patrick.net

I AGRE TAHT DEBT IS ENSLAVEMANT AND...

(why is the rum gone? ... but why is the rum gone?!?)

Debt is a tool. Assets are a means to production. There is no such thing as willing "enslavement", only addiction. And nothing is more addictive than Easy. Taking credit for anything aside from long term benefit or profit is stupid. Let it burn. I am more Hank Rearden than James Taggart. I still remember how to build stuff, and this country will too.

It would be tyrrany of the majority only if they knew what to value. Give the boomers some happy pills and Miller Lite, and this will all be over quietly.

Peter, I think you see that water finds its level. So do grit, sludge and cream. I don't share your desire for an easy life. I just want to spare my capital until I can build something again, without too many parasites sucking its lifeblood.

And mideval lords had horrible bathrooms. My iPod toting plebian ass has a jetted tub.

Er, medieval...

We all work for the banks.

I don’t share your desire for an easy life.

Who says speculation is easy? Or being a medieval warlord is worry-free?

They needed dungeons for a reason. :)

TOB, trust your instincts.

There are no experts in economics. It is an art.

"All government “affordability” programs drive up prices and increase debt:"

And all the greedy idiots who bought homes that they couldn't afford took in the bait. It's in the government's best interest to sell the American dream and drive up home prices, and that is exactly what happened. However, when a bubble is created, EVERYONE has to pay. I have also lived frugally and responsibly waiting patiently to buy a home that I could afford. I never saw a good time to buy because prices were super inflated and I knew that these prices could not keep going up. I watched on the sideline as idiots without any common sense were buying homes way beyond their means, taking out equity to buy fancy cars and lavish vacations. I did not reap any of their rewards, but now we ALL have to pay to keep them in their homes?

I do understand that losing a home is rough, but before this whole bailout mess, unfortunate folks who could not keep up with their payments due to unforeseen events lost their home, plain and simple. Why are we wasting precious tax money to bail out these "homeowners" who never should have been allowed to purchase a home in the first place? There are much better uses for our tax dollars... cleaning up the environment, improving education, research for alternate sources of energy, health care, etc. There are much bigger things out there than people losing their homes. It happens, we can move on. Contributing to our national debt so that on our dime and our future generations dime is NOT okay. It's a tragedy that I am not surprised that our government fails to see any of this.

On today's news page there's a story from the SD paper on commercial real estate....

It looks like the down payment requirement is going up dramatically, from maybe 20% up to 50%.

Where landlords may have been able to get a loan for 80 percent of a building's value during the boom, lenders now are limiting loan amounts to as little as 50 percent of value.

One of the commenters in that story stated that typical CRE loans were due in 3 to 7 years. Is this really true?

When I walk out of my house and look up and down the street at the other houses, I'm compelled to define each house as bought by greedy f@ck ups or not. It strikes me as a strange way to view my surroundings. 10 years ago I would have defined each house by the persons occupation and if they were a good neighbor or not. Currently, about 75% are owned by greedy f@ck ups.

It's going to be interesting to sit back and watch the results of these Obama plans unfold. He has instilled a sense of hope for the middle and lower class folks, at least for now. This could have a positive effect. Typically, drug abuse and the crime rate go up during bad times. He may be able to curtail those problems to some extent. All of the would be criminals are scrambling to figure out how to get some free government money. Single people with no children will be able to get food stamps.

disclosure:I voted for Ron Paul

Like fore example, they will cut the principal amount.

I was listening to Jamie Dimon from JPM on CNBC and he clearly said, they are not going to reduce principle, just interest rate. Many of them will be disappointed about the plan if they do understand. Low Interest rates are only for 5 years and it goes back up. At least that's the plan.

Let me emphasize this strongly: no one is to suggest doing anything illegal here. Protest all you want but please respect the law.

(I am referring to mickrussom's comment regarding "linchpins")

The banks will NEVER cut the principal amount.

The whole government effort was NOT meant for the J6Ps, it was meant for preserving the banking system upon which the government presides. Any disruption of the banking system as it is means question mark on the existing form of government as a going concern.

The government is by elites, for government and when it comes to the choice between the survival of the government vs survival of the people, the government will always ensure the survival of itself regardless of the cost to others.

what do you do when the law is made by criminals?

If the criminals have a bigger gun, obey it and try to become a part of the criminals.

If the criminals have a smaller gun, ignore it.

When the government clearly knows how to discourage "bad" behavior through targeted taxation (sin taxes on cigarettes, alcohol, etc), why do they discourage good behavior as well (saving, avoiding debt, living within your means)???

what do you do when the law is made by criminals?

I am SOL.

The lawsuit on behalf of renters is a great idea.

A class action will get lots of press and even if it stands no chance of winning, its a great way to let people see the hypocracy of making people who waited out the bubble, pay for the bubble and receive no benefit.

I bet lots of attorneys would take the case just for the publicity.

I'm onboard!

Protest all you want but please respect the law.

I may not respect the law, but at least I obey the law.

I may not respect the law, but at least I obey the law.

That is what I meant. :)

Damn fucking $@^%$% AMT!!!

I am feeling better.

DOW was down by over 200 points today. Suddenly it shot up to be down only about 50.

Wonder who gave the "buy" order.

Wonder who gave the “buy” order.

Market can do amazing things all by itself. A down day can also trigger buy programs in black boxes.

It is also Feb options expiration tomorrow. Day-traders and swing-traders are out in full force.

HeadSet Says:

> DOW was down by over 200 points today. Suddenly
> it shot up to be down only about 50.
> Wonder who gave the “buy” order.

There are a lot of people that don't want weekend headlines to say the "Stock Market in the Tank Lowest Close in 12 Years" (we were back to 1997 a little while ago...

I have been thinking about the lawsuit angle for quite some time and think its a great way to go, even if it gets nowhere. We can't just sit by and take this crap without going down fighting, we need to make as much noise as possible because as of now, our voices are not being heard and no one is representing us.

Another GREAT idea, if nothing more than symbolism, came from TheHousingBubbleBlog.com bits bucket today courtesy of Darrell_in_PHX

Comment by Darrell_in_PHX
2009-02-20 04:48:12

Time for an “Amercan Key Party”.

Like the Boston Tea Party sent a message that they weren’t going to pay for the tea, it is time to send government a message that we aren’t going to pay for the bailouts that are targeted at only those who were the most stupid.

If we’re going to focus a bailout only on those that can’t afford their house, and let those that did the right thing pay for it, then as someone that did the right thing, I fully intend to not pay back my debt either.

Time to gather at our state capitols and build a pile of discarded keys as symbols of our intention of walking away from our debt unless the bailout is based on merit, NOT on need.

_________________________________________________________
Comment by pressboardbox
2009-02-20 09:28:11

Darryl, you are so right. The responsible (working/bill paying) people have ALL of the power - they just don’t know it! If WE all got together on this one and collectively stopped paying all bills, taxes, and mortgages the whole financial (and hence, government) world would be held hostage to meet our demands. We could write a whole new constitution - and refuse to pay anyone anything until all of the doucebags currently running our government step down. What could they do - put us all in prison? How would they pay the light bill? Raise your hand if you want to partake in the FInancial Revolution and take America back.

Suing or protesting are better than doing nothing but the best way to get their attention is to stop paying taxes...

1) Get a job that pays you off the books (for at least part if not all of your pay). Quit your current job if you have to.

2) Pay cash for everything and negotiate not to pay the sales tax... (it's easier than you think)

3) Buy a safe or use safe deposit boxes to store your cash. Close all bank accounts (they're not paying much interest anyway)

To make up for some of your lost income...

1) Apply for food stamps, welfare, child health care, unemployment benefits etc. Obama is the man to help you here.

2) Deflation is on your side

Disclaimer: This is mostly wishful thinking on my part thus far, but every bailout pushes me closer to actually doing this.

someone should shut that bitch up.

Oh my god, someone get me her address and a gun.

Just kidding of course, but oh my god.

All this constant thrashing around trying to save one major financial institution after another is getting VERY OLD!

It's pretty obvious that the system is seriously screwed up and constantly slapping more band aids on it is not going to stop the bleeding OR fix the underlying problems.

It seems as if Bush and now Obama are just chasing after a non-existent magic bullet that will fix the economy without anyone suffering any further pain. They seem scared to death that the Dow will fall each day or banks will fail - even if that is obviously what needs to happen to start to move forward again.

Ron Paul said a long time ago that all these ridiculous machinations to keep the current system alive will just make it worse when it dies. He was right.

This is incredibly harmful to the country. EVERY DAY we hear about another plan or another crisis or a new major effort to control the economy. IT NEVER WORKS!

This crap has been going on for a year now and it just keeps getting worse. We need to decide if we're going to be a free market economy and let the chips fall or if we want a Constitutional Convention where we can convert to something like socialism.

The current half-a$$ed solutions are a disaster.

Rick Santelli was right. We need a new Tea Party!

Credit Suisse recently produced a graph showing a big peak in interest rate resets for Alt-A and Option Arm loans will happen in May, 2009 and an even bigger peak in May, 2010. They predict a huge wave of foreclosures as a result and those foreclosures, they predict, will result in a further reduction in average home prices in America.

The default rate on Alt-A and option Arms is predicted to be at least as bad as subprime.

Hard to say when the bottom will happen.

Little did we know?

LITTLE DID WE KNOW?

I graduated from college in 2005 and entered the work force at a median wage entry level science/engineering job and took one look at the numbers and knew we were headed for smoething on the scale of the great depression.

House prices were 8-12 times local annual wages. The median house price would carry a minimum income requirement of three time the median wage to fit into traditional lending standards. According to wage statistics, only 1-1.5% of could afford homes at or above that median wage. Even "entry level" housing was drawing sale prices often untouchable without some exotic form of financing. I was told by lending agents that you qualify on interest only loans then just refinance before the monthly payment resets. Keep in mind that this was during a period of extremely stagnant wages (even after 3 1/2 years in the workforce, and advancement to a managerial position 2-3 levels above where I started, I am still very close to what was reported as the median wage for my occupation when I graduated). I had no reason to assume that I would be able to afford any more in 2, 5, or 7 years. It didn't make sense. But I knew that some people were less astute with numbers and were walking into a dangerous situation. It was a mania. And it was blatantly obvious that it was a mania. It was the same thing we saw with the dot-com bubble and the stock market over the past decade. Flipping was the new beanie baby. And as all fads go, it could not last forever.

We knew.

We lived in denial by rejecting sensible warnings and branding those bearing them as doomsayers and fools.

But we knew.

Donna Wigness has cried plenty of tears during the months she's battled depression and the bank that foreclosed on her West San Jose condo.

But it had been a long time since she cried tears like the ones she cried outside a San Jose courtroom Friday. Tears of relief, of happiness, of joy.

Litton Loan Servicing, her Houston mortgage company, has agreed to let Wigness buy back the home she owned for nearly 15 years. The price? Roughly the $298,000 Wigness owed the bank before Litton foreclosed. The agreement was the latest "up" in a remarkable series of ups and downs that Wigness, a 62-year-old grandmother, calls her "roller coaster from hell."

"I think it's going to happen," Wigness said through the tears, moments after Litton's lawyer told Santa Clara County Superior Court Judge Mark Pierce that the lender would give her 30 days to close the deal. "I feel like I need to collapse."

There are not many happy endings in Pierce's courtroom, where he hears eviction cases. But Wigness' story is a moving one of love from many for one woman in desperate need.

"This is not something that is going to happen every day," said Dee Allen of the non-profit Neighborhood Housing Services Silicon Valley, a key Wigness supporter. The deal took a remarkable group of supporters who refused to simply watch as Wigness lost her home and as much as $150,000 in equity that she'd gained since 1995. They stood outside the courtroom with her Friday. And their presence told the story of how one woman's home was saved from the crushing wave of foreclosures rolling over the country.

And Terry Wigness, Donna's ex-husband, who agreed to be a co-signer on the new mortgage she will need to buy her home back. After being divorced for 16 years, the two are reconciling.

"I can't let her go down the drain," he said. "I still love her."

Earlier this week Neighborhood Housing Services agreed to lend the Wignesses $300,000 as a 30-year fixed mortgage at 4.9 percent. Nothing is ever certain in real estate until the close of escrow, but Allen says she's reviewed an appraisal and Terry and Donna Wigness' income statements, bank records and credit scores. The loan is going to happen, she said.

Frank, a 28-year-old renter in Campbell who is looking to buy a first home with his parents and sister, said he and his family are still looking for the perfect home at the perfect price before making an offer.

Frank, who did not want his last name used for privacy reasons, said his parents are leaning toward buying a resale house in Fremont or Hayward for about $350,000, while his preference is to spend about $500,000 for a newly built townhouse in San Jose.

Volcker stressed the importance of international cooperation in creating a new regulatory framework, particularly for major banks that operate across national boundaries -- the reverse of what's happened in recent years.

"The more international agreement we have on where we want to get to, the better off we'll be," Volcker said.

And while major banks should be more tightly controlled and less able to make the sort of risky bets that led to their current debacle, Volcker said there should also be more oversight of some kind for hedge funds, equity funds and the remaining investment banks.

He scoffed at the notion that those entities must be free to innovate -- stating that financial "innovations" like asset backed securities and credit default swaps have brought few benefits. The most important "innovation" in banking for most people in the last 20 or 30 years, he maintained, is the automatic teller machine.

Patrick,

At some point we have to accept things we don't like. This might be one such case. The desire to have their own place is a big motivation of our ancestors to immigrate here from Europe back in the day and from places like Shanghai and Mumbai nowadays. Even though we all look different, coveting home ownership is a hard-coded gene that a lot of us who all look different share. Maybe it's recessive on some folks, but if it is, betcha it'll be expressed in your kids.

If we can accept that we live in a gene pool where that coveting of home ownership dominates, we can try to at least educate people and hope that the message gets through. Even if it gets through to only one person, you made a big difference in that person's life. Been there myself on that one. Of the several including my own sibling that I tried to talk out of buying a home in 2005-06, I actually got someone to read your blog and then start asking his own questions. So he waited it out. So you see Patrick, you had a positive effect on that person's life.

Another thing that you can do, we cannot stop the unstoppable gene-coded force, is to ride it to our own advantage. Lotsa people who posted on here have shared things they've done in that regard.

PermaRenter,

Listen to yourself. Do your own math. And instead of looking at spread sheets with standardized test scores, go to the high schools and see for yourself.

And then convince yourself that a 850K townhome in the municipality of San Jose, which for time being may come with the "privilege" of going to Monta Vista, is a good deal.

You guys should watch this:

http://www.cnbc.com/id/15840232?video=1040027101&play=1

You guys should watch this:

Only one idiot out of four... could this be a sign that the media is finally catching on?

Credit Suisse recently produced a graph showing a big peak in interest rate resets for Alt-A and Option Arm loans will happen in May, 2009 and an even bigger peak in May, 2010.

I wonder how many of those people have ballon payments coming due? I once had one, and it was $30k due in five years. Those people won't be refinancing, if they are under water.

There is NO MORE land ownership in the traditional sense any more anywhere in the world, unless you are one of those lucky folks who bought land in California prior to the 70s with next-to-nothing locked-down prop 13 property tax that will not even adjust 2% up each year. Or, if you own a large piece (100 acre up) of agricultural lot or land left to nature, and qualify for Williamson Act which exempts you from property tax, you are a true land owner.

Ownership is a particularly a joke in places like TX, where property tax is 3.x% and assessed according to market value each year, which means your land is NO longer your land in 33 years assuming no land value increase. Any other state with no locked-down property tax like prop 13 is also practicing a very watered down, compromised policy of land "ownership". In many other parts of the world, your social cost outlay on a piece of land can cost you as much as 1/20 of the land value each year.

So land ownership today only means prolonged tenancy, with a large part of the rent locked in, but the flexible part (property tax) goes up every year and occupies a larger and larger part of your rent as time goes by.

In that sense, CA is the most ideal place to own real estate (if you do not overpay). Prop 13 allows for the truest sense of land ownership in the traditional way, and if you are a libertarian or true conservative, this is probably the only piece of code that is worth fighting for.

"People like [Robert] Shiller were very worried about the housing bubble. People like Steve Roach were worried about an economy based on asset bubbles leading to consumption bubbles that were unsustainable. People like Ken Rogoff talked about global imbalances in the current account deficit not being sustainable. Nassim Taleb has been worrying for a while about 'fat tail' events . . . . So lots of people signaled concern about things. I was one of those who put the dots together and thus gave a more fleshed-out picture."

To Mr. Roubini, the most interesting question isn't the one of who got it right. Instead, he asks why we "over and over again, get into these periods of irrational exuberance, when not only is there an asset bubble and a credit bubble, but people believe these are sustainable over a long time -- Wall Street, policy makers, rating agencies, academics, journalists . . . ."

Regarding the Rick Santelli "rant", Amen! Once again, just because the loan value was already five times the homeowner's income, tapping into imagined home equity to get those granite countertops, or move up from a Ford to a BMW, was a personal choice. I'm not certain why those of us that kept driving our Hondas and preparing dinner on "formica" (gasp!- perish the thought) should now be forced to pay for others' lifestyle decisions. I actually had a neighbor that was a "banker" around 2005- young girl who also tended bar on weekends (no lie)- that didn't understand such complex financial concepts as equity. Yes- she is a "victim", but being willfully stupid does not make one a victim, it makes them a fool.

As for the maturing ARMS, I have a balloon due in Summer 2010, and I am doing my best to pay it down until then. Of course, since I bought a house in 2003 at a mere 2.5 times my annual income and put 20% down and never refied despite a 50% increase in value at peak, I anticiapte a mortgage that will be down to roughly my annual income (assuming I still have a job). If we are blindly handing my neighbor $50K for his stupid decisions, I want my $50K too so that I can get my granite countertops and BMW- it's only fair (although giving me the $50K would actually help more since I will spend it).

For the 92% of Americans that pay mortgages timely (even those underwater since there are actually still penalties to foreclosure), we really need to both demand transparency and limit help to those that were truly defrauded, and make sure there are criminal charges to attach to each of these truly wronged cases. This would also force some of our excess lawyers to make an honest living- but that's another topic.

Yes- I am riled up on a Saturday morning.