patrick.net

Peter P,

Vegetarianism isn't a problem as long as they don't try to impose their beliefs on meat eaters. In fact, if the world was 80% strict vegetarian, we meat eaters would have a bigger supply of sushi and good beef at better prices.

As with most belief systems, the problem comes when they want to impose their world view on non-believers.

Vegetarianism isn’t a problem as long as they don’t try to impose their beliefs on meat eaters.

I agree. But many "animal rights" activists are being very aggressive in either seeking ban on meat or making life difficult for food businesses. They produce propaganda movies and attempt to liken meat-producing farms to Nazi concentration camps. (My friend showed me such video. Fortunately, I was completely unaffected.)

Meat eaters never tried to outlaw veggies, but vegetarians are using every opportunity to force their beliefs upon everyone.

How is this related to the housing bubble? It matters if the state is heavily influenced by fascist fundamentalists. Even if housing is affordable, what good is it if basic a human right - food - is severely curtailed?

Sorry for ranting. Let's go back to housing.

"Alan Greenspan says flood of cheap labor from nations like China..."

Ok, the republicans are really reaching now. Bring back ole Greenspam to reassure the FBs after Ben's nasty rate hikes. What a f'king circus this country has become.

Everytime I look in on this blog I have noticed that the discussion has turned to food .

Huh? What are you talking about? :roll:

Housing Wizard,

It's mostly Peter P. He works hard to remind us of the truly important thing in life. I've personally been so persuaded that I think people with impaired smell and tastebuds deserve federal disability categorization.

I think people with impaired smell and tastebuds deserve federal disability categorization.

That should not be difficult to fix. Just commit yourself to a few weeks of bland, watery food. Then add flavors one by one. Your "touch" will be back in no time. :-P

HARM,

MBS and CDO are tranched, and most mutual funds only purchase the prime tranche as commercial paper or cash equivalent. This tranche, as FAB said, is probably as safe as US Gov't Bonds themselves, except but for the prepayment risk. The US Gov't cannot prepay their bonds and take them away from you (generally), but top-tier MBS debt can be prepaid and often is, causing it to be slightly less "safe" (in terms of volatility) than US bills.

Even the tranches below prime aren't bad investments; in fact they can be better because of lower prepayment risk. The big re-insurers like Swiss Re use such debt heavily to offset insurance positions.

What is at risk is known as the bottom 1 or 2 tranches, known as "toxic waste". This tranche is bought almost exclusively by those seeking very high returns in trade for high risk/volatility. Hedge funds have been big buyers of toxic waste, as have some foreign investors. If they get slammed by defaults, well, that's the way the cookie crumbles. Buy a Junk Bond and you get Junk.

$3 trillion in ARMs set to adjust in the next 12 months

http://www.lewrockwell.com/englund/englund35.html

Is it much?

It's $ three zero zero zero zero zero zero zero zero zero zero zero zero in ARMs set to adjust in the next 12 months

It's $3,000,000,000,000 in ARMs set to adjust in the next 12 months

It's 6,000,000 FBs each owing $500,000 in ARMs set to adjust in the next 12 months

It their rates adjust up in average by 1%, it means 6,000,000 overly stretched FBs will pay $5,000 more a year ($416 more a month).

It their rates adjust up in average by 2%, it means 6,000,000 overly stretched FBs will pay $10,000 more a year ($832 more a month).

I got a feeling that's gonna be ugly. Very ugly.

Some of us are and some of us have have gotten out of funds that contain MBS, in fact some of us are all cash in certain non U.S. curencies in certain non U.S. banks for the next two years because we feel that the transaction and opportunity costs are justified by the high level of risk at the present time.

Which non US currency at which non US bank are you invested in that has less MBS/CDO than any average US Mutual fund? Maybe Russia. Good luck with that. In fact, most US Mutual funds have higher grade debt as cash equivalent than most foreign central banks.

Randy H,

I agree with your overall assessment and I'm fine with the "mechanics" involved, where I have issues is with the quality of the collateral. If the safety nets were taken away would we be as eager to throw money at MBS? I realize this is a "hypo" but given the consensus that most res. RE markets have peaked and are in some state of decline, at what point SHOULD we be concerned?

Right now any one of us can attain a 5.85% return from Senior Subordinated Debt (Bank Loans) tied to LIBOR w/considerably less risk. Typically loan concentrations are below .34% of AUM. Yeah, they eat defaults from time to time (telecom, airlines etc.) who doesn't? It's just my way of side stepping this whole issue. It's not my job to "prop up" MBS as an asset class and I couldn't if I wanted to! The "pecking order" in the event of a default is:

1. The employees

2. The gub'ment

3. ME!

I'm o.k with that.

Randy H,

I agree with your overall assessment and I'm fine with the "mechanics" involved, where I have issues is with the quality of the collateral. If the safety nets were taken away would we be as eager to throw money at MBS? I realize this is a "hypo" but given the consensus that most res. RE markets have peaked and are in some state of decline, at what point SHOULD we be concerned?

Right now any one of us can attain a 5.85% return from Senior Subordinated Debt (Bank Loans) tied to LIBOR w/considerably less risk. Typically loan concentrations are below .34% of AUM. Yeah, they eat defaults from time to time (telecom, airlines etc.) who doesn't? It's just my way of side stepping this whole issue. It's not my job to "prop up" MBS as an asset class and I couldn't if I wanted to! The "pecking order" in the event of a default is:

1. The employees

2. The gub'ment

3. ME!

I'm o.k with that.

Sorry for the slowness of the site this morning. I talked to the ISP, Hurricane Electric, and the rebooted the server. Hope that fixes it...

DinOR

Your points are well taken. I would be very concerned were I running a hedge fund and relying on subprime MBS tranches for part of my strategy. There is actually a lot of talk about the markets mispricing the risk premium, so it's entirely likely that the "pricing correction" will come abruptly and unpleasantly.

As to senior subordinated debt, if you're talking about the average public corp's debt notes, then a lot of that is secured against the assets of the company, the most liquid of which being cash & equivalents, which are in turn commercial paper, mbs, etc. Correct me if I'm wrong, but it's a bit of a big circle isn't it? I do agree that SSD is safer to some degree, though.

Max Headroom lives!

http://www.browardbesthomes.com/

Run your cursor around the real estate dude...creepy

Randy H,

To a large degree that's true. These two have as much in common as they do differences but the big advantage (in my mind anyway) is that this brand of comm. paper has already had it's "turn in the barrel" if you will. During the tech/telecom meltdown defaults were in the double digits. Double digits! Since the "dark hours" things have stabilized and defaults are reverting back to their historic norms. Being as these instruments are considered "Ultra-short" in their duration and reset as quickly as 30 days there's not much correlation to traditional investments.

There's not much of a secondary market and the loans themselves aren't exactly liquid so many of these portfolios have "redemption windows" so if you miss them, you're out another 90 days. Some of the more established ones though do "offer" daily liquidity (but prefer you kind of call in advance) if you're selling a sizeable stake! You can get away with it once in awhile but grading comm. loans is labor intensive (not to mention a real drag) so they appreciate when you don't make a habit of dropping 1 mil. sell order 15 minutes before the close.......! Arghhh.

Typical holdings would be things like:

R. H. Donnelley, Charter Comm., MGM Studios, Fed. Mogul etc.

Oh, sorry about the double post above! Check this for a goof.

www.luxuryestatesatadiscount.com

How difficult is it to picture these abandoned McAlbatrosses becoming your local "meth cooker's" new digs? You finish the "shell" and keep the profit! LOL!

Thanks for the clarification DinOR.

George,

Pretty spooky huh? *astrid has kidded us endlessly about the proliferation of ghost towns and this really helped me visualize it! The real "knee slapper" was the "click on thumbnail for larger view" feature they had on the site. Gee, I've always wanted to know what a bare wall of 'two-by-fours' looked like up close? Judging by the weed growth and weathering on these McShells (TM) I'd guess there hasn't been a full days work on them in at least...... 6 months?

@DinOR

www.luxuryestatesatadiscount.com

Thanks for my morning dose of bubble pics. Man, those things are ugly. Who the hell would want that biggest one at the bottom? With 9000+ sq feet, you could divide into at least 10 apartments, at least...

Silicon Valley Slide Levels Out (?)

http://realtytimes.com/rtcpages/20061010_slidelevels.htm

@George, :lol:

You know, I was thinking about doing a thread on that --sort of a "how to" for would-be McAlbatross squatters. There will be plenty of vacant inventory just sitting around rotting away for years to come, so why not? The Utilitarian in me despises the concept of letting all that housing capacity just sit idle while there are renters out there who could use a bigger, better place. Not to mention cheaper (how's free, everyone?).

I guess the key is figuring out how to get the lights on without attracting attention and/or eviction (Realtors, builders, the out-of-state specuvestors who might occasionally visit, etc.). For the REALLY ambitious squatter, you also have to figure out a way to stay put long enough to legally OWN the property. Looks like FL requires an 8-year stint, eh?

How would THAT be for "renter's revenge"? Living in a luxurious McAlbatross completely mortgage and rent-free for 8 years, and then taking legal POSSESSION of the place in the end? Talk about your bloodless coups!

skibum,

Perhaps George can enlighten us as to exactly where in GA these McAlbatrosses are located? (Even by Patrick Regular's standards those pic's are about as "hardcore" as it gets!)

I have no idea where they are pulling those numbers out of and if making $1.7 mil. were that easy the first question anyone actually contemplating their proposal would have to ask themselves is, why aren't YOU GUYS finishing these projects?

It seems to me that their sources of lending are drying up like a puddle on Georgia asphalt? In the end, bankers look after themselves. If they're not lending on it, there's a reason. It would appear that we've rounded the bend down an even darker alley here. It wasn't that long ago that "if you don't do the bridge loan, someone else will!" When that liquidity dries up mid-stream it really tells us something!

George,

We'd love to see 'em! Bring it.

Anyone out there have some good practical advice or anecdotal info about the how-to's of McAlbatross squatting? I'd heard rumors about this happening in Palmcaster (Lancaster-Palmdale for you non-SCALers) during the last bust in the early 90s, but I never met anyone who had actually done it. I also wonder what CA law has to say about it. As in, how long until the place is legally mine, free & clear? Any thoughts on this from the CA lawyers here? Joe Schmoe...?

HARM,

And what's even better is that for 7 of those 8 years you wouldn't even have to contend with neighbors of any kind! If they ran me off from one, I'd just go down the road and get nice and "comfy" in an a bigger one!

My "ghost town/party like a dog" scenario is shaping up quite nicely.

Ok, then, it's settled. My goal is to become a McAlbatross squatter long enough to take legal possession of the place --all without spending a dime on mortgage or rent.

This is HARM's "American Dream" :-) .

I want to learn as much as I can about my new lifestyle, so I can avoid the common practical/legal pitfalls. What good is making it to year 7.9 in my shiny new McAlbatross if I come home from work on the next-to-last day and find the place padlocked by the local sheriff? Totally kills the climax.

Screw that sociopathic self-absorbed fuckknob, Casey Serin --don't give him anymore free advice! Instead, help ME achieve MY dreams!

Am I being too hard on Casey? I decided recently to direct any Angst I may gather throughout the day on him, and not my innocent friends here.

It's actually quite therapeutic, although I feel a bit guilty picking on him and some of his supporters. Feels like eating Koi out of a backyard pond.

Ok, I have become addicted to watching Casey Serin’s blog. It’s like a slow-mo train wreck, and he still doesn’t seem to get it.

You are not the only one. My wife also finds it interesting.

It seems that Casey's blog has suddenly become the most popular bubble blog. :(

lol, thanks George.

My patience tends to wear thin when I'm negotiating a deal with a telecom. Telecom guys know how to elevate obfuscation and perturbation to an art form. Sometimes I just want to turn on the light and show them that not only are none of them wearing any clothes, but none of them are anything close to emperors either.

RE: McAlbatross squatting, Boston has an interesting historical perspective on this. The South End was basically a late-19th century development: rows upon rows of similar-appearing, albeit much better construction than today's McMonsters, brownstones. They were built for the growing business class in the city. Then the financial center of gravity moved more towards NYC, and these buildings eventually fell into disrepair 1930's-1970's. They for the most part got rented out, and the city bought many of them and currently still rents some as low-income housing. Then the gentrification-yuppification of the 90's happened, and now they are for the most part luxury condos.

Wouldn't it be funny if this happened to your nearby McMansion Toll Bros. development?

HARM,

In ways, (through NO intent on our part) renting=squatting? The difference being if we remain current on our monthly obligation we are MUCH harder to "evict". Having some sort of buyer's option built into your agreement basically would give us squatters 'first right of refusal' when the Casey's of the world go belly up.

Was is Spike66 or HITB that said they don't even look for "rental homes" in the paper anymore? They simply show up at open houses, get the realtor on the side and ask "Would the owners be open to renting this place/palace?" Without exception they've been told "everything is on the table!"

After several months/years of gushing neg. cash flow, we'll basically take over by default anyway. At the new greatly reduced price of course!

skibum,

You just covered about 100 years worth of history in a single paragraph! It made me think though, look how things have changed. It used to take generations for a neighborhood to change from "owned homes" to rental homes and now it's whoever shows up first gets their deal!

You're buying? I'm your seller's agent!

You're renting? Meet your new landlord!

What have we done!

HARM,

Your squatting idea depends on a legal doctrine known as "adverse possession." Adverse possession wasn't originally designed to permit squatters to acquire free houses, although some homeless advocates in NYC have attempted to use it for this purpose.

The real purpose of adverse possession is to avoid problems caused by erroneous surveys, etc. I.e. I hire a surveyor to tell me where the boundaries of my property lie. He makes a mistake and says that my property includes three feet of my neighbor's land. I build a house on my property, and the south wall is positioned on the neighbor's land. Four years later, the neighbor has a survey done, discovers that my house is located on his property, and sues me for tresspass, demanding that I tear tear my house down. The law of adverse possession was designed to solve problems such as this, basically by declaring that if you tresspass on your neighbor's land for long enough, you'll get away with it.

I am not really familiar with the California law of adverse possession, but I do know that many states have a requirement designed to prevent people who intentionally tresspass on another's property from acqurinig title to the property. It is known as the "claim of right" requirement. The person doing the tresspassing has to have an actual, good-faith belief that he or she is entitled to occupy the property before he or she can invoke the doctrine of adverse possession. This prevents someone who is an intentional tresspaser from using the doctrine to acquire title.

In your case, you would need to establish a "claim of right" for occupying the McMansion. I believe that if you got an opinion from a California lawyer which says that you have a right to occupy the property, that would suffice to establsh your "claim of right."

Now don't sue me for malpractice over this, but if it helps, I am hereby willing to tell all patrick.netters that squatting in an abandoned McMansion is perfectly lawful in the State of California. Just move right in -- you don't need to buy the house, or lease it or anything. It's like, you know, free. And if you live there long enough, the house totally becomes yours. You know how California is liberal, right? Well, we have these really amazing laws here which just let anyone live wherever they want. It's all perfectly legal. Perfectly.

Again, if for some strange, totally unforseen reason this doesn't work out for you, don't sue me for malpractice. I can't, you know, like guarantee that it will work.

I myself do not plan to use the adverse possession strategy described above, but I have thought of buying a trailer, renting a vacant lot in a ritzy neighborhood with a good school district, and registering my kids for school. When the district tries to stop me, I'll sue them for violating the "civil rights of the homeless" or some such BS. I've thought about this on more than one occasion. The ordinances in one town I am thinking of don't expressly forbid what I am trying to do, so...

The San Francisco Tenants Union (bloody nut cases) have a blurb on squatting on their website.

Hmmm... I have to decide which is worse: animal "rights" activists or homeless rights activists?

Hmmm… I have to decide which is worse: animal “rights” activists or homeless rights activists?

Do you think there are homeless animal rights activists? Someone has to protect the rights of panhandling marmots.

SFWoman,

Now that makes sense. One of the reasons my suggestions regarding "lease w/option" have been criticized is b/c what options would you have when your LL (Casey S. in this instance) loses any claim to the property?

(Let's not laugh here, most speculators aren't in much better shape).

Up until recently I'm told that lenders didn't want anything to do w/FB's in arrears. It was just "too hot" a market to play that game so rather than work w/them they just let the property fall into foreclosure and RE-SELL it at an even higher price! That is sooooo 2005!

I would suggest that for anyone looking into this option to come up with as little (preferably ZIP) on the front end and not concern yourself with "building equity right away and stop throwing your money away on rent!" Pffft. I've got plenty of worries right now but "building equity" isn't one of them! For me, it's more about finding exactly the home you like and having the right agreements in place to follow up on once the market and what you might be willing to pay intersect.