patrick.net

The extreme example was during the dot-con heyday, where idiots with no skills, no background called themselves “web developers.”

Stop the hate. Please don't be an idiotcist.

Hey DennisN, how long did it take you to pay back your $19,237* in undergraduate student loan debt? Or were you able to take advantage of the no tuition UC system while simultaneously avoiding the draft. If so, kudos to you Sir, this type of skill is amazing. One might be so shallow as to call it luck, but certainly it was anything such.

*Few students can afford to pay for college without some form of education financing. Two-thirds (65.7%) of 4-year undergraduate students graduate with some debt, and the average student loan debt among graduating seniors is $19,237 (excluding PLUS Loans but including Stafford, Perkins, state, college and private loans), according to the 2003-2004 National Postsecondary Student Aid Study (NPSAS).

Anyway, black or white, Obama probably means higher tax.

I don’t understand why a gold digger can marry a guy for a few years and after to agreeing to stay with him “until death do us part” break the contract (to move in with her personal trainer) and take half the guys assets…

Because the gold digger is a victim and the rich man is always the bad man?

There should be physical penalties for marital treason.

Even as a libertarian, I recognize the need for the government to enforce private contracts. When a gold digger seek to unilaterally breach the contract, the government should move to block.

Any chance Tom McClintock will become our next governor? :(

http://republican.sen.ca.gov/web/mcclintock/article_detail.asp?PID=344

Are they really going to teach "global warming" in public schools? How is that more real than God?

We are supposed to be free from religions.

Here's an interesting new story up at the Chron's site:

www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/05/RENBVULBH.DTL

I wonder if he was one of the trolls here?

"The people who left are the ones who had other options or just saw the writing on the wall," he said. "The stereotype is that it's the casual agents and the opportunistic ones who are the first to fall off. I don't know if that's the case. The people who I know who are leaving got into real estate for very legitimate reasons and were very dedicated. But if you start doing the numbers, somebody had to go."

DennisN Says:

> Here’s an interesting new story up at the Chron’s site:

We now know why Marina Prime is no longer posting:

"When Jaime Gutierrez got his real estate license in 2005, he thought he had found his new career. Then the housing market crashed, and now Gutierrez works as a cab driver."

surfer-x Says:

> *Few students can afford to pay for college without
> some form of education financing.

As someone who had no problem working to pay for college I don’t understand why most people in America do not expect kids to work over the summer or a little bit of work between fraternity parties to pay their own way through college.

The tuition for a full year with a full load of transfer classes at a Junior College is about $500. A full year at a California State School is about $4K and a UC School is about $7K. So without a penny of student aid or scholarships you can get a Bachelors degree from a CSU campus (after a JC transfer) for about $9K ($43 week over four years)

FAB, you obviously have no idea how difficult it is playing Ultimate Frisbee and drinking beer. There's no time for work!

Most students put more planning into Spring Break than their summer job. Also, that statistic ignores the fact that most students prefer their student loan debt to almost every other kind of credit. It doesn't kick in until you're done (and presumably making better money), and it's at a very low interest rate. Why put clothes, food and entertainment on your expensive credit cards and then pay cash for your education? Uncle Sam is offering you a low low rate on deferred credit! I wonder why the lenders were never able to replicate their HELOC strategy with student loans. "Roll all your debt into one low monthly payment, deferred until graduation!" If they could have just loosened those pesky regulations a bit more.

Getting a student loan was the very best decision I made. I used it to make a downpayment on my first house.

I'm way late in chiming in here....

First, 50% ownership? That is mind boggling. Who knew Hummers and pergraniteel cost that much?

Second, Surfer-X, my parents-- the boomers--, have lost their home and ended up in Thailand after fleeing almost $1 million in debt and the IRS. Great examples for us all, no?

Brand says:

I believe that people should be thoroughly informed about their choices. If they need help understanding the potential consequences, then perhaps we should provide our fellow citizens with an impartial, high-quality information source. We should mitigate future housing bubbles by making sure that every single high school graduate in this country understands the different types of mortgages and is literate in reading contracts (or in retaining a lawyer).

That was part of a great post, but I'd like to add.

Knowledge is not really the issue. As long as some people have access to credit to fulfill an immediate wish, they are unconcerned about the long term. Think of all the easy credit stores. I'm sure the customer knows that paying $100/mo for 18 months to buy a flat screen is a bad deal when the same item is available for $1,000 at discount stores, but he gets to take it home today. This "have the bling now" concept also applies to BMW, Lexus, and Escalade leases, and explains the unpaid credit card balances. Unfortunately, houses were not immune to the financially short sighted, and that I do not believe education will have any effect on the "have it now" crowd. Only sensibly tight credit will prevent bubbles.

Ms. Vora seems to have been a smart but fairly low-level intern in Yahoo’ interaction research lab.

Yahoo gives low six figure salaries to interns? That would explain some attitudes.

As home prices soared in the middle of the decade, consumers tapped the rising value of their property as a source of cash by refinancing first mortgages or taking out home equity loans. But in 2007, as home prices fell and foreclosures skyrocketed, lenders turned wary of the housing market. Home equity lending volume fell sharply in 2007, tumbling to $60.5 billion. By the last three months of the year, such lending slowed to an annual rate of $26 billion.

2003 2004 2005 2006 2007
$92.2 $180.5 $138.2 $147.5 $60.5

from today's SFChronicle. Someone here described our economy in the last 5+ years as based on not two but three paychecks (mom, dad, house). Now even the Chronicle and Wall Street economists agree!

So it seems we'll be fine this year because the government in all its wisdom has replaced MEW with tax rebates. What happens in 2009? hahahaha....

the link if anyone cares

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/05/MNI1VS96B.DTL

>> When Jaime Gutierrez got his real estate license in 2005, he thought he had found his new career. Then the housing market crashed, and now Gutierrez works as a cab driver.”

He also does substitute teaching:

After two years Jamie Gutierrez has quit the real estate game. During that time he hung on to his cab-driving job; now he's making ends meet by substitute teaching.

Chronicle photo by Katy Raddatz
http://www.sfgate.com/cgi-bin/object/article?f=/c/a/2008/04/06/RENBVULBH.DTL&o=0&type=printable

Second, Surfer-X, my parents– the boomers–, have lost their home and ended up in Thailand after fleeing almost $1 million in debt and the IRS.

SQT, I thought your parents were Silents.

BAI,
And in my opinion, we get a better society if we can make it on not 3, not 2, but 1 paycheck. There is a lot to be said for how much a stay at home parent means to a child growing up.

…The only thing worse than being trapped in an office listening to a boomer blather on about themselves

LOL…I'm reminded what I missed about this blog: Surfer-X rants on boomers. I used to think he was a bit off-base, but less now. The only thing worse than continually hearing out self-deluded, narcissistic Boomers is dealing with their children-- who fully bought into their parents' path of "success" and entitlement. They're even stupider than their parents, because they have less basis for their assumptions and attitude. So it's not a generational problem, but a defunct mindset that I'll daresay will leave a toxic legacy for years in this country.

Brand Says:

> I believe that people should be thoroughly informed
> about their choices. If they need help understanding the
> potential consequences, then perhaps we should provide
> our fellow citizens with an impartial, high-quality
> information source. We should mitigate future housing
> bubbles by making sure that every single high school
> graduate in this country understands the different types
> of mortgages and is literate in reading contracts

Then HeadSet Says:

> That was part of a great post, but I’d like to add.
> Knowledge is not really the issue. As long as some
> people have access to credit to fulfill an immediate wish,
> they are unconcerned about the long term. Think of all the
> easy credit stores. I’m sure the customer knows that paying
> $100/mo for 18 months to buy a flat screen is a bad deal…

I wish HeadSet was right, but unfortunately knowledge is the issue for most people… Not many people that actually spend time discussing the housing market on line. Most people are either on line looking at porn or reading about celebrities on TMZ or they are watching basketball or American Idol on TV…

My friends kids that go to UHS or SI are all getting a good high school education, but I bet that most of the kids that “graduate” from public schools in California today could not tell you the what the annual interest rate is if you buy a $1,000 TV making 18 monthly payments of $100 (a huge percentage of the graduates would not even understand the question if it was in English)….

In Oakland and parts of Sacramento almost half the kids that start high school don’t even graduate. I’ve done volunteer work in poor schools for over 20 years and the bar keeps getting lower and lower (and the kids keep getting dumber and dumber)…

Headset, I will of course agree that there is a huge demographic for instant gratification. However, most people carrying a CC balance or car lease know that they are paying more, but have no idea how much more. They are getting nailed way harder than they think. If those innumerate folks knew up front how much it was going to cost by the end, fewer of them would make that purchase at all, and another respectable chunk would pay off their CC balances quickly.

As for the others, well, staying in debt is their choice. I simply require that in a modern society, it be an informed choice.

One of my biggest complaints is the deliberate information gaps maintained by lenders so that they can keep people hooked on credit. Look at exploding ARMs---how many J6P borrowers can we reasonably believe had the math skills to understand the consequences of using the Pick-a-Payment option, even if it were completely spelled out to them? Heck, most of them don't have a damned clue that a mortgage actually costs them money over the 30 year period, even with house appreciation. Unethical mortgage brokers may have been the spark that ignited an inferno, but the dearth of education on exotic mortgage products was the pile of dry tinder. And there is no reasonable counterbalance to Realtors who can belabor points about tax-deductible mortgage interest and house price appreciation. How much would it really take? A simple picture and a few indisputable equations ought to cover it. You can bet your last leveraged HELOC dollar that if Congress made a push to truly educate its citizens on credit, the backlash from banking and real estate lobbyists would be nothing short of epic.

Of course, the antidote to the information asymmetry created by the uber-wealthy might not be education. It might just be restraining our desires for luxuries like perigraniteel and European cars until we can actually afford them. And perhaps a wise few might start to question if they really need such luxuries them at all... but that's a different rant. ;o

I’ve done volunteer work in poor schools for over 20 years and the bar keeps getting lower and lower (and the kids keep getting dumber and dumber)…

Since it is politically incorrect to distinguish performing kids from non-performing kids we can only keep them equally dumb.

Brand, FAB

Good news if you fellows are correct, because solving the problem long term would be merely education and not having to change an ingrained nature. Either way, tight credit will be needed in the short term until the financially innumerate learn.

My viewpoint - that short term greed and not ignorance - is the cause comes from personal observation. I have seen people who are paid on Monday use a check cashing service on the Mondays that banks are closed. When I ask why they can't wait until the next morning and thus save the 10% fee, I get a slack jawed answer like "I needed to buy toilet paper." Even in the example I gave, with the $100 for 18 mo vs the $1,000 for cash, surely one does not need to calculate an APR to know that if one saves for ten months and pays cash, one will save $800. Even more since the price of the flat screen will fall. My perspective may also be influenced because I took an econ elective class in (public) high school that included a textbook called "The Time Value of Money." For that course, we had to calculate loans, present values, and had exercises like comparing a bank loan vs store credit on purchases. I also notice that stores like Target, Kmart, and WalMart all sell several brands of financial calculators. Plus, virtually all spreadsheets have built in financial functions. For anyone who uses the web for any real estate info, you can't help but notice all the "rent vs buy" and mortgage comparison calculators. Who were all the electronic calculators, spreadsheets functions, and web tools made for if no one is using them? Especially since those calculators are sold at stores aimed at the masses, and the web tools ask simple questions requiring no financial expertise (ala TurboTax).

But, since you two may be correct, I would be in favor of high schools having a mandatory "personal finance" course. Teach about checkbook management, time value of money, insurance, savings and investments. This may lead to less victims of "loaded funds," "whole life insurance," "car leases" and "creative financing."

I'd even propose a standard college course in "citizen law". There are standard requirements in the humanities, social sciences, and natural sciences for graduates of schools such as the Univ. of Calif. campuses. Why not have a standard requirement for learning about the US legal system? It would be much more meaningful than the typical Mickey-Mouse breadth-requirements courses in French poetry or sociology.

A law degree is little more than a degree in applied library science - I should know, I'm a lawyer. It would be possible in a 2 quarter class to cover a skimpy outline in contracts, torts, real and intellectual property, and constitutional law, with projects in legal research. This at least would alert the so-called "educated classes" to issues in their day to day life. I was completely puzzled about the legal system until at age 40 I dove in and spent 3 years and a lot of money going to law school.

Call up the Merriam-Webster people. They need to replace their definition of shameless unmitigated gall with this

http://www.ft.com/cms/s/0/81c05200-03f2-11dd-b28b-000077b07658.html

For anyone needing a little cheering up this evening.

*Schadenfreude warning*

Mortgage Bankers Assoc feel good story

A year ago, the Mortgage Bankers Association was thrilled to sign a contract to buy a fancy new headquarters building in downtown Washington. Interest rates were low, the group's revenues were steady and the prospects for quickly renting out part of the structure were strong.

*snip*

The lobbying group is about to sign the final papers to buy the 12-story building on L Street NW for about $100 million. Like many of the companies it represents, the organization is facing a triple whammy of woes: Its financing costs are up, its income is down, and the leasing market is slow, leaving it, so far, without a single tenant.

Unethical mortgage brokers may have been the spark that ignited an inferno, but the dearth of education on exotic mortgage products was the pile of dry tinder.

This is a brilliant analogy and I agree with all the calls to make basic financial education a requirement for a high school diploma. The sad truth is though, if you are not willing to at least do some basic arithmatic on your own, you are going to get ripped off again and again. I bet 1/3 of the population is functionally math illiterate. No amount of high school classes can substitute for that.

I don’t understand why a gold digger can marry a guy for a few years and after to agreeing to stay with him “until death do us part” break the contract (to move in with her personal trainer) and take half the guys assets…

This is just not how it works FAB and you know it. She does not get half the guys assets, just half his increase in net worth during the time they were married, which seems perfectly reasonable to me.

BAI-
Wow, that really takes it...what a smug, paternalistic bastard.

I am puzzled why the remarkably similar housing bubbles that emerged in more than two dozen countries between 2001 and 2006 are not seen to have a common cause.

I'm puzzled too how some first-rate economies such as Germany, effectively avoided running up their housing? Wiser fiscal policy and regulation, perhaps?

Stupidity can be local, and the effects global.

You know, I read that entire article without noticing the name at the top. For the most part it sounded rational but a little light on the evidence. For example, the author challenged a lack of statistical correlation between the bubbles/busts and Fed actions, but provided no specific analysis to demonstrate such.

Then I read that the author is a former Fed chairman and immediately thought, "Man, that guy really has no taste at all, does he?". So much for going gracefully into that good night. Greenspan is just blaming it all on Wall Street. How convinient.

Jimbo says: I bet 1/3 of the population is functionally math illiterate.

Sadly, I think that 1/3 is awfully optimistic. My circle of friends is mostly college educated, and I would consider probably 25% or more of them to be financial innumerate. I don't know any people in the inner city, the boonies or the "other" parts of town.

To Headset's point on greed, even some of my mathematically inclined friends talk smugly about using "OPM" (Other People's Money) to increase their net worth. For example, an engineer friend of mine used the tried-and-true example of 10% down, with 10% price appreciation is doubling your money. I pointed out that the leverage had a cost of approximately $1000 a month in that case (we were talking about a particular house in his subdivision), and he proudly went on about how the interest was tax deductible. I pointed out that in the best scenario you only get about 30% of that money back, and generally it's much less because you had other deductions anyway. I offered to let him give me $650/month for three years and then return $20,000 to him at the end (of course, this argument is equally lopsided because he did have the utility function of a house for that period of time).

The wheels fell off the wagon when he defaulted to "you have to live somewhere" and then chided me repeatedly for "paying someone else's mortgage" by renting and "giving the government too much of your money". But come hell or high water, he wasn't going to concede that the leverage using OPM was actually costing him something. There was only upside.

Maybe while we're out educating the masses on basic American financial situations, we can we could outlaw Robert Kiyosaki just for completeness.

Germans and Japanese had their share of the housing bubble back in 1990, after the Berlin wall came down and the whole Germany was rejoiced in Wiedervereinigung. A German Bay Aryan on this blog talked about how he got trapped in the bubble before. I don't think those Germans who bought at the peak of the last bubble are able to come out even nominally in 2006.

Germans and Japanese are very much alike in many aspects, even in their bubble cycle. Perhaps it is about their turn to shine for the next decade. Germany and Japan are probably the countries with the smallest housing bubble, if at all, in the world right now.

Middle of the U.S. never experienced a bubble. We bought new homes in Oklahoma for about $160,000 each about 2 years ago. If energy problems continue, these homes should do well.

I wrote:

> I don’t understand why a gold digger can marry a guy
> for a few years and after to agreeing to stay with him
> “until death do us part” break the contract (to move in
> with her personal trainer) and take half the guys assets…

Jimbo Says:

> This is just not how it works FAB and you know it. She
> does not get half the guys assets, just half his increase in net
> worth during the time they were married, which seems
> perfectly reasonable to me.

My main point was that I don’t see why a person who breaks a marriage contract does not have to “pay damages” like the people that break other contracts.

If I sign a contract to coach the San Francisco 49ers for 5 years and the value of the team goes up in three years after I take the team to the Super Bowl I don’t get paid any of the increase in the team’s value if I break the contract and will have to pay them if I wanted to leave and coach the Dallas Cowboys.

I know that if you marry an aging pop star worth over half a Billion you will only get about $50 million if you dump him after a few years. Most of the divorced guys I know who got married when they were still paying off student loans and working long hours have lost close to half of everything when they got dumped for “someone more exciting”…

P.S. To any women reading this and thinking about getting married to a guy with a Masters in Electrical Engineering and a MBA who is working at a top 5 VC firm. The guy will probably never be “exciting”…

Middle of the U.S. never experienced a bubble.

Plenty of places inland from the coasts experienced a bubble. You're lucky if your town was excluded, but plenty of cities saw credit-leveraged overbuilding, rampant speculation, mortgage resets--the whole list of damages. The news tends to focus on metro areas, but the downturn has hit nearly everywhere.

Perhaps one difference might be: coastal areas think they're too strong for the bubble to collapse, while some heartland areas consider themselves too stable for the bubble to ever hit. From the data I've seen, the downturn is generally nationwide.

My main point was that I don’t see why a person who breaks a marriage contract does not have to “pay damages” like the people that break other contracts.

The person who breaks a marriage should pay a 150% tax on the proceeds.

# HeadSet Says:
Yahoo gives low six figure salaries to interns?

I don't know - seems unlikely - I hired a couple of stellar interns in my group (not yahoo, though) last year, who were paid a lot less. Her linkedIn profile said "intern". The newspaper article said "low six-figure salary". One of those is inaccurate.

I do not understand why Greenspan is so defnesive. He seemed to largely ignore the praise when he was lauded as the greatest Fed chief ever. So why now blog about the current problem not being of his deisgn? Let it go Alan. You played hero, now play goat. Its just media.

Fo my part, and I am guessing I am unique here, I have no problem with Greenspan from a monetary side. However, his lax view of regulation and his hyper-belief in 'effecient-markets' was sadly out of tune with the reality of man. To me its almost a classic case of one who sees the world as it ought to be versus one who sees the world as it is. Somehow I think he just cannot understand that given little or no oversight, people will game any system to maximize profit while performing as little work as possible - no matter the destruction it casues.
Kill Countrywide while pocketing hundreds of millions. Sure.
Make hundreds of millions with MBS then take a governement job to lock in those profits, Paulson, sure.
In truth, counterparty sruveilance no longer works becuase all financial roads lead, rather quickly, back to the Fed. This means the Fed IS the counterparty and it better start acting like it.
And as long as I am making demands, the rest of the Central Banks better start helping the Fed wth the heavy lifting or the world GDP contraction will be sharper, deeper, and longer lasting than they think.

It appears that WaMu is getting bailed out, but NOT by Well Fargo.

www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/04/07/financial/f042734D60.DTL

Washington Mutual is close to landing a $5 billion cash infusion from private-equity firm TPG and other investors...

Who the heck is TPG?

$5billion is not going to cut it. Stay tuned on WaMu