patrick.net

sfbubblebuyer Says:

> Prop 13 makes me so mad I want to start
> punching every old person I see at Safeway.

It is not just old people you have to punch since kids can take over the prop 13 tax basis of their parents. I have a friend that lives in the home he grew up in near my apartment in Presidio Heights paying a little over $5K a year in property tax while others on the block who bought in the past few years are paying over $100K a year. When his parents (who are living in the Pacific Heights co-op his grandparents bought in the 70’s and paying just a few $ a year in property tax) die he will not only lock in the low tax basis on not only the Presidio Heights home he lives in, but the Pacific Heights co-op and the vacation homes in Seadrift and the West Shore…

OK, this quote takes the cake. I don't even need to comment on it.

“This is not a bailout,” Joseph Smith, the commissioner of banks in North Carolina, said this month in announcing a program to direct $300,000 in taxpayer money to mortgage counselors who could help homeowners refinance. “We’re not paying off anybody’s mortgage.”

http://www.nytimes.com/2008/02/26/us/26backlash.html?_r=1&ref=patrick.net&oref=slogin

Same article: Does this confirm my fear that we are in a depression? The logic follows that the practice was used during The Depression and is being justified as being used during The Depression. It must stand to reason we are in a depression.

Government has a history of getting involved in foreclosure crises. During the Great Depression, the federal government created the Home Owners’ Loan Corporation, which helped refinance about a million loans — and made a profit in the process. In December, Alan Greenspan, the former Federal Reserve chairman, suggested that government provide assistance to homeowners facing foreclosure.

sfbubblebuyer Says:
> Prop 13 makes me so mad I want to start
> punching every old person I see at Safeway

When I was a Republican I used to think it would have been funny to grab their walker and pretend to run away with it. Then I would have teased them from a safe distance and watch them stumble towards me and then pull it away at the last second.

To add to the visual, I'm dressed as Uncle Sam in the joke :)

prop 13 is part of the 'perfect storm' killing CA house prices.

the only missing is an earthquake and race riots. shocks from credit crunch is so powerful it might cause both of these.

The credit crunch is probably triggered by Pluto's ingression into Capricorn.

I had to take a day of from blogging, but here are some "late hits"

Peter P,

>>Optimal rate of production.

Again, not all will agree upon what is the optimal rate of production. This could easily end up as a circular argument.

NVR,

Right on. I have some personal experience with some of these countries, and I can only agree with you. There is indeed a lot of capitalist fantasy in the US. People think that they are rich purely because of their own ability and effort, rather than the fact that they had a lot of people doing the work for them. I'm not going to knock ability or effort, but it only goes so far if you are alone. The premium that rich people want to attribute to their own talent and effort, and the pay premium they assign themselves is way out of whack with reality. You just need to look at CEO salary and compensation to realize that. The pay premium comes from power, not from their actual worth to the company.

Malcolm, Paul, others: Interesting to hear your take on employment, skills etc. Food for thought.

Peter P,

Yeah, I think it may be too late to short google. It is always risky to short these high-flying stocks anyway. It is impossible to predict how the average investor will value them, and that is what counts. Now I wish I had the guts to short them at 700, but it could just as easily have gone to a 1000 as to 400.

Patrick,

A list of property taxes would be great. I used the assessors site that Sybrib mentioned, but it has the "inverse turing test" thing that impedes collecting all the data.

Here's a possible new topic:

Is the proposed VISA IPO the mother of all contrarian indicators?

VISA International has filed for IPO, with an expected completion date of March 19. They are offering 406Mshares + 10% over-alottment at an expected pricing range of $37-43, for a midpoint of $16B raised. If you fine-read the S-1 filing, you can see that the total number of shares after the offering can be as high as 966M. The implied market cap at $40/share is about $38B,

Now, VISA International is only an umbrella organization for credit card issuers, The real money is made by the banks that collect interest on negative card balances. And it is rumored that the banks (who are also owners of VISA International) are using the IPO to get cash to shore up their own balance sheets that are rife with subprime and other questionable loans.

Is the VISA IPO the mother of all contrarian indicators? With the decline in the credit markets, people have been walking away from their houses rather than their credit cards, but what will happen when things get really bad?

NOT investment advice!

This is why I proposed Prop 1313 last year:

http://www.burbed.com/2007/05/26/college-grads-fleeing-california-how-can-we-tax-them/

Summary: We must directly tax children to save granny's house.

RE: MBA

I'm perplexed... why would having an MBA hurt your chances of getting a job. Or, what jobs were looking for that having an MBA hurt?

I guess I’m not very familiar with “white Trash”. Living in the bay area, I think they’ve all moved away.

Trust me, they're not.

I ran into some the other night at a late night entertainment venue in The Real Bay Area. I also ran into some when going to open houses in The Real Bay Area, and in parts of Campbell, East San Jose, and... well... San Jose.

What's really frustrating is that I cannot for the life of me remember how I personally voted on Prop 13 back in 1978. I was age 25 at the time. I clearly remember almost all people I have voted for but somehow for many ballot propositions I don't remember whether I supported or opposed them at the time.

prop 1313 is a great start to maintain state population levels - but it doesnt go far enough

I propose proposition 1212 - which will lure newcomers to the state by:

giving them freebies like public education
free breakfast and lunch for school children
education in thier non english native tongue
subsidized rent if they are poor
free cash and food stamps if they need it
for medical they can just cram the ER and not pay the bill and we totally wont care.

think about it, this needs to happen!

HelloKitty Says:

> I propose proposition 1212 - which will lure
> newcomers to the state by:
> giving them freebies like public education
> free breakfast and lunch for school children
> education in their non English native tongue
> subsidized rent if they are poor
> free cash and food stamps if they need it
> for medical they can just cram the ER and not pay
> the bill and we totally wont care.
> think about it, this needs to happen!

We already have all the items above to lure poor newcomers to the state and to lure hard working tax payers who will start businesses and grow the economy our leaders in have the following items:

Free public education in old crappy dilapidated schools where the kids learn things like “self esteem” “gay rights” and “cultural sensitivity” (but learn very little reading, writing, math or history).

Crappy overpriced unhealthy food for sale in public schools.

The ability to sit through hours of education you can’t understand when kids that speak Chinese or Spanish are “mainstreamed” (along with the disabled and seriously mental disabled kids that are also put in to regular classes).

High rent and high home prices with very high taxes for all newcomers.

High health care costs.

There is no surprise to me that throughout my life I have seen lots of poor people move in to the state and lots of hard working tax payers move out of the state….

eburbed Says:
February 27th, 2008 at 1:01 am
RE: MBA
"I’m perplexed… why would having an MBA hurt your chances of getting a job. Or, what jobs were looking for that having an MBA hurt?"

It seems counterintuitive and I don't have anything other than my own observations to substantiate the claim. Here are a few reasons that I've noticed:

1. Like many things in our economy, an MBA creates a value that exceeds the cost an employer is willing to pay. In an HR pay matrix an MBA puts someone in a pay category that will lead an employer to choose someone without one if they can get someone with minimal qualifications for less money. Two candidates apply for the same job, one with one without, the employer may choose the one without if they can do the job for less. Maybe they will actually divide the job and use a consultant or outside firm for the MBA functions.
2. It is our own fault but MBAs have a view that they are professionals in their field and not a servant type employee. It is easy to find some sort of work, employers don't tend to want people who have other options, they want people who look at their employer as a provider/master, not a client.
3. Some people don't want to put people in their organizations who can potentially upstage them. Believe it or not, the inferiority complex towards someone perceived as elite (they replace the 'in crowd' clique from high school) carries over from people's past. Many entrepreneurs and business managers are actually misfits who successfully pursued their own vision to build a successful company. Many MBAs are snobs and create that stigma that we then all have to bear.
4. As I hinted at earlier, many MBAs like me devoted their whole study to business without learning a marketable technical skill. The ideal MBA is an engineer or scientist who then becomes more rounded with the financial knowledge that comes with earning an MBA degree. Looking at it objectively, these people actually have a fairly aquired competivie advantage and are the biggest competition.
5. MBA degrees have become much easier to earn and so there is much more competition. This is most obvious geographically. If I go just a few miles south, the demographic changes to where less than 15% of the working population even have a bachelor's degree. If you go to areas like SF, or you the higher priced coastal cities, everyone has at least a bachelor's degree, and probably 10% have MBAs. Therefore there is a distribution mismatch between the markets. I get calls all the time from flyover states and they actually seem surprised that I have no interest in moving. "But why? This is a very good paying job!" Yeah, but you're in Phoenix, paleeze!

HelloKitty Says:
February 26th, 2008 at 10:55 pm
"prop 13 is part of the ‘perfect storm’ killing CA house prices."

In his original treatise (not sure if it is still there) Patrick used this point in a very convincing argument as to why prices will fall. The disparity between fast rising home prices does end up putting downward pressure on houses, that's part of why bloggers hating P13 seems counterintuitive to me. That article you linked against P13 unintentionally supports that where it talks about the court decision where they determined it was fair because it is rational. It is a consistent rational premium that the market is aware of and the market in theory factors that into the valuation of a home. There is nothing written in stone that says a future home buyer must pay more than the one before. People buying now and in the future will be exposed to a new phenomenon where they are paying 1/2 as much for their homes and taxes as the speculators were. The nice thing for them is that even when the speculators appeal the values the tax can jump right back up to where it was if home values rise. Those locking in the new lower cost basis have that "for eva" and are limited to the 2% rule for future increases.

To be clear, locking in the cost basis is by buying low, appealing a high value to a lower value is temporary.

Paul,

I'd hoped I was fairly clear about not intruding w/ unsolicited "career advice"? It's just that when you see as many people "fall on their sword" as I have you feel obligated to at least run down the list of "what we KNOW doesn't work"?

Truthfully, what "does" work is solely up to that individual. What I hope replaces conventional wisdom (needing a job) is that at some point in your working life... you don't really have anyone left to look up TO! I think we've all seen a lot of really competent people continuously frustrate themselves desperately trying to "fit in" when what they really should be doing is "moving on".

Not Career Advice

DennisN,

I've worked out a system that makes it really easy for me to remember how I voted on ballot measures. I've only to recall... "did I vote No, or HELL No!?) Works for me.

We recently had yet another "Range War" ballot in OR. I voted No. Many people asked how could I possibly do that when M49 clearly supported land owner rights!? I said it was b/c just 5 years ago I got on the band wagon and supported "The Last Time We'll Ever Ask you For A Favor!"

"They don't have a culture to fall back on or a country to go back to"

Truer words were never spoken. And you don't have to be poor for them to necessarily apply. Just watch any two older white guys that are stuck in the same bank/post office line. They actually "create space" by extending the "comfort zone" between them. They barely exchange glances (let alone words) no matter how much chatter is going on about them.

And that's all I was really trying to share about becoming anyone's advocate as their career transitions. If you think your former co-workers STILL adore you after you left the company... clearly you haven't been around the lunchroom for a while?

DinOR, I respect your opinion so feel free to give me as much career advice as you want. I'm one of those types that I take what makes sense to my situation and leave the rest with thanks. One thing I really like here is how many different angles on different topics including career planning that come out from everyone's different experiences.

DinOR Says:
February 27th, 2008 at 7:44 am
"Just watch any two older white guys that are stuck in the same bank/post office line. They actually “create space” by extending the “comfort zone” between them. They barely exchange glances (let alone words) no matter how much chatter is going on about them."

Let alone the old white boomers who mark their territory by putting their crap on the empty row of chairs on the tour bus so that someone wanting to stretch out can't. They basically are reserving the RIGHT for themselves and make it very clear that no one else can.

I hate that sprawl mentality. I did notice that my fellow whites are friendlier in other states, but in general they are very reclusive. I've only ever gotten into arguments with whites as to who was first in line, who doesn't move fast enough at a stoplight, and my favorite argument was the boomer at the airport who got pissed at me when I reached around his fat boomer ass to grab my luggage at the luggage conveyor at LAX. Why do these boomers have to stand right next to the thing instead of just standing back and walking up when they see their bags? Sheesh!

Malcolm,

>Why do these boomers have to stand right next to the thing instead of just standing back and >walking up when they see their bags? Sheesh!

I have always attributed the airport conveyor crowding mentality to pure sheeple stupidity, ot a lack of understanding of what is the globally optimal behavior, if you will. Are you saying that this is instead an expression of an individual me-first-at-all-cost attitude?

Congressional leaders yesterday gathered support for aggressive changes to bankruptcy laws that would help troubled homeowners, even as the Bush administration threatened to veto the plan and emphasized its opposition to any program that would risk tax dollars.

Democrats are calling for the government to do more than what the administration has done to date. They propose a range of initiatives that include the purchase of troubled mortgage securities by a federal agency and the empowering of bankruptcy judges to change the terms of high-interest loans held by homeowners facing foreclosure.

But the administration said that changing mortgage terms retroactively for a select group of troubled borrowers would only add to lenders' woes and lead to higher mortgage rates for everyone.

The clash highlighted the sharp differences between Democrats and the Bush administration over how to solve the nation's worst mortgage crisis since the Great Depression.

"Homeowners at risk of foreclosure are floating 50 feet from shore, and the Bush administration has thrown them a 30-foot rope," said Sen. Richard J. Durbin (D-Ill.), the author of a proposal that would allow bankruptcy judges to change the interest rates on subprime, adjustable and other nontraditional loans for homeowners facing foreclosure.

Malcolm Says:
Two candidates apply for the same job, one with one without, the employer may choose the one without [a MBA] if they can do the job for less.

Doesn't this just imply that the MBA degree was not necessary to do the job?

The government-sponsored company was forced to set aside billions to account for bad loans. Its results clearly showed the ravages of the mortgage-market turmoil that began last spring and rattled the economy.

Because Fannie customarily buys more solid mortgages as opposed to the high-risk subprime loans that have mushroomed into default, the latest losses show how pervasive the mortgage crisis has become.

BankRate.com is reporting the national average 30 year fixed conforming loan rate is now up to 6.10%.

Nobel Prize winning economist Joseph Stiglitz, the former World Bank Vice President and chief economist who is now a member of the Columbia University faculty, has been one of the more reliable sources for "Greenspan mess" sightings in recent months. Once again he comes through in this Bloomberg interview.

Host: Alan Greenspan in the last 24 hours said the recession is going to be deeper than the last two contractions. Let's not debate that. Let's debate Greenspan because you say that he basically left the U.S. in this mess.

Stiglitz: Exactly. I mean, perfectly right about the fact that this downturn is going to be the worst downturn in a quarter century. But he's largely to blame. And why is he to blame? Not just because he looked the other way - he was asleep at the wheel - in some ways, he was an active promoter.

When people asked the question, "Aren't you worried about a housing bubble?", he said, "Oh no, it's just a little froth in the market." He actually encouraged it. Congress gave him the authority to impose regulation to dampen the bubble in the housing market and he decided not to use that authority. Bernanke finally did it, but it was like closing the barn door after the horse got out.

Host: And you say that misguided monetary policy and poor regulation got us into this, but the flip side of that doesn't really get us out of this mess, does it?

Stiglitz: Exactly. Once you start tightening the regulation, it helps deepen the downturn. You don't have much choice at that point, but it means that it makes it more difficult to continue the bad practices. You don't want to continue the bad practices, but that means that consumption is going to be contrained and that is going to help push the economy down.

"Congress gave him the authority to impose regulation to dampen the housing bubble"

And what would THAT have been? What "regulation" is Stiglitz referring to? Did I miss something? Oh and there were plenty of pom-poms in Congress too!

Malcom,

Thanks. The "sprawl mentality" is a big part of it. "Me first-at-all-cost"? You bet. These are things I understand. What I don't get is... why all the alienation? Other groups and women don't typically engage in this type of behavior. Perhaps to a degree but not nearly as obvious as older white males.

It's just weird to me b/c you can really bend over backwards to help them (even for years) and you still get this "me against the world" attitude! It becomes self-fulfilling b/c after awhile (as a CPA/CFP/Whatever) you think to yourself (here we go again) and besides everyone else is so open with me! Do I really need this? And so on it goes....

@FAB

Socio economic status, opportunity, and environment are the relevant causes of any higher crime rates within ethnic groups. Implying that certain peoples are more inclined to violence or crime based on skin color is completely ignorant and racist.

Justme Malcolm Paul DinOR others

I've recently become active in job market myself.

Linked In seems to be a tool working well for some folks, if anyone is interested in hooking up there please email me address catchspam00 at yahoo dot com offlist, note identity here and I'll send you an invite. Thinking we all might benefit from some networking here, no? I might also serve as a bit of a clearinghouse to get all of us hooked up, I'll figure someway to manage that privately and appropriately.

@FAB

Apologies on coming across so combative in post of 8:51, I didn't mean to be disrespectful. I'd pull that post back if I could, my intent was not to call you directly racist or ignorant. I understand your thoughts on the matter, its a defendable viewpoint in some ways. I clearly disagree, but you are correct about cultural issues being a factor also. I do not necessarily think you ignorant or racist.

Anyway, just wanted to be clear. Again, please no offense man.

if you need a gig nowadays, you must be a "PC pansyass", even if it means overlooking the white elephant in the room.

@Headset

No, I have not lived in any of those countries but know them well enough to draw an informed opinion. I've probably spent 7-8 months total between them all, and dated women from each which is where much of my real knowledge probably derives. And my family is Swedish.

I'd argue that quality of life is significantly better if one measures by physical and mental health, spiritual fulfillment, quality and perspective of education, and social and artistic life. Materially, their TV's might be only 27 inches and the sq footage of their residences may not be 10,000 sq ft, but life is about much more than money in a bank account or what kind of car one owns. Longer lifespans, lower infant mortality, significantly more leisure time, higher appreciation and enjoyment of the arts, more family time.

“Homeowners at risk of foreclosure are floating 50 feet from shore, and the Bush administration has thrown them a 30-foot rope,” said Sen. Richard J. Durbin (D-Ill.), the author of a proposal that would allow bankruptcy judges to change the interest rates on subprime, adjustable and other nontraditional loans for homeowners facing foreclosure.

Nice subtle Katrina allusion there. All with the aim of rewarding the reckless, propping up house prices and prolonging the long-overdue correction. Durbin is an ass.

@eburbed,

Prop. 1313 -- :lol: !

Newsflash

OFHEO Just lifted investment caps from both GSE's, fannie and freddie.

In his original treatise (not sure if it is still there) Patrick used this point in a very convincing argument as to why prices will fall. The disparity between fast rising home prices does end up putting downward pressure on houses, that’s part of why bloggers hating P13 seems counterintuitive to me.

Here's my main beef with Prop. 13:

a) It's not really about "saving grandma from eviction", the way it was sold to the public 30 years ago. It's all about providing a perpetual tax shelter for big business and for a select group of fortunate-born wealthy Boomers and their lazy, greedy Trustafarian spawn, who disproportionately benefit from it.

b) It's a form of discriminatory taxation that --despite what the Supreme Court said-- clearly violates the "equal protection" clause of the Constitution. Age discrimination is no better than race or gender discrimination. If you're going to lower taxes for one group of people, why not lower it for everyone?

I would be in favor of the following:

--Eliminating property taxes altogether (better no tax than one that taxes me to death, so my scumbag Boomer/Trustafarian neighbors and CEOs can continue to fund their lavish lifestyles).

--Expanding Prop 13's 1978 tax-basis to EVERYONE who buys a home --not just the Birth Lottery winners.

You'll notice that *neither* of these proposals would RAISE taxes one cent for anyone now benefitting from Prop. 13, and the former would actually LOWER taxes for them. But you'll never get a Boomer or Trustafarian to go along with either one, becuase it's never really been about "lower taxes". It's really all about "I got mine, so F**k you!" It's really about keeping privileged tax benefits for the lucky few, not about helping out the rest of us Hoi Polloi.