iwog's comments

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iwog   ignore (1)   2009 Jun 13, 1:46pm   ↑ like (1)   ↓ dislike (2)     quote        

In California, prop 13 prevents property tax increases over 2% a year for life, for the children's life, for the grandchildren's life, and 30 generations down the road as long as the real estate stays within the family.

Unfortunately prop 13 also applies to corporations meaning there are quite a few commercial buildings that are still being billed at values from the late 1970's + 2% a year.

There have been many attempts to overturn prop 13 and all of them have been unsuccessful.

There is no rent control in the majority of California.

iwog   ignore (1)   2009 Sep 2, 4:31pm   ↑ like (1)   ↓ dislike (2)     quote        

The first sentence reads:

"The American far right wing fits the 14 Points Of Fascism well enough that we should call a spade a spade."

Have ANY OF YOU on the right bothered to even challenge this premise? Has anyone discussed the 14 points of fascism and made the argument that the American right does not fit them? What relevance does socialism and health care and taxes and the free market have to the fact that THERE'S A FASCIST MOVEMENT IN THE UNITED STATES AND IT'S GATHERING SUPPORT!?!

I'd love to see someone on the right with the guts to take on this question. The implications are far more destructive than a national healthcare program.

iwog   ignore (1)   2009 Nov 28, 1:00am   ↑ like (0)   ↓ dislike (2)     quote        

The stock market represents pieces of corporations, and most of these corporations have intrinsic value that will increase as the dollar is devalued. While the dollar is in crash phase, I expect the long term stock market to benefit from both inflation and a boom economy. It's a good place to have money right now.

iwog   ignore (1)   2009 Nov 28, 3:12am   ↑ like (1)   ↓ dislike (2)     quote        

CRA had nothing to do with the housing crash. A study proved that CRA banks wrote fewer subprime mortgages than non-CRA institutions. This means that CRA actually inhibited the writing of bad debt, which is the exact opposite of encouraging it.

iwog   ignore (1)   2009 Nov 28, 3:50am   ↑ like (1)   ↓ dislike (2)     quote        

Kevin says

Why do you believe that the collapse of the dollar is “inevitable”? What makes the dollar special compared to, say, any other major world currency?
If the dollar’s value drops quickly enough, the result will be that it loses its status as a global reserve currency, which will end the devaluation since inflation will no longer be an easy way for the fed to erase the treasuries debt.
Why do you think other countries economies are in such good shape (Dubai, really?) that they could just start buying up american assets?
What is this “real money” that you speak of, anyway? Unless other countries suddenly move back to the gold standard (and that isn’t going to happen), your doomsday isn’t going to happen.
Lastly, your whole premise is absurd. You think that any stock market is going to be safe if the dollar just collapses? The fallout from that clusterfuck would make the current recession and the great depression combined look pleasant. That’s the sort of event that would send the whole world back a century or more. Stock market? You’d better invest in ammo if you honestly think that’s going to happen.

The problem is that most of what you're describing doesn't happen. Hyperinflation isn't some Greek myth that people need to make guesses about, it's a rather common event that happens somewhere several times a decade. Just in the last 20 years we've seen it in Russia, Zimbabwe, Mexico, and Argentina. To assume that it can't happen here is a little ridiculous, especially since our economic polices make those of the former Soviet Union look conservative in comparison.

What makes the dollar special compared to any other world currency? Several hundred trillion dollars worth of debt for starters. When you add up EVERYTHING representing dollar debt, you find out that there's not enough money on the entire planet to pay it off. This means that a general failure in the credit of the United States will require several hundred trillion dollars worth of newly printed paper to resolve.

"If the dollar's value drops quickly enough, the result will be that it loses its status as a global reserve currency" CORRECT!!! "which will end the devaluation" INCORRECT!!! The process of removing the U.S. dollar as a world reserve currency isn't complicated. It means dollars are released from central banks and SPENT into the only place left that accepts dollars: The United States. The fall from world reserve currency status is like gasoline pumped into a wildfire.

Real money is defined as gold and silver. Not by me, by approximately 6000 years of human history. We abandoned silver in 1965 and gold in 1971. That means that our experiment with pretend paper currency is only around 40 years old. I'll bet on 6000 years vs 40 years every time.

The stock market will be a "safe" place to put money while the dollar is collapsing because a currency collapse is a red hot market. Everyone is spending. However once it becomes clear the currency collapse is over, the stock market will be a terrible place to put money and will probably crash again. Timing is critical, but right now the stock market is a screaming buy.

Investing in ammo? Once again I'll remind you that there are several examples of hyperinflation every decade and it doesn't usually result in anarchy and civil war. Another Great Depression is coming, but not until AFTER the dollar dies.

iwog   ignore (1)   2009 Nov 28, 6:39am   ↑ like (1)   ↓ dislike (2)     quote        

Kevin says

iwog says

The stock market will be a “safe” place to put money while the dollar is collapsing because a currency collapse is a red hot market. Everyone is spending.

Nobody is spending, everyone is panicking. You think a crisis in the world’s largest economy is going to send people into a buying frenzy? Have you been paying attention at all for the last two years?

I want to use this as an example of how difficult you're making this conversation.
"A currency collapse is a red hot market"
Your reply?
"Nobody is spending, everyone is panicking"
Well DUH, which is exactly why there's:
a. No currency collapse yet and
b. No red hot market yet.

iwog   ignore (1)   2009 Nov 28, 6:54am   ↑ like (1)   ↓ dislike (2)     quote        

Kevin says

I mean, really — The USSR? Zimbabwe? Germany? You don’t think that was anarchy and civil war? Are you kidding me?

Where are you getting this stuff??

Civil war and/or anarchy in Russia? Zimbabwe? Even Germany?

Nope, absolutely not. Germany recovered from hyperinflation, became strong, THEN went to war. The Soviet Union collapsed without a shot fired, then worked out the new economy. Zimbabwe is a poor third world African nation, but Mugabe is still running the place.

None of your examples even come close to the violence currently happening on the Mexican border, nor do they qualify as anarchy or civil war.

Try and be reasonable. Almost everything you posted is pure hyperbole.

iwog   ignore (1)   2009 Nov 28, 7:01am   ↑ like (1)   ↓ dislike (2)     quote        

Everything is not a bubble. I'm the only one in my family who owns gold & silver. I'm the only person in my son's Boy Scout troop who owns gold & silver. I'm the only person in the PTA who owns gold & silver. I'm the only person in my extended group of friends who owns more than 5 ounces of gold in any form.

Compare this to EVERYONE owning tech stocks or EVERYONE buying real estate or EVERYONE hoarding beanie baby dolls.

There are no taxi cab drivers and waitresses buying and saving gold and silver coins. In 1980 there were plenty of them. There's probably a bubble coming, but not yet.

iwog   ignore (1)   2009 Nov 28, 7:03am   ↑ like (1)   ↓ dislike (1)     quote        

Nothing written by Glenn Beck has any credibility whatsoever. He's the class clown of the American fascist movement.

iwog   ignore (1)   2009 Nov 28, 3:09pm   ↑ like (1)   ↓ dislike (1)     quote        

Bap33 says

um .. negative. Lending standards were reduced, buyers pool was increased, stupid people got access to money, homes artificially inflated, other stupid people pulled out fake-equity, bubble popped, the end. The rates on those loans made no difference to the idiots getting the loan, they were just playing Monopoly anyways. Heck, they made very few payments anyways.

Lending standards were reduced across the board, however CRA banks wrote fewer subprime toxic loans than non-CRA banks. This means that CRA actually moderated the reckless lending practices while the "free market" banks didn't give a damn.

The reality is that most of these loans were illegal before free-market zealots deregulated the entire industry and removed the New Deal protections between Wall Street and banks. This deregulation combined with stupid low interest rates caused the disaster. CRA was totally irrelevant.

iwog   ignore (1)   2009 Nov 28, 5:00pm   ↑ like (1)   ↓ dislike (1)     quote        

Bap33 says

ya … I didn’t mention CRA. On that we disagree.
My point was the interest rate of a loan made by a LiarBuyer was not something they were worried about. If they had planned on paying that note, THEN the interest rate would be of intrest.
How you doing Iwog?

Doing pretty good thanks for asking. I'm up to 4 investment homes now in Concord.

LiarBuyers as you call them were doing nothing more than taking a risk and making a bet. Most knew that they would not be able to make the payments after the rate adjustment, but were betting on the home being refinanced and gaining equity. Both real estate and lending professionals, operating under agency law, were telling them it was going to work out fine. How the hell is an auto mechanic or a hairdresser supposed to second guess their paid professionals about how real estate works?

I have endless sympathy for those who simply wanted to own their home. I have no sympathy at all for those who were PAID to be experts on the home purchase, and then screwed over their clients for a few extra dollars. THIS is the REAL nature of an unregulated free market in real estate. As I've said many times, we need to turn the clock back.

iwog   ignore (1)   2009 Nov 28, 5:08pm   ↑ like (1)   ↓ dislike (2)     quote        

Honest Abe says

Iwog, Beck has no credibility, according to who, the liberal, socialistic political class? Haha. And no, he isn’t a fascist. He’s a proponent of things like free speech, private property, individual liberty, privacy rights, personal responsibility, freedom, the rule of law…you know, things that you, liberals and elitists hate.

Aren't you forgetting a few things? He's a hypernationalist. He looks for scapegoats constantly. He LOVES guilt by association, even when there's no real connection. He attempts to cause fear and panic in those he's talking to.

Free speech? Private property? Individual liberty? Privacy rights? Personal responsibility? Freedom??? WHAT A PILE OF CRAP!!!!! If Glenn Beck devotes 10% of his show and his books to those ideals, he devotes 90% to slash and burn. Grab your guns! Blame the liberals! Obama is a Marxist racist Kenyan!! Rise up and take back your country!!! Wave the flag!!!

He's a fascist according to every definition of fascist I've ever read.

iwog   ignore (1)   2009 Nov 29, 1:45am   ↑ like (2)   ↓ dislike (1)     quote        

Honest Abe says

BAP, I’m going to recommend the kindergarden version of Econ 101 for our economically illiterate friends here on, what do you think…too advanced for them? Abe.

So basically you've totally failed to indicate a single reason why CRA had anything to do with the housing crash, so you're going back to a flame war instead.
I happen to be extremely well versed in economics. I examined the issue and read several economic papers on the subject including this one by the San Francisco federal reserve:
CRA Lending during the Subprime Meltdown
The conclusion from every single source is that CRA was not responsible for the mortgage crisis. Furthermore most economists go further and say CRA banks were actually more responsible than non-CRA banks.
Now you can whine and cry about how this is wrong, but then again you've presented nothing. Nada. Zilch. A blind assertion is NOT an argument.

iwog   ignore (1)   2009 Nov 29, 1:51am   ↑ like (1)   ↓ dislike (1)     quote        

Honest Abe says

ARGUING WITH IDIOTS, none of you have read the book. I could tell by your incorrect assumptions on virtually all points you attempted to make.
Todays book: 1984, by George Orwell.
TotallyScrewed123, I totally enjoyed your posts. Sounds like a good project - too bad I quit drinking. Cheers, Abe.

You're correct, I haven't read his book. The reason I haven't read his book is that he's a moron, which he established beyond a reasonable doubt on his television show. I gave him a chance, and all I saw was a fascist trying to rally the troops by lying.

The best example is telling people Obama is going to outlaw their guns. Not only is this total crap, but it motivated some mama's boy to start killing cops.

This is fascism folks. A hypernationalist who looks for scapegoats under every rock, is paranoid beyond hope, and who has no use for truth.

iwog   ignore (1)   2009 Nov 29, 1:57am   ↑ like (0)   ↓ dislike (2)     quote        

Let me understand the argument you're trying to make here.

It's your assertion that Republicans would NOT use the power of the government to enforce tax laws?

We live in a time when taxes are at their lowest level in decades. Obama wants to turn the clock back to 2002, and this is somehow a disaster? Honestly I can't comprehend this political opinion. It doesn't make any sense.

iwog   ignore (1)   2009 Nov 29, 1:59am   ↑ like (1)   ↓ dislike (1)     quote        

Racking up more debt is the only thing we have left.

iwog   ignore (1)   2009 Nov 29, 9:32am   ↑ like (1)   ↓ dislike (1)     quote        

Kevin says

iwog says

Racking up more debt is the only thing we have left.

Oh come now iwog, you’re a smart guy. I know you’ve done the math here. Getting rid of our debt isn’t even that difficult:
1. Have a policy of moderate inflation (5-7% annually), which is high enough to erase a lot of debt quickly but low enough to not cause major problems for individuals (and if you make it clear that this is the policy ordinary folks can plan accordingly)
2. Restore taxes (especially capital gains) to Clinton levels — possibly Reagan levels if you really have to.
3. Get out of Iraq and Afghanistan.
Similar recommendations have been made by many economists. With such a policy we could have a balanced budget and our deficit would be mostly gone in a decade.

All that might work if the debt was static and the Chinese were willing to eat $2 trillion in devaluation. Unfortunately we still have a trade deficit, unfunded baby boomer liabilities for SSI and Medicare totaling 70 trillions, and a complete lack of political will to fix any of it.

Therefore I decided several years ago that the best policy the United States can follow is to bust out on its creditors and attempt to preserve as much wealth as possible. Doing it quickly will mean Americans keep most of our domestic assets. Doing it over decades would mean most capital assets in the hands of foreigners.

iwog   ignore (1)   2009 Nov 29, 11:29am   ↑ like (1)   ↓ dislike (2)     quote        

Honest Abe says

Ummm, let me see, you acknowledge you haven’t read “Common Sense”…yet you claim it’s trash, and the author is a moron, haha.
Todays book: The Vampire Economy, by Gunter Reimann.
Oh, wait a minute, are you fools going to say Gunter is a moron and his book is trash - again, without reading it?
Koo-Koo, Koo-Koo.

I've already read it. There were FAR more economic controls under Nixon than exist today, in fact it's not even close. NO ONE, and I do mean NO ONE with any knowledge of history would argue otherwise.

Yet you and your silly friend Glenn Beck keep ringing the alarm bells about Barack Obama, who's showing every indication of being a free market advocate like Bill Clinton

Once again I need to point out that your movement is entirely fake ideologically and based in fascism.

American right wing:

- Ultra nationalistic
- Paranoid to the extreme of making up lies about death panels and everything else
- Constantly searching for scapegoats be they terrorists or liberals or even Jews
- A very clear "with us or against us" mentality with ANYONE not conforming to the party line being viciously attacked (witness television ads against Republicans who vote the wrong way)

You wont challenge these points, in fact you wont even talk about them. They are obvious to everyone, even you, but you don't want to talk about that do you.

iwog   ignore (1)   2009 Nov 29, 11:32am   ↑ like (1)   ↓ dislike (0)     quote        

Honest Abe says

This just in from Reuters, [the Venezuelan version of the Community Reinvestment Act, CRA].
Venezuelan President Hugo Chavez said “if banks don’t want to extend credit to the poor, and comply with the law (CRA ?), he could nationalize them.” Gee, that sounds kinda what like what happened here…and Chavez is a Socialist, isn’t he?
The same news release said “funds for insurance should go directly to the people”…(national health care?), and Chavez is a Socialist, isn’t he?

Holy crap, you're serious????? You want to make a case against CRA by invoking a socialist program in Venezuela?????


How about this. You admit that you have absolutely no case, and I'll admit that nationalizing banks that don't comply with CRA is wrong. What? You mean the United States has never nationalized any bank for not complying with CRA? Gosh, what are the odds?

iwog   ignore (1)   2009 Nov 29, 11:56am   ↑ like (2)   ↓ dislike (0)     quote        

thomas.wong87 says

So the countless FASB pronouncements / SEC guidelines and regulations effecting business over the past some 30 years don’t count ?

Nope, they probably don't count, but unless you're going to list some specifics I'm afraid it's impossible to talk about them.

Ultranationalism isn't good or bad by itself, but it's certainly one facet of fascism. What makes people like Glenn Beck fascist for real is the sum of his beliefs and assertions.

Business is more unregulated now than any time since before World War II. If you care to debate this, go ahead, but I can prove it very easily with historical examples. Payday loans, mortgage bonds, sub-prime lending, huge segments of the derivatives market, and gambling in nearly every form imaginable were all ILLEGAL in 1980 and DEREGULATED into existence from Reagan onward. Many "businesses", such as check cashing stores charging 600% interest rates, were criminal acts prior to the free-market zealots taking control.

What a society eh?

iwog   ignore (1)   2009 Nov 29, 4:39pm   ↑ like (0)   ↓ dislike (0)     quote        

Bap33 says

does anyone know why/how/by what law the lending standards were reduced from 20% down to the crud we seen in 1998 -2007? That may help remove the target from the CRA and place it on the correct entity. Was is due to the actions of ACORN? B.Frank? Can anyone pin point what allowed the lenders to engage in irresponsible lending?

My favorite Federal Reserve bank, the one in St. Louis, did a study on subprime which can be found here:

The conclusion was that the growth of the subprime disaster required many acts of deregulation combined with the removal of state controls on predatory lending practices. Zero down loans became legal in 1980, creative financing in 1982, etc.

The final final however came straight from George Bush and no one else. He instructed the FHA to begin making zero down loans. While it may have been legal for lenders to offer creative financing from 1982 onward, no bank was stupid enough to do so until the FHA gave everyone the green light. I quote from Investor's Business Daily:

In 2002, the George W. Bush administration urged Congress to pass the American Dream Downpayment Act, which subsidized the down payments of prospective homebuyers whose incomes were below a certain level.

After passage of that act, the president also urged Congress to pass legislation permitting the Federal Housing Administration to begin making zero-down-payment loans at low interest rates to low-income Americans.

In 2004, Federal Housing Commissioner John Weicher said, "the White House doesn't think those who can afford the monthly payment but have been unable to save for a down payment should be deprived from owning a home."

Here's the article:

iwog   ignore (1)   2009 Nov 30, 1:04am   ↑ like (1)   ↓ dislike (1)     quote        

staynumz says

That ship has sailed. It is debt as far as the eye can see. owebama had a chance to do something sensible, unfortunately, he is carter revisited.

It's a sad fact that Obama will suffer the blame for hyperinflation and the destruction of the dollar, when it's really the only option this country has.

The ONLY other alternative is to transfer our remaining wealth overseas and become sharecroppers. We lost the ability to provide for ourselves in the 1980s.

iwog   ignore (1)   2009 Nov 30, 6:14am   ↑ like (1)   ↓ dislike (1)     quote        

Bap33 says

@tatupu @Iwog,
tatupu, I think you have read this story before, and Iwog I would like your input too.
Thank you.

CRA is like a puzzle piece that looks like it should fit somewhere in the meltdown, but doesn't.

Your article contains a number of factual errors.

Banks have been placed in a Catch 22 situation by the CRA: If they comply, they know they will have to suffer from more loan defaults. If they don’t comply, they face financial penalties and, worse yet, their business plans for mergers, branch expansions, etc. can be blocked by CRA protesters.

None of this is true. CRA sub-prime loans default at a LOWER rate than non-CRA sub-prime loans. There are NO penalties for not becoming a CRA bank in fact state chartered banks are not under federal jurisdiction to begin with.

Instead of continuing to break down the MASSIVE amount of propaganda on the CRA issue (read lies) let me point to a second analysis of the meltdown and CRA's involvement. I've already posted the opinion from the St. Louis Federal Reserve bank, now here's the opinion of the Dallas Federal Reserve bank. They did an extensive study on CRA's involvement linked here:

Their conclusion? "Moreover, data from the Board’s staff report suggest that the CRA prevented the subprime situation from being more severe." This opinion confirms the fact that CRA banks wrote fewer toxic loans than non-CRA banks. Far from causing the crisis, if all banks followed CRA guidelines for subprime loans, the crisis may never have happened.

iwog   ignore (1)   2009 Nov 30, 6:22am   ↑ like (1)   ↓ dislike (1)     quote        

A prediction isn't hyperbole, it's simply a prediction.
Germany entered its hyperinflationary event in the early 1920s. War didn't break out until more than one full decade after hyperinflation was FIXED by the German government. Saying this is an example of hyperinflation causing violence and/or civil war is utter nonsense. In fact it would be entirely accurate to say that German hyperinflation only occurred during the PEACEFUL period between WWI and WWII!!!! How in the hell can you interpret this is hyperinflation causes violence????
Because I'm extremely well read in historical events, I stated a fact: Hyperinflation doesn't usually lead to a breakdown in society and violence. PERIOD!!! I have no idea why you choose to attack this, but the facts stand whether you like them or not.

iwog   ignore (1)   2009 Nov 30, 6:44am   ↑ like (1)   ↓ dislike (1)     quote        

The currency will collapse because the United States has no pathway to redeeming hundreds of trillions of dollars worth of debt.

Money is the illusion of wealth meant to represent REAL wealth. A dollar is simply someone's promise to someday deliver $1 worth of stuff. The primary reason why the dollar MUST collapse is that the paper promises for paper promises now exceed the value of everything on the planet. This means that paper promises, trillions of them, cannot be redeemed.

The ONLY thing supporting the system right now is the illusion that the United States may one day redeem those paper promises for goods and services. This illusion is maintained because the United States continuously and aggressively "freezes" those dollars into fixed rate debt, thus delaying their entry into the market where they would cause inflation.

The problem with this system is that it's EXACTLY the system Bernie Madoff used. The United States has almost exactly $2 trillion. This is the sum total of the national money supply, in fact $1.2 trillion of it has been printed during the last year in a massive effort to devalue the dollar. The United States has promised that $2 trillion to people holding several hundred trillion worth of paper promises! Believe me, this is no exaggeration in fact some people estimate that derivative debt alone is a quadrillion dollars.

China LITERALLY owns every single dollar in the world. So does the Middle East. So does Europe. So do American citizens. See the problem?

iwog   ignore (1)   2009 Nov 30, 7:02am   ↑ like (1)   ↓ dislike (1)     quote        

elvis says

If lower income neighborhoods were such a good credit risk, why did the CRA have to force banks to make loans there?

Banks were not forced to make loans there. Banks were given incentives to make lending available to people who qualified in certain areas. If you read the Dallas Federal Reserve article I linked, you'll find out that CRA lending remained either marginal or outright profitable for decades.

iwog   ignore (1)   2009 Nov 30, 7:40am   ↑ like (1)   ↓ dislike (1)     quote        

CrazyMan says

Which will just drive home prices down further.
Wage inflation? hahahahahahaha

That's not the way it works. It's a myth that you need wage inflation to increase the price of real estate. All you really need is a declining standard of living and a lot of rich people to buy up the houses and turn them into rentals.

That's why the market continues to improve even while unemployment is rising and credit remains tight.

iwog   ignore (1)   2009 Nov 30, 9:10am   ↑ like (1)   ↓ dislike (1)     quote        

CrazyMan says

iwog says

That’s not the way it works. It’s a myth that you need wage inflation to increase the price of real estate. All you really need is a declining standard of living and a lot of rich people to buy up the houses and turn them into rentals.

And completely lose their asses because no one can afford the rent to cover the prices they were purchased at.
Sorry, not buying it. Biflation here we come.
Also, it doesn’t take a genius to see the market is being artificially propped up as it is not inline with fundamentals; it’s not even close actually.
It’s being propped up for a pump and dump and revenue is increasing because of massive layoffs. It’s not sustainable.

Once again, that's not the way it's working. I currently own 4 homes that I purchased in Dec 2007, June 2008, Dec 2008, and Oct 2009. In fact I highlighted every one of them on this board real time. All are now rented, and I'm $18,000 per year positive income flow with $750,000 financed and $270,000 of my own money. EVERYTHING is included. Taxes, Insurance, repairs, and utilities.

This works out to a return on my investment of 6.6%. When you take into account tax benefits and principle paydown, I get a return of greater than 10%.

Was I lucky? Nope I was actually very stupid. A home I paid $230,000 for sold at a foreclosure auction 6 months prior for $175,000. Another home on the same street sold for $175,000 at a foreclosure auction and was resold 3 months later for $270,000. My first home was purchased for $317,000 and is now worth about $240,000. I could have done MUCH MUCH better had I known what I was doing from the start.

Predictions of falling lease rates never happened. My tenants are all single family refugees from foreclosures. My first home was rented for $1700 a month in early 2008 (3 bedroom) and I just signed a new lease on my latest home for $1850 with a $1900 bump for the second year. (4 bedroom)

Currently SF Bay real estate is THE best return I could possibly get for an income investment and has been for over a year now. There's nothing I'd rather be in.

iwog   ignore (1)   2009 Nov 30, 9:21am   ↑ like (1)   ↓ dislike (1)     quote        

Bap33 says

Please share your opinion on ACORN and B. Frank & Co. with regards to the bubble.

Thank you.

ACORN appears to be an unreasonable and sometimes criminal advocate for poor people. They had no effect on the mortgage crash and I'm happy they are being choked to death.

Barney Frank's involvement seems to be as an advocate for congressional control of Freddie and Fannie, and an unsuccessful attempt to get loans approved for multi-family housing. Whatever Barney Frank said about the 2005 reform bill, it was DEAD ON ARRIVAL! The bill had already passed the house, and George Bush promised to veto it. It was killed by REPUBLICANS in a REPUBLICAN chaired committee.

I like the guy and have yet never seen one shred of evidence linking him to the reckless subprime lending that was going on. He's probably too liberal for my tastes, but he's entirely rational.

iwog   ignore (1)   2009 Nov 30, 12:05pm   ↑ like (1)   ↓ dislike (1)     quote        

errc says

This is still more evidence that the U.S. Government intends to devalue the dollar rather than accept deflation of any kind.
isn’t that the entire purpose of the FED?? When was the last time we had deflation? hasn’t the FED had the dollar on a race to zero since it’s inception? more importantly iwog, what’s gonna happen with OIL?

The next major oil shock comes next year. The economy will be back in recession by December unless there's a LOT more printing or we make significant progress on an electric economy. I'm going long on June 2010 contracts sometime in December.

I agree with everything you said about the fed, but there really is no choice. The cure is bad, but the disease is fatal.

iwog   ignore (1)   2009 Nov 30, 12:34pm   ↑ like (1)   ↓ dislike (1)     quote        

Okigan says

iwog says
$18,000 per year positive income flow with $750,000 financed and $270,000 of my own money. EVERYTHING is included. Taxes, Insurance, repairs, and utilities. This works out to a return on my investment of 6.6%.

How can you call it a 6.6% return on investment?

You are counting it against 270K of your money, but for some reason forgetting about 750K that are being financed !?

And at what rate is that 750K being financed?
Second, 230K home in bay area ? and rented for 1.8K? sounds dubious as well.

What about maintenance and/or property management, time investment for 4 homes?

6.6% is the return on my capital. Anyone who runs a business understands that you do not calculate the return on the bank's capital because the return on the bank's capital is ALWAYS FIXED at the interest rate of the loan. In my case, the return on the bank's capital is 5% and 5.5% depending on which of the three mortgages you're talking about.

Besides 6.6% is just net cash flow. When tax deductions and principle paydown are factored in, the return on my $270,000 is EASILY 10% or higher. Notice I said absolutely nothing about appreciation, however it's very likely that after holding these homes for 10 years or longer that I'll have substantial capital gains as well.

Basically you called me a liar with respect to my examples, so I'll just say you're ignorant and leave it at that. Anyone can check the average lease rates on 4 bedroom homes in Concord, CA by looking at Craig's List. Anyone can check the prices I paid (and the prices other people have paid) by checking Zillow.

Real Estate has so far been an outstanding investment and rents are GROSSLY out of line with home prices to the high side. Almost anything I buy in the 200k-250k range is positive income flow from day 1. I keep hearing assertions to the contrary, but they have nothing to do with the market I'm participating in.

iwog   ignore (1)   2009 Nov 30, 6:41pm   ↑ like (1)   ↓ dislike (1)     quote        

Pretty close analysis. I get $2000 rent on one house, $1850 on 2, and $1700 on the third for a total of $7500 per month. All are 1 year lease contracts.

I do my own property management and have found ALL of my tenants through Craig's List and referrals. One of the advantages of owning 4 homes on one street is that everyone gets to know you, so I find a property management firm is not helpful.

$600,000 is at 5% fixed for 30 years. $346,000 is at 5.5% fixed for 30 years. The remainder is in cash waiting for my next purchase. I will continue buying real estate in Concord as long as the bank gives me more money.

iwog   ignore (1)   2009 Dec 1, 2:07am   ↑ like (1)   ↓ dislike (1)     quote        

You're just talking about current government debt. I'm talking about ALL debt, which is legitimate if you want to chop up a United States and pay what's owed to everyone.

Dollars are just markers for future goods and services. A currency is flexible and can handle quite a bit of stretching because people often pretend that the currency itself is a tangible asset. They save it and stockpile it in bonds for retirement. As long as inflation remains under control, like it has since the late 1980's, there's no reason to disturb the sleeping money.

However pretending that we'll never see double-digit inflation again is a fool's paradise. It WILL come back someday. When that happens, the value of cash and bonds will drop fast enough that people will no longer be willing to hold federal bonds, municipal bonds, corporate bonds, bond derivatives, mortgages, or anything else that can't inflate in value as the dollar is devalued. That's when you'll see a cascade failure of people panicking and trying to exchange their money for something real.

Even then, things might be okay as they were in 1980 when the government was forced to pay 14% on 30 year bonds, but it's different now. VERY different. The United States rescued itself in 1980 by driving interest rates too high for anyone to borrow money. It temporarily squashed our economy and loaded up debt on the DOMESTIC market. It was Americans borrowing money from Americans for the most part.

Today most debt is held abroad. Temporarily driving interest rates to the moon will wreck our economy just like it did in the early 1980s, except THIS time the Chinese and everyone else will not sit around twiddling their thumbs while we erase trillions of dollars off our balance sheet. They will either sell off their debt and buy gold and capital assets, or at the very least they will stop buying new debt and force the government to print what it needs.

So lets assume that I'm wrong and that somehow we pull the fat out of the fire and find buyers for enough debt to cover the new bonds to pay off the old bonds and things don't fall apart. What then? We STILL have a massive trade deficit. We STILL have bankrupt Social Security and Medicare systems set to blow up when Baby Boomers want to retire. We STILL have a government that spends much more than it taxes. The trend lines for ALL OF THESE THINGS aren't just sloping upward, they are parabolic and slowly bending towards infinity.

We aren't even talking about reversing the trade deficit or balancing the federal budget or increasing taxes to make Medicare and Social Security viable. Even people who see things continuing as they are generally can't get past "Oh the Chinese will keep funding our insanity because they need our markets."

Anyway back to the discussion on all debt versus government debt. When things start to fall apart, it will make no difference if you owe money to the treasury or your local water district or Macy's Inc. Hundreds of trillions of dollars worth of worldwide dollar debt will be competing for EXACTLY $2 trillion worth of cash. That's all there is in the entire world. The fractional reserve system is built on a credit rating. Once that credit rating is gone, it doesn't function anymore. Expanded measures of money like the M2 and M3 and MZM aren't going to mean squat.

iwog   ignore (1)   2009 Dec 1, 2:31am   ↑ like (1)   ↓ dislike (2)     quote        

totallyscrewed123 says

Sounds like Concord is in the sweet spot where a $300k house rents for $1800. While rents are falling I think that a worse case scenario would put rents for these at $1100 which according to Okigan is still a safe cash flow position. Couldn’t the same numbers be accomplished with paying cash for one single property, with 0 negative cash flow risk?
iwog says

When tax deductions and principle paydown are factored in

Also … I will be the first to claim ignorance on the rental business. What are the tax benefits of being a land lord?
I agree that the mid to high end has a ways to go since investors are not interested. We are looking for a cash flow neutral purchase in the mid end as I fully expect live in it and then move in 5 years. We would rent it out in the event of depreciation. The numbers still require almost 50% down to currently make that work. With rental rates visibly declining and mid end purchases flat or declining, purchasing is becoming less and less attractive.

The government allows people to depreciate real estate over 27 years and deduct it against rents and other income. Once the home is depreciated, it can either be left in a will to heirs tax free, or the owner can move into it for a couple of years and use the $500,000 tax exemption to get their gains free and clear.

It's worth a LOT of money. For me it works out to be worth over $3000 per month.

You make a very good point about paying cash for a house and getting positive income flow that way. This is what CrazyMan and others don't realize. I'm cash flow positive using the banks money, which is kind of cool because I could never do this without a large amount of borrowing. It would NOT make sense for me to buy a $500,000 home in Walnut Creek and rent it for $2500 a month.

However $2500 a month on a $500,000 investment is better than a 5% return after taxes, insurance, and depreciation. That's DAMN good in an inflationary environment where real estate is slowly appreciating. (normal market conditions) I expect the stock market to crash again late next year, which will liberate a huge amount of cash at a time when interest rates and home prices should be rising in tandem. At that time, a 5% return on an appreciating asset is going to seem heaven sent.

iwog   ignore (1)   2009 Dec 1, 2:35am   ↑ like (1)   ↓ dislike (2)     quote        

pkowen says

Welcome back IWOG, I have asked after you recently. I’ll make my usual contribution of “not on the penninsula”. Rent is still half the cost of owning in many cases. The only people turning positive cash flow have had their properties for decades. I’m talking SFRs, no idea how the apartment complexes are doing - although there are tons available for less than they were a year ago. However, I fully believe you are making a positive cash flow in Concord / WC. You certainly have proven it by sharing your numbers. Thanks for the update. On a ten year horizon you may even see appreciation, but I wouldn’t bank on it (not like you need to).
I’ve actually seen some ‘for sales’ in south bay that are pretty darn cheap relative to what they once were. Some aer literally 1/2 their peak sale. I’ll continue sharing those on the property honesty forum. The equation is starting to work out in more places.

Thanks for the welcome! I can't stand this forum format but I guess I'll to learn to live with it. (grumble grumble) How about that gold eh? ; )

iwog   ignore (1)   2009 Dec 1, 2:54am   ↑ like (1)   ↓ dislike (1)     quote        

In the 1970's to early 1980's, people did panic. That's what drove silver to $50 an ounce and gold to over $800. Real Estate doubled or tripled during this period.

The difference is that in 1980 we were a self-contained nation with no trade deficit. Debt was owed by ourselves to ourselves. The situation could be handled by crushing the money supply and stopping lending dead. There was a HUGE flight to hard assets like real estate and metals, but in the end Americans simply transferred wealth around to each other and came out okay.

The bizarre situation we're in now is that China has more money than we do. So does Saudi Arabia. They EASILY hold more dollar assets than the federal reserve, and don't have any problem lending or spending in an American recession. We have literally handed control over our money supply to foreign interests. When the crisis comes, vultures will fly in like last time to scoop up all the hard assets. The difference is that after it's all over, Americans will be sharecroppers just like Warren Buffett predicted in 2002.

iwog   ignore (1)   2009 Dec 1, 3:01am   ↑ like (1)   ↓ dislike (1)     quote        

pkowen says

iwog says

Well, I’m thinking sell the gold, but it certainly turned upward. Were you saying $2000/oz at one time? Still believing that? I guess maybe you are with your hyper-inflationary scenario.
The format is ok once you get used to it.
p.s. I still don’t get this “interest rates and house prices up in tandem business” but ok!

I think $2000 gold is the bubble number very similar to what platinum did in early 2008. What comes next is probably a correction followed by a stock market crash followed by inflation and more gains. Who knows if I'm going to be right, but it sounds good.

Real estate and interest rates went up in tandem in the late 1970's. That's where we're headed I think.

iwog   ignore (1)   2009 Dec 1, 3:03am   ↑ like (1)   ↓ dislike (1)     quote        

tatupu70 says

iwog says

In the 1970’s to early 1980’s, people did panic. That’s what drove silver to $50 an ounce and gold to over $800. Real Estate doubled or tripled during this period.

I guess we have different ideas of what “panic” means. Adjusting your investment portfolio to account for different conditions doesn’t constitute “panic” in my book. I’m envisioning riots, tear gas, bank runs, etc…..

I don't think we're headed for anything that dramatic, even if the dollar falls to zero.

iwog   ignore (1)   2009 Dec 1, 3:43am   ↑ like (1)   ↓ dislike (1)     quote        

China can't buy assets at a mad rate without tipping their hand and causing the exact disaster they are trying to avoid. They ARE buying up assets slowly and carefully, including gold and natural resources. China's experience with Unical shows just how difficult this can be.

Fiat currency is by design a pure faith system. Nothing holds it up except the assumption that everyone isn't going to go to the well at the same time. In 1980, there was 1 well and about 10 people taking turns. In 2009 there's 1 well and 100 people taking turns. It doesn't get better from here, it gets worse because jobs are still leaving the country and the government is still deficit spending and corporations are still finding creative ways to turn $1 in to $10 in fake assets.

BTW while you may be right about Social Security, such a fix doesn't apply to Medicare. The cost of fixing Medicare is fast approaching a 100% tax.

iwog   ignore (1)   2009 Dec 1, 3:50am   ↑ like (1)   ↓ dislike (1)     quote        

Oh HELL yeah!!! I got a list!!!!

No emoticons, (silly I know but it warms this place up) I still haven't figured out the underline code, editing a post seems to automatically remove all the paragraph breaks, I'm not sure if it's possible to post a graphic in a reply although I can do it in a first topic, and there are still too many Republicans.

Okay I admit that some of these things might be due to my own incompetence. : P