patrick.net

The Fed, when it was created, was created for the ostensible purpose of keeping the dollar strong. Considering how miserably it has failed to do that since its creation, why would we expect it to do any better now?

It was, is and will be, a political tool. The Fed will do whatever its masters think is best for them.

Yes. Much as I would like to see Bendover pull a Volcker and raise rates to the sky to pop this thing quickly, I am far too congnizant of the Fed's politically-driven past behavior to expect he will do anything but obey his political masters.

It doesn't matter which corrupt, fossilized party of the moneyed elite gets "elected" this year or in 2008. Nothing will change the fact that politicians and their prime benefactors (banks, CC companies, HBs, etc.) stand to lose far more if rates are raised vs. lowered. I expect there will only be a short pause, then they will resume slashing --to zero if necessary.

Downsides of raising rates (from the Fed/Congress/Administration's perspective):

1. Could trigger a severe recession. FBs don't like severe recessions. FBs tend to vote regularly and tend to punish incumbents who favor taking away the punchbowl.

2. Could trigger broad-based deflation. This will strengthen the USD and make dollars repaid (to foreigners) on our $9 Trillion National Debt more expensive in real terms. This is bad for both taxpayers and our balance of payments.

3. Deflation --or even just LOW inflation-- would also gigantically increase the real cost of future Medicare/SS obligations promised to retirees (which are indexed to the CPI). Thanks to hedonics or just plain leaving shit out, the CPI currently does a brilliant job of UNDERstating very rampant true inflation, which means USDs being paid to current retirees are LOSING real value with each passing day. Reversing this carefully constructed arrangement would be a very bad thing (for the government).

Don’t mince words HARM, tell us how you really feel.
:lol: my pleasure!

As an agent, I can tell you being in the middle of the lowball buyer/unrealistic seller menage et tois is pretty uncomfortable. So is the swelling the morning after your seller let’s you have it for bringing him a “ridiculous” offer you are under every obligation to bring.

George, given that you're about the last honest FL agent left standing, I totoally symnpathize with you. Again, I place the blame for any pain or "swelling" on the greedy unrealistic FB, not you. If they don't understand the law (or price to sell), it should not be your problem.

Its all the more incentive to qualify your sellers ahead of time. It they are stuck with little or no equity, have unrealistic expectations, and aren’t truly willing to bend over backwards to make the sale, then it isn’t worth my time. Let some other schlub deal with them.

I think you've hit upon the ideal solution, my friend!

-totoally symnpathize
+totally sympathize

George (and all other decent, reputable realtors),

While writing "lowball offers" (which is a misnomer as I'll explain), I recommend the following common sense:

1. Make sure you actually *want the house you're bidding on*. You should have the attitude, "if I could get that house for X, or a little bit more, then I'd happily buy it today and never look back (even if prices fall further)".

2. Be professional and courteous to the selling agent. Sometimes you won't get the same treatment in response. But you can't go wrong taking the high road. A surprising number of agents are professional and will say something like "Thank you for the offer. I think your offer is a bit/lot low for this seller. My client isn't interested in couteroffering at this time, but I'll contact you if that changes in the future".

3. The offer shouldn't be a "lowball" at all, but what you as the buyer really truly think the house is worth. I like anchoring in negotiations, but in this case prices are already so ridiculously high that simply offering the true value of the home is a massive low end anchor. I'd personally be happy to pay a *reasonable* premium over my guess at the house true value for the privilege of not waiting for the absolute bottom. I think that's a reasonable attitude.

My current formula is actual or best guess at 2002 home value minus 10%-20% depending upon school district, condition of home, and how much my wife likes it.

Newsfreak --very sorry to hear about your job. But, at least you're not an over-leveraged flopper and are in a cash-strong position. You have options most FBs can only only dream of.

The offer shouldn’t be a “lowball” at all, but what you as the buyer really truly think the house is worth.

Sad, but I'm 100% sure that pretty much every BA seller at this point will regard a fair-priced offer as an insulting “lowball” offer. Kind of like the perma-bull Orwellian definition of "buyer's market" (tons of inventory, sky-high asking prices, no significant negotiations to be had on price).

Give it a couple more years, and it will be a different story.

Santa Clara County inventory seems to have reached a sort of plateau.

If inventory has reached a plateau at this time, perhaps the market will live another year. Median price is leveling off though. So there is no urgency to buy. However, there is no urgency to sell either.

However, there is no urgency to sell either.

There is if you're an underwater FB who's already spent all that guaranteed "equity" and is now seeing your "flexible payment" option-ARM adjust for the first time (but not the last).

China needs us before the 2008 showdown time to show off to the rest of the world what a great country it has become. You cannot imagine how important this is to the face of PRC, and how far they will go to make sure not to mess things up.

When is the 2008 Olympics again? Pluto will enter Capricorn in late 2008. And Capricorn is associated with snob.

How many weeks until the mid-term elections?

Not too many. But it will be 17 years before pluto enters the Aquarius New Age.

While it’s sort of annoying that there are this many cheap lawn mowers on the site, it is very telling about what is going on.

... That people have finally realized how inane it is to spend so much time/money/resources on a lawn? :)

So much water, so much fertilizer, so much pesticides... for what?

"If inventory has reached a plateau at this time, perhaps the market will live another year."

I just looked back at the inventory numbers I logged last year. It looks like August 2005 inventory fluctuated between 3700-3900. Inventory hit 4000 in early September and continued a slow climb to 4347 by October 21st. Inventory went down from that point and did not come back up until May 8th of this year when inventory was 4349. Current inventory stands at 5521 (SFH/condos combined, SC County, source: mlslistings.com). I wonder if we will see a similar inventory climb this September/October. Only time will tell, obviously.

MA,

Thanks for the Bend link and update. What a joke. To hear people in that area talk you'd think there were 99 Californians A DAY moving there! Well that certainly would explain 400% appreciation over the last 5 years would it not?

Up in PDX there was an accident with an Isuzu Rodeo and a Tri-Met bus and this poor guy was actually EJECTED out of the vehicle w/life threatening injuries and this 66 year old guy heists his wallet as he's laying in the street! www.katu.com. Is this pathetic or WHAT!

eburbed says
… That people have finally realized how inane it is to spend so much time/money/resources on a lawn?

i hear you.

Here in LA's sunny San Fernando Valley (river basin/desert) green lawns are de rigeur - and so are the $500 DWP bills every month.

You'd think that the Astroturf people would have marketed a new brand - something longer, lusher and greener than the stuff that they sell for sports - specifically designed to cover the average 5,000 ft lot.

No water, no pesticides, no mowing. And it would look a lot better and cost have less maintenence than the real thing.

eburbed,

My problem with this strange "cult" called Home Despot is that the latest trend is to have so many freaking gazeebos, koi ponds, decks and landscaping there's no damn room for kids to even play!

Hmm. Imagine that, a yard for.........kids? One indirect result of the bubble is the amount of money that has gotten dumped into these useless projects! Drive around and see how many people are actually getting ANY utility out of these albatrosses. Now I could see when it was well over a hundred degrees out but by and large the patio furniture etc. goes unused. What waste. I guess FB's feel the need for all of this crap b/c it's become the "standard".

"You're trying to sell your overpriced sh@tbox and you DON'T have "expansive decks" and a koi pond"?! No "extensive landscaping"? You're in trouble Mister!

So there's a house down the road that just sold over asking for $1,215,000, asking 1,198,000 listed on June 28th, sold July 11th - sounds bad for us until I tell you that it was originally listed April 13th for 1,358,000 - or at least that's when I first came across it.

Still not good for me as I can't afford that kind of price, but I can afford to rent :-)

DinOR,
Thanks for the inspiring Karaoke image - maybe you could follow it up with a rendition of "End of the World as We Know It" (REM).!

Here's a question I pose to everyone: it seems the general consensus is that the Fed SHOULD raise rates to combat inflation, but it probably won't because of political pressures. What happens if it doesn't, and even drops rates? Of course the obvious answer is rampant inflation, but what I'm wondering is what about down the road? How long will the average FB, Congress, the next President tolerate runaway inflation? Look what happened to Carter, for example.

I’m ashamed to call myself a conservative anymore. The fiscal policies of this administration and Republican Congress have been nothing short of shameful.

I still consider myself conservative (fiscally, at least). The current Republican administration is not fiscally conservative at all, so you shouldn't be ashamed of calling yourself conservative.

George,

From the excellent Volcker article you linked,

A wise observer of the economic scene once commented that "what can be left to later, usually is -- and then, alas, it's too late." I don't want to let that stand as the epitaph of what has been an unparalleled period of success for the American economy and of enormous potential for the world at large.

Sadly, this is exactly what the Fed and the current administration appear to be doing right now.

Randy H,

Just a thought on lowball offers. Why can't we just take out an ad or even use C/L and simply say;

Wanted: Reasonably priced home in the 92XXX zip code. Prefer 4 bd. 2 1/2 bath on larger lot. Older home o.k. Potential buyer is qualified to XXX,XXX. Please call (415) 555-5555.

and just see what happens? Or just use your trash e-mail and only call back the ones that are mostly sober. I'm sure you'd get some real winners responding but you only need ONE, right?

BayBear, excellent analysis.

1. Get a new, temporary phone number - like a disposable prepay cell phone. Also, a temporary Hotmail address wouldn’t hurt.

I know, I know - this is just plain cruel. So if you do this, please choose deserving targets :-)

Better yet, go to the open house wearing some really expensive clothing. Eat their food, drink, light up a nice thick smelly cigar (they probably won't stop you because you look like you are a potential sheep who has money), when you have the place just about clouded with smoke, offer them (with a straight face) 50% of the asking price and ONLY if they throw in a new BMW and a years supply of gas. Sometimes I have evil thoughts :twisted:

The first time I heard about alligators referring to housing.

I don't believe Kiosaki was the first one to use the term, but it's certainly come back into vogue in recent months (for obvious reasons) and is bound to get even more popular. Here's a good fresh post on the subject over at Mish's:

http://globaleconomicanalysis.blogspot.com/2006/08/beware-of-alligators.html

I don’t believe Kiosaki was the first one to use the term,

Who was it then?

I don’t believe Kiosaki was the first one to use the term,

Who was it then?

Though it pains me to give a shameless, self-promoting confabulator like Kiyosaki any credit, I suppose he could be credited with popularizing the "equity alligator" term. It would not surprise me, though, if it goes back years or decades --even possibly to the previous Florida real estate bubble of the 1920s. If I had an membership to the online O.E.D. or access to a good etymologist, I could probably find out.

You don't like kiyosaki? I find his articles very interesting to read.

allah,

Kiyosaki may be a very entertaining speaker/writer, but then again so are a lot of slick, dishonest hucksters, which is what he appears to be (Different Sean or ajh might prefer the term "spruiker"). I recommend reading John T. Reed's excellent expose of Rich Dad Poor Dad to see how Kiyosaki bends and distorts the truth --or just plain makes shit up-- to sell books and seminars, all the while claiming he made his fortune by being a brilliant investor (not likely).

http://www.johntreed.com/Kiyosaki.html

That's just one persons opinion. Writers do this sometimes criticise other writters to help them promote their own material. I always take peoples opinions with a grain of salt. He may have some skeletons in the closet, but so does everyone else. I have never read his book "Rich Dad Poor Dad" so I cannot make any judgments myself; but as far as the articles he writes, I found them logical, truthful and entertaining as well.

Kevin Says:

Kevin wrote:

> Let’s try this: 1. Get a new, temporary phone number -
> like a disposable prepay cell phone. Also, a temporary
> Hotmail address wouldn’t hurt.
> 2. Go to as many open houses as you can.

I have a friend that always uses (415) 267-6999 when he needs a fake phone number...

allah,

If you have found value in what RK has written and put it to good use, then more power to you. I can't claim to be an expert in Kiyosaki debunking nor have I bought his books or boardgame. Even so, the degree of fact-fudging and vagueness about his past, as well as the questionable "sources" he used for RD/PD raises some red flags for me.

No one is bias free or correct 100% of the time, this is true. Even so, I find his casual willingness to blur the line between fact and fiction a bit a bit too James Frey-esque for my taste. His whole operation smells strongly of "get rich quick/motivational speaker", or as Reed puts it, a "cult of personality".

I have a friend that always uses (415) 267-6999 when he needs a fake phone number…

I think the person wanted to get call backs to continue messing with the person.

For that, just sign up for a SkypeIn account - it's like $36 or something for a few months. I have one so that I can have a 646 number and pretend I'm living in Manhattan. :)

You’d think that the Astroturf people would have marketed a new brand - something longer, lusher and greener than the stuff that they sell for sports - specifically designed to cover the average 5,000 ft lot.

The Ortho-Toro-Scotts industrial complex probably would crush them. :(

DinOR,

Wanted: Reasonably priced home in the 92XXX zip code. Prefer 4 bd. 2 1/2 bath on larger lot. Older home o.k. Potential buyer is qualified to XXX,XXX. Please call (415) 555-5555.

That's not a bad idea. I don't know what kind of quality you'd get; probably pretty low. And the sellers you want to reach -- the equity rich probably older seller -- isn't going to be scouting CL for houses wanted ads. But maybe someone would see the ad and tell them about it? Longshot, but maybe worth it with a Skype # or some other disposable phone w/ voicemail.

BayBear,

I do agree with most of the HFers opinions about the Fed's likely actions. I will point out that truly believing oneself immeasurably smarter than the entire Fed is a pre-requisite of being a Hedge Fund Manager.

I heard a BGI global macro fund manager once proclaim that he was able to consistently outflank every major world Central Bank. Not that I doubt BGI's global macro performance, but it may not be 100% pure alpha genius either. It could just as well be that we've been coming through an extended period of arbitragable central bank policy. I'll be curious to see how well these guys do once trade barriers start rearing their ugly heads again.

And if we are on the precipice of another global depression and endemic deflation then I'll go on record as predicting that the Hedge Funds will be the first casualty. Those that don't go under in their positions will be seized, confiscated, frozen or regulated out of existence in very short order. They are the perfect scapegoat for any meltdown. Just read the FT any day to see how much global suspicion there is for these guys.

I can't stand that term "leveled off"; I guess according to a realtwhore, prices either increase or level off. The only two possibilities.

Then you hear, "we are going into a more normal market".

When will this denial end? How high does the inventory have to go?

As soon as I see stuff like this in an article, I lose my interest in reading the rest of it!

I will point out that truly believing oneself immeasurably smarter than the entire Fed is a pre-requisite of being a Hedge Fund Manager.

Then my cats can run hedge funds. :)

LILLL Says:

In la la land we just spaypaint the brown grass green!
I’ve actually seen this done!

Now that's just plain wrong!

In the use and application of the term "alligator" I've heard this typically applied to all types of assets you wish you could lease instead of having to own.

Say for instance a guy that owns an auto body shop? I'm told today's alignment machines can run into 100K or more. For people at this level it's a HUGE outlay of capital. If he were able to lease it instead this would be a more modest monthly expense and for the $50 a pop he can charge he can at least break even on a monthly basis. If he has to purchase it outright, he has to recoup the expense through the depreciation schedule. Hence the term alligator.

Well, when is a gator NOT hungry? He requires constant "feeding" and not a day goes by when we don't wonder why we aquired him in the first place!

I have personally heard the term's use since the 1960's and given that alligators are not indigenous to Chicago I'll side w/HARM's version of southern origins.

DinOR Says:

"...FB’s have taken a sudden interest in numbers. And they’re not good. Even the guy that’s not exactly “the sharpest tool in the shed” has figured out that all the fancy pants “shuckin’ n jivin” financial maneuvering won’t save his a$$ now!"
_____

More preciousness!