patrick.net

I’m not suggesting shorting gold, I’m just saying it may become profitable in not too long. And I think gold will exhibit much less “stickyness on the way down” than real estate has been showing.

"Not too long" can mean 1 month or 15 years.

The rise of gold has been relatively mild.

Rhodium was trading below $450/oz in 2003. It now costs over $8000/oz. Yes. More than 17 times.

BTW, Randy H is the resident expert on housing price stickiness.

RE: schools

School voucher is the answer. I have yet to see a rational argument against it.

I would also like to see more tax incentives for home schooling.

Jeff Bezos just unloaded 1.8M+ shares at $70+.

Time to buy puts on AMZN.

Who is Jeff Bezos?

Founder of AMZN.

@Peter P,

The COMEX/NYMEX does not like competition-

Why doesn’t GLD have options???

The COMEX/NYMEX does not like competition

Gold is also traded on CBOT anyway.

Anyone has experience with YG/ZG on CBOT? I heard it has good activities at night.

Peter P Says:

> RE: schools School voucher is the answer.
> I have yet to see a rational argument against it.

Liberals in general hate vouchers because it will allow poor people to take their kids out of public schools where they learn important things like “white men are evil” “SUVs kill polar bears” “government programs are the way to succeed”.

Liberals in the teachers union really hate vouchers since private schools don’t pay as much and actually expect you to teach vs. sitting at your desk e-mailing friends while the kids watch DVDs of current movies.

Free Market is the only feasible solution to education.

Liberals in the teachers union really hate vouchers since private schools don’t pay as much and actually expect you to teach vs. sitting at your desk e-mailing friends while the kids watch DVDs of current movies.

I was about to express offense at this (I was a public school teacher back in the '90s), but then I realized: a) I was never unionized, and b) it accurately describes some (though certainly not all) tenured teachers I knew.

I am not aware that private school teachers aren't paid as much.

I know in other parts of the world, the private school teachers are paid a LOT. For example, for the private schools in Hong Kong, a teacher with 10+ years experience was paid on average US$75K+ a year, and I am talking about the early 80s. My aunt-in-law was a private school teacher, and when she retired in the mid-90s, her gross salary was already close to US$120K (plus housing allowance). She also enjoys generous pension after retirement which was almost half of what she made right before retirement.

Most liberals are genuinely kind-hearted people who want to help.

Most teachers genuinely want the best for the kids.

However, mixing liberalism and human nature gives interesting chemistry.

Just out of curiosity, how much do these teachers at Harker make?

What about the real elite boarding school teachers at Philips Academy?

I believe that public school teachers only make about $50-80K in the Bay Area, which is really not a lot given that such positions require certain certification/training beyond undergrad education. It is hard for me to imagine that you can recruit any quality teachers at Harker at a salary below that.

Moreover, home-schooling should be encouraged.

I believe that public school teachers only make about $50-80K in the Bay Area, which is really not a lot given that such positions require certain certification/training beyond undergrad education.

In a relatively free job market, why would they choose this profession?

The problem with vouchers is that it will amplify the difference between good and bad schools. Good schools will take the vouchers, add tuition on top and start an arms race the like of which you have never seen before.

The lesser schools will decline even further. The less savvy parents will not know what to demand from their schools in return for their vouchers.

The net result will be an even further decline in uniformity, and a near total loss of opportunity for the pupils in the poorer areas.

Guess which choice the REIC (especially agents) are salivating over? That should tell you right there which choice is the right one.

The problem with vouchers is that it will amplify the difference between good and bad schools. Good schools will take the vouchers, add tuition on top and start an arms race the like of which you have never seen before.

What's the problem with differences?

The net result will be an even further decline in uniformity, and a near total loss of opportunity for the pupils in the poorer areas.

If uniformity is a virtue, God would have cloned us like Imperial Stormtroopers.

Why do you want uniformity? People are not born to be in equal in IQ, aptitude and creativity. We strive for a society of equal access to basic rights, not equal performance. We are not even born with equal opportunities, my kids will never get the same exposure and doors open to them as Bill Gates' kids, and that is fine with me.

In some areas, I have more rights than the emperor of Japan, who is prohibited by law from consuming Fugu. :)

Guess which choice the REIC (especially agents) are salivating over? That should tell you right there which choice is the right one.

Of course the REIC does NOT want vouchers, which empowers residents to send their kids anywhere they want.

Good schools will take the vouchers, add tuition on top and start an arms race the like of which you have never seen before.

Excellent! Free Market solution!

It is hard for me to imagine that you can recruit any quality teachers at Harker at a salary below that.

OO,

My wife was an Elementary School teacher. People who go into that field know they will be low paid, money is not the draw. You may have noticed that teacher shortages are not in the districts with the lowest, pay but where the students are more unruly. I never heard a teacher tell me they quit because of the pay. They lose heart after dealing with an entity that allows a student to be flunked only once, allows no way to effectively deal with disruptive students (one of the drivers at the cab company is a burley black man who quit teaching middle school to drive cabs because he was tired of facing down tough acting students), and parents concerned more with students "rights" over student learning. Add to that having coworkers who were hired more for affirmative action than for ability or work ethic.

I accompanied my wife to the housing projects several times for Parent-Teacher meetings. The third grade kids were able to be good students, but the parent (single term intended) usually stunk on ice and was the biggest detriment to the kids education.

Hopefully, the Supreme Court will get more conservative over time.

We need serious changes in the education system.

Headset,

thanks for the explanation. But low pay is definitely deterring more good people from entering this profession. In your wife's case, at least she has a spouse, you, who is probably making market salary. If she married another teacher, or remained single, her life would be very harsh given the cost of living in the BA. I think I have read some disheartening story about a teacher who had to get by at a homeless shelter.

I think such a compensation system is sickening. I am more than happy to pay for the best talents, and what investment is more important than our offspring? Teachers have kids too. Even if they are not materialistic at all, they still need to worry about putting food on the table for their family.

I am all for paying competent teachers the best salary we can afford. Admins are the people that we absolutely don't need at all. Parents who care about the education of their kids should be allowed to pay higher tuition to make teachers happy.

I am not a believer of public education.

We need serious changes in the education system.

I am not a believer of public education.

Me neither. But that should be obvious by now.

For too many parents, school is just a place to dump unwanted responsibilities. Such parents have no business having children.

Why did only one line of a post print? Oh well, here goes again

We need serious changes in the education system.

Even the "bad" schools with a high percentage of underachievers have some students who get scholarships or other academic achievement. A "bad" school is really just one where the the majority of students do not take advantage of what is offered.

You will never design a system that will give a good education to an unmotivated student with apathetic parent(s).

You will never design a system that will give a good education to an unmotivated student with apathetic parent(s).

But we can design a system that will ignore such influences.

But we can design a system that will ignore such influences.

How? Take kids away from bum parents and sent to boarding school?

How? Take kids away from bum parents and sent to boarding school?

We can send them to special schools that are more appropriate for their aptitudes. This way, they will be unable to adversely affect other students.

Good point.

Newport News has an "Achievable Dream Academy" that takes high risk kids. Seems to work, disipline and respect is enforce by Army NCOs who volunteer their time.

Newport News has an “Achievable Dream Academy” that takes high risk kids.

Yeah, we all want them to achieve the American Dream and buy a house with the latest financial innovations. It is that important. :)

Peter P Says:
February 21st, 2008 at 5:36 pm
-Good schools will take the vouchers, add tuition on top and start an arms race the like of which you have never seen before.- Justme

Excellent! Free Market solution! - Peter

This is the typical exchange on this particular topic. It's a funny issue because both sides agree on the outcome but for some reason the side claiming to want to improve public schools doesn't like the idea of allowing bad schools to fail. The argument goes something like, vouchers will mean everyone will flee from public schools and private businesses will make a lot of money. Then I get into the prop 13 argument with people saying public schools are underfunded. With no disrespect to anyone I have to ask, because it really begs the question, if schools are so underfunded why is it that these businesses will make a ton of profits with less public money and at the same time be so offensive as to draw away all the students with superior customer service?

justme Says:
February 21st, 2008 at 5:21 pm
"The lesser schools will decline even further. The less savvy parents will not know what to demand from their schools in return for their vouchers."

Oh no you di'ant. Are these the same parents who hate having their kids stuck in public schools with no other choices? You really believe that a parent concerned about their child's education to the point that they would yank them out of the public school, and actually shop for the best school, wouldn't have an expectation for a result?

http://88.80.13.160/wiki/Wikileaks

To Stop a Leak
Did Bank Julius Baer overstep when it demanded an entire Web site be disabled for hosting a handful of documents?

By Brian Braiker | Newsweek Web Exclusive
http://www.newsweek.com/id/114415/page/1

The Julius Baer Bank claimed in papers filed in U.S. District Court in San Francisco this week that a fired executive stole internal documents and illegally posted them on Wikileaks, a Web site that specializes in publishing anonymous leaks and whistle-blowers. A federal judge ordered the site's Web address blocked for posting the internal documents, which accused a bank branch of money laundering and tax-evasion schemes.

It was, by all accounts, an innovative move: when threatening Wikileaks with legal action didn't get the documents removed, the bank demanded that Dynadot, the domain-name registrar, block traffic to wikileaks.org. Curious Web surfers were, as a result, not only rendered unable to access the Julius Baer documents, but everything else posted on Wikileaks, as well. (Of course, a bevy of mirror sites and alternative Web addresses--including the original numeric Internet protocol address for Wikileaks—remained available, and began rapidly multiplying after the judge's order came down.)

Laywers for both Dynadot and the Julius Baer bank declined to comment on the case. In a statement on one of its mirror sites, Wikileaks responded: "When the transparency group Wikileaks was censored in China last year, no one was too surprised. After all, the Chinese government also censors the Paris-based Reporters Sans Frontiers and New York Based Human Rights Watch ... But on Friday the 15th, February 2008, in the home of the free and the land of the brave, and a constitution which states 'Congress shall make no law... abridging the freedom of speech, or of the press,' the Wikileaks.org press was shutdown." The court has scheduled a hearing on the injunction for Feb. 29.

I am trapped in Merced County and cant find a REpro with a firm grip on reality.

Can you find one in the Fresno area?

February 22, 2008
Rescues for Homeowners in Debt Weighed
By EDMUND L. ANDREWS and LOUIS UCHITELLE
WASHINGTON — Prodded in part by some of the nation’s biggest banks, the Bush administration and Congress are considering costly new proposals for the government to rescue hundreds of thousands of homeowners whose mortgages are higher than the value of their houses.

Not since the Depression has a larger share of Americans owed more on their homes than they are worth. With the collapse of the housing boom, nearly 8.8 million homeowners, or 10.3 percent of the total, are underwater. That is more than double the percentage just a year ago, according to a new estimate of the damage by Moody’s Economy.com.

Administration officials say they still oppose any taxpayer bailout for either people who borrowed more than they could afford or banks that made foolish loans during the height of the speculative bubble in housing.

But with the current efforts to arrest the housing collapse so far bearing little fruit, Washington is being forced to explore new ideas, among them the idea of a federal mortgage guarantee for troubled borrowers.

And policy makers are listening to proposals from industry and community groups to use government funds to purchase and refinance billions of dollars in mortgages now in danger of default.

Many owners are only gradually becoming aware that their homes would sell for less than the debt against them — a phenomenon, said Richard T. Curtin, director of the Reuters/University of Michigan Surveys of Consumers, that is “beginning to weigh on people, making them uncertain and nervous about the future.”

That nervousness is evident across the country, particularly in places like Memphis, a city of nearly 1.3 million people where falling home prices and negative equity are new experiences.

The housing slumps of the mid-1970s and late 1980s were confined to the coasts. The current bust, while leaving some cities relatively unscathed, has cut a far wider path and it comes just when home debt is at its highest level since World War II.

For Stuart B. Breakstone, the problem hit home when he was forced to come to the closing on the sale of his eight-year-old custom-built house with a check for $65,000. The money, out of his own pocket, was to pay the difference between what he still owed on the mortgage for his home and the lower selling price.

Mr. Breakstone, a 42-year-old lawyer, and his wife, Lori, chief of customs agents at Memphis International Airport — who together earn more than $250,000 a year — managed to extricate themselves by paying off the mortgage. But millions of others are trapped in their homes. They have jobs, make their mortgage payments on time, but cannot raise enough cash to cover the shortfall.

Some eventually default, surrendering to foreclosure. But the vast majority — embedded in their communities, their children in public schools, their reputations at stake — wait nervously in hope that prices will bottom and rise once again, eliminating their negative equity and restoring their freedom to sell or refinance.

“People can’t believe this is happening to them,” said Robert Moulton, president of the Americana Mortgage Group in Manhasset, N.Y.

In Washington, it will be difficult to engineer a bailout similar to the one for savings and loan companies in the early 1990s, because Democrats and Republicans alike cringe at the very word bailout and fear a backlash by people who never became overextended.

But with millions of homeowners already underwater and the prospect that millions more may face the same situation, Democrats and Republicans alike are scrambling for ideas to keep people from simply walking away from their homes and to help those struggling to pay their bills.

Bank of America, which is in the process of acquiring Countrywide Financial and has potentially huge exposure, has circulated a proposal to create a new federal agency that would buy vast quantities of delinquent mortgages at a deep discount and replace them with fixed-rate federally guaranteed loans.

The bank warned that tightening credit conditions were leading to “escalating levels of delinquency and default among borrowers” and “an unprecedented number” of homes that would enter foreclosure.

Administration officials have given the Bank of America plan a cold reception. But the idea is similar to one proposed by Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Senate Banking Committee.

The Federal Housing Administration, meanwhile, is examining ways to expand its new insurance program, known as FHA Secure, to help people replace their costly subprime mortgages with federally guaranteed fixed-rate mortgages.

Mortgage industry executives have complained that the F.H.A.’s eligibility requirements are so restrictive that the new program has helped only a trickle.

Credit Suisse executives said they have held lengthy meetings with F.H.A. officials and have urged the agency to relax rules that currently disqualify many borrowers.

One idea, company officials said, was to allow borrowers who had simply made six payments during the course of their mortgage to qualify.

Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee, has ordered his staff to come up with options for a broader rescue bill. An aide to Mr. Frank said his bill would, among other things, allow the government to buy up at least some troubled mortgages.

A more modest plan is being developed by John M. Reich, director of the Office of Thrift Supervision, the agency that regulates savings and loan companies. His plan, still in rough form, would create a voluntary system under which mortgage lenders would reduce debt and monthly payments to reflect the diminished sales value of a home.

It would take the remainder of the mortgage as a “negative amortization certificate,” a lien that the investor could recoup if the house were later sold for its original mortgage value or higher.

In an interview, Mr. Reich said he hoped that most of the old mortgages would be replaced by cheaper mortgages insured through the F.H.A.

“It isn’t a bailout,” Mr. Reich said. “It is a market-driven solution.”

For Americans caught in a mortgage trap and owing more on a home than it would sell for, consumer spending and confidence are the most immediate casualties, Mr. Curtin reports. But the damage goes deeper.

People cannot move easily to jobs in other cities if they have to sell their homes at a loss. The $168 billion federal stimulus package is likely to be less effective than intended because many homeowners may simply use their government checks to pay down their debts.

Housing prices in Memphis fell by 2.5 percent last year, only the second decline since records began to be kept in 1968, and by far the largest dip, according to Chandler Reports, which gathers this data for Greater Memphis.

The Memphis metropolitan area highlights the larger national trend, with the average first-mortgage debt, at $153,764, edging above the average home price, $152,815, for the first time. And that does not count refinancing and home equity loans, as well as closing costs.

Collie Tuttle, in her early 60s, is caught in this bind. Four years ago, she purchased a newly built four-bedroom three-bathroom house in the Memphis outer suburb of Olive Branch, Miss., for $270,000. She put nothing down, relying on her six-figure income from selling furniture to pay down the mortgage, reducing it to $248,000.

But then she lost her job, and in her next one — also selling furniture, but at lower pay — she is being forced to choose between her home and the rest of her life.

“It was a big mistake on my part to buy this house,” she said. Divorced, with two grown sons, she rattles around in it alone. She had thought the house would add to her wealth.

But now, to sell it for the $269,000 a potential buyer was recently willing to pay, “I would have to come up with $6,000 from my pocket,” Ms. Tuttle said, explaining that she cannot afford to invade her meager retirement account. “All I’m asking is for enough so that I come out even.”

Her house payments and utilities come to nearly $2,400 a month. That is affordable, she said, on her present income. But very little is left over to replace her 11-year-old car, to travel, to pay down her credit card debt, or even to buy new clothes.

“I’m stuck,” she said. “I’ve tried everything and I can’t get rid of this house.”

The reluctance to sell at a loss helps to explain why the number of homes listed for sale in the Memphis area has climbed to more than 13,000 from 9,000 a year ago.

Jane and Kevin Naus, in their mid-40s, have had their home on the market since last May; their attempts to sell for a price that covers their debts are skewing their lives.

Mr. Naus took a job in Greenville, N.C., last March, at a local bank. His wife stayed behind, putting their house up for sale, just a month before prices began to unravel.

But there were no offers at the $239,000 the couple asked for their four-bedroom brick house on a one-acre corner lot, so they gradually cut the price to $220,000, barely enough to cover the $192,000 in mortgage debt and an additional $22,000 in closing costs and broker’s fees. It still did not sell.

Mr. Naus says prices are under downward pressure because of competition from the auctioning of foreclosed homes at bargain prices. There were 5,714 foreclosures in Memphis in 2007. “In our neighborhood alone,” Mr. Naus said, “five houses were sold last September and October, and four of the five were foreclosures.”

Mrs. Naus joined her husband in Greenville in December but he lost his job in January, when his division was shut down. The couple decided to stay in Greenville, to be near the family of Mrs. Naus, who has multiple sclerosis and no longer works.

Her $1,800-a-month in disability pay, however, falls short of the $1,400 in monthly payments on the Memphis house and the $700 in rent for an apartment in Greenville. The Nauses make up the difference with his severance pay, and occasional dips into their savings, which have fallen below $100,000.

“We don’t want to lose the house or cut the price,” Mrs. Naus said, “and end up owing money.”

“Basically,” she added, “we are praying that the house sells before my husband’s severance runs out.”

The Breakstones are similarly in danger of sinking, despite their high income. After forking over $65,000 on the house they just sold, they are struggling with $670,000 in debt on their present, larger home — perhaps more than the house itself is worth.

The Breakstones, each previously divorced, married in 2006, bringing three children to their union. They needed a bigger house than the one Mr. Breakstone had built.

Mr. Breakstone thought that he could sell his other home quickly, but it sat on the market for 17 months and finally brought only $170,000. He covered the shortfall by borrowing against his present home — bringing it closer to being underwater, too.

Now the Breakstones are saddled with $4,000 a month in house payments, and $14,000 more in fixed outlays, including child support, car leases, taxes, consumer debt and utilities, using up the bulk of their income.

“I used to think,” Mr. Breakstone said, “that I would pay the piper later and enjoy life now. I’ve totally reversed that view.”

Edmund L. Andrews reported from Washington and Louis Uchitelle from Memphis and New York.