patrick.net

FB's turning to a life of crime in Cleveland...

http://money.cnn.com/2007/11/16/real_estate/suprime_and_crime/index.htm?cnn=yes

House Approves Bill to Restrict Mortgages

"With home foreclosures skyrocketing, the House on Thursday voted to crack down on mortgage lenders by forcing them to get licenses, making them responsible for discovering whether borrowers can really repay and fining them for steering people toward risky subprime loans,"

Amen, and about bloody time. Of course, Congress is great at shutting the barn door after all the horses have bolted and the barn is on fire.

Oh, and while they're at it with all the "day late and dollar short" attempts at common sense regulation, they might also acknowledge their own responsibility in creating the bubble by enacting "any two will do" & 1031 capital gains rewards for specuvestors & flippers, not to mention growing Fannie & Freddie into the needlessly gigantic moral hazards they are today.

Getting licenses and making sure borrowers can pay back the loan?

I don't know HARM, sounds kind of anti-competitive to me?

You know, I'd never really thought about the impacts from 1031's but everyone I know that talked about it described doing it like you'd expect to hear about a bank heist? Again, after they got out of control (developers etc.) the IRS is vowing to take a closer look. About time.

I heard NPR talking about the decline in Starbucks revenues as related to the increase in gas prices. How bloody close to the edge are people living when they are forced to stop drinking coffee drinks? I knew Applebie's customers came and went with the price of gas, but coffee?

I also had to explain to a Realtor friend that the median price of houses went up in San Francisco, but it didn't mean that the value of her house necessarily went up. I explained how it could be the mix of houses that changed, that she really needed to look at the price per square foot in her particular area of her zip code to see what was happening. She would have none of it, the median price was up so her house was worth more.

Interestingly, the first house she bought (in 1989) declined in value for so long it was years before she could sell it and move, but she still tells me the Bay Area is different, prices don't go down here. Flat-earther.

Bap,
You gotta be careful about infrastructure. . .
Most builders carry the cost themselves and have a back-out clause that no-one reads. Namely, if the builder does not sell enough homes the infrastructure bill can be pushed back onto the neighborhood residents. Lennar pulled this stunt in Florida and man, some people were steamed.
Historically in Colorado, cities have asked developers to carry the cost of infrastructure in their busness plan. However, developers there were famous for stiffing the city by simply overpaying themselves then disolving their companies in bankruptcy. This is why there are so many special assessment districts in Colorado - people are carrying the costs of their own infrastructure.
Locally, we have a Windemere that is charging an arm and a leg for infrastructure in massive taxes, 1.7% prperty tax. But we also have some smaller builders that carry their own infrastrucutre cost and pass it on to the consumer. I guess it just pays to be aware of what costs go into the cost of the home YOU want.
I suppose one of the things I find annoying is that if the cost for a new home were fully specified that marketing and realtor fees appear. Of course your property tax assessment is levieid as the purchase price which effectively means you are paying for realtors and marketing, at an increeasing 2% rate, FOREVER!
Grrrrrrr.

I heard NPR talking about the decline in Starbucks revenues as related to the increase in gas prices. How bloody close to the edge are people living when they are forced to stop drinking coffee drinks? I knew Applebie’s customers came and went with the price of gas, but coffee?

On the other hand, it makes sense if you think about it this way. $4-5/pop for starbucks coffee's? Two drinks is the price of a whole pound of coffee beans from Starbucks. I'm a cheap bastard, so in my mind, that's the calculus I use, so I brew at home or work, and take a travel mug. Maybe FBs are starting to do the same.

skibum,

I never drink coffee, so Starbucks is where I get a cup of tea when I need a clean public restroom. There seem to be a lot of people who are really, really into their weird coffee drinks, however, so it just seems odd to me that you'd keep driving your Escalade to work and then fret about your $4 coffee. People seem to be cutting back on their smaller luxuries and not on their Leviathan cars or their mega-can't-heat-or-cool it houses. Oh well, if they want to be slaves to Saudi oilmen because they want to be seen in a giant car or house of some sort that's not my problem. (Well, maybe at some point in the future another oil war or global warming will be my problem....)

I also heard on NPR that those little PT Cruisers only get about 14 miles to the gallon (heard it on Car Talk). What's with that?

I don't know if Howard Schultz made use of that "crutch" but it does seem in character with so many CEO's. If you think back to the 2nd and 3rd qtrs. of 2000 many tech CEO's were boasting and then out of the corner of their mouth tempering expectations for the upcoming quarter.

We should expect to see the validity of that connection severely strained as we go forward. I'd heard GE claim that when people buy single light bulbs for replacements (vice the 4 pack) it's also a sign of consumers tightening the belt. Trust me, we'll get tired of hearing those.

SBUX has been publicly traded long enough to have been through several bus. cycles. I always thought their spin was that people will do without other things before they do without their coffee?

Guess not. Most pay with c/c and since they've been MEW fed for the last 7 years...?

@SFWoman,

I think your theory about cutting back on the smaller luxuries is true. But on the other hand, there's already evidence in the harder-hit places of big-ticket items getting hit. You might have seen this piece in over the weekend in the Chronicle:

"Fairfield balances on the edge as housing prices plunge"

Sam Zuckerman, Chronicle Staff Writer

Until recently, the spillover from housing was confined mainly to businesses directly linked to the residential market - real estate firms, construction companies, building materials suppliers and the like. But now there are ominous signs that the pain is spreading to businesses further afield, such as furniture and home-improvement retailers, and even restaurants and car dealers.

"Our customers appear to have less disposable cash," said Thomason president Pancho Redfern.

The WSJ also reports that SBUX is going to use national TV ads for the first time in its history. Seems like lean times ahead to me.

Quote of the Day

"I've been advising builders, in general, (to) do whatever it takes to get rid of inventory now because the prospects for house prices in the coming year don't look good. I'm afraid that '08 may be a year of pretty systematic price erosion, at least in many markets." – National Association of Home Builders.chief economist David Seiders. (BusinessWeek, Nov. 16th)

pshawn,

Actually that is. David Seiders is probably one of the few original REIC Cartel (TM) members still in the same job he held "pre-bubble".

Systematic price erosion. That's bad isn't it?

On the other hand, it makes sense if you think about it this way. $4-5/pop for starbucks coffee’s? Two drinks is the price of a whole pound of coffee beans from Starbucks. I’m a cheap bastard, so in my mind, that’s the calculus I use, so I brew at home or work

Hey you can buy 3 lbs. of good "SF Bay" French Roast beans for $10 at Costco, and it has a less burnt taste than the Starbucks FR. But then again I'm a world-class cheapskate.

The reason people cut out small luxuries and keep the gas-guzzler is that it's much more of an expense to sell one car and buy another. Try the math sometime...it takes a long time to amortize the loss of selling a low-miles used Escalade and buying a Prius even with $3 / gal. gas. Where these people were stupid was buying the Escalade in the first place.

SUVs weigh much more than the pickup truck on whose chassis they are designed and therefore get much much worse mileage. My 2001 F-150 XLT gets 17 city / 20 hwy observed, whereas the Expedition built on the same chassis weighs 900 lbs more and gets 5 - 7 fewer mpg.

Where these people were stupid was buying the Escalade in the first place.

O, Peter P, where art thou? ;-)

Dennis N.,

I agree that the people were stupid in the first place buying a vehicle that was larger than they needed.

A couple of the people I know who have showy lifestyles but are living paycheck to paycheck never seem to learn, however. They just lease a new Range Rover or Mercedes when the lease on the old one is up and then gripe about the price of gas. If the price of gas really bothered them they'd just buy a Honda Civic or lease a Camry. I think what really bothers them is that they can't afford their lifestyles, and the gas is eating into that.

I buy a car every 10-15 years. I'll get my next car when they fly.

SFWoman Says:

> I never drink coffee, so Starbucks is where I get a cup
> of tea when I need a clean public restroom.

I like to go to big chains like Starbucks and McDonalds to use a restroom without buying anything since the employees don’t care if you buy anything. Small coffee shops and restaurants will make a big deal if you don’t buy enough…

> There seem to be a lot of people who are really, really
> into their weird coffee drinks,

And when I was a kid there was a lot of people really really in to frozen yogurt…

> however, so it just seems odd to me that you’d keep driving your
> Escalade to work and then fret about your $4 coffee. People
> seem to be cutting back on their smaller luxuries and not on their
> Leviathan cars or their mega-can’t-heat-or-cool it houses

Most people “can” stop buying coffee but they “can’t” get rid of the Escalade since “most” owe more than they are worth (not counting what they owe on the rims). I have a tenant (renting a $900/mo. Apartment) who proudly told me that the new “dubs” on his (late model) F250 cost $6,800…

> I also heard on NPR that those little PT Cruisers only get about
> 14 miles to the gallon (heard it on Car Talk). What’s with that?

I think I heard the same call (a few weeks back) from an older lady that just drove around town where they said it was low, but not scary low (for a car that gets EPA city 19 mpg for the turbo model)…

Harm,

Oh my, did I inadvertently insult Peter P.? Does he really own an Escalade?

Between my F-150 and my 30+ mpg Miata, I always have the right vehicle for whatever my driving needs. And since both are sensibly priced vehicles which should last well over a decade, and since I paid cash for them, I don't see any real downside. I do all my own work on my cars so my cost of ownership is especially low. You really need something like the truck for country roads here in Idaho since so many are not paved.

I also heard on NPR that those little PT Cruisers only get about 14 miles to the gallon (heard it on Car Talk). What’s with that?

They were probably, my guess, talking about a *Toyota Land* Cruiser. Just did a web search and that mpg looks about right for the LC. I am waiting for the Euro version of the PT Cruiser with the Mercedes diesel... sigh... this will probably never happen now that Chrysler and MB are splitting up.

Song/sign of the times-

http://www.youtube.com/watch?v=erJc4dzZ3IA&feature=related

@DennisN,

I don't think he owns an Escalade, but Peter P is very much in favor of massive high-profile vehicles with robust all-steel frames, mainly due to their ability to survive (and allow you to survive) collisions.

I have some mixed feelings on this. While I want to be able to survive a traffic collision, I'd also rather not kill everyone else in the other vehicle. I'm also convinced that Peak Oil is near, if not already upon us (some excellent well researched material on The Oil Drum, btw). So, I would like to see much higher CAFE/MPG standards on all vehicle types, especially SUVs. (Disclosure: HARM drives an older model Toyota 4Runner that averages 20-21 MPG and would like to purchase a hybrid SUV that gets 35MPG or better next time).

Okay, SFWoman and FAB are correct. Cartalk did have a little old lady that managed to get extremely low mileage out of a PT Cruiser.

For those of you out there seriously interested in squatting in SCAL, you might even be able to find a squatter's palace already furnished:

Vacant houses: picking up the pieces
Business booms in collecting items left by residents hit by foreclosure

...An old gas stove with a skillet full of dust was found. In the back yard, there were mattresses, a microwave, two mangled couches and a bulky refrigerator.

"There are times we've gone to a house and we've stood with 4-foot-high furniture in every room," Meyers said. "A lot of times we just take it to the dump. It's usually pretty horrific when we go out to these jobs."

Our offer will be 50% off of 2005 last sales price and 40% off what they’re currently asking.

What city are you making this offer in?

Some live for the future; many more in the present; a few in the past. Each group looks at the other two with sneer and disdain. But, your happiness is, and ought to be, independent of what others do. Besides, those who live for the future take advantage of the vast majority who live in the present; and, vice versa.

I live in a collage town where most students drive a SUV. They would work part time jobs and eat free junky snacks at work place just to save lunch $$. They still want their SUV.

Harm,

Well OK then. I own such a vehicle so Peter P. should be all right with me, especially since my F150 gets me to the good fishing grounds around here. The best raw fish to eat is that which you pulled out of the river yourself and banged on the head with your club.

My point being that a $23K paid-cash-for F150 is a lot more responsible use of money than a $50K (?) MEW or leased Escalade. I know a single lady attorney at a firm in Palo Alto that leased an Escalade even after I told her not to. She's one of those people who faint at the sight of dirt...and who would never get involved in any outdoors activities like skiing or camping. Why on earth would she buy an Escalade? She thinks they "look cool".

Hey, anyone who owns a truck or SUV, either because they need it for their job, or for offroading, or due to bad roads, or just because they think it "looks cool" will get no lip from me --another SUV-owning a$$hole American. I just think we could really do a whole lot better on mileage/CAFE (hasn't budged in over 20 years) without sacrificing too much in creature comforts or safety.

HARM Says:

> (Disclosure: HARM drives an older model Toyota
>4Runner that averages 20-21 MPG and would like
> to purchase a hybrid SUV that gets 35MPG or
> better next time).

The Lexus RX 350 costs about $5K less than the Hybrid RX 400 that will average about 5 mpg better (even more if you just drive around town on the battery).

If you drive 1,000 miles a month you save a little over $400/yr. in gas (at $3/gal) every year with the Hybrid (but you will make $250/year if you get 5% on the $5K you save on the non Hybrid).

With the Hybrid you will break even in just over 30 years (~15 years if you drive 2,000 miles a month) or even less if gas goes over $4/gal.

Last time I took the SUV to Tahoe I used over $130 in gas driving just under 500 miles in a weekend (not much less than a cheap roundtrip ticket to Salt Lake City)…

With the Hybrid you will break even in just over 30 years (~15 years if you drive 2,000 miles a month) or even less if gas goes over $4/gal.

Come on FAB. This is a freakin' Lexus. You buy this so you can drag race the Porsche Cayenne S (okay, he may win) and then laugh at him at the gas pump (and on the showroom floor).

skibum says: On the other hand, it makes sense if you think about it this way. $4-5/pop for starbucks coffee’s? Two drinks is the price of a whole pound of coffee beans from Starbucks.

Think of it as $1 for pressurized water forced through bitter plant seeds, and $3 for participating in a cozy social scene with an abnormally high number of attractive women.

The same could be said of a pint of beer at your local pub vs. a bottle purchased in bulk and consumed at home. If it were purely utilitarian, only a fool would choose the former over the latter.

From hybridcars.com:

"Lexus LS 600h L

If solar panels on Al Gore’s 20-room mansion and Vanity Fair’s 300-page annual green issue make you feel queasy about the eco-chic spin on our sustained environmental and energy crisis, then the Lexus LS 600h L might make you feel downright nauseous.

The Top 10 list of why the Lexus LS 600h L is the most bizarre and misguided hybrid:

A hybrid powertrain on a 5-liter V8 engine.

430 horsepower (equivalent of 6-liter V12).

City/highway mileage rating in the low 20s.

70-percent cleaner emissions than the “cleanest” of its V8 competitors.

Noise and vibration levels are about half of conventional cars. (“This is the kind of vehicle that travels slightly detached from the road, the local environment, and anyone else that doesn’t have a near 7-digit income,” writes Art Vatsky in AutoBlogGreen.)

Since you can’t hear anything outside the cabin, the vehicle uses two-cameras and a radar system to detect approaching objects and humans. A third camera mounted on the steering column monitors if the driver’s head is turned to the side. If a car, object, or pedestrian gets too close, the “advanced pre-collision system” alerts the driver with a chime and a flashing light.

Each vehicle is hand-sanded twice during the painting process.

Lexus aims to sell 1,200 to 2,000 units in the U.S. (Is this profitable for Lexus?)

Starts at $104,000. (At this price, you could buy four Priuses, keep one for yourself, and give three away as cute gifts).

The Lexus LS600h L is an amazing showcase of Lexus’s creativity and technological sophistication—all applied to a vehicle that is completely out-of-step with our times."

less need to force GM to build a car that runs on dog poop and smells like roses

This sounds all well and good, sure, but what about cat poop?

Hey, Fluffy Pumpkin wants to know about a car that runs on cat poop! :)

Bap33,

Couldn't agree with you more that driving style has a big effect on energy efficiency. Some of the worst offenders are realtwhores hurrying between their many important appointments in their big-ass leased Esca-Lexus machines. I just hate it when I see people driving like complete idiots from an energy perspective, accelerating like madmen from one red light to the other, as if it saves them time.

That being said, we should all strive to use small and efficient vehicles, not just have big ones that we drive efficiently.

Goober, it is indeed awful that so many car companies have perverted the concept of an efficient hybrid car into a muscle car. For god's sakes, the 2007 Chevy Tahoe Hybrid just won the green car of the year award. Talk about having your head way up your ass to vote for something like that.

Here's the rub: The only way to get insipid boomer Americans (and their devil spawn) to stop wasting oil is to hit them in the only god-damn fucking place they care about, which is their pocketbook. It's the only thing that works. I can talk until I get blue in the face about saving scarce resources for future generations, but nobody gives jack shit unless it costs them MONEY (apologies to surfer-X for the not-so-good imitation).

Here's to $6/gallon gas. At the rate we're burning it, it will arrive sooner rather than later.

If it were purely utilitarian, only a fool would choose the former over the latter.

Well, therein lies the rub. Folks pay for participating in the "Starbucks Culture" with the price of a latte, but in the end, what does it get you? 2nd rate coffee and an illusion of being in a hip world? I'll take the utilitarian choice any day.

Wouldn't say the same for a beer at a pub, though...

skibum says: Well, therein lies the rub. Folks pay for participating in the “Starbucks Culture” with the price of a latte, but in the end, what does it get you? 2nd rate coffee and an illusion of being in a hip world? I’ll take the utilitarian choice any day.

If I recall, there is a Mrs. Skibum? This limits the utility of a place where you can come into casual contact with eligible young women. :o

What does any social pseudo-mating ritual get you? A chance at mating. Considering how much people spend on cars, clothes, electronics, haircuts, perfume, shoes, houses, furniture, cutlery, china and other possessions in order to impress potential mates, I declare the cost of a latte to be absolutely insignificant. If one enjoys a brief flirt with faux hip culture in a cookie-cutter "unique" setting, so be it. The suburbanites have spoken.

Wouldn’t say the same for a beer at a pub, though…

Context is subjective to personal tastes. It's still a social ritual. :P But I'm sure that Peter P can produce a more insightful observation on such behaviors...

My comment is awaiting moderation. :(

Every oil field has a finite supply and its output reaches a peak and then declines. It is sensible to believe that the collective supply of all the world’s oil fields would do the same. Of course, new oil discoveries change the calculation. But, it is impossible to know how much oil remains undiscovered.

All my life I have been hearing about the end of oil. In the 1970s the prediction was that we would run out of oil around the turn of the century. So, we should be freezing in the dark by now, with our useless vehicles all abandoned. But, with each new oil field discovery that day of reckoning keeps getting pushed back.

Is the end upon us? Here is a quote that provides an interesting perspective on the timing of this crisis:

“The question of the possible exhaustion of the world’s oil supply deserves the gravest consideration. There is every indication that we are face to face with this possibility.” - Scientific American, 1913

It seems that the end has been near for a very long time.

Bap33,

Life without oil will be nasty, brutish and short, to misquote Thomas Hobbes. Preserving oil for as long as we practically can will buy us time to develop alternative energy sources. And we really need all the time we can get.

Our whole civilization is built upon the assumption of plentyful oil, and it will collapse like a house of cards if oil suddenly disappears (not that it will, instead it looks like it will be a long and very painful process).

If it is your grandchildrenes lives that will be be nasty, brutish and short because of lack of oil, are you still willing to let market forces rule? I think regulation of mileage standards and high taxation of wasteful vehicles and practices is the way to go.

Oil -- they aren't making any more of it.