February 3, 2013

Bits Bucket for February 3, 2013

Post off-topic ideas, links, and Craigslist finds here.

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Comment by Combotechie
2013-02-03 07:41:09

An old video (from 2004) but worth watching:

“Frontline: The Secret History of the Credit Card”.


A summation: Shear ‘em and shear ‘em and shear ‘em … and then skin ‘em.

Comment by azdude
2013-02-03 08:00:14

Stay away from AMEX.

Comment by eight pieces of chicken
2013-02-03 08:04:27

They should name it what it is….DEBT.

It’s a debt card!

Comment by Bill in Los Angeles
2013-02-03 08:09:58

I pay mine off every month. I get good miles for flying. Used miles for a first class nonstop flight from Hawaii to Phoenix last time. I don’t know about you, but I hardly sleep on a plane. On red eyes I want to be as comfortable as possible.

Comment by Ol'Bubba
2013-02-03 08:18:41

What is the flight time between Phoenix and Honolulu?

Comment by Bill in Los Angeles
2013-02-03 08:54:29

Not sure about Honolulu, but I have flown back from Lihue on Kauai, and Kona on the big island a few times. All those flights leave after 10 pm. The plane crosses over California at sunrise.

On the way to Hawaii, flights reach the islands in mispd afternoon.

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Comment by Overtaxed
2013-02-03 10:15:05

About 6 hours between the 2. Less on the way back to PHX.

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Comment by Bill in Los Angeles
2013-02-03 10:50:33

Yeah. Thanks Overtaxed. I should have been more direct.

Comment by Anon In DC
2013-02-03 09:48:26

I like my cc. I have a $100 check from them sitting on the counter. Get a check a couple times a year for my points. I am one of the “deadbeats” that the cardholders dont’ like. Their cartel is breaking. Saw a Wall Street Journal article this past week. As part of a lawsuit settlement in a number states merchants can now charge more for cc purchases. Hence a discount for cash.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 09:56:18

Our little household has its own secret history of the credit card:

1) Never wrack up a larger balance than you will be able to faithfully pay in full every month.

2) Seek to use cards which either minimize or eliminate annual fees.

3) Get cards that give you cash back at the end of the year (e.g. CostCo AMEX) or frequent flyer miles (Southwest Airlines VISA).

And the industry has a name for people like us: DEADBEATS. For the record, we never put a gun to credit card providers heads and forced them to offer these terms.

Comment by Pressboardbox
2013-02-03 07:49:11

Nothing goes with the souper bowl like a new housing bubble. How about a “Rocky” type commercial with Suzanne getting back in shape for the sequel?

Comment by ibbots
2013-02-03 08:02:39

Game day chicken bucket go BOOM!

Comment by Bill in Los Angeles
2013-02-03 08:19:16

Home moanership and football are as American as pizza, wings, apple pie and obesity. A person with a good asset allocation plan and who has saved for decades can stay free by renting and staying single. In my case my modest income from my savings bonds and Arizona municipal bonds can pay for my Arizona rent, and then some. I wish I could be home in Arizona more often though!

If I can increase my assets 300% it would make renting even more favorable. Arizona in the winter and Big Sur in the summer. That’s my goal.

Comment by azdude
2013-02-03 08:34:59

Sad they turned home ownership into a gravy train for the banks and a casino for wall street. the howmuchamonth crowd are at the mercy of the banks.

You cannot top az winters. I want to spend my time between AZ and CA as I have been trying to do. You ever been to pacific grove? We go there often as in laws have a crib there. Close to pebble. Done any wine tasting in carmel?

Comment by Bill in Los Angeles
2013-02-03 09:03:10

One of my sisters lived in Pacific Grove with her husband when they first married. My late great Uncle lived on 17 mile Drive. I once interviewed with Naval Post Graduate school faculty and had a tour of the facilities and some unclassified labs, as the US Navy sent me there to try to get me interested in a Phd. My great uncle used to teach there.

Did not go wine tasting those days. I was a beer man back then.

You also have great goals. Yeah, to skirt around congested L.A. and get to cleaner, cooler air of the central coast is worth living below your means NOW and saving like a squirrel. I will be closer to relatives, to the part of California I grew up in, and avoid the clutches of the FTB.

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Comment by Bill in Los Angeles
2013-02-03 09:30:18

Most people do not look beyond the obvious. Home ownership is many traps in one. Emotional, financial, political to name a few. A few days ago I posted that most people who own homes or are paying for homes are sitting ducks for property tax increases. A renter with a one year lease can decide every year if he should move to another state. Emotional: everyone must build a nest and reproduce. My own neighborhood where I bought a brand new house - across the street in an apartment complex was a meth lab - that was in the high desert of California. Years later a young colleague and his girlfriend bought a new $200,000 house. Right away they hated it because a neighbor teenager rode his motorized razor up and down their street at 11pm. Why would you committ yourself to many years of living with rude neighbors by buying? Financial: I became far more financially free by not being obligated to stay in one small community, by renting instead of owning.

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Comment by azdude
2013-02-03 10:26:10

I guess the main benefit to home ownership would be the chance to eventually have some equity. By paying down the loan or by price appreciation you could eventually have some cash.

Also society puts a lot of pressures on people to own homes.

Nowadays people basically rent from the bank because most people put very little down when buying.

Comment by Bill in Los Angeles
2013-02-03 10:59:54

It’s that social pressure that prevents people from having freedom. Those who resist tend to profit by seeing things from unique perspectives. Since the turn of this century, the best stance was to avoid real estate ownership. I think it will continue that way through at least 2020. We have to wait and see if the U.S. government is forced to greatly reduce its power and size. Many young people are Ron Paul supporters and he had the biggest rallies in 2012 compared to Obummer and Mitt Rino. They see no reason to bring children into the world since the USA has been becoming more totalitarian. These people might shrink government in their lifetime.

Comment by ahansen
2013-02-03 23:05:32

Big Sur is fogged in all summer, but it’s lovely in the wintertime.

Comment by snowgirl
2013-02-04 06:45:26

Sure glad you brought that up as that little tidbit is never mentioned on the travel brochures. ;)

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Comment by aNYCdj
2013-02-03 08:20:51

Time for the racist soopr bowl gun commercial…..


Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 19:16:28

My kid’s jazz band coach plays in a band that submitted an audition tape for a Got Milk? commercial.

Guess what: They won!

Comment by ahansen
2013-02-03 21:21:54

Excellent, Prof. You must be totally stoked for your kyd. What fun!

Comment by vinceinwaukesha
2013-02-03 08:41:04

Hey sfhomowner, back on the 30th (yeah I’ve fallen behind on reading posts) you commented in the home appliance insurance thread about a loud, slow clothes dryer.

1) I did the appliance insurance thing with an ancient dishwasher, they’ll go to any extent to avoid purchasing a new appliance (to prevent upgrade fraud, probably). So most likely they’ll fix your dryer no matter what the cost, not install a new one, not install a used one, not a credit, blah blah. Even if an ancient electro-mechanical timer drum costs more in exotic parts, shipping, and labor than a new washer, because they don’t want everyone trying to upgrade on their dime. Maybe you’ll be pleasantly surprised if you ask, but don’t plan on them doing anything but pure repair work.

2) After a decade or two the dryer rear bearing fails. That is almost silent and makes no noise. The problem is when it fails the front of the dryer tub droops smashing the front gasket parts. Thus destroying the gasket-like thing in the front and resulting in an incredible noise, also the clothes in the dryer get pinched and damaged and broken pieces of plastic gasket appear in the dried clothes hamper. Both take about an hour to repl if experienced, or 4+ hours if no experience. I found I had to pretty much disassemble the entire dryer to the point of ridiculousness, like remove the heating elements and their wiring, unbolting structural components, etc, I think the only thing I didn’t have to remove was the motor… Its like the assembly line starts at the bearing and builds the entire dryer around it. Once you’re in there, replace the drive belt and you’ve pretty much replaced all moving parts except the motor (which is usually eternal if kept dry). So the bright side is if it CAN be fixed you practically have a new dryer.

If it squeaks horribly when freshly loaded with heavy load of wet laundry and then the squeak goes away as it dries (gets lighter) this is the problem.

3) Looking at #2 above the killer problem is if you replace ONLY the front gasket, which is the symptom, then the bad bearing in the back aka the cause, will make the new front gasket self destruct in a month. So you might be in for a bit of a battle with the repair guy. Its like “fixing” a car that burns a quart of oil per gas tank by simply pouring more oil in. Also lets be frank, this is almost “normal wear and tear”. Either way this is probably going to be a difficult time with the service dude… just a heads up to steel yourself for battle.

4) Buying over the internet I found my rear bearing kit cost about $15, and a front gasket was about $150+ shipped. Add a new drive belt and labor (and annoyance) and you’re rapidly getting into the territory of replacing it. Which is what I ended up doing in the end after just replacing the rear bearing didn’t help with the front gasket/bearing. Note the economics of replacement instead of repair work much better at the $400 on sale model than the wifi connected $1600 deluxe model.

5) WRT to slow dryer / energy use, my OLD washer/dryer could wash faster than dry, but the NEW combo dries much faster than it washes by maybe a factor of two. The key is new washers spin at 1000+ RPM so the clothes come out slightly damp rather than almost dripping wet. New dryers don’t use any less power than old dryers (you’re not going to be able to plug that dude into a 110 outlet or something) its just they use less energy because they only run 45 minutes instead of 90 minutes, because the washer does all the work squeezing out the water. So if you think you’ll save energy by replacing the dryer, you’ll actually save much more energy by replacing the washer. Your dryer is dead anyway so it doesn’t directly matter, just go into the deal eyes wide open that you’re not going to save any energy by replacing only the dryer.

6) One joyous discovery was my drain was partially clogged very near the street sewer connection, so the little old washer could fill the sewer pipes as it slowly drained out without flooding the basement, whereas the new larger washer when fully loaded could quite easily flood the basement. $450 of drain work later all was well. The point being that you need to be in the financial area of laughing off $500 here and there or else you’re really in over your head. So pinching pennies is a nice hobby for fun but if you genuinely can’t afford then look out you could be in for world of hurt because of a zillion other (closely related) un-pinchable pennies. All I can say is home ownership must really suck for people who aren’t well off. Or something’s wrong when you need to make 2x the median HH income just to feel merely “put upon” by the expenses of basic living. I donno how hand to mouth people literally even survive.

7) I ended up with a package deal at home depot for a washer and dryer. Frankly they’ve been value engineered for decades to fail about the same time, so if you think your washer isn’t ready to break you’re probably not looking at it closely enough. At least put new hoses on it before it bursts one and causes a flood. Also you can live without a dryer, just hang out on a clothesline, but you can’t realistically live without the washer. So in a prioritization scheme even if its your dryer that broke, what you really need to replace is the washer thats just about to break. See #6 above about $500 here, $500 there, pretty soon you’re talking about real money… like my roof that’s going to cost about $4K this summer.

Comment by Happy2bHeard
2013-02-03 16:22:31

I suspect this is why we end up with slumlords. They overcommit on the purchase, figuring that the tenants will cover PITI and underestimate maintenance expenses.

Even when they inspect well, they fail to account for the stupid things that the best of tenants (or their children or the neighbors) do that cause damage. And they expect things to last longer than they will. Suddenly, they find themselves over their heads and unable to do necessary repairs.

When rents are rising, they may be able to keep up for a while. If rents are steady or falling, they quickly fail to keep up and are stucco.

They did not set out to become slumlords. They set out to become real estate moguls.

Comment by Robin
2013-02-03 19:28:32

Vince - How big is your roof? My 400 sq. ft. guest house has developed a leak and is growing mold.

Any one have an estimate of cost to repair/replace?

Also, anyone know if it’s covered by my Homeowner’s insurance or Landlord policies/

Thanks in advance.

Comment by aNYCdj
2013-02-03 20:50:28

get a spray bottle and fill it with the concentrated bleach…lemon, or fresh smell is good …use the stream setting……

That will work temporarily.

Comment by vinceinwaukesha
2013-02-04 06:25:01

“Vince - How big is your roof?”

Its irrelevant because I’ve got a section of flat roof, which costs about 4 times as much per sq than regular roof.

I think a regular roof might cost only $2000 or so?

My limited knowledge of insurance is it covers damage. Much as my car insurance covers collision but not oil changes. Actually my health insurance seems to have to opposite strategy where maint is free but I only get 80% coverage of emergencies. Insurance is a weird business, the only real constant is screwing over the customer. Guarantee from the installer and mfgr covers it for awhile, although enough weasel words in both that you might not get any coverage.

Comment by AbsoluteBeginner
Comment by azdude
2013-02-03 09:18:52

screwed over the wrong people?

Comment by Bill in Los Angeles
2013-02-03 09:37:16

Just out of curiosity, not only did the article say the tycoon had a partner (who is male), the article mentioned the woman who picked him up from the side of the road had a partner, a male. Are these two different meanings? Or do Irish folks have a partner instead of a husband or wife?

Comment by Skroodle
2013-02-03 11:29:40

Divorce has only recently been made legal in Ireland and is still difficult to obtain.

Many people have a husband/wife and a partner.

Comment by Combotechie
2013-02-03 12:12:31

Sort of sends a message, does it not?

I have it on good authority that the super rich are running scared and have been running scared for several decades now - ever since Patty Hearst was kidnapped. The Patty Hearst incident notified the super rich that any one of them or any one of their children are at risk. Some of them and/or their children circulate throughout the land using secret identities.

The OWS folks have a nifty opportunity at hand in that they have the talent to plunge into databases and “out” those using secret IDs but for some reason or other they would rather spend their time fighting with the police.

Comment by Bill in Los Angeles
2013-02-03 14:01:53

A guy at work told me he knew some guy who had a nice Mercedes Benz. Sold it and got an economy car after a nerve-wracking event when someone followed him from work once.

Let the young $30k millionaires buy the fancy cars.

Comment by Carl Morris
2013-02-03 14:09:32

Or if you really need a good road trip car I suppose you could be like Patrick Swayze in Road House and store the nice car most of the time and drive the beater to work. I’d rather just live somewhere where I don’t have to worry about such things.

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Comment by Bill in Los Angeles
2013-02-03 14:13:36

Yeah me too. If I can have three more years of this type of work I am in, I am going to aim for staying in North Scottsdale, renting a spot there. Maybe owning. There is a point that I want to stop all this traveling.

Comment by scdave
2013-02-03 09:33:43

Amazon…Reading some reviews on the new book “After the Music Stopped”…

Allan Sewell posted a review that is so spot on I had to bring it to the HBB attention…Its to long to cut & paste but, it is worth your time to go read it..

Comment by vinceinwaukesha
2013-02-03 10:36:36

That’s the review that pretty much rips the author a new one (and rightly so, if his characterization of the author is correct) and ends in:

“However, it fails to address what I see as the BROADER problem, which is the targeted destruction of American employment”

Come on you guys fess up which of you all wrote it…

The “facts and logic” writing style with no pulled punches reminds me of Hoz from the olden days. I believe Hoz to be dead which is an unfortunate loss, but I never heard one way or another. I don’t think its prof bear but it could be. I don’t think its Ben himself but it could be (aside from the obvious name issue). The style does remind me a little of paladin also from the olden days. The writing style is not anything like anycdj or the goonsquad or billinla… not that there’s anything wrong, just clearly different people. There’s nothing about reinstating the “fugitive slave act” type thinking so that rules a certain former court jester out.

I’m completely unimpressed with the credentials of the author. Romney / Rmoney syndrome. Hmm march out a big time insider financial prince, the kinda guy who screwed us all up to begin with, and expect the folks who would never trust that type, to suddenly start believing in him merely because they’re following the “PR campaign in 24 hours” list of checkboxes. I suppose its interesting in an academic / PR sense to see how an insider tries to whitewash his culture’s own wrongdoing without actually implicating anyone. Either that or its a “let them eat cake” moment where they assume they are superior enough to the dregs of humanity that a little condescension is just what the dr ordered… now now little consumers now don’t worry about the man behind the curtain after our little bedtime fable you just go out there and “shop for murica(tm)”

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 10:05:41

Did you ever wonder where Big Box Mart was born?

P.S. I like to joke about warehouse discount stores, but in honesty I have a Costco executive card and have shopped there regularly since my kids were in diapers (it was great fun having two kids in diapers sitting side by side in one of those humongous shopping carts — my wife utterly refused to enjoy the experience!).

Comment by azdude
2013-02-03 10:21:17

we go to costco maybe once a month to get meat. They have some decent wine in their too. I go into sams club too. Often times prices at walmart are cheaper than sams for the same items. I sometimes get gas at sams club because costco doesn’t have a station at the store locally.

I really dont spend a lot of money at costco or sams. I dont think they have the great of deals personally. I dont buy a lot of product in bulk.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 10:44:06

I tend to spread my shopping between Costco and Trader Joe’s (across the street). The thing I like about both stores is the balance between price and quality, i.e. they both offer a wide selection of good quality products at a competitive price. TJ’s wine is priced more to my cheap tastes, but if I ever come into a lot of money, I plan to enjoy Costco’s wide selection of high-end wines at low-end prices.

I had heard about some of these things before, but not all of them. Jim knowed all kinds of signs. He said he knowed most everything. I said it looked to me like all the signs was about bad luck, and so I asked him if there warn’t any good-luck signs. He says:

“Mighty few—an’ dey ain’t no use to a body. What you want to know when good luck’s a-comin’ for? Want to keep it off?” And he said: “Ef you’s got hairy arms en a hairy breas’, it’s a sign dat you’s agwyne to be rich. Well, dey’s some use in a sign like dat, ‘kase it’s so fur ahead. You see, maybe you’s got to be po’ a long time fust, en so you might git discourage’ en kill yo’sef ‘f you didn’ know by de sign dat you gwyne to be rich bymeby.”

“Have you got hairy arms and a hairy breast, Jim?”

“What’s de use to ax dat question? Don’t you see I has?”

“Well, are you rich?”

“No, but I ben rich wunst, and gwyne to be rich agin. Wunst I had foteen dollars, but I tuck to specalat’n', en got busted out.”

“What did you speculate in, Jim?”

“Well, fust I tackled stock.”

“What kind of stock?”

“Why, live stock—cattle, you know. I put ten dollars in a cow. But I ain’ gwyne to resk no mo’ money in stock. De cow up ‘n’ died on my han’s.”

“So you lost the ten dollars.”

“No, I didn’t lose it all. I on’y los’ ’bout nine of it. I sole de hide en taller for a dollar en ten cents.”

“You had five dollars and ten cents left. Did you speculate any more?”

“Yes. You know that one-laigged n—-r dat b’longs to old Misto Bradish? Well, he sot up a bank, en say anybody dat put in a dollar would git fo’ dollars mo’ at de en’ er de year. Well, all de n—-rs went in, but dey didn’t have much. I wuz de on’y one dat had much. So I stuck out for mo’ dan fo’ dollars, en I said ‘f I didn’ git it I’d start a bank mysef. Well, o’ course dat n—-r want’ to keep me out er de business, bekase he says dey warn’t business ‘nough for two banks, so he say I could put in my five dollars en he pay me thirty-five at de en’ er de year.

“So I done it. Den I reck’n'd I’d inves’ de thirty-five dollars right off en keep things a-movin’. Dey wuz a n—-r name’ Bob, dat had ketched a wood-flat, en his marster didn’ know it; en I bought it off’n him en told him to take de thirty-five dollars when de en’ er de year come; but somebody stole de wood-flat dat night, en nex day de one-laigged n—-r say de bank’s busted. So dey didn’ none uv us git no money.”

“What did you do with the ten cents, Jim?”

“Well, I ‘uz gwyne to spen’ it, but I had a dream, en de dream tole me to give it to a n—-r name’ Balum—Balum’s Ass dey call him for short; he’s one er dem chuckleheads, you know. But he’s lucky, dey say, en I see I warn’t lucky. De dream say let Balum inves’ de ten cents en he’d make a raise for me. Well, Balum he tuck de money, en when he wuz in church he hear de preacher say dat whoever give to de po’ len’ to de Lord, en boun’ to git his money back a hund’d times. So Balum he tuck en give de ten cents to de po’, en laid low to see what wuz gwyne to come of it.”

“Well, what did come of it, Jim?”

“Nuffn never come of it. I couldn’ manage to k’leck dat money no way; en Balum he couldn’. I ain’ gwyne to len’ no mo’ money ‘dout I see de security. Boun’ to git yo’ money back a hund’d times, de preacher says! Ef I could git de ten cents back, I’d call it squah, en be glad er de chanst.”

“Well, it’s all right anyway, Jim, long as you’re going to be rich again some time or other.”

“Yes; en I’s rich now, come to look at it. I owns mysef, en I’s wuth eight hund’d dollars. I wisht I had de money, I wouldn’ want no mo’.”

– Mark Twain’s Huckleberry Finn

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 10:30:02

Price Club founder’s son tells story of how father perfected warehouse shopping, paving the way for a retail revolution
By Roger Showley
12:01 a.m.Feb. 3, 2013
Updated7:44 p.m.
Feb. 1, 2013

“Sol Price: Retail Revolutionary & Social Innovator”
Author: Robert E. Price
Cost: $19.95, available at a discount (of course) at Costco

Lecture: Iris Engstrand, 5:30 to 7:30 p.m. Monday, Joan Kroc Institute for Peace and Justice, University of San Diego. RSVP at (619) 260-7446 or at solpricesandiego.eventbrite.com. Space is limited.

Sol Price was right when it came to serving consumers.

In the 1950s he perfected the art of warehouse-based discount shopping in San Diego that morphed into a whole consumer subculture of big-box retailing, led by his Price Club outlets, later followed by Costco, Best Buy, Home Depot and Walmart.

Traditional department stores, variety stores and stationery shops largely disappeared and with them went savvy sales staff, elaborate window displays and women in hats and gloves going downtown for fittings and tea room dining.

What was behind the Price revolution? His son, Robert Price, tells all in a biography of his dad published by the San Diego History Center. University of San Diego historian Iris Engstrand will present a lecture on the book Monday at the campus.

“I wanted my children to have a legacy about what my dad’s life was about,” Robert Price said.

But the 223-page book also offers a window for the rest of us into the evolving habits of consumers in the post-World War II era and sets the stage for what’s next.

Sol Price, who died at age 93 in 2009, turned industrial-zone warehouses into meccas for bargain deals on everything from toilet paper to diamond rings. The $1.50 hot dog and drink remains a mainstay at Costco, which merged with the Price Club chain in 1993.

The Price Group, a $2 billion company based in San Diego, still operates 30 similarly conceived PriceSmart stores in Latin America, including two that just opened in Colombia. Expansion to Asia is not in the cards.

“We’re better off sticking to our own hemisphere,” said Robert Price, who was the chief executive of Price Club and the founder of PriceSmart.

Comment by azdude
2013-02-03 17:14:39

I remember shopping at price club. They had some good deals in there. It was actually wholesale prices at that time. Wasnt it set up for small business to get inventory?

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 19:26:13

“Wasnt it set up for small business to get inventory?”

I believe Costco targets small business inventory as well as retail customers — a pretty good marketing strategy, in my opinion. When we host a large party at work, I am the go-to guy for buying enough food to go around. In some ways, it is easier to shop at Costco for a large group than for a family, as their packages are large.

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Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 10:09:03

Overtaxed — I found a relevant article on your AMT question which I posted earlier on the Take My Money! thread.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 10:14:17

Here is a great idea for members of the 1% club to cash in on massive interest deductions kept alive by the 11th hour year-end 2012 fiscal cliff deal. Isn’t it great to realize that despite the dire fiscal situation, Uncle Sam always has extra billions on hand to pour down the real estate subsidy rat hole?

Feb. 1, 2013, 1:25 p.m. EST
No-money-down mortgages are back
By AnnaMaria Andriotis

Some affluent buyers are getting the keys to their new home without putting a penny down.

It’s 100% financing—the same strategy that pushed many homeowners into foreclosure during the housing bust. Banks say these loans are safer: They’re almost exclusively being offered to clients with sizable assets, and they often require two forms of collateral—the house and a portion of the client’s investment portfolio in lieu of a traditional cash down payment.

In most cases, borrowers end up with one loan and one monthly payment. Depending on the lender and the borrower, roughly 60% to 80% of the loan can be pegged to the home’s value while the remaining 20% to 40% can be secured by investments. On a $2 million primary residence, for instance, the borrower could get a $2 million loan, which would require a pledge of assets in an investment portfolio to cover what could have been, say, a $500,000 down payment. The pledged assets can remain fully invested, earning returns as normal, without disrupting the client’s investment goals.

While these affluent clients may be flush with cash, this strategy allows them to get into a home without tying up funds or making withdrawals from interest-earning accounts. And given the market’s gains combined with low borrowing rates in recent years, some banks say clients are pursuing 100% financing as an arbitrage play—where the return on their investments is bigger than the rate they pay on the loan, which can be as low as 2.5%. Some institutions offer only adjustable rates with these loans, which could become more expensive if rates rise. In most cases, the investment account must be held by the same institution that’s providing the loan. See: Home improvement gets a makeover

These loans also provide tax benefits. Since borrowers don’t have to liquidate their investment portfolios to get financing, they can avoid the capital-gains tax. And in some cases, they can still tap into the mortgage-interest deduction. (Borrowers can usually deduct interest payments on up to $1 million of mortgage debt.)

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 10:53:41

Is there any chance the mortgage interest deduction giveaway to millionaires could be eliminated as part of the sequester negotiations?

Because a great way to raise revenue without raising taxes is to eliminate unwarranted loopholes that massively benefit the rich.

February 3, 2013, 10:34 a.m. ET

Reid Says No Sequester Cuts Without More Revenue

Senate Majority Leader Harry Reid drew a firm red line in the continuing budget showdown with Republicans, saying the Democrats would insist on additional revenue as part of any deal to alter the mandatory spending cuts known as the sequester.

“There are a lot of tax loopholes that should be closed,” he said in an interview with ABC’s “This Week,” citing tax provisions for oil companies and for companies with operations overseas. Mr. Reid laid down similar conditions in remarks to reporters last week.

Democrats would also oppose any attempts to alter the sequester package that would spare military spending at the expense of domestic programs, Mr. Reid said.

Several Republican leaders in the Senate have said they expect the sequester cuts to be implemented, at least temporarily, given how far apart the two sides are. GOP lawmakers say they already agreed to $600 billion in new tax revenues as part of the last-minute deal to avert the so-called fiscal cliff at the beginning of the year, and aren’t willing to consider any further revenue increases to avert the mandatory cuts.

In the GOP-controlled House, Republicans last year twice passed legislation that would have shifted the defense portion of the cuts on to spending elsewhere in the federal budget, most notably cuts to the food-stamp program and a requirement forcing federal employees to contribute more to their retirement savings. Senior House GOP aides have suggested that leadership may decide to bring that bill, or something similar to it, to the full House again for a vote, hoping to add pressure on Senate Democrats to move forward with their own bill to avert the cuts.

Mr. Reid said Sunday that he was confident the general public supported the call for additional tax powers as part of any push to cut more spending.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 10:17:30

Could this be our future Treasury Secretary they are talking about so rudely?

Is This Much Beloved CEO In Deep Water?

By Jessica Alling
January 15, 2013

It’s coming from the inside. JPMorgan (NYSE: JPM ) CEO Jamie Dimon is being listed among those to blame for the London Whale snafu last year, according to an internal review. While the CEO has often tried to downplay the situation and his role in the debacle, will this report knock him from his spot at the top?

A little context

Last May, JPMorgan announced that it had incurred losses up to $2 billion from a portfolio of derivatives (read: complex investments) amassed over the prior four years. The company would go on to lose over $6 billion from the trades. As a result, the company’s Chief Investment Officer, Ina Drew retired. Since then, Dimon has been outspoken and blunt about the blunder, but often downplayed the situation, calling it a “tempest in a teapot.”

The internal report was based on an investigation into the trades, their management, and the company’s risk oversight. The report, which is said to be incomplete, is critical of senior management, naming Ina Drew, Dimon, and former CFO Doug Braunstein in their loose oversight of the traders responsible for the derivatives portfolio.

Comment by michael
2013-02-03 10:32:52

listened a bit to ric edelman’s radio a show for about 10 mins yesterday heading out to get the fam some breakfast.

man….him and his co-host were having a circle jerking mania over the dow hitting 14K.

all i could think was…man…damn good. 5 years later and you are back even.

they noted that there is still $ 10 trillion in cash on the sidelines and dedicated the show those people sitting on the sidelines.

i almost puked.

Comment by Anon In DC
2013-02-03 10:33:23

Sold my AAPL stock Friday. Took the advice of my very smart friend. Or rather friend who is smart enough to rarely give unsolicited advice or opinions. So the once every few years when he does I pay attention. He thinks APPL will drop to about $150 - $200 within a year. Take the money off the table he said.

Comment by michael
2013-02-03 10:36:41

come on man…the iphone 6 is coming out!

i hear they are changing the button from black to red!

you better get in line now…it’s only 800 bucks!

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 10:50:43

Buy the rumor, sell the news (and the news is obviously out…).

Comment by Pimp Watch
2013-02-03 14:37:00

Exit all things (rotten)Apple quickly.

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Comment by azdude
2013-02-03 17:11:58

hedge funds rushing for exits. I was amazed the party lasted so long.

Comment by Spook
2013-02-03 10:51:30

For those not interested in the souper bowl, here is a good old fashion style documentary series on the first world war:


Yes, its a 10 hour series, but you actually need all that time to fully understand what and how it occured.

The pro “Anglo American bias” is not too over the top and they do a pretty good job of describing the elastic nature of “self interest” when it comes to “choosing sides.”

Watching this series makes me wonder what the next world war will look like?

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 10:56:06

Half a decade after some of us sounded the alarm on “too big to fail” banks right here on the HBB, how are efforts to rein in the international Megabank, Inc bankster cartel shaping up?

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 11:10:36

International rules to limit chances of another Lehman-like shock still years away
By Howard Schneider & Danielle Douglas
The Washington Post 12:01 a.m.
Feb. 3, 2013
Updated7:59 p.m.Feb. 1, 2013

Five years after the collapse of Lehman Brothers, a global push to tighten financial regulation around the world has slowed in the face of a tepid recovery and a tough industry lobbying effort.

Important progress has been made. Banks in the United States and Europe have socked away capital to guard against a fresh economic downturn, and evolving rules may force them to split off some of their riskier operations.

But the post-Lehman goal — of a global scheme that would immunize the financial system from another large-scale shock — remains incomplete. Big banks, insurers and other financial giants remain intact and arguably “too big too fail.” Tools to guard against dangerous bubbles in the value of property or other assets are not yet in place. There is no agreement on how countries should coordinate the failure of a globally important financial company. Implementation of basic banking rules in major nations has fallen behind schedule.

Finishing the job “is going to take many years,” International Monetary Fund chief economist Olivier Blanchard said last week. “It is conceptually very difficult, politically very difficult.”

The roadblocks: In their effort to overhaul the global system, regulators have been confronted by a number of head winds. The world’s economy has been unexpectedly slow to recover, making governments leery of doing anything that might make banks cautious to loan and invest. The financial industry has pushed back hard, warning that aggressive regulation might undermine growth. Regulators are simply limited in their understanding of how modern finance can be made safe while still supporting economic activity.

The result: Some of the proposals once considered core to a safe, post-Lehman system have been delayed and weakened, and others have been played down, at least for now, as too politically complex. In other cases, the world is heading toward a patchwork. Some major European nations, including Germany and France, are preparing to impose a tax on every financial transaction, while Britain and the U.S. have rejected the idea. There is a growing divergence, as well, over how involved banks should be in securities trading and investing.

“The global economy is such a complex animal, there is a lot of structural work to be done. We are discovering that there is still a fault line here, a fault line there,” said World Bank chief economist Kaushik Basu. “As this gets mitigated, there will be a period of difficulty and danger.”

The complexities are such that even basic questions remain in dispute among the international bankers, regulators and political officials involved in the process.

In the wake of the 2008 Lehman collapse, there was a seeming groundswell behind the idea that no institution should be so important to the economy that taxpayers would have no choice but to provide a bailout if the company faltered. The concept of “too big to fail” prompted the United States to rescue American International Group, the insurance giant known as AIG.

A follow-up move, a committee of central bankers and regulators operating out of the Bank for International Settlements in Basel, Switzerland, agreed that the most globally important banks should set aside extra capital as a cushion against losses, raising their cost of doing business and possibly acting as a break against growing too large.

Comment by michael
2013-02-03 11:41:17

the entire mortgage industry has been effectualy nationalized.

since some here dig that policy as it relates to the college loan industry…i would think think they would give the results a double plus good.

i personally give them an F.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-03 19:21:26

Turning the mortgage lending system into a centralized command-and-control operation was a move in the wrong direction. What they need to do is to (1) break up Megabank, Inc — in particular, get them out of the home lending business, where they have no business operating; (2) stimulate local competition; (3) enforce a rule of law with real teeth (no more fines in the millions for crimes in the billions).

Comment by look out down below
2013-02-03 11:29:01

Okay, have all the fun you want after you listen to this:


Comment by azdude
2013-02-03 17:09:28

is that suzanne? bunch of BS.

Comment by Pimp Watch
2013-02-03 20:29:27

The is exactly the yapping hag image that keeps everything NAR in the sewer.

Comment by rms
2013-02-03 20:58:43

Disgusting that she refers to this FedGov propped-up industry as “a market.” There are no market forces in this rigged housing casino.

Comment by ahansen
2013-02-04 00:16:40


This supercilious creep EPITOMIZES everything we detest about lying realtresses. This p’d me off so badly, I took the time to transcribe her smug little screed to post here along with her aol.com address (GerriGCRE at…) so we can all let her know just how much we appreciate her suggestions. In fact she’s SO annoying, I may post it again tomorrow. Thanks, lodb.

“I’m Gerri Cregnotti owner/broker, and I had 39 agents respond to this, so I’m gonna read part of this…

Buyers, if you wanna buy a house today, when your agent tells you that the house you are offering on has multiple offers…believe her.

When you agent tells you your price or terms are not strong enough ta get the house…believe her.

If your agent tells you you are offering all cash and you still need to raise your offer…believe her.

When your agent tells you to present a strong pre-approval letter and proof of funds, just because you think you are a strong buyer and don’t need it… believe her.

If you are looking at Zillow for the pricing value of the home you are interested in, give it up. Zillow is irrelevant today.

If you pick the comp for this property, chances are you picked the three lowest comps to work in your favor and that’s not gonna help you either.

If you have a relative that’s bought teeeeen homes in the past and tells you to offer below this market, tell them to put on their leisure suit and go home because that’s not relevant either.

If you have your client tell you that the guy at work told you to offer 10% below the market because his brother just got a home like that, tell him it’s irrelevant. What used to be relevant is not relevant in this market.

Please buy a professional agent that will help you through this process. Believe them.”

Comment by Resistor
2013-02-03 12:43:49

Is DJ still around? Has he paid off his $3k in CC debt?

Comment by aNYCdj
2013-02-03 13:23:33


I used that example to show how Bernanke was throwing that much money to the banks each year….

$3K x 100 million is $300 Billion….OOPS I need to raise that at almost double $45 bill a month is $540 Bill per year

oops now hes buying $85 Billion a month ………$3k was a pittance in comparison to stimulate the economy from the bottom up……OK get it?

Comment by frankie
2013-02-03 13:47:34

Silvio Berlusconi has been accused by opponents of spouting “dangerous electoral propaganda” after he vowed to ease the tax burden on austerity-stricken Italians if his rightwing coalition wins elections this month.

With only three weeks to go before the country goes to the polls, the threetime prime minister is gaining ground on centre-left frontrunners in what he described on Sunday as his “last great electoral and political battle”. One opinion poll released on Friday had his grouping within five points of the Democratic party-led coalition.

In a speech aimed at winning over the large number of undecided voters, the billionaire media mogul cast himself once again as a friend of the people who would break with the agenda of the technocrat prime minister, Mario Monti



Comment by rms
2013-02-03 14:43:10

“…after he vowed to ease the tax burden on austerity-stricken Italians…”

Berlusconi should declare his mistress the new national bird.

Comment by CRATER!!!!
2013-02-03 15:21:53


Comment by SV guy
2013-02-03 16:19:31

Looking forward to the 49ers putting a smackdown on the Ravens.

Comment by Pimp Watch
2013-02-03 17:25:04

mmmmmm…… not. :mrgreen:

Comment by aNYCdj
2013-02-03 18:55:54

whats a raven?

Comment by joesmith
2013-02-03 18:55:56

Lol, sorry about your tiny pink team, bro.

Comment by ermagerd
2013-02-03 19:01:32

Looks like Anonymous hacked the circuitry. Serves NfL right for letting Century 21 sponsor their big shew.

Comment by Anonymous
2013-02-03 19:06:42

Only half the lights went out?

Curses, foiled again

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Comment by Pimp Watch
2013-02-03 20:19:55

“Looks like Anonymous hacked the circuitry. Serves NfL right for letting Century 21 sponsor their big shew.


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Comment by goon squad
2013-02-03 19:05:39

No electricity in New Orleans? Better call a private-sector, for-profit, Invisible Hand of the Free Market, government contractor to fix that sh*t yo!

Comment by eight pieces of chicken
2013-02-03 20:46:13

Or blame the president.

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Comment by rms
2013-02-03 21:00:24

Or blame the president.

Or blame the former president.

Comment by Pimp Watch
2013-02-03 20:50:56


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Comment by goon squad
2013-02-03 20:51:03

Yay, Bodymore. And now back to reality.

For every overpaid future concussion-case, 100,000 of you will live and die in poverty. Your future is “The Wire”, not the Souper Bowl. The future belongs to Lucky Ducky. Welcome to the recoveryless recovery :)

Comment by aNYCdj
2013-02-03 20:52:44

Exclusive: Eric Schmidt Unloads on China in New Book

Eric Schmidt is brutally clear: China is the most dangerous superpower on Earth.


Maybe mittens was on to something declaring china a currency manipulator

Comment by snowgirl
2013-02-04 07:07:59

Pot meets kettle.

Comment by Bill in Los Angeles
2013-02-03 21:11:22

Aside from the final score in the super bowl, here’s this:

The idiotic war on drugs by the US Military in Latin America is expanding.


Frigging WHY?

Comment by ahansen
2013-02-04 00:20:39

They don’t want the competition?

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