patrick.net

Sriram Gopalan,

While in the past your contributions here have been highly valued your......ahem, credibility has come under question. The article you linked supposedly citing DQ (Data Quick) as it's primary reference did not contain their customary "Signs of market distress are notably absent" disclaimer at the bottom!

I suggest you explain yourself sir!

The article you linked supposedly citing DQ (Data Quick) as it’s primary reference did not contain their customary “Signs of market distress are notably absent” disclaimer at the bottom!

What happened to the moderate distress signal?

Ooops!

"Signs of "moderate distress" are still notably absent"

LILLL,

This past Sunday Oregonian ran fraud at USB as it's lead story. The "ring leader" (former SF cop btw) started out there as a fraud investigator and what followed over the next 8+ years sounded like "Tammany Hall". The guy had this very modest roll (and modest 30K a year salary) but through "sharing the wealth" quickly rose in the system. In no time at all he was living in a posh house in Lake Oswego and doing land deals w/Walmart no less! All of this on a 30K salary!

Numerous co-workers complained and I mean loudly and then were let go. He plans to plead guilty but had they heeded the warnings from people that were in a position to know this should have stopped as early as 2000! One for the bank, one for me, one for the bank, TWO for "us".

RE: homebuilder resistance to cutting prices.

Of course HBs don't like to cut prices. What manufacturer or salesman does? Lower prices = lower profits. They will always prefer to try incentives/upgrades first. Nonethless, when push comes to shove and McAlbatrosses aren't selling, drop them they will (and some already have: http://www.bloomberg.com/apps/news?pid=20601109&refer=home&sid=azJPMYd1ec3M, http://www.sptimes.com/2006/08/08/Business/Home_glut_brings_pric.shtml, http://www.news-press.com/apps/pbcs.dll/article?AID=/20060926/BUSINESS/609260391/1076, http://money.cnn.com/2006/08/09/news/companies/toll_brothers/index.htm).

HBs profit margins over the last few years have been HUGE. They still have an enormous amount of room to cut prices and turn a profit, and --like every other cold-hearted, profit-maximizing business-- they will do so when they must. HBs are not in the subsidized rental business, nor in the "sunk costs, let's keep feeding the alligator" business. They will do whatever it takes to to move inventory and stay afloat.

I see a lot of young MD's starting out with 300k in debt and think: you poor bastard. How will you ever pay this off? Sadly this is forcing MD's to behave more like businessmen than Physicians. When patients became "clients", when "physician" became "provider", the profession sufferred.

SP,

One of my clients (MD) was about to retire. The closer he got to it, the more candid he became. One of the things he said that really astonished me was that "first generation" doc's can't realistically be expected to EVER be all that wealthy! Now if your father and your grandfather were doc's well that's something different! It really cleared up a lot of stereotypes for me.

Rather than be shaking these guys down like they had more money than they knew what to do with, we should be supporting them by helping them contend w/their considerable debt as well as supporting them in the community. IMHO.

Sorry for the late response, guys. I read your posts every day but seldom post. Mainly because I have nothing new to say. I am a SF peninsula renter, hoping to buy in 09 or 10. Let us see.

Regardless whether there is a hard or soft landing, I will buy IF and ONLY IF it makes good financial sense for me. That means at least 20% down and a fixed mortgage (15 year if possible).

I grew up in a country where people (still) buy houses only when they have most of the money needed. The rest, they prefer to borrow from friends or family and repay ASAP. I like that practice and believe that, in the long run, this keeps the prices down since the price cannot exceed real affordability.

My dad built the house I grew up in, over the period of 3 years. But, by the time he was done and we moved in, he actually owned most of it! I remember some stressful times in between when my Mom had to sell her jewelry etc. but overall, not having debt felt good.

I strongly believe that houses over here in the US would cost much less if we didn't have big government "incentivizing" house purchases.

Comptroller urges stronger mortgage underwriting

In another speech Monday, [Comptroller of the Currency] Dugan told members of the American Bankers Association that a recent underwriting survey showed a "significant easing" in residential mortgage lending standards.

"Frankly, that concerns me," Dugan said. "We don’t want to see the lending decisions bankers make today result in excessive foreclosures -- and reduced affordable housing credit -- tomorrow."

Lenders easing borrowing standards at the peak of possibly the largest RE bubble in history? I'm shocked, shocked, I tell you! :roll:

Lenders easing borrowing standards at the peak of possibly the largest RE bubble in history? I’m shocked, shocked, I tell you!

This is expected. They need the volume.

Standard will be tighten only after there is blood on the street. Not before.

They are actually more proactive than I have expected.

how do you define that?

When banks start having trouble recovering money from foreclosed properties.

Investment bankers are also overworked. But at least they can afford homes in the Marina district.

But if foreclosures are up, then isn’t that already happening Peter P?

Foreclosures are up but no one is really suffering yet. If you do not see widespread report of mortgage related homi-suicides, it is not time.

I think the public needs to understand that doctors are here to help. If shit happens (as it happens all the time), it is mostly just fate.

I think only criminally negligent doctors should be prosecuted. Other misfortunates should be accepted by the society.

one way I look at all this is it would be sad if we didn’t have a hard landing.

Have faith in karmic justice.

Socialize medicine, tighten government oversight of the medical profession and take medical liability out of the court system. These things really make more sense in mediation and arbitration - juries who never started college have no business deciding most medical malpractice cases - both as to fault/liability and the proper amount of liability/penalty.

Stay healthy, eat swiss chard.

Someone mentioned Nomadtoons. What became of him? I miss his long-winded nostalgia for Tenessee and fixing stuff.

SQT said:
"Julie may be reached online at www.jalone.com or by calling (916) 276-6883 “

I'm all for projecting a positive attitude in business; especially when times get tough, but this one is WAY out there. I wonder how she gets a pass on her newspaper column?

Nomadtoons changed his screen name to WWII. He still posts from time to time.

Standards will be tighten only after there is blood on the street. Not before.

How to make a fortune in stated-income mortgage lending:

1. Incorporate sub-prime mortgage firm in Cayman Islands, Bahamas or some other con-man/mobster safe haven.
2. Locate homeless person, illegal alien, recent Carlton Sheets/Robert G. Allen/Marshall Reddick seminar attendee or Casey Serin.
3. Loan that person millions of neg-am voodoo loans to buy absurdly overpriced flip houses.
4. Before the ink is dry on papers, bundle fraudulent loans as “low risk” investment to China/pension/hedge funds, collect origination fees, wash hands and walk away.
5. Before mortgage Ponzi scheme blows up during the inevitable crash (after safely having transferred profits to numbered Swiss accounts), close shop & file Ch 11.
6. Skip town before federal/state regulators or MBS buyers come looking for you with “repurchase agreements” (or handcuffs).
7. Change name & location and repeat steps 1-6.

From a Buyer's Agent commenting on a cash back to buyer in a CASH DEAL:

"Basically, as a buyer's agent, you have to consider their motivations and their future. Most MLS systems will maintain records for 3-5 years.

The basis is that if they sell the house in the next 3-5 years, the buyer wants the MLS data to portray a sales price of $200k instead of $195k so they pay more and then ask for some money back for repairs, escrow etc. and if anyone pulls up their home, either for resell, comps for appraisal, etc, it will show a larger figure."

How will THIS tactic, if it becomes common, screw up data?

PS - I have a similar opinion of lawyers. Trial lawyers make some sense as a last resort, but it's almost always better to preemptively prevent the problems with good rules, good guidelines and good drafting. In my opinion, the more time lawyers spend drafting, the more successful the legal field has been as a whole.

OO,

Cool comparison of UK circa 1930s to US's possible future.

Wikipedia is a amazing resource.

Before declaring doctors here “overpaid”, you should consider that: a) malpractice insurance and legal fees (thanks to ambulance chasers) will consume a huge portion of that doctor’s lifetime earnings, and b) s/he probably took on a quarter-million dollars in student loans just to get that MD (even more for specialists), which s/he will spend the next 10-20 years paying off.

but they go through exactly the same thing in Oz, UK, France, etc. training is the same. malpractice insurance is the same. specialisation is the same. except salaries are perhaps half.

the only difference is that putting doctors through med school is heavily subsidised by the taxpayer in all these countries. the bill is presently only about 1/5 of the actual cost of running the course, and it's recovered through income tax on a threshhold system with no interest at no more than about 5% p.a. on the top threshhold. it used to be free, barring textbooks and materials.

so here, taxpayers pay for 4/5 med school. universal health care also pays for the doctor's services out of taxes. the system is 'efficient' in terms of administration, as there is very little insurance to be processed. and yet taxes are no higher than in US, both are essentially '30% taxing' countries. a GP might make about $70-80K p.a. after malpractice insurance and overheads are taken out.

you will find they really never had 'physician' status instead of 'provider' status. except for state hospital service, the whole model of provision of services has been around private autonomous practice almost since inception, where they now may or may not be subsidised in part of in full by govt.

Before declaring doctors here “overpaid”, you should consider that: a) malpractice insurance and legal fees (thanks to ambulance chasers) will consume a huge portion of that doctor’s lifetime earnings, and b) s/he probably took on a quarter-million dollars in student loans just to get that MD (even more for special ists), which s/he will spend the next 10-20 years paying off.

but they go through exactly the same thing in Oz, UK, France, etc. training is the same. malpractice insurance is the same. special isation is the same. except salaries are perhaps half.

the only difference is that putting doctors through med school is heavily subsidised by the taxpayer in all these countries. the bill is presently only about 1/5 of the actual cost of running the course, and it's recovered through income tax on a threshhold system with no interest at no more than about 5% p.a. on the top threshhold. it used to be free, barring textbooks and materials.

so here, taxpayers pay for 4/5 med school. universal health care also pays for the doctor's services out of taxes. the system is 'efficient' in terms of administration, as there is very little insurance to be processed. and yet taxes are no higher than in US, both are essentially '30% taxing' countries. a GP might make about $70-80K p.a. after malpractice insurance and overheads are taken out.

you will find they really never had 'physician' status instead of 'provider' status. except for state hospital service, the whole model of provision of services has been around private autonomous practice almost since inception, where they now may or may not be subsidised in part of in full by govt in a purchaser-provider model.

7. Change name & location and repeat steps 1-6.

mortgage firm 'CEO' thinks "ahhh, life is good...."

HidingintheBronx,

1,400 deg F is uh........ pretty freakin' hot man! I've been to a rock crushing plant and that was mega loud and looks fairly energy intensive as well.

The only reason I brought it up originally was b/c I get the sense that builders are most definitely making every effort to conceal or sweep declining bldg. materials prices under the first carpet they can find!

When compared to post Katrina/top o' market, material pricing on everything from copper to concrete has fallen off markedly. Always rubbed in our faces on the way up yet quietly ignored on the way down. Builders are dealing w/so many issues right now they can't even think about confronting that right now.

Scumbags.

Compare the average physician’s salary to that of your average corporate bigwig or RE developer. Not very impressive and and it requires far more formal education, brains, effort & liability.

Doctors don't own Learjets etc

the thing is, many people in medicine don't have the front to be a corporate bigwig or RE developer, it just doesn't fit their personality. many practitioners are virtual science nerds. it's a nice, safe, protected job in certain respects. medicine is still the most rarefied, sought after and competitive entry course in universities here, as it is the only guaranteed way to a good consistent salary with guaranteed 100% employment and an interesting career with a range of meaningful advancement options, e.g. in hospitals, administration, govt, academia or private practice. corporate bigwigs and developers can easily get fired or go broke.

what they do get is varied, interesting work. they don't have to work in a cube farm with weekly blame sessions. they don't have an oppressive, bullying, arbitrary and capricious boss or do meaningless, atomised, soul-destroying work. they get to be autonomous, self-employed service providers. they hopefully get the satisfaction of fixing people up. they are paid well above average salary to do so. they have the monopoly of being able to write scripts and perform procedures and having the AMA behind them. they have a constant stream of sick people that doesn't run out.

i feel sorry for the very talented graduates in biological or medical sciences who can't get good work or solid employment, some of whom are much smarter than the docs, who didn't realise they should've angled for a career in medicine instead of general science.

LILLL,

Although I've often said "friends don't let friends buy houses" I will applaud if your LB is accepted! In ways I understand. Part of me says this WILL get chaotic! VERY chaotic. Who knows what might happen in 2007 if mortgage $'s evaporate? We realize you could probably just buy it outright but what becomes of your "cushion"?

O.K, great I paid my house off and actually "own" it but if there was a family emergency (God forbid) and I need to draw on my equity and HELOC's are at 14%! Now what? What if MID is scaled back?

As bearish as "I" am there's still this "intersection" where:

1. Incentives evaporate

2. Price reductions might be taken off the table (pffft, what's the point?)

3. Mort. money gets scarce (remember, "liquidity is a coward")

4. Comps fall (but property taxes don't)

Just b/c prices crash and we see an inviting entry point doesn't mean we're out of the woods yet. Not by a long shot.

Now if somebody can tell me why the Aussie Dollar is so strong

is it? 8O

been at 75c US for ages now. WAS 54c in a remarkable downturn for some years, which exporters just loved, as they benefited, but it hurt importers. nobody knew why it fell (ha). open to conspiracy theories here.

commodities in the form of iron ore to china, uranium, primary produce etc have propped up the economy in recent times.

A$ used to be worth US $1.20 (!), when A$ was pegged to the GBP, until the 80s, when it was floated on the currency market and sank like a stone...

Robert Coté Says:
Their economy is tanking, their housing crash is worse and ahead of ours, they are tied to commodities including natgas. Despite all this the central bank hinted that interest rates would go up to contain inflation thus the carry trade flow.

oops, i'm not scrolling comprehensively enough. just on this, the housing market is kind of 'soft landing' with the potential for a crash, but it appears to be tanking at about the same time as the US market, altho the boom started earlier. my own blog has some recent tanking stories on it, in fact, but it's hard to read between the lines and the hype in the press. realtors are saying off the record the market has been dead for some months, but prices have not corrected down significantly (yet). i think it is all brewing tho.

on commodities, they have been more of a strength than a weakness of late, especially with demand from china. the australian economy has always been weak on value-adding and manufacturing, more interested in exporting raw materials and ag produce, so in some ways there has been less to offshore at the present time, which is also an accidental strength. (this reliance has been a hallmark for more than 100 years tho.)

interestingly, there are differences between the GD relationship between US and UK and today's world and china, because US and UK were both high cost 1st world countries back then. the relationship today is high cost-low cost, which is what makes the goods attractive.

the heightened interest rates to combat inflation problem is interesting, i actually see that as mainly an artifact of the overheated domestic housing market. while this is a somewhat monolithic theory, i see increased housing repayments leading to higher prices for goods and services leading to increased demands for wage rises. hence general inflation, caused by widescale attempts to exploit a single asset class when rates were low, including a boom in purchasing 'investment' properties. am i right, or am i right?

All of you (DinOR, HARM, Peter P, austingal and anyone else I forgot),

A sincere thanks for standing up for the medical profession! For me, the vast majority of fellow MD's I know went into this profession for all the right reasons: wanting to help others, intellectual curiosity, even yes, the prestige. I honestly don't know many who did it for the money. These days especially, anyone who looks to go into medicine looking to become rich is stupid, IMO. There are a lot of easier and more straightforward ways of doing that than being a doctor. No one tells you in med school, but it can often be frustrating and disheartening practicing in today's environment. Paperwork, dealing with insurance companies, fear of litigation, huge school debt, it's all too real.

I should have been a realtor.

; )

Jon Says:
That’s nothing. I’m assuming this guy you know is doing more than that (such as system/network admin and other, more comprehensive support). I don’t know anyone who could earn a living solely running ad aware.

I could hardly believe it myself. Here is what his lackeys do at the monthly house-call - run AdAware, Hijack This, Norton Security Update, and M$oft patches. A couple other utilities that clean the registry. Run a disk defragmenter, and a script that collects statistics on disk usage and other useless crap that he puts in a nicely formatted "System Assessment Report". And oh yeah, wipe the monitor and blow crumbs out of the keyboard with a compressed-air thingamajig.

System-setup, OS-upgrade, Backup, Network-setup, etc. is all extra charge. A-la-carte prices. He also has a high-margin home-entertainment 'consulting' business - works with architects who call him in to wire up McMansions.

Without any extras, the monthly computer service costs more in a year than a decent computer. As far as the tech-work is concerned, it is a complete rip-off. However, the perceived value is in the service aspect, where I must admit he does a very slick job. His clientele is mostly folks who pay hundreds a month for landscape/pool maintenance, so his prices don't seem outrageous. He has grown up around really wealthy professionals, so he has a pretty good understanding of how to present himself and what buttons to push to get their business.

SP

A sincere thanks for standing up for the medical profession!

i didn't :P

further, doctors are more in demand in rural, regional and remote areas than many other professions, but they choose to operate preponderantly in well-heeled areas in cities, to the point where the govt has to bribe them to relocate. they also get a bribe to spend more time with each patient. funnily enough, i've never been offered extra bribes in my desk jobs to do satisfactory work...

my working life perspective is as a sociology graduate, a labour activist and someone who has worked in their fair share of cube farms and seen the pathologies of the modern workplace...

having said that, my sis is a doc, as are many of my friends, and i am swotting to sit the GAMSAT in march next year, as i would prefer to be busy as a doc than perennially bored and compromised as a public servant...

LILLL Says:
I am going to make a lowball tomorrow.

Pictures. Don't forget to take pictures of the seller's face when you submit your offer. You can borrow my camera. :-)
SP

Man, I have a bad feeling about this. If LiLLL and SQT both end up buying houses, what if they become bubble-deniers and start batting for the other side... :-)
SP

Man, I have a bad feeling about this. If LiLLL and SQT both end up buying houses, what if they become bubble-deniers and start batting for the other side…

Then I may join them too. :)

We've been lowballing for a while now. We actually would like the homes we're bidding on; this isn't just for fun. I'm coming in about 35-40% below asking in most cases, but it's really a function of utility, as they say...

@chuckleby,

Thanks for the link. I'll just go and weep quietly in the corner now.