patrick.net

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.

Just a couple of observations of why things are screwed up in the medical industry.

I was accompanying my father-in-law to El Camino Hospital (it calls itself the first magnet hospital in the Bay Area, what the hell does that mean??), and found an interesting situation with how the doctors operated there in emergency room. There was a big cabinet with with all sorts of equipment and supplies locked up under key, not everything lying there was expensive, it ranges from scissors to bandaids. Anyway, in order to get to the item, the doctor needed to punch in some sort of secret code to open the cabinet, then after use, put it back, punch the code again. I was very amused by this much-ado-about-nothing process. The doctor told me that it was a part of their new accounting system (I suspect this must be another MBA-initiated activity based accounting circus), the cabinet seemed to be installed with some sort of automatic recording mechansim which records everything that the doctor or nurse uses, so as to keep track of who used how much. The doctor himself was very frustrated with the process, because he accidentally got the wrong code and had to call the nurse in to get the right item. I mean, how much can a band-aid cost as compared to the consultation time charged by a doctor? So if he uses 10 more band-aids than the next doctor per day, so what???

And then, in another couple of doctor visits up in the Peninsula, I almost always encountered salespersons from different pharmaceutical companies or equipment sellers visiting the doctor's office at the same time. You can spot these salesmen type right away, typically in dark suits with a troller suitcase. Think about it, how much should the medicine cost if they are flying their sales force around the country visiting every single doctor? No wonder these pills cost $10 a piece.

Coupled with the insane lawsuits and the expensive test that doctors must order to protect themselves, this medical industry is doomed for a reset, since we are just spinning out of control. I have a lot of respect for doctors because they invest tremendous amount of time and energy to become what they are, and they deserve every single penny they earn, as compared to a lot of other industries. But it is just very sad that they themselves are also victims of a rather sick medical system that is heading for a train wreck some time down the road.

SP,

do you mean that the UK retreat from its colonies overseas also contributed to the cushioned blow in Great Depression? Does that mean that once we start to withdraw troops from the current military base from around the world (i.e. cutting military expenditure), we should also enjoy some windfall gain?

Defense has always been a big employer, I am actually not sure if a smaller military presence of the US will help our economy.

OO Says:
do you mean that the UK retreat from its colonies overseas also contributed to the cushioned blow in Great Depression?

No, I mean stealing from the colonies helped the UK cushion some of the hardship.

SP

ah....makes sense.

Do we have any defacto colonies to steal from?

Probably I have missed some of the discussion on this thread and related ones but, given the pool of competence and insight here, I am curious what defensive moves others consider to be prudent if some of the darker scenarios painted here play out as described.

At least some of us, I imagine, have assets in addition to our houses which will be affected if some or all of the macroeconomic negatives we've been discussing continue or worsen. If housing prices, credit, unemployment, inflation, currency exchange, balance of trade, the deficit and offshore willingness to assume US paper take a turn for the worse, what are the options for a forewarned individual?

Seems to me we have several elephants in the room.

Or am I OT? Sorry, if so.

I have also been considering a major lowball. This week I will visit three nice homes within 2 miles of work that are in foreclosure or bankruptcy. There are plenty more, but these have lots of equity.

One was bought for 89K in 1991 and foreclosed on Monday for $159K. See if this sounds familiar...

RENOVATED & UPGRADED! This 2280 total SF home has major interior renovations. Kitchen: new maple cabinets, new wood floor, new smoothtop range, new sidexside refrig, new built-in micro, Corian countertops. All new flooring: wood, carpet, tile. New lighting. New plumbing fixtures. Redesigned master bath w/beautiful new tile, new oversized tub, new champagne fixtures. Fireplace. 10,500 SF fenced yard w/mature trees, est. neighborhood, VIEWS. Landscape allowance. MOTIVATED SELLER. MAKE OFFER!

Two possibilities there. One is of course that zillow.com just didn't pick up a flipper purchase in the last few years. The other (more likely) scenario is that they HELOC'ed the heck out of the place, made massive upgrades to everything and then got nailed by something like the layoffs that swept the area in 2000-2004.

In Northern Colorado, things really didn't spike until 2000-2005. So I figure that I should shoot for the 2000 estimated price, +5% for each year since then. That would basically revert any given house to a normal median appreciation without all this bubble bullsh*t.

The above house is 2200 sq.ft. 3 bed, 3 bath, 2 car garage in a pleasant neighborhood with good schools. All new appliances and upgrades, the lawn's kinda crisped, and they're asking $215,000. If I do the math, lo and behold that property has reverted to the mean! It basically tracks the Northern Colorado RE appreciation graph dead on if you ignore the past 3-4 years of bubble.

There's also another one where the folks are in bankruptcy. 5 bed, 4 bath, 2 car with 2700 sq.ft. in an even nicer neighborhood and closer to work. This hime is one block off the 600K+ lakefront palaces that are 4000 sq.ft. Obviously those people are sending their kids to top-notch schools; I might even have lake rights so I could have a small sailboat. :) Purchased in mid-2005 for $268K, asking price is $284K. Sold as-is with no pictures on the MLS listing. Maybe could be lowballed, maybe not (depends on their financial flexibility).

I have a lot of interest in the first place. The comps from this year are all in the $240K range, which means $215K has more or less busted the bubble on that property after all the upgrades. But I'm kinda stuck on a moral question. And I know which way most of ya'll are going to lean, but let's set aside the cliches and glee for a second. I don't personally believe that everyone who gets in over their heads in a HELOC deserves to be hanged. I know lots of dumb, nice people. Is anyone else disturbed by the thought of buying a property in foreclosure? You basically end up researching the situation via web sites and lawyers, and then make a lowball offer to someone in brutal financial distress. On one hand all the research is being an educated buyer, and the property is going to be REO anyway. But on the other hand, let's not kid ourselves, I went hunting for these specific opportunities. Is that wrong on some moral level? I'm obviously not going to bid $215K, which I think is probably a fair price. I would open somewhere about $185K, which is the same price as an expensive condo a few miles away, just because I know the situation.

Also, what are the practical implications for buying a house in these circumstances? For instance, what if the current owners trash the house between closing and moving out? If they are declaring bankruptcy, then am I out of financial recourse and my only threat is criminal?

Correction: stated the comps were $240K. It's a typo, the comps are $230K.

OO Says:
Do we have any defacto colonies to steal from?

you nearly got one, but it's gone a bit pear-shaped...

england didn't pull out of india until just after WWII -- the war weakened the hold european countries had over their colonies, so there were loads of independence uprisings at around that time... some of the relinquishing may have even had to do with morality...

danville woman,

Welcome and congrats on your "sell into strength"! Sometimes I have to remind myself, buy on weakness, sell into strength". It's still nice to be reminded of that once in a while.

I'm just not sure I see "good karma" in overpaying. Regardless of the state of affairs for the seller. Most of these folks HAD the same options that were laid before you, did they not? They had their window to sell into strength. They declined b/c they KNEW if they held out either "a little longer" or treated it like money in the bank they would pocket even more!

At 56 I respect the fact that you well remember a time when the objective in America was to have your home paid off by the time you retired. NOT have your home pay for your retirement.

Since as a nation we've declined on this dated notion of "saving" we've put all our marbles on housing. We've made it an "all or nothing" proposition and there will be winners and losers. I didn't start it and I damn sure ain't gonna agonize over it.

I love the melanoma story posted. Now, there is zero discretion when it comes to skin lesions- everything is removed and everything is sent to the lab! For massive escalation of medical costs. And dermatologists diagnostic skills are made meaningless because "its going to the lab for diagnosis anyway". I know a dermatologist who is the pre-eminent person in his field and is perhaps the most published MD in the WORLD. He misdiagnosed a melanoma. Whatever he called it, the patient was going to die and soon. The MD lost the case. Estimated 8 million$ in damages. The premier person in the field. The best/brightest have left medicine or are no longer selecting it as an occupation. I have a a neurosurgeon friend who is both a genius and compassionate. He used to volunteer for trauma service. After several lawsuits he quit volunteering and no longer practices. Nice, US and A.

Alot of funny things are afoot. Wall street is doing the sunshine and roses dance proclaiming at 12k highs the economy will definately have a soft landing. Defection or thoughts thereof are starting to show on this blog. I wish I had a crystal ball don't you? Home buliders are showing resilience, sellers are pulling there home off the table. Could they Fed and Wall Street manufacture a "all is well in America" illusion that the masses buy? I don't see the exuberence of the bears lately.