Monitor, a real-estate forecasting firm. But that still is well above what many other investments yield.
Before you start scouring for deals, keep in mind that owning rental properties is time-consuming, expensive and fraught with challenges, and many investors lose money. You will want to avoid falling into one of these common traps.
• Mistake 1: Confusing a cheap deal for a good deal.
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• Mistake 2: Overlooking key costs.
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• Mistake 3: Forgetting that time is money.
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• Mistake 4: Assuming you will sit back and watch the rent roll in.
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• Mistake 5: Underestimating repair costs.
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• Mistake 6: Assuming that owning a rental is the same as owning a home.
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“Just like homeowners who can’t pay the mortgage, tenants lose their jobs and stop paying the rent. Evicting them can take several weeks, and some steal appliances or other property. Mr. Kreditor says that once or twice a month, a tenant removes a home’s copper tubing on the way out the door to sell the copper for its meltdown value.“
Real low-life scum in action.
I smelled this one coming down the colon…
BUSINESS
SEPTEMBER 10, 2011
White House Seeks More Home-Loan Refinancings
BY NICK TIMIRAOS
The nation’s top housing-finance regulator, with the enthusiastic backing of the White House, is moving towards revamping a federal program aimed at allowing more Americans to refinance their mortgages at today’s low rates.
President Barack Obama alluded to the effort in Thursday night’s prime-time jobs speech, when he said his economic team would work “to help responsible homeowners…refinance their mortgages at interest rates that are now near 4%.”
Officials said Friday they were weighing changes to an existing initiative that the White House rolled out more than two years ago for loans guaranteed by mortgage giants Fannie Mae and Freddie …
Live by the gov-backed MBS, die by the gov-backed MBS.
(Or at least make a point less than if the gov would just back them at full price and do nothing else.)
It seems like F&F are trying the best to hammer private sources of loanable funds. This would help ensure that they remain essential as the only available source of U.S. mortgage finance. It’s survival of too-big-to-fail at its worst.
BOOKSHELF
SEPTEMBER 10, 2011
Follow the Money
The best economists are formidable intellects, but do they really know what they are talking about?
By JAMES GRANT
Mankind missed a bet 2,000 years ago when no one thought to invest $100 or its equivalent in Roman coin in a certificate of deposit compounding at 2% a year forever. The principal balance today of this ungifted benefaction would come to the astounding sum of $15,861,473,276,036,900,000. That would be $2.3 billion, before tax, for every man, woman and child on earth. But the ancients bungled, perpetuating the problem of scarcity and leaving the way open for Sylvia Nasar to write her “Grand Pursuit: The Story of Economic Genius,” a survey of economic thought from Charles Dickens to Paul Samuelson and beyond.
Economic genius would seem to be in short supply these days. On the say-so of economists, Congress has spent upwards of $1 trillion to “stimulate” an economy that remains unstimulated. The best economists are formidable intellects, as it goes without saying—Ben Bernanke was the spelling champion of South Carolina—but you begin to wonder if they know what they’re talking about.
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There are bulls and bears, too, in these pages, the bears seeming to predominate. Schumpeter and Fisher are the standout optimists, each irrepressible in his belief in the capitalist future, even when they didn’t have two nickels to rub together. Alfred Marshall also took a sunny view of mankind’s material prospects. He marveled at the sheer power of compound interest: “If you can get mental and moral capital to grow at some rate per annum there is no limit to the advance that may be made.” As for America, which the English economist toured in 1875, he called it an “empire of energy.”
By contrast, the Keynesians were inclined to doubt that the world could get along without the intercession of governments staffed by people like themselves. The phrase “secular stagnation” fell from their lips in the 1940s, even on the eve of the great postwar boom. As for Marx 100 years earlier, the sight of prosperity drove him to distraction. He had, he was sure, ruled out the possibility in his writings. In especially low moments he would pray for war.
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ECON5
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Getty Images;
Friedrich August von Hayek
There isn’t room for every economist in this book or any other, but I myself missed the voice of Jacques Rueff, the 20th-century theorist who was able to demonstrate the superiority of the classical gold standard over the faux gold standard devised by Keynes (incorporated in the Bretton Woods system of 1944-71) or the paper-money regime advocated by Fisher and Friedman.
I missed, as well, Murray Rothbard, who blamed the Great Depression on the Hoover administration. It didn’t intervene too little, Rothbard unconventionally sought to show in his 1963 book, “America’s Great Depression,” but rather too much. The economics profession just smiled at this contention, but the unsolved case of the depression of 1920-21 counts heavily for Rothbard’s thesis. It was a deep and painful slump (a young Army veteran, Harry S. Truman, lost his Kansas City haberdashery to bankruptcy), with the wholesale price index dropping by 37% and the measured rate of unemployment tripling to 12%.
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Getty Images;
Paul A. Samuelson
But it ended. Why it ended will mystify anyone who has taken to heart the arguments of Keynesians for more fiscal and monetary stimulus to revive today’s economy. To meet the crisis that spanned the administrations of Woodrow Wilson and Warren Harding, the Treasury ran a budget surplus and the Fed raised interest rates. Yet the slump did end, and the 1920s roared.
The musicologist Ludwig von Köchel systematized, cataloged and published the musical output of Wolfgang Amadeus Mozart—he’s the “K” that denotes a particular Mozart composition. Köchel was a botanist and mineralogist as well as musical scholar, but Mozart was the genius. In the matter of income and wealth, savings, and investment, the Köchels are the Friedmans and Schumpeters and Hayeks. The Mozarts are the Fultons and Edisons and Jobses.
—Mr. Grant, editor of Grant’s Interest Rate Observer, is the author, most recently, of “Mr. Speaker: The Life and Times of Thomas B. Reed, the Man Who Broke the Filibuster.”
Deflation? After the Fed raises interest rates during a recession? Wow! Whoda thunk?
And then we effortlessly climbed out of it with the easy money policies of the 1920s. Which led to endless prosperity, just like Greenspan’s low interest rate policy of the last decade.
Amazing. Keynes is disproved.
This is by far my favorite passage in this lurid book review; I simply must get my hands on a copy of this book! Can you imagine BB tooling around DC with a hooker on each knee!?
…in post-World War I Vienna, the fortunate were preoccupied by the destruction of the Austrian currency, the krone. The less fortunate, having no krone, worried about starving to death. The author quotes a conversation between Anna Eisenmenger, a middle-class Viennese diarist, and her know-it-all banker.
“If you had bought Swiss francs when I suggested, you would not have lost three-quarters of your fortune,” said he.
“Lost!” she exclaimed in horror.
“Why don’t you think the krone will recover again.”
Her money was invested in government bonds. “Surely,” she said, “there can’t be anything safer than that.”
“But, my dear lady,” the banker replied, “where is the State which guaranteed those Securities to you? It is dead.”
Schumpeter and Friedrich Hayek were in Vienna in those awful days, Schumpeter living large. A failed Austrian finance minister, the future author of the memorable phrase “creative destruction” and of the great book “History of Economic Analysis” got himself elected the president of Vienna’s oldest investment bank. The timing was perfect, and Schumpeter plunged into the bull stock market that Anna Eisenmenger’s banker had been talking up.
“The frenzy of deal making, buying and selling was intoxicating,” Ms. Nasar writes. “Schumpeter may have dressed like a bank president, but, as the Viennese press observed snidely, his lifestyle was as extravagant as a lord’s . . . . He was as careless of his reputation as he was of his money. In response to a business associate’s warning about appearing in public with prostitutes, he rode up and down . . . a main boulevard in the inner city . . . with an attractive blonde prostitute on one knee and a brunette on the other.”
The May 1924 crash of the Vienna stock market cost Schumpeter his money as well as what was left of his self-respect. “Despite his misadventures in politics and banking,” Ms. Nasar relates, “his reputation as a brilliant economic theorist had survived.”
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Corollary: Brilliant economic theorists are often clueless when it comes to practical economic reality.
Beyond Cairo, Israel sensing a wider siege
http://tinyurl.com/3soycta
“With its Cairo embassy ransacked, its ambassador to Turkey expelled and the Palestinians seeking statehood recognition at the United Nations, Israel found itself on Saturday increasingly isolated and grappling with a radically transformed Middle East where it believes its options are limited and poor.”
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Nobody could have seen it coming.
Aren’t these interesting times?
How many different ways can the Fed think up to hose the middle class to the betterment of Wall Street banksters?
Fed to Take Unconventional Actions
Sept. 8, 2011
Federal Reserve officials are considering three unconventional steps to revive economic recovery and seem inclined to take at least one as they prep to meet this month. WSJ’s Brenda Cronin reports on the News Hub.
Could anyone who believes now is a good time to buy stocks please explain your reasoning to a deep skeptic?
P.S. Try not to catch yerself a falling knife.
TODAY’S MARKETS
SEPTEMBER 7, 2011
Investors Run From Stocks
By JONATHAN CHENG
U.S. investors went back to work Tuesday to find themselves scrambling again to escape more fallout from Europe’s spiraling debt crisis.
Stocks dropped as investors continued to flee risky assets. The S&P 500 notched its worst-ever three-day start to September. Steven Russolillo has details on The News Hub.
The Dow Jones Industrial Average fell 100.96 points, or 0.9%, to 11139.30, while gold jumped to a record high in intraday trading and Treasury bond yields traded below 2% for much of the day and finished at a record closing low.
Bank stocks in Europe and the U.S. took the brunt of the damage, in a reflection of renewed fears about the fundamental health of the global financial system and policy makers’ inability to address deep-rooted economic issues.
“Clearly, the risk is another 2008-like scenario,” said Dan Greenhaus, chief global strategist at BTIG, pointing to the lack of obvious safe havens amid widespread selling.
The day’s heaviest losses came shortly after the opening bell in New York, with the Dow falling more than 300 points, following Monday’s heavy declines in Europe and Asia during the U.S.’s Labor Day holiday.
Stocks got a temporary reprieve following a brighter-than-expected reading of U.S. nonmanufacturing activity, and they managed to claw back some of the losses by the day’s end.
Swiss National Bank headquarters. Officials took the extreme step of capping the franc’s rise against the euro.
Even so, after Tuesday’s selloff, the Standard & Poor’s 500-stock index is off 4.4% over the past three sessions, making it the worst start to September in the index’s history.
Investors have been on the defensive as the debt situation in Europe has flared up again as a major source of concern. After a bruising debt downgrade in the U.S., investors have fixed on developments in Europe, which faces a slew of deadlines and pivotal votes in coming weeks.
Investors, increasingly discouraged by a toxic blend of political gridlock, austerity efforts and vulnerable banks, appear to be in no mood to take chances.
“Investors realize that policy makers in Europe and the U.S. don’t fully comprehend the whole situation,” said Matthew Lloyd, chief investment strategist at Advisors Asset Management. “A prime example is the U.S. jobs picture, which should have become a top priority two years ago, and now it may be too late to do anything.”
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Does anyone besides me find “bloodbath” to be an overly strong description for a mere 300 point dip on the DJIA?
Dow sinks 303 in bloodbath
By PAUL THARP
Last Updated: 11:52 PM, September 9, 2011
Posted: 11:52 PM, September 9, 2011
They’re ba-ack.
The summer’s twin economic demons — Europe’s crisis over the bailout of Greece and the sputtering US economy — reared their ugly heads again yesterday, pushing stocks lower, to their their sixth down week in the last seven.
The stock sell-off has cost US investors more than $2.1 trillion in lost stock value in the three months ended yesterday — as fears over Europe’s stalled recovery plan and the euro’s survival chased investors to the exits.
“Markets always vacillate between fear and greed, and today we’re coming down pretty much all on the fear side,” said Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group.
US stocks are down more than 11 percent over the same three-month period, wrecking most portfolio reports being delivered in early October.
Traders stampeded all day to the safety of US Treasury bonds, sending the benchmark 10-year note to an all-time low close of 1.93 percent. The dip could help lower costs of car and home loans.
The Dow Jones industrial average dived 303.68 to settle under 11,000, a stigma of the past recession. The Dow shed 2.7 percent to 10,992.13. For the week, the Dow lost 4.4 percent.
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I have to say that given the amount of press the Greek default has already received, it seems like a rather low-risk, albeit putatively inevitable, event. If it happens, it will be due to deliberate political action, rather than some kind of “nobody could have seen it coming” black swan.
P.S. The prospect of a complete reboot and redesign of the international banking system seems increasingly likely to this mildly interested observer. The failure of the post-Bretton Woods system of freely floating exchange rates seems overwhelmingly obvious at this point to anyone who is paying attention, with the possible exception of central bankers with lotsa skin in the game. I know it seems outlandish for me to say this, but I predict that (1) this will seem obvious through the lens of the rear-view mirror and (2) top economic policy makers will generally pretend it was retrospectively obvious to them early on once it becomes obvious to all observers.
European Crisis Slams Stocks as Investors Fear Greek Default
By Jeff Macke | Breakout – Fri, Sep 9, 2011 3:12 PM EDT
The collapse of the European Union as we know it is picking up steam and the impact is destroying US stocks.
The problem stems from the unpleasant fact that Greek government debt is worthless, and no turnaround is in sight. No one, not even the European banks themselves, know just how much of this Greek government scrip is in the EU banking system. Greece is merely Patient Zero in a European, if not global financial Black Plague. Speculation is now focusing on a Greek default as soon as this weekend.
This crisis has been staring the world in the face for months, if not years. Breakout hasn’t been alone in trying to bring this to investors’ attention, particularly as the situation began escalating earlier this week. Everyone knew the day of reckoning for the EU would come; the question was simply when the uncertainty would really start hitting the global equity markets.
The new information exacerbating today’s European and U.S. market sell-offs is the resignation of European Central Bank official Jeurgen Stark for “personal reasons,” widely believed to be Mr. Stark’s personal objection to an ECB balance sheet expansion through a bond purchase program.
For its part, Greece announced this afternoon that it “rejects the talk of default.” In a different context, Greece’s announcement is adorable; akin to your kids rejecting the idea of bedtime. Given what’s stake, it seems Greece remains in tragic denial.
Now that the process of pricing in of Europe’s economic reality is now in full swing, it’s simply a matter of figuring out the size of this thing. In an effort to get a sense of the magnitude, I asked Rob Arnott, founder and CEO of Research Affiliates, if the toxic debt crisis in the EU could rival that of the 2008 U.S. financial meltdown.
“This is bigger than Lehman in terms of scale,” Arnott told me. “You’re looking at most of the largest banks in Europe, which on a mark-to-market basis, are insolvent.”
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So why is their problem worse than ours? Is it because people are still willing to buy our fiats instead of theirs?
Or is it just a US media deployment of diversionary tactics?