patrick.net

Brand,

Hmmm, that wasn't my impression but I'm not an engineer. My sense is that an engineer would not make as much as a marketing person of equal general ability, etc. I certainly felt my boyfriend was underpaid for his level of responsibility at his previous job.

I don't think the inequality between lawyer pay and engineer pay became evident until pretty recently. Didn't new associates get paid similar level as teachers in the 1960s? Now big NYC firms are paying first year associates $145-160K a year, equal to very senior engineers. That's a hell of a lot of money (even when divided by 2,500 billable hours a year) for people who are basically doing paralegal type work to start.

Jimbo,

I *may* have overstated how unfocused my boyfriend actually is -- he's very bright and pretty well adjusted, so things have always come easy to him. Now he's a bit burnt out and he's dragging his feet on what he wants to do next. I *may* be projecting some of my fears about him wasting his potential.

The Boomers had a rather self indulgent revolution against their parents' world, and boy did they let everyone know about it!

Now the Snowflakes think mommy and daddy made everything just perfect and they can be perfect and special as they are.

(Randy, I know I am a severe pessimist. You say America still has the entrepenerial spirit, but I see that becoming more and more crass; more about making money than building something lasting and long term. It feels like America has skid off the rails of Henry Ford and became a massive Enron funny money game.)

Malcolm Says:

> I have a 99 Boxster which is the same. Nothing
> handles like it, and it has that classic rounded
> sleek sportscar look which looks just like what
> James Dean wrapped around a tree.

Dean actually wrapped his 550 Spyder around a 1950 Ford…

Some PCA guys still drive out to the accident spot East of Paso Robles when they come up to events at Laguna Seca…

What kind of engineer is he astrid?

? Now big NYC firms are paying first year associates $145-160K a year, equal to very senior engineers.

The difference is that those first year associates will be working 209138720 hours a day, whereas the senior engineers will be working a mere 60 hours a week.

Also, those first year associates will have massive dry cleaning bills. :)

chem e and he doesn't want to go to med school (that, he is certain about)

So my question is, short of terrible catastrophe or nuclear war (which somehow manages to not irradiate me),

That's one of the reasons why I want to move to NY/Boston/DC - in the event everything goes to hell, I won't have anything to worry about.

[Goes back to laughing about how in 24, all the terrorism happens in LA, and how Jack Bauer is able to cover so much ground every hour driving]

But senior engineers actually have skills beyond shuffling paper and getting into a top 20 law school law review!

PS - my guess is that Jack Bauer actually graduated from Hogwarts Academy and stole a time turner from the Ministry of Magic.

LunerPark,
that Marc article has got to be the most idiotic articles I seen.

Anyone really pluged into real wall street business news already
knows that business-capital tech spending is down. Fact is we
are already seeing spending for semi, computers, storage, and
software down.

What a stupid writer....

Monday, April 02, 2007
BusinessWeek: Weak Capital Spending

For equipment and software, investment declined in two of the last three quarters. With a lag of 3 quarters, the YoY change would turn negative in Q1 2007. Of course the lag might be longer, or YoY investment might not turn negative this time. But it would be reasonable to expect the YoY change to turn negative soon.

/calculatedrisk.blogspot.com/2007/04/businessweek-weak-capital-spending.html

A reprint from my maiden thread, for the boomer critics. I probably take this all much too personally.

mrsburnside says:
October 8, 2006 at 5:57pm

That is the crux of the matter, of course. Whether or not your post reflects your actual nature - that I can't know - it breathes insularity.

/rant

(we had fun watching a trust fund Gen Y kid try and find the spare on his M Roadster at an autocross at the Marina Airport a couple years back)

I changed a tyre on an M coupé a while ago, and it wasn't easy. There's about 10 gadgets just to get the tyre to drop out from under the boot -- it's external and underneath. And the supplied spare is about the dimensions of a bicycle wheel...

P.S. we had a grumpy old guy work for us for while who was a gadget freak -- spent every cent on laptops, orienteering toys, yachting and m/bikes, didn't own a house, and was one of about 8 kids, so wasn't going to inherit much... however, he really didn't know a whole lot about technology, and was pretty similar to the UPS kid... nor did he work very hard... so boomers and Gen Y can reverse, and clearly people vary within generations, not just across them...

Malcolm Says:

Post 1
Baby Boomers - I guess that’s what I mean when I call them hypocrites. [...]they just became incredibly selfish and materialistic. They are the first generation to literally make sure that their heirs don’t have an inheritance to build on. Only a baby boomer would come up with the concept of a reverse mortgage.

Post 2
I have a 99 Boxster

Most (but not all) the people I know who grew up in a screwed up divorced home have been divorced at least once while most (but not all) the people I know that grew up in a (at least appearing to the outside) normal home with parents still married are still married…

nature or nurture, the perennial question...

Randy H Says:

Part 1
This is an incredible strength which gives me great confidence in the next Century of “American Dominance”. I almost hesitate to use that term because it’s become so maligned.

Part 2
I’m no jingoistic patriot.

jokes ;)

PS:

Thanks for the f&*^ed up world/mess you baby boomers gave to the gen y kids. I now have to spend my lifetime trying to clean it up salvaging civilization. You baby boomers did a very bad job, now give us a chance and pass your verdict after we have had the 30 years you used to screw all of us.

I'm Gen-X.

I'm not sure if we're "lame" or just the victims of circumstances.

We've been accused of being "slackers," yet our generation has stepped up to the plate just as much as any other but sees diminishing returns for our efforts. Hell, most of us won't even see a pension, much less affordable housing.

The good news is that 40 is the new thirty, so we can pimp out ten more years of living at home, riding a skateboard and hanging out at the beach!

Hey, it's only rock 'n roll...but I like it!

Different Sean Says:

> I changed a tyre on an M coupé a while ago,
> and it wasn’t easy. There’s about 10 gadgets
> just to get the tyre to drop out from under the boot

Here in the US the M Coupe does NOT have ANY spare tire (and why the Gen Y trust fund babies get so frustrated when we ask them to show us where it is)…

http://www.bmw-m.net/Reviews/m_mobility.htm

Older Gen-Xers were toughed up early on by Bush I recession. Younger Gen-Xers were toughed by the dot.com bubble burst.

Maybe the housing bubble burst will toughen the Gen-Yers.

We did have one advantage over them - it was a heck of a lot easier to get into a top 25 school back in the 1980s and 1990s.

Michael Holliday Says:

> The good news is that 40 is the new thirty, so we
> can pimp out ten more years of living at home,
> riding a skateboard and hanging out at the beach!

The “boomerang” kids that move back home in their 20’s are bad but anyone that moves back home in their 30’s is truly pathetic…

FAB,

No more pathetic than living in a $750,000 loft completely paid for by parents and getting parental help with groceries.

OT, but here's a NYT article about the subprime mess that's surprisingly bearish, considering how much of a REIC cheerleader the rag usually is. A few of interesting issues raised in the article:

- The Clinton administration deserves a fair amount of the blame for initiating loose lending standards in a misguided attempt to increase homeownership rates. (As I believed all along, it comes down to the misguided and poorly thought out liberal do-good mentality, yet again).

- As I've brought up before, a big part of the grease that kept this wheel turning was that with ever-increasing appraisal values, rolling the refi fees into the refi costs was no big deal to the FB, as they still got a good bit of cash out with the refi. Now, those fees are a big chunk to swallow when the appraisal comes in flat. (Of course, depreciating appraisals are a whole other problem).

- The article nicely ends with a trashing of the subprime bailout idea.

Sorry about the long post - a login is otherwise required, and I thought this was a pretty good read.

*********************

Home Loans: A Nightmare Grows Darker

By GRETCHEN MORGENSON
Published: April 8, 2007

SNAZZY and newfangled mortgage loans, like those with low initial rates of interest or extended terms of 40 or 50 years, helped to drive homeownership rates in the United States from around 64 percent two decades ago to a peak of almost 70 percent in recent years. Called “affordability loans,” these new kinds of mortgages have gone mostly to first-time home buyers and borrowers with tarnished credit or spotty employment histories.

Even though these subprime mortgages account for only one-eighth of total mortgages outstanding, they represent 60 percent of foreclosures, according to the Center for Responsible Lending, a nonprofit and nonpartisan research organization in Durham, N.C. This is not surprising, since the features common to subprime mortgages actually increase the risk of foreclosure, mortgage experts say.

“The subprime market should be an additional and welcome opening of the credit markets for borrowers who have previously been shut out,” said Michael D. Calhoun, president of the center. “But it has been allowed and even encouraged to develop in a way that we think will result in a net loss of homeownership.”

For years, the homeownership rate in the United States ranged from 60 to 65 percent of the total population. But in 1995, President Bill Clinton directed Henry G. Cisneros, then the secretary of the Department of Housing and Urban Development, to work with the housing industry, nonprofit groups and other government officials to develop the National Homeownership Strategy, “an unprecedented public-private partnership to increase homeownership to a record-high level over the next six years,” as described in an Urban Policy Brief in August of that year.

Citing studies showing that high rates of homeownership generate financial wealth for borrowers, reduce crime and stimulate economic growth, the group agreed to a list of initiatives. One was to make financing arrangements for borrowers more affordable and flexible.

Lenders were off to the races. They created slick new mortgage products with low “teaser” interest rates that ratcheted up significantly after two years or so. They devised loans that required only the payment of interest, not principal as well. They extended mortgages to 50-year terms to reduce monthly payments.

The partnership succeeded. In 2004, the homeownership rate reached 69.2 percent, a record.

As recently as January, even as delinquencies among subprime mortgages had risen, the Mortgage Bankers Association, a lobbying group, praised the role that the loans played in bolstering homeownership. “The availability of nontraditional mortgage products is a positive development because these products increase the financing choices available to borrowers,” the group said in a report.

But according to experts on lending practices, the products devised to propel homeownership did so only as long as housing prices kept rising. Now that prices have started to fall, these products look instead like a transfer of wealth to mortgage lenders from those who can least afford it: subprime borrowers.

“It’s not good to put somebody into a home if they can only afford it when home prices go up,” said Thomas A. Lawler, founder of Lawler Economic and Housing Consulting Daily, a newsletter. “Now that prices are falling, the folks who made enormous amounts of money lending in 2003, 2004 and 2005 are giving some of it back. But they aren’t giving it back to the poor borrowers.”

Comparing prime and subprime loans shows how different the two types can be, Mr. Lawler said.

Loans made to borrowers with good credit histories, for example, rarely generate prepayment penalties when the loans are refinanced. But 70 percent of subprime loans have such penalties, he said. And they are hefty — typically involving six months’ worth of interest.

On a $250,000 loan with a current interest rate of around 8 percent, a prepayment penalty would be $10,000. Because many subprime borrowers do not have that kind of money lying around, lenders typically offer to roll the amount into the new loan offered in a refinancing. Tacking on such penalties to new loans makes it even harder for borrowers to pay them off.

Another characteristic of subprime loans, Mr. Lawler said, is that they rarely have escrow accounts. These accounts are established to collect money over long periods to cover real estate taxes and insurance.

CRITICS point to two possible reasons: without property taxes added to the mix, the mortgage payments look lower than they otherwise would. In addition, the absence of an escrow account in a subprime loan often means a big tax bill that cannot be paid unless the borrower undergoes another expensive financing, with all those fees attached.

Finally, subprime loans with low initial rates that reset at much higher rates almost force refinancings, generating fees for lenders but often putting borrowers in a hole. Now, for instance, subprime loans that reset after two years have interest rates based on the London Interbank Offered Rate of interest, or Libor, which now stands at about 5 percent, plus 6 percentage points.

It is almost impossible for subprime borrowers to get lower rates on their mortgages given such reset rates, Mr. Lawler said. “A subprime A.R.M. borrower,” he said, one with an adjustable-rate mortgage “with an initial rate of 8 percent for the first two years would face an upward adjustment on her mortgage unless the Fed cut its short-term rate target to 2 percent.

“These loans are designed to make borrowers refinance and keep the loan production mill churning,” Mr. Lawler said.

Mr. Calhoun of the Center for Responsible Lending said that few borrowers, subprime or not, would be able to survive a reset shock that increased their monthly payments by as much as 50 percent. Ditto for serial refinancing deals that generate fees of 6 to 10 percent of the total loan value each time.

“Probably the majority of homeowners who have been in their house for a while could not afford payments on those loans,” he said.

While subprime borrowers try to climb out of the holes they fell into, those who sold and packaged the loans are laughing all the way to the bank. “Folks who ran these companies are going to walk away not just unscathed but extraordinarily well rewarded,” Mr. Calhoun said.

Josh Rosner, a managing director at Graham Fisher, an investment research firm in New York and an expert on mortgage securities, says he has watched with interest and exasperation as the same groups of people who pushed for higher homeownership rates now recommend ill-conceived bailouts. He also believes that the current system creates incentives for people to strip equity from their homes rather than use their mortgages as a forced savings device.

“If you’re trying to do social engineering, it should be to put people in homes so they can build up equity as a cushion for economic shock,” Mr. Rosner said. “But unless they have significant equity, they are not homeowners; they are renters. We’ve created a society where we love the term homeownership, yet we can’t allow people to understand that they are being taken advantage of by the term.”

skibum Says:

(As I believed all along, it comes down to the misguided and poorly thought out liberal do-good mentality, yet again).

As compared with the well thought out liberal do-good mentality, espoused by such notable liberals as me. Problems occur if your policy is to enable dodgy market solutions to dodgy market problems...

The policy dislocation between these two paragraphs is your problem, right there:

"Citing studies showing that high rates of homeownership generate financial wealth for borrowers, reduce crime and stimulate economic growth, the group agreed to a list of initiatives. One was to make financing arrangements for borrowers more affordable and flexible.

Lenders were off to the races. They created slick new mortgage products with low “teaser” interest rates that ratcheted up significantly after two years or so. They devised loans that required only the payment of interest, not principal as well. They extended mortgages to 50-year terms to reduce monthly payments."

Apart from the fact that similar banking products have been offered around the world throughout the boom without National Homeownership Strategies. I doubt whether policy apparatchiks in the Clinton administration would have premised their strategy on a belief that it will always go up. The NYT seems to have blurred quite a few things together to try to smear the Clinton policy platform as a discrete agenda. Does NYT generally lean right?

"The “boomerang” kids that move back home in their 20’s are bad but anyone that moves back home in their 30’s is truly pathetic… "

I left my parents home at 18.5 yrs and never looked back. In fact have not been in contact since. And loving every minute of it since.

Astrid
Hmmm, that wasn’t my impression but I’m not an engineer. My sense is that an engineer would not make as much as a marketing person of equal general ability, etc. I certainly felt my boyfriend was underpaid for his level of responsibility at his previous job.

Engineers don't seem to understand that they are a commodity and even though they have a very technical talent it is easily replaced especially in a slowing economy. A marketing person is paid on the results the can generate especially with a track record. They are very different in terms of creativity which is why some make minimum wage, and others make millions.

Does anyone know if Lucy’s Tea House (mountain view) has reopened in a different location? It closed a few years ago, I really loved that place.

I don't know. But we love Lisa's Tea Treasure. They have one in Menlo Park.

http://www.lisasteatreasures.com/

DifSean
Malcolm Says:
Post 1
Baby Boomers - I guess that’s what I mean when I call them hypocrites. […]they just became incredibly selfish and materialistic. They are the first generation to literally make sure that their heirs don’t have an inheritance to build on. Only a baby boomer would come up with the concept of a reverse mortgage.
Post 2
I have a 99 Boxster

Ha, it may appear to be a contradiction. Let me just say that is basically my only tangible indulgence. My other one is jetting off to a different place every few months. To be clear it is a gorgeous car but I only paid $20K for it on Ebay when it was 4 years old. That is less than most people pay for a brand new car, and unlike a baby boomer, I actually paid cash.

DS,

What you're saying makes little sense. My read is that the Clinton admin. turned on the green lights for the mortgage industry to come up with "creative" ways of letting more people with less income "afford" homes. Noble idea, horrible execution.

Besides, their underlying assumption was that the correlation between high homeownership rate neighborhoods and low crime, economic growth, etc. implied causation - increasing homeownership rates among "the poor(er)" would decrease crime, stimulate economic growth, etc. This argument is specious at best. Allowing folks with marginal jobs, poor social networks, poor financial skills to "buy" a home was just asking for trouble.

Also, you must be kidding about the NYT. To most of this country, the NYT is the bastion of the "left wing media." It's also a paper that's lost most of their quality and integrity in the past 10 years or so.

Engineers don’t seem to understand that they are a commodity and even though they have a very technical talent it is easily replaced especially in a slowing economy.

Very true. They may just as well have an Engineer futures contract on th Board.

“The “boomerang” kids that move back home in their 20’s are bad but anyone that moves back home in their 30’s is truly pathetic… ”

I hate to be that judgmental although it is funny to see balding men living at home. In some cultures people routinely live at home into their 20's and different people live different ways. As long as everyone is happy then I can't pass judgement.

BTW, Lisa's tea Treasure has real cream, which is all important. Their tea is excellent. Prices are reasonable.

skibum,

I wouldn't say NYT has lost the most integrity. All major American papers are pretty irrelevant at this point. The Washington Post news coverage is at least as bad.

Malcolm,

If an engineer succeeds, something concrete is created. If they fail, bad things happen.

If a marketing person succeeds, a bunch more kids are now hooked onto a high fructose corn syrup doused breakfast cereal.

I have a very low opinion of marketing/business development people, even though I'm contemplating heading in that direction.

On the other hand, people living at home really maximizes resource usage. Environmentalists should encourage people to live with parents for life or live in group homes.

If an engineer succeeds, something concrete is created.

Yeah, software is so concrete. :)

Astrid, of course you are right. No one said it was right or fair, in my opinion it represents a free market failure but that's life.

I also agree about the environmental impact of extended families sharing resources.

Software engineers used to make 80K per year, now they jump at 50K per year. A planner (my training) now exceeds a software engineer, and I know of very experienced engineers in other fields that are easily below the 60K mark.