Bits Bucket for December 11, 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
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
January 2025 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Detroit nears bankruptcy
Nowhere to run
The motor city flirts with fiscal disaster
Dec 10th 2011 | DETROIT | from the print edition
IN THE 1960s, the first hit song from Berry Gordy’s Motown empire was “Money (That’s What I Want)”. It might well be an anthem for modern-day Detroit. On December 6th Michigan took the first legal steps towards a state takeover of Detroit. If it happens, it will be the largest American city to be taken over by a state.
The problem has been building for decades; declining property values and the flight of better-off people to the suburbs have hit revenues, while the cost of servicing a still-sprawling city has not shrunk proportionately. The effects of the recession, particularly severe in Michigan, have provided the trigger for the crisis. Detroit’s mayor, Dave Bing, now says the city will run out of cash in April 2012.
…
“Detroit’s mayor, Dave Bing, now says the city will run out of cash in April 2012.”
Easy come, easy go. But, never fear, a new people will arrive and make it Detroitistan.
…
Middle eastern people like getting shot?
I have a childhood friend who left the Bay Area in the late 80’s for Detroit. His Father-in-Law was a big shot at Ford and he set my friend up with a job in their facilities department. The friends plan was to sell his Morgan Hill home and buy a small number of homes in Detroit.
I haven’t spoken with him in 20+ years. But I often wonder if he rode the market down to the hell hole it is now?
Detroit Demographics
May 16, 2011
Black alone – 689,965 (75.7%)
White alone – 120,891 (13.3%)
Hispanic – 67,361 (7.4%)
Asian alone – 15,184 (1.7%)
Two or more races – 13,548 (1.5%)
American alone – 1,831 (0.2%)
Other race alone – 2,068 (0.2%)
To me, that says it all.
Another short clip from the “Detroit Riots of 1967″ gives you a better perspective of the “shift” in population”
Demographic Change
Like Newark, Detroit was swept by a wave of white flight. During the 1950s the white population of Detroit declined by 23%. Correspondingly, the percentage of non-whites rose from 16.1% to 29.1%. In sheer numbers the black population of Detroit increased from 303,000 to 487,000 during that decade. (Fine 1989:4) By 1967, the black population of Detroit stood at an estimated 40% of the total population. (National Advisory Committee on Civil Disorders 1968:89-90). As in Newark, some neighborhoods were more affected by white flight than others. This was particularly true for the Twelfth Street neighborhood, where rioting broke out in the summer of 1967. “Whereas virtually no blacks lived there in 1940 (the area was 98.7% white), the area was over one-third (37.2%) non-white in 1950. By 1960, the proportion of blacks to whites had nearly reversed: only 3.8 percent of the areas residents were white. Given that the first blacks did not move to the area until 1947 and 1948, the area underwent a complete racial transition in little more than a decade.” Sugrue 1996:244)
Now it’s over 75%. Less than 15% “white”. That’s Detroit’s problem.
NO its everybody’s problem…we have allowed the black family to disintegrate while we poo poo around “sensitive” issues
I hope OhBahhma is the worst president we ever had, so we can finally eliminate all political correctness and deal with the issue of getting black people to speak English again, that is the key to their and our recovery, and safety.
I don’t believe history will view Obama as the worst president on record. You have to judge performance to take into consideration the situation the president inherited from his predecessor, which was a disaster on many levels.
I also note that Obama speaks English very well.
And knows how to properly pronounce, “nuclear.”
And knows how to bow very deeply.
For someone who harps continually on the necessity of “black” people using proper English, you certainly make a lot of grammatical and spelling errors. I count eight in this post alone.
Just saying
sorry but i am used to writing in short sound bites…some of my tv/radio training.
the …. are a pause….
Maximum effective range of an excuse: 0.00 m
we have allowed the black family to disintegrate while we poo poo around “sensitive” issues
“We” have allowed the black family to disintegrate? Sorry, but the only family I’m responsible for is my own.
Smart societies tackle tough issues, while backwards ones simply allow them to fester.
Sure, you can claim that “the only family I’m responsible for is my own”, but when the unemployed black kid shoots your wife during a mugging is when you realize that you aren’t an island.
Other people’s family’s might be my problem, but they’re not my responsibility.
“White” can’t go bankrupt. How do you explain the PIGS?
Fact is that anyone who could afford it left, leaving the underclass behind. And yes, the underclass was overwhelmingly black. How would that be different from the moneyed class in the US leaving the country (with their wealth) in the event of a US bankruptcy?
Even better than the state taking over Detroit would be for the state to merge the inner city with the wealthier suburbs.
It would Never work…..the inner city kids would be failed out in massive numbers since at a “Good” school you are forced to speak English when you walk past the front door.
The inner city kids will have a years of after school and summer school homework to catch up with that goal.
—–I also note that Obama speaks English very well.——–
Yes but he Hates Black people, so let the status quo stay in place, its all good just the way it is.
White” can’t go bankrupt. How do you explain the PIGS?
I say Greeks are Europe’s Blacks. I’ve said that for some time.
The PIGS are Counties that act like our welfare addicts. The Germans work hard and get to build everything for all the rest of Europe to “Consume”. Yes, they have a consumer economy, too.
As for your proposal to provide more “Integration”, that’s been going on for decades. Once it happens, the “minorities” skim off the wealth of the working whites, and create criminal slum areas.
The lucky white folks vacate and try to find a crime-free area, which again will be mostly white.
People like you won’t allow any “FREEDOM” of choice or Association, you want a big socialist movement that forces free people to be burdened by an underclass. I see the problem as racial. Nothing more. Nothing less.
You are the reason for the term “african-american” as a “race”.
It makes every black person on the planet an american. what a joke. what it really does is makes a statement of CLAIM on the wealth of others……after all, we’re all Americans, right??
I am glad the integration process hasn’t taken full swing in Europe, just yet. Germans are still very smart and industrious. Why should the pay to support a bunch of laid back Greeks?
Because, in your world, it’s “Fair”. The Germans need to pay their “fair share”. Sound familiar? It would, coming from a Black man. Unfortunately, he’s in the White house.
Now it’s over 75%. Less than 15% “white”. That’s Detroit’s problem.
What happened to “diversity is our strength?”
What happened to “diversity is our strength?”
That’s the biggest lie to ever be perpetrated on a group of people by the media propagandists.
Let’s see:
60 years of unbroken liberal democrat rule +
Insane public union contracts =
a bankrupt city
Pretty easy to figure out.
And funny how NO ONE actually wants to live in these “workers paradises”
Orange Country, California.
60 years of unbroken conservative Republican rule+
Insane crony capitalism=
A bankrupt county.
Pretty easy to figure out.
And funny how EVERY ONE actually wants to live in these “bankers’ paradises.”
Your point?
Time for another meme, hon.
It was not insane crony capitalism, but the bad decisions of the treasurer who made bad investment decisions with the county’s money. I think that is a huge difference than having a city go broke because it has totally disintegrated and everyone who can is moving out……unless, of course, you collect “benefits” from the City.
The voters simply decided not to increase the tax base to make up for the short-fall. The County claimed bankruptcy. The big difference is the County is still very prosperous and lots of people are wanting to move in, particularly the Non-white population.
Like many other prosperous regions, it was once almost exclusively a white enclave……smell the welfare potential.
Persians aren’t “White?”
Right.
And that treasurer functioned in a vacuum.
Concurrent with Michael Milken, IIRC.
(Both “white” people, by the way– whatever that’s indicative of.)
Conservative Republican rule reversing. Net outmigration. Some banksters and fraudsters finally prosecuted and serving time.
\We still have the best weather! -
No longer bankrupt.
my post October 2009:
On Sunday, I was in Detroit. It was bright and sunny and I was walking along 16 Mile. Nobody walks along 16 Mile, everybody drives. I walked past Manhattan Dr. Sign says Lot 5, For Sale, Foreclosure, other sign almost hidden by trees says Houses for Sale starting in the mid $300,000. “You wish” I think to myself. I walk down Manhattan Dr. I think there are a total of 6 houses, they look nice, brick exterior. two are vacant and never lived-in, one (lot 5) is vacant but there are signs of former occupants: curtains and venetian blinds, a poorly maintained lawn. At the end of the street there is a nice house with election signs. Random evidence of a housing bubble.
Walking west, I pass a sign twirler. Since we are the only human beings not in cars, I say “nice sunny day, this morning there was frost”
He says “I sleep in my car and I like it cool. Don’t like the heat.” and later something like “the situation doesn’t hurt my feelings”
I don’t know if my living-in-his-car sign twirler has a gun or not but the man I saw was honest and upright.
http://kunstler.com/blog/2009/10/marching-toward-zombieland.html#comment-panels
I just wanted to thank Ben and all the people who post on this blog. I’ve been lurking here on and off since around 2005. I live in Rhode Island and sold my paid off home in 2007 for $335k. Most of my money was tied up in it. The family who purchased it put at least another 100 k into it. It’s probably worth around $225k now. For the past four years I’ve been renting and have moved twice. The past few months the wife and I have been searching to purchase a “home” which to raise my 7 and 9 year old. I’ve been really trying to find something which is in the 2000-2001 pricing. It really hasn’t been easy moving around with two little ones.
Saturday, a house which I looked at two months ago was reduced on Friday . We made a “as is” cash offer of 115k on the house now listed at 130k. It’s not a short sale nor a foreclosure. The offer was accepted two hours later and we are closing on Christmas Eve. It’s a 1960 ranch with three beds and one bath. Comparable houses were selling in the 265k + range a few years back. I’m sure the prices will fall further but at least i don’t have all my wealth tied up in one house.. I feel that even if I find something else in the future , I could always rent it for $1300.
Larry
Congrats. I’m happy for you guys.What a Merry Christmas!
Perfectly timed bubble stories are rare and always nice to hear. For every one of those there are one hundred of the other kind. I would say that is probably the ratio: 100:1. Humans are herd animals.
“Perfectly timed bubble stories are rare and always nice to hear.”
+1 Nice to see the HBB being used to one’s advantage. I know it’s really tough on some marriages to be devout renters while everyone you know is buying and/or remodeling with their nostrils held high.
Yep
We’re frozen in time. This is our 2nd marriage to each other and this housing nightmare is dreadful. But our relationship is like Mozzarella. It stretches, best when hot, and can form to conditions.
We are thinking of moving to an affordable area, but the issue we have is jobs.
Ahhh I see an immediate upgrade to a family room and a second toilet in the basement….good luck
Congrats, Larry! I see an addition off the back with a new half-bath.
The house you’re describing would be at least $100K more in the DC area. I’ve resigned myself to that, but I figure that two years of job stability will be more than enough to offset the higher cost of living here (and still cheaper than rent). Could I get a job in a cheaper area? Probably. Could I keep a job in a cheaper area? Probably not.
Congrats Larry.
One in the hand you know…..
Congrats, Larry!
It’s really nice to hear an HBB success story. I totally understand buying when you think prices will still go down further, as there are so many considerations other than strictly the financial. There is value in not having to move.
Though if you are correct about what you could rent it out for, and the area has a stable job-base, then prices may not go down much more after all. Rents should put a floor under pricing.
Enjoy your new place!
Congrats — great to hear a story of patience that paid off!
Larry, where did you buy?
Hey, Larry,
Hope this is the first of many memorable Christmases in your new home.
Congratulations!
I’m having a lovely flashback now to an evening my wife and I spent in front of the fireplace in our newly purchased home back in the early 1990s. Thanks for the memory.
Awwwwww.
Interview byTess Vigeland
Marketplace Money for Friday, November 11, 2011
Tess Vigeland: For the past two years, California home owner Althea Blakey has been trying to get a loan modification on her mortgage. She bought her east Palo Alto home more than 30 years ago for less than $18,000. But after refinancing several times, she ended up owing more than $265,000.
Ann Carrns is the lead blogger for the Times’ Bucks blog and reported this story. Welcome.
Ann Carrns: Thanks for having me.
Vigeland: Tell us first of all just a little bit about Althea.
Carrns: She’s 59 years old. She has a small home in east Palo Alto that she bought more than 30 years ago. She was a young, single mother at the time and she was able to save up a little bit of a down payment and bought the house.
Vigeland: And I think we have a clip of her talking about the importance of this home in her life. So let’s listen to that.
Althea Blakey: We have lots of birthday parties, we have lots of barbecues on the patio. Yeah, this house was always filled with love.
Vigeland: Oh that’s great. So, when did she start pulling money out of that home?
Carrns: She said that over the years she did several refinancings, that the most recent one that led to her current loan modification was in 2007.
Blakey: I was off of work for a year, like seven years ago? And we wind up using credit cards.
Carrns: She had gotten into a little bit of trouble with credit card debt. Her husband’s business wasn’t doing well, and she refinanced. The end result was that she got a loan for $265,000 and the monthly payment eventually proved more than she could handle.
Vigeland: All right, well, let’s hear what she had to say about all this refinancing.
Blakey: I wish I never had refinanced at all.
Carrns: It’s amazing to think that your home, which started out at $17,000, at one point it looked like it was worth almost $500,000.
Blakey: People just wanted to get me in debt!
http://www.marketplace.org/topics/business/which-way-home/re-fis-loan-mods-never-ending-story - 63k
“They held a gun to my head. I had to sign.”
“People just wanted to get me in debt!”
And they still do! When you are in debt you are to go to work to earn money, and then you are to turn this earned money over to some stranger so as to allow him to spend the day at the beach.
You go to work, some stranger goes to the beach.
What’s not to like?
Oh, and you get to do this for - what? - thirty years or so?
Longer? The rest of your life maybe?
“Oh, and you get to do this for - what? - thirty years or so?”
I think 50 years which means Althea will get to go to the beach when she is 109. Until then she and her husband Cornel Blakey, 61, will just have to relax in the back yard of their east Palo Alto, Calif. home and have have lots of barbecues.
“Althea Girard-Blakey, 59, and her husband Cornel Blakey, 61, relax in the back yard of their east Palo Alto, Calif. home that they were able to keep after a loan modification to her mortgage.”
From the lender’s point of view this method of bleeding people of their earned money beats all, even sharecropping.
A sharecropper doesn’t own the land but gets to work it and return part of the crop he produces to the person who does own the land. The land owner makes out since the only thing he needs to offer to the arrangement is the land.
The loan broker doesn’t even have to to that. All the loan broker needs to offer to the arrangement is a bunch of paperwork that is in need of signatures. Once he gets the signatures he is set. No land that he owns needs to be involved. In fact NOTHING that he owns needs to be involved.
Once he gets the signatures he is set. No land that he owns needs to be involved. In fact NOTHING that he owns needs to be involved.
I was once told by a foreigner living in the US that Americans make a living by “taking a cut” from someone else’s labor.
A nation of dummys.
I was once told by a foreigner living in the US that Americans make a living by “taking a cut” from someone else’s labor.
The smartest people in every single country in the world (a.k.a. the “monied class”) do this for a living.
That’s the way the world works, buster!
Check out the Phillipines sometime. There’s a national pawn-shop chain. National! Think about how poo-inducingly scary that is.
Also, the concept known as 5-6 out there run by (mostly) the Indians. The Indians are the Jews of the Phillipines. It’s almost shocking and scary to see the similarities to medieval Europe.
The smartest people in every single country in the world (a.k.a. the “monied class”) do this for a living.
That’s the way the world works, buster!
True, but consider how the “housing industry” in the US is lined with parasites that take huge cuts: realtors, mortgage brokers, title insurance, etc. The percentages we pay here are unheard of in other countries.
Check out the Phillipines sometime. There’s a national pawn-shop chain. National!
And we don’t? In fact we have more than one. Of course they are also pay day loan stores. I recall reading an article about how there are more payday loan stores than fast food joints in Ohio.
The parasite class is too strong right now to defeat. Sooner or later, RedFin, Zillow, etc will get into the mainstream on sales and put the Realtor class out to pasture, like should have happened by now.
“…lined with parasites that take huge cuts…”
Nobody put a gun to their clients’ heads and made them pay those huge cuts. (Did they!?)
For those of you that don’t know, East Palo Alto is an absolute shathole surrounded by very nice areas. For example, Steve Young (49er QB) owns a home about two miles from EPA. Steve Jobs (RIP) about 5 miles.
EPA is loaded with recent immigrants and minorities who are probably an easy mark for some shylock broker who preys on their lack of financial sophistication.
“Steve Young (49er QB) owns a home about two miles from EPA”
That`s funny, Steve Young grew up about two mile from me. But he was a (GHS QB) back then.
East Palo Alto was tall cotton…when I was a repossessor.
“East Palo Alto was tall cotton…when I was a repossessor.”
When them Deadbeats start their squattin, you can’t pick very much cotton, In them old cotton fields back home.
“When them Deadbeats start their squattin, you can’t pick very much cotton, In them old cotton fields back home.”
FWIW, these ghetto folks weren’t lazy. They operate in a rough alternative economy working under the table, or providing drugs and ladies to the white folks who couldn’t get what they really desired closer to home. Unscheduled trips to jail or lengthy prison stays make loans difficult to satisfy. Anyway I made a good living (tall cotton) from ‘dat hood.
recent immigrants and minorities??
I thought we were all “equal”. How could “minorities” be taken advantage of when the went to the same schools, got the same education, and even got extra help with “head start”, affirmative action”, EEOC rulings, and all kinds of racial discrimination against white men for more then 35 years. Are we equal or not?
How could you even make such a claim?
Dio,
I believe we’re on the same page here. But as much I enjoy a Montana type demographic, we do share a common enemy.
And it ain’t each other. An enemy of my enemy and all that……
Because those minorities live in ‘hoods near wealthy, politically, socially and environmentally correct neighborhoods, that’s why.
Not that you didn’t know that already.
Probably more like the target of wealthy area residents who are highly in favor of class warfare politics.
Keep the peons nearby so someone is available to make you your latte and fresh-baked Panera bread.
It’s why lesser neighborhoods exist, no?
You people should be ashamed of yourselves for this gratuitous victim-bashing.
/sarc off.
It’s true. The average black kid in America goes to as good of schools, faces the same prejudices and has the exact same opportunities as the average white kid in America.
In Brazil too. It’s really rad!
Thanks, Rio.
Sometimes the willful, feigned ignorance on this board is truly breathtaking.
Can’t say I disagree…
I volunteer in Harlem in summers to the “talented kids” with science and math.
These are the cream of the crop, and let me assure you, down to the last kid, every single one has already missed the boat in life.
It’s just shocking.
Why?
They have not had the default “knowledge” that most kids would have routinely absorbed through their parents.
They have no clue what a lawyer does, or how a microbiologist would make a career. They know nothing about what it means to be an editor or a paralegal or a nurse or a cancer surgeon.
They don’t know how to ask questions, or how to approach figures in authority with their questions. They don’t know that learning is a skill that you have to work at. They don’t know how to network, and even if they did, they simply don’t have access to the “right people”.
They quite literally don’t know most of the common-sensical things that the average middle-class kid would know backwards and forwards just by the dint of being middle-class.
They’re smart. Very much so, and yet they’ve already missed the boat in life.
It’s sad.
The “willful feigned ignorance”, as ahansen so skillfully puts it, is equally sad. You simply haven’t the faintest freakin’ clue what people who are underprivileged, and this is about class (= money) not race, are up against.
“They have not had the default ‘knowledge’ that most kids would have routinely absorbed through their parents.”
And their friends. These are where the values and interests come from, from parents and from friends.
Values and interests. Hang with those who value football above all else and you’ll get to learn all about football, the jargon, the plays, the teams - everything you need to know about football (assuming you need to know anything about football).
Have parents and friends that value education and you get to learn a lot about education.
Science? Select parents and friends that like to talk and do science and you’ll get to learn a lot about science.
Business? Carpentry? Commercial fishing? Same rules apply: Parents and friends.
Mention the name of a university to some people and they will tell you how their football team is doing. Or their basketball team. Others will tell you that it is (or is not) a great party school.
Some will tell you about their engineering school. Or their medical school. Or their film school.
Same universities, same schools, but different views of what these universities are all about.
They have not had the default “knowledge” that most kids would have routinely absorbed through their parents.
They have no clue what a lawyer does, or how a microbiologist would make a career. They know nothing about what it means to be an editor or a paralegal or a nurse or a cancer surgeon.
They don’t know how to ask questions, or how to approach figures in authority with their questions. They don’t know that learning is a skill that you have to work at. They don’t know how to network, and even if they did, they simply don’t have access to the “right people”.
They quite literally don’t know most of the common-sensical things that the average middle-class kid would know backwards and forwards just by the dint of being middle-class.
They’re smart. Very much so, and yet they’ve already missed the boat in life.
You just described my childhood in Wyoming. The few people there who knew how the rest of the world worked would try to take a few of the best and brightest under their wing but it generally wasn’t enough. They were able to successfully prepare their own kids for life on the outside but the rest of us had to figure it out on our own as best we could. I’m still hobbled by my ignorance of and impatience with the social norms of the civilized world. But that’s not *always* a bad thing…some of the stuff you city folks do is ridiculous :-).
I once met a woman who grew up in ritzy community where most people she knew were children of business people. This woman, as a teenager, got together with others in her neighboorhood to set up a lemonaide stand at a Little League baseball game so as to earn some money.
Nothing new here, lots of lemonaide stands pop up at these places, except this idea quickly evolved to contacting the Coca Cola company and having the company work out a deal with them to have them (Coke) deliver cases of coke and fritos and other Coca Cola products to the ballfield (at Coke’s expense) and in return they (Coke) would split the profits with the kids.
The total cost was borne by Coke, all the kids had to do was supply the labor of despensing the product - which is something they would have to do anyway if they were to mix up a batch of lemonade.
It worked out great for the kids and it worked out great for Coke. And the reason it worked out great is becuse these kids applied some valuable business skills they picked up mostly by osmosis from their parents and their friends.
Faster:
It not just inner city kids. When i put ads on CL looking for talk show hosts, the one thing that struck me was the lack of ability to do internet research. How can you be a talk show host when you don’t have the foggiest idea how to formulate good questions to ask.
Plus they expected to get paid with no experience. And were outraged you had to pay for the studio and engineer and to think of it as learning a new skill.
Also I was shocked at the people graduating 4 year communication colleges Emerson in Boston, even Columbia Univ. that had on air and internet stations and these kids had tons of debt and NO air checks or demo tapes…..just mind boggling
They don’t know how to ask questions, or how to approach figures in authority with their questions. They don’t know that learning is a skill that you have to work at.
FPSS, you just described my parents.
I second Carl Morris…my childhood in so. California with a single overwhelmed parent. But I guess that’s what we’re talking about. All I knew is what we saw on TV or read in books, and the only occupations I knew anything about was just generic office worker.
“The average black kid in America goes to as good of schools, faces the same prejudices and has the exact same opportunities as the average white kid in America.”
Go see a white kid in the juvenile detention system in Fl. that is predominantly run and inhabited by African Americans if you want to see racism and abuse. Nobody trying to hide it and nobody cares.
But you have said average so you would be correct.
“People just wanted to get me in debt!”
It’s all about the fees. Fees, fees, fees. A fee for every transaction and if you don’t do anything, there’s a fee for that, too.
Fee this.
+1. But apparently they aren’t doing that anymore. AND in 2009, many states started requiring mortgage brokers to be licensed and bonded. That cleared out a lot of the dregs, apparently.
What cleared out the dregs was the subprime collapse and the banks and securities firms jettisoning their mortgage-origination units. It had very little to do with the states suddenly developing an active interest in protecting their citizens from predatory or grossly irresponsible mortgage origination.
To expand on the above, states and municipalities benefited (short-term, long-term detriment) from the housing bubble, by being able to collect more property tax revenue. They had no reason to want to engage in actual responsible governance and throw up barriers to all the fraudsters riding the housing bubble to instant riches - that would’ve curtailed the gravy train.
The financial system craved “tulip bulbs” aka loans for its debt market. I say tulip bulbs because I’m referencing the tulip bulb mania the Dutch had back in 1600s. Tulip bulbs were thought to have lots of value. A risky loan - a few pieces of paper and a supposed promise to pay - is very similar to a tulip bulb or a beanie baby.
It worked great until eventually someone had to start paying back a loan. Instead of letting the market burn out the chaff, the world governments have stepped in to keep the credit bubble going.
http://www.bloomberg.com/news/2011-12-10/jefferson-county-bankruptcy-should-be-dismissed-bny-mellon-creditors-say.html
Jefferson County, Alamaba, is trying to declare bankruptcy to get out of creative-financing deals struck between corrupt municipal officials and (of course) JP Morgan. A bankruptcy would potentially turn the tables on the Wall Street grifters, who are understandably not amused.
“Jefferson County creditors including JPMorgan Chase (JPM) Bank NA, which owns more than $1 billion of the sewer warrants, Bank of America NA and Assured Guaranty Municipal Corp. filed court papers supporting BNY Mellon’s request for dismissal.”
What are they going to do, repo the sewers? That would stink.
The media has been focusing on the huge money that went into this project and how JPM is owed all this debt. Naturally, JPM makes huge bets on governments because they can then fleece the taxpayer. But what is missing in all these stories about corruption is how the whole thing got started……..GOVERNMENT Mandates.
Yes, that’s right, as I’ve written before, the Federal Government is out of control and DICTATES to State and local governments the things the MUST do to meet Federal Regulations.
I will research this a little today, since I am still sick and sitting at my desk mostly, but I suspect that the “sewer project” was part of an EPA Mandate for the County.
Many rural areas use Septic tanks which EPA hates because they claim it destroys the groundwater, which may be true. However, reasonable and prudent ways to achieve a change-over are not a concern of bureaucrats. You must “meet the new mandates” or be shut-down. I’ll get back to you on this. I want the “whole story”, not just the backroom payoffs the commenced when the construction started.
I did some fishing on Google to satisfy my curiosity. The tale is long and sordid. It goes back to the Clean water act of 1973, but actions by the County and “agreements” with State and Federal EPA adminstrations go on for decades, resulting in constant upgrades to the systems, during periods of rapid growth and numerous “moratoriums”. Here is a link to a report for the intellectually curious:………http://parca.samford.edu/jeffco/History%20of%20the%20Jefferson%20County%20Sewer%20System.pdf?AspxAutoDetectCookieSupport=1
It’s a PDF file. A dissected summation at the end of the first part:
In October 1993, the EPA demanded an accounting from Jefferson County for all unpermitted discharges of pollutants from its wastewater treatment plants since 1988. The request was unusual in that it bypassed ADEM, which (as noted above, on pages 68-69) had initiated its own enforcement proceedings to correct the same problem. 52 EPA officials stated that the Agency had concerns with sewer overflows in Jefferson County and with ADEM’s proposed order, and that the Agency had been informed that a federal lawsuit would be filed in the controversy.53
In November 1993, a federal lawsuit was filed by three citizens against the Jefferson County Commission for violating the Clean Water Act. The Cahaba River Society intervened in the suit in March 1994, and the EPA filed its own complaint in December 1994. The lawsuits, which were combined into one action, alleged that the County discharged pollutants into the Cahaba and Black Warrior Rivers, and their tributaries, without the required permits, and that it violated the terms of the permits for its treatment plants. The plaintiffs sought to stop the County from operating its sewage treatment system in violation of federal law. They also asked that the County be fined for its violations and estimated the total at over $100 million.54
The permit violations for which the County could be fined up to $25,000 per day by EPA were of two types: (1) violations of the water quality standards contained in the permits for the County’s treatment plants, and (2) violations of the procedural rules governing permits. One of these procedural rules is that permit reissuance must be requested at least 180 days in advance of the expiration of a current permit, and Jefferson County had not met this requirement in a number of instances, with each day’s tardiness potentially subject to the same $25,000 penalty that would apply to a pollution-related violation.55
Noting that the County had admitted that its pollutant discharges exceeded the permitted levels in a number of instances, the judge in January 1995 found for the plaintiffs and ordered the County and the plaintiffs to present an agreed-upon plan to end the problem of sewage overflows, particularly in periods of heavy rain, or two separate plans that would leave the decision to him.56
Estimates by the County at the time put the cost of reducing rainwater leakage into sewer pipes by 30 to 35 percent at $600 million, which would require a doubling of sewer rates from an average of $15 a month to $30. However, the plaintiffs favored a reduction of rainwater infiltration by 70 to 80 percent, which the County estimated would run $1.2 billion and require quadrupling sewer rates to $60 a month. The Cahaba River Society
71
estimated that the ruling would require no rate increases above those already planned by the County. 57
In April 1995 an informal consent agreement was reached between the County and plaintiffs. The County was to implement a ten-year program to end sewage bypassing. The EPA could levy a connection moratorium against any County treatment plant that continued to bypass in the final phase of the plan, around 2003.58 In May 1995 County officials proposed spending $30 million for a Greenway Parks and Environmental Preserve System rather than paying large monetary penalties. The land would act as a buffer zone, helping to protect the waterways and wildlife in the county.59 The County also presented its plan to create a single, comprehensive countywide sewer system to mayors or representatives from 19 cities. A majority of mayors present at the meeting informally supported the program, which involved a County takeover of responsibility for the rehabilitation and maintenance of all sewer lines feeding into the County’s main sewer trunk lines. Under the unified sewer system, the County would also be allowed to decide what kind of sewers went into the ground, but officials promised that this authority would not be used to inhibit the growth of municipalities or to stop them from placing sewers where they desired. The County estimated that 60 percent of the sewer system’s problems originated in lines owned by municipalities.60
On December 9, 1996 the final Consent Decree, which settled the lawsuits, was entered in U.S. District Court. This brought to a close a 23-year period of rapid change and frequent conflict in the development of the Sanitary Sewer System.
Los Osos, CA is caught-up in the same sort of mess since the unincorporated county area lacks a sanitary sewer system, and they are located adjacent an tidal estuary. Lacking millions for the capitol outlay the project hasn’t been built-out yet, but they have argued for twenty-five years while spending endless planning funds. Fortunately Goldman-Sachs wasn’t involved.
http://www.sewerwatch.blogspot.com/
The average voter and public official in Jefferson county should be considered untreated waste.
Some mandates are ridiculous, but most exist because without them, we would still be using 19th century systems and getting 19th results.
It is a FACT of the human condition that most people will NOT change unless forced to. It is the same for groups as well.
A sad fact, but a fact, nonetheless.
I think we have unmasked the true identity of LV Landlord, the infamous HBB tout for “it’s different here” in Las Vegas, circa 2005-2008, as she bought up more “bargain” properties to rent out. She stopped posting around the time Lehman Bros crashed & burned - I’d assumed she was probably living in a cardboard box by now.
http://www.businessweek.com/magazine/the-king-of-all-vegas-real-estate-scams-12082011.html
Before the market crashed and home prices tumbled, before federal investigators showed up and hauled away the community records, before her property managers pled guilty for conspiring to rig neighborhood elections, and before her real estate lawyer allegedly tried to commit suicide by overdosing on drugs and setting fire to her home, Wanda Murray thought that buying a condominium in Las Vegas was a pretty good idea.
At first glance, Murray doesn’t look much like the type of person who would arrive in Las Vegas only to get tangled up in and eventually help unravel a complex criminal conspiracy. At 65, she stares out at the world through thick glasses. She is legally blind. Her eyes never quite seem to focus on any one thing. On a recent Friday morning, she sits at her dining room table wearing a zip-up leopard-print sweatshirt and recounts how she helped to foil a group of lawyers and contractors running amok in Sin City. “They didn’t think there would be four old ladies who wouldn’t put up with their stuff,” says Murray. “They really pissed me off.”
Her eyes never quite seem to focus on any one thing…. she sits at her dining room table wearing a zip-up leopard-print sweatshirt…
Is it just me or does that sound hot or what?
Well, she’s like 900 years old, but if that’s your thing, who am I to judge?
wearing a zip-up leopard-print sweatshirt
I love that they added this detail. How tacky.
GREAT article! Thanks for sharing, Sammy…
The intricacies of this scheme were really fascinating. It was an impressive if incredibly corrupt scheme.
The one tidbit hidden towards the end that I though fascinating was this bit:
“Murray and her husband moved out of the Vistana in 2008 and now live in a nearby development. “I couldn’t take the pressure anymore,” says Murray. “Everything we did, they came after us. I’d had enough.”
Eventually, she and her husband let their dream home slip into foreclosure. “The reputation was out there, and nobody wanted to live there,” says Murray. “So we let it go. … I took a big hit.””
So Murray ended up being a jingle-mailer. She pins it on the “pressure” of the situation, but it sounds to me more like she realized the smart financial move (jingle-mail and buy nearby for much cheaper), and did it.
My pleasure. The scope of this fraud, and the extent of complicity between the Nevada political establishment (the Establishment Republican kingmaker in the state GOP was arrested for his complicity, surprise surprise), local law enforcement, sleazy lawyers, and (though the article doesn’t explicitly say so) mafia-linked construction contractors, is truly revealing. And it sounds like this is just the tip of the iceberg.
The four little old ladies who took down this racket are an inspiration. What is depressingly familiar is how the vast majority of the residents of the complex did nothing as they, and the collective, were victimized year after year by these criminal shysters. What a microcosm of America itself.
I’m not really sure what the average resident of such a complex could do, other than dig for the relationships between the various parties to the conspiracy.
When reading the story, I wondered about the HOA rules that governed these associations that were “victimized”. The rules set down the qualifications for who can serve on the boards.
And their rules apparently let a 0.5% owner of a single condo run for office. That seems ridiculous on the face of it.
That was the initial problem that allowed such a scheme by outsides to take over the board, and then milk the association…
The lawyer who wrote rules so flawed should be disbarred. I wonder whether the rules originated with one of the law-firms that ended up assisting in the rape and pillage?
The article failed to really mention this flaw in their rules, though.
The other thing that struck me was that the vote-counting fraud was so easy to pull off. It makes me wonder how much of this goes on in elections for public office.
I’m sure that in a free market, this kind of thing would have never happened.
Damn unions!
OUCH! I think I just hurt myself laughing!
Where is lainvestorgirl?
It would be awesome if she were to put in an appearance again.
Bad To The Bone lyrics
The day I bought my house
The neighbors all gathered ’round
And they gazed in wide wonder
At just what they had found
The HOA spoke up
Said “leave this one alone”
They could tell right away
I was bad one to loan
Bad one to loan
B-B-B-B-Bad
B-B-B-B-Bad
B-B-B-B-Bad
Bad one to loan
It`s been twelve-hundred days
Since I have paid you
It’ll be twelve-hundred more, baby
Before I am through
I wanna live free baby
Free right here in my home
I’m here to tell ya honey
I was bad one to loan
Bad one to loan
B-B-B-Bad
B-B-B-Bad
B-B-B-Bad
Bad one to loan
SOLO
I make a rich banker laugh
I’ll make a Fed Chairman steal
I’ll make an old saver poor
I make a renter squeal
I`ve lived here for five years
They call me on the phone
But I always tell `em
I was a bad one to loan
B-B-B-B-Bad
B-B-B-B-Bad
B-B-B-B-Bad
Bad one to loan
Bravo!
LOL!
You got the rent money yet, sucka ?
“You got the rent money yet, sucka?”
I don’t believe yo’ tryin’ to find no job. I seen you today, you
was sittin’ at the computah, typin’ lyrics onto the HBB!
Is that the famous Rapper and former realestate investor Deadbeat Pete?
Sean “Diddy” Combs
“Jay-Z”
“50 cent”
“Deadbeat” Pete
Yo` word to your credit counselor.
This is an AWESOME one, jeff!!!
I think you are just getting better and better…
“I make a rich banker laugh
I’ll make a Fed Chairman steal
I’ll make an old saver poor
I make a renter squeal”
Brilliant
Realtors Are Liars®
Reuters
SHELBY COUNTY, IOWA (Reuters) - On a recent morning inside a crowded town hall, auctioneer Jeffrey Obrecht sold off a sliver of western Iowa farmland barely wider than a football field.
The soil had drainage issues. A muddy creek made it tough for a tractor to reach the back corner. Still, the self-described “dirt dealer” figured some investor might want the tiny parcel in the nation’s top corn producing state.
His raspy baritone rising high above the din of the crowd, Obrecht struggled to hide his shock as the price tag spiraled ever higher. In the final minutes, the bidding narrowed down to two farmers after an anonymous investor who was bidding by phone had dropped out earlier.
The winner paid $10,450 an acre — more than double the land’s value just two years ago.
“There’s no reason that land should have brought that kind of money,” Obrecht, 61, said afterward. “Am I dreaming, or did that just happen?”
Here in the nation’s heartland, institutional investors, eager speculators and well-heeled farmers have raced in recent years to buy up farmland in order to shelter their wealth from tumultuous Wall Street or expand their profits in the global food chain. And auctioneers like Obrecht have been on the front line of this farm frenzy, charged with talking up the bid amid these sprawling fields and boarded-up agrarian towns.
Their business is thriving as more and more sellers see auctions as their best way to cash in. But the auctioneers are also keen observers of the rally, and what they see is this: Outsiders may have helped set off the investment boom, but it’s farmers that are now driving it to worrying extremes.
http://www.csmonitor.com/Business/Latest-News-Wires/2011/1205/Bankruptcy-of-MF-Global-hits-farmers-hard
Farmers and ranchers, who are getting a first-hand education on Wall Street fraud and criminality since they appear to be primary victims of MF Global’s “co-minging” of firm and “client” (mark) funds, may not give a warm reception to absentee Wall Street “investors” who snap up farmland. I’m guessing those properties are going to be turned into unauthoritized dumping grounds for every pissed-off farmer for miles around. And God help the suits if they show their face in any local establishment, especially where beer is served.
you got that right, Sammy. These investors would do well to read about the early 1980s, when one couldn’t give away Midwest farmland. When this farm bubble finally ends, when farm subsidies end, this land will be worth the tax payments.
“when farm subsidies end”
If the monied interests are now heavily invested in farmland, you can bet that the subsidies will never end. They will probably be increased with the justification of “helping the small farmers” during the coming farm-depression, while the benefits to actually be reaped by large hedge funds.
They won’t even pretend to be helping small farmers (unless they’re minority small farmers - that’s a whole ‘nuther story). They will help the agribusiness cartels that are destroying small farmers, polluting the food chain, raising animals under horrendous conditions, and bringing in legions of illegals to use as virtual slave labor. But did I mention that they’re generous contributors to farm state Republicrat senators and congressmen?
The subsidies will end. From what I gather, they are at the front of the chopping block. Regardless, when our masters (the Chinese) have their own economic contagion and stop buying our worthless bonds, farming subsidies are an easy wealthfare program to cut. It can end on our terms, or theirs. Unfortunately, it will probably end on theirs.
“The subsidies will end.”
Optimist.
http://market-ticker.org/akcs-www?post=198954
How many youthful Obama Zombies of ‘08 are now seeing the light?
“The threat of the borrower declaring bankruptcy and avoiding the debt taken on is the only market check and balance that works to restrain predatory and abusive behavior by lenders.”
This.
And for you bailout afficionados who voted for Obama or McCain, or who support statist, corporatist faux conservatives like Romney, Gingrich, Perry, etc., I would like to dedicate this video by the Ron Paul campaign, titled “Consistent”:
http://www.youtube.com/watch?v=B7RaYbToq7Q&feature=relmfu
And a Romney volunteer, and a rather hot one at that, sees the light and defects to the Ron Paul campaign. Perhaps there’s hope for the Obama Zombies & McCain Mutants after all.
http://www.youtube.com/watch?v=DhrqFh3o4CM&feature=related
This article is a must-read gem for anyone living with an underwater mortgage. It does a fine job of laying out the unpleasant choice between either walking away or paying off a principle balance level which might never again be matched by the market value of the underlying collateral.
P.S. For the Deseret News editors, the saying is, “Come Hell or high water.”
Underwater: Walking away from your mortgage
Published: Sunday, Nov. 27, 2011 11:03 p.m. MST
By Michael De Groote, Deseret News
WEST JORDAN — If being underwater in a home mortgage were literal, Alan Smith would be stranded on the roof by the flood, water lapping around his ankles. And if the whop-whop-whop of a rescue helicopter’s spinning blades hovered above him, Smith would just wave them off.
Come heck or high water, Smith and his family are staying put.
Fortunately being underwater in a home isn’t literal. Being underwater simply means you owe more on your home mortgage than the house is worth — what realtors call “negative equity.”
At least Smith, a realtor with Coldwell Banker Residential, is not alone in his pain.
CoreLogic, a business analytics website, released second quarter 2011 data that showed 10.9 million residential properties were underwater. And of those underwater, nearly three-quarters paid above-market interest on their mortgages. By the third quarter Zillow, a website for real estate statistics, estimated that 28.6 percent of all single-family homes were underwater.
Dave Anderton, a spokesman for the Salt Lake Board of Realtors, said about 20 percent of homes in Utah are underwater. One in five, whether they know it or not. And that doesn’t even touch the worst states’ figures. CoreLogic reported Arizona mortgages at 49 percent underwater, Florida was at 45 percent, Michigan at 36 percent and California at 30 percent. The worst was Nevada at 60 percent. A study by the Nevada Association of Realtors found that 23 percent of the state’s foreclosures were from people who just walked away from their underwater homes. And the impact of negative equity across the country threatens property values in neighborhoods and contributes to the sluggishness of a recovering economy.
For individuals in that situation, it can destroy retirement and education plans. It makes it appear options are limited and shakes moral certainty. Should you keep your promise to the bank and stick it out? Or should you look to your own financial interests and walk away?
…
The central bankers’ too-big-to-fail QE liquidity injections keep biggering and biggering AND BIGGERING!
FT dot com
Central banks fire the second barrel of QE
December 11, 2011 5:47 pm
by Gavyn Davies
The financial markets are becoming ever more dependent on the continuing willingness of the central banks to use their balance sheets to rescue the global economy. The central banks are not flinching from their task. In fact, they are in the process of firing their second barrel of quantitative easing at the global crisis. It could prove to be as large as the first barrel in 2008/09.
The dependence of the markets on the central banks is, of course, nothing new. But nor has it ever been greater than it is now. At the time of the 2008/09 crisis, the provision of unprecedented amounts of liquidity by all of the central banks to the financial sector was an essential component of the policy response which stabilised the crisis. And the precipitous cuts in interest rates which followed, along with the first experiments in quantitative easing, helped the global economy to recover in 2009/10.
But at that time the central banks were not acting alone. Governments also used their balance sheets to cushion the depth of the recession, as the private sectors took urgent steps to reduce debt. Now, governments are trying to reduce the growth of their balance sheets by tightening fiscal policy, leaving the central banks as the only remaining actor in the rescue operation.
The scale of recent central bank action is extraordinary, by any historic standard other than that of late 2008. The first graph shows what the major developed central banks have been doing recently, and makes some assumptions about what they may do next.
At the Fed, there has been no increase in the size of its balance sheet since QE2 ended in July, but Operation Twist started in September. This is commonly estimated to have the same impact on monetary conditions as QE2 had via an increase in the balance sheet.
In the graph, the low estimate for the Fed makes no allowance for Operation Twist, and assumes that there will be no announcement of QE3 in the first half of next year. The high estimate assumes that Operation Twist is the equivalent of a $600 billion increase in the balance sheet. Alternatively, the result would be the same if we make no allowance for Operation Twist, but assume that the Fed’s new programme of dollar swaps turn out to be worth $300 billion, and that the Fed also undertakes purchases of mortgage securities worth $300 billion in the first half of next year.
…
Beware of zombie fund traps!
FT dot com
December 11, 2011 12:43 pm
Private equity trapped in ‘zombie funds’
By Daniel Schäfer in London
About half of all institutional private equity investors have a stake in a “zombie fund” where unsuccessful managers with no hope of getting a bonus are holding on to the investments as long as possible to live off the management fee, a global survey shows.
The findings are yet another strong sign of difficult times for private equity as many groups struggle to cope with the fallout from the credit-fuelled takeover binge in the run-up to the financial crisis.
The situation is most prevalent in North America, where 57 per cent of the investors said they had capital locked in an underperforming fund, according to the Global Private Equity Barometer, due to be published on Monday by Coller Capital.
Private equity funds are typically structured with a 1.5 to 2 per cent management fee and “carried interest” that pays managers a 20 per cent share of the profits.
There is usually an 8 per cent profit threshold that managers have to achieve before they get paid a performance bonus.
“Some groups that really pushed things in the good times will now pay the price by not achieving the hurdle rate necessary for carried interest [the performance bonus],” said Jeremy Coller, founder of Coller Capital, one of the largest global investors with interests in second-hand private equity.
…
LONDON (Reuters) - One in five workers suffer from a mental illness such as depression or anxiety and these conditions increasingly affect productivity in the workplace as many struggle to cope, a report by the OECD said on Monday.
Apparently you can only push the worker bees so hard, before you have to fire them and get new worker bees.