patrick.net

# FuzzyMath Says:
While for those with their cash in hand waiting for a more massive crash it may not be the best thing… I still think those wishing for housing to crash more than 40% from the peak in a short period of time should beware what they wish for.

Oooh, 40%. Go ahead, make my day.

You see, it is bogeyman scare-tactics that make me suspect you are a closet realtwhore. Housing prices dropping 40% in the Bay Area will not do any harm to anyone except FB's, speculators, knife-catchers, and various species of RE-shills.

Heck, I _own_ my home practically F&C, and I still wouldn't mind a 50% or greater drop.

I think Ben B for instance has a very sound understanding of moral hazard, probably more astute than my own. It’s just we will not hear him talking much about it.

Unless we are willing to let people starve, moral hazards will eventually creep into our economic policies.

As I have said, the human problem is intractable. (If it is at all solvable, God would have solved it and everyone would be happy.)

Heck, I _own_ my home practically F&C, and I still wouldn’t mind a 50% or greater drop.

That's the only time that I will buy a bigger house when the 40% drop happens, then I can finally get a house with a pool table (I'd like to get a snooker table though), I will never trade up right now because of the massive increase in prop. tax.

I will never trade up right now because of the massive increase in prop. tax.

You can trade UP to another state. Hint: Oregon is north of us. :)

I can finally get a house with a pool table (I’d like to get a snooker table though)

All I need is a 2/2 plus a library/office.

I am architecturally picky though. :(

@SP

"You see, it is bogeyman scare-tactics that make me suspect you are a closet realtwhore"

Ha! Farthest thing from it. I'm a physicist who pretends to be a mechanical/software engineer. I am a home owner though.

And I don't think the 40% drop in and of itself is a scary thing. It will be nice to have affordable housing... especially in the bay area. It's the consequences of it that could have drastic long-term negative effects. Alot of those are discussed on this blog daily.

Perhaps you would live through the mess without experiencing any pain... and perhaps I will too. But a very large number of people won't.

I always vote libertarian, and I'm against big government at every turn. I am failing to see how a bank and a borrower mutually agreeing to cram a loan constitutes as a bailout. Exactly who is doing the bailing out in that situation? Both resposible (or irresponsible) parties are sharing their loss. I did not see any mention in the BB article where he said government would pick up the slack in what he was suggesting.

It’s the consequences of it that could have drastic long-term negative effects. Alot of those are discussed on this blog daily.

Both Hong Kong and Tokyo have experienced declines much larger than 40% without much drama.

NVR said:
Layoff announcements will begin to dominate the nightly news segments within 3 - 6 months.

Yeah, and how about those web2.0 social-circlejerking jobs these days? I wonder how they are doing... seriously, I haven't heard from that sort of recruiters lately.

FuzzyMath said:
I did not see any mention in the BB article where he said government would pick up the slack in what he was suggesting.

I seriously doubt anyone is _that_ naive. :-)

Yeah, and how about those web2.0 social-circlejerking jobs these days?

When people's first lives are trashed, they have no choice but to embrace cartoon lives.

And I don’t think the 40% drop in and of itself is a scary thing. ... It’s the consequences of it that could have drastic long-term negative effects.

And I don't think a 40%, 50% or even 60% drop in housing prices will have any negative effects (other than to the constituencies listed earlier). A 60% drop from here will merely bring prices back to about 1999 levels, and 40% would only take things back to about 2003.

"Both Hong Kong and Tokyo have experienced declines much larger than 40% without much drama"

True. They didn't make up a quarter of the world economy though.

@SP
I hope you are right.

I am failing to see how a bank and a borrower mutually agreeing to cram a loan constitutes as a bailout. Exactly who is doing the bailing out in that situation? Both resposible (or irresponsible) parties are sharing their loss.

How is the borrower "sharing" in the loss in this situation?

A real sharing would be something like this. The bank would agree to write down the mortgage if the borrower wants to keep living in the house, BUT the borrower would sign a contract agreeing to share any future capital gains on sale if the house price eventually recovers (say 60%/40%).

DennisN,

I don't believe a cram would have to be down to the exact value of the house. Say someone owe's $400K... but the house is worth $300K, and the owner can only afford to make the payments for $350K. The bank and the borrower could agree to cram the loan down to $350K.

If the agreement is succesful, and the borrower continues to make the payments through the life of the loan, the bank will have done better than the alternative, ie, auctioning off the house for $250-275K plus the cost of the auction. And the borrower would retain their house.

Seems like a win win considering the alternatives for both parties.

northernvirginiarenter :

I think Ben B for instance has a very sound understanding of moral hazard, probably more astute than my own. It’s just we will not hear him talking much about it.

I understand your respect for Heli Ben, but I don't share it. He saw no moral hazard in reducing the discount rate on a triple witching day. He saw no moral hazard in slashing rates by 75bp because of a stock market crash.

I am not opposed to cutting discount rate or fed fund rate or whatever. I am hardly a person qualified to judge that. But the TIMING clearly indicates that he is a real chicken little at best and a reckless Wall Street bitch at worst. Yes, he was dealt a rough hand, but he should react to other important economic indicators than on stock market, which is not a very good indicator on a day to day basis.

That guy doesn't even know how to spell moral hazard, far from recognizing it. I repeat again. Greenspan was evil, but in a smart, slick way. HeliBen is simply a PR disaster. He draws contempt.

FuzzyMath :

What the borrower, servicer and the lender ALL agree to do to their contract is none of my business as long as it is not my business.

A part of what Heli Ben was saying was about FHA buying the mortgages. Spin it whatever way, it stinks. It's a not-so-well-disguised plan to bail out his masters using tax payer's money.

OT: Need restaurant recommendations

Have a couple of Aussie friends coming in town that I need to entertain. I actually think Evvia is not up to the standard compared to the Greek and Turkish food I have had in Sydney and Brisbane (no kidding), they've got ample supply of first gen immigrants from these areas. Kaygetsu sounds pretty pricey, since I will be footing the bill, and there are plenty of world class Japanese restaurants down under.

Are there any fantastic, unique Californian food that can blow visitors away without being too damaging on the wallet? Anything below $100 pp would be good.

"It’s a not-so-well-disguised plan to bail out his masters using tax payer’s money."

Probably. The government shouldn't be saying anything along the lines of a bailout. Then the banks might start to entertain reasonable and private solutions. As is, they're just going to wait to see what they can squeeze out of all of us.

Whats really going to piss me off is paying for some other dick's mortgage while pissing my own mortgage payment into the wind. If the government gets involved the bailout will be targeted at exactly the people that don't deserve it.

I had a business meeting with a guy yesterday who spent his weekend down in the Santa Barbara area helping a friend move out of his foreclosed house. Apparently the guy bought the house 7 years ago for $350K. Since then, he refinanced 4 times, bringing the total loan amount up to $900K. The house is now worth $800K. That is exactly the kind of situation a government bailout would target.

"unique Californian food"

you mean Vietnamese? Sure, there's a nice one right down the street from me :)

Kaygetsu sounds pretty pricey, since I will be footing the bill, and there are plenty of world class Japanese restaurants down under.

Kaygetsu is the best possible value around, in my humble opinion. I am serious.

Below $100 is a possibility for the a la carte menu.

Are there any fantastic, unique Californian food that can blow visitors away without being too damaging on the wallet? Anything below $100 pp would be good.

Ritz Carlton, The Dining Room in the city.

I think it should be possible to get away with under $100 pp without wine.

Viognier in San Mateo is not bad either, and it is much easier to book.

Peter P,

the problem is all Aussies are alcoholic. Is there any place closer by without doing the long jog into the city?

the problem is all Aussies are alcoholic. Is there any place closer by without doing the long jog into the city?

Chez TJ in Mountain View has improved a bit. You can try that out too. But it may be over $100 with wine pairing.

If they like steaks, Fleming's just opened up at Stanford Shopping Center. I recommend medium-rare-MINUS*. :)

*Consuming raw or undercooked meat, poultry, seafood, shellfish or eggs may increase your risk of food-borne illness.

Peter P,

thanks for all the suggestions, I will check them out @ yelp.

Peter P,

I just found out that opentable is running a promo on 1000 points for a bunch of restaurants, seemingly the economy is really HURTING in the Bay Area.

1000 points = $10 open table dining coupon, but you need at least 2000 points for redemption. Still, eating out twice and get $20 back, that is not a bad deal at all.

Well, don't forget the 3% visa card rebate on top of that. Life is good.

I just found out that opentable is running a promo on 1000 points for a bunch of restaurants, seemingly the economy is really HURTING in the Bay Area.

Sometimes, I get 1000 points just for dining at odd hours. :)

I use opentable whenever possible. It is a great invention.

@OO,

Creola in San Carlos is a pretty good New Orleans style place - not quite California, but may be an interesting new experience for visitors from AU. It runs quite a bit less than $100 p.p., though. :-)

I'd imagine the Fed chief job is a complex seat in which to plop ones ass. I've a fraction of the information, and much BS to filter, compared to what Ben B has at his disposal. I have no idea whether his loosening and timing of same was smart, I understand it caused people to loose. But I don't know that those were bad decisions. I know this swim against much of the blogosphere contempt.

I've read a good bit of Bernanke’s academic work out of curiosity relative to depression economics. I found him to be intellectually deep and my impression is of a moral man. I'm glad I don't have his job right now.

Did his loosening prevent a crash? Maybe. Many on the wrong side of the bet lost money, but maybe it stopped a true panic. I don't know for sure. I'll give Ben B the benefit of the doubt, not blind faith but some trust.

Where would we be right now if we held interest rates high? Interesting exercise, I don't know.

A stock market panic and sell off creates economic damage in the real world, it is part of the fed chairs job to stem massive fear until cooler heads prevail. Fear feeds on itself. Its a judgment call I suppose, I don't have serious problems with Ben's calls so far. I'm not sure I would have made the same ones, but no serious issue. He must maintain confidence in our markets, no easy job after all the slime peddling.

I do however take serious issue with calls coming out of the Bush cabinet, DOJ, FDA, EPA, State, HHS, Treasury. No real leadership shown out of that group.

Ben B's toughest calls are in front of him. Its way too early in the game to draw judgement on the man.

Creola in San Carlos is a pretty good New Orleans style place - not quite California, but may be an interesting new experience for visitors from AU.

Ooh, I have to try that out. :)

OT: Need restaurant recommendations

OO, don't you owe us a review of Nick's Cove (which still seems to be getting ubiquitous press coverage -- that is some PR machine)?

Few others from my notes...

- Yuzu Sushi in San Mateo
- Sakae Sushi in Burlingame
- Hola Mexican in Burlingame (yeah, I know - upscale Mexican is kind of an oxymoron around here)
- Cascal tapas in Mountain View (I am kind of bored of it now, but people who go there for the first time still seem to like it)

Cascal tapas in Mountain View (I am kind of bored of it now, but people who go there for the first time still seem to like it)

Try the black ink paella!

Hola Mexican in Burlingame (yeah, I know - upscale Mexican is kind of an oxymoron around here)

But is it upscale Mexican? I have almost given up on the cuisine.

I like Sakae Sushi too. But it ain't cheap if you go crazy. :)

# Peter P Says:
Creola in San Carlos
Ooh, I have to try that out. :)

Here you go - I had their card right here on my desk. Better call ahead for a table.

344 el camino real, san carlos, ca
650.654.0882
http://www.creolabistro.com/

Of course, for the ultimate fish experience (both quality and quantity) you have to try Sawa Sushi in Sunnyvale.

Too much fish even for me.

Stay away from *anything* cooked.

Which is the best place for Oyster Rockefeller?

Here you go - I had their card right here on my desk. Better call ahead for a table.

Thanks, SP!

I want a Gumbo and a Étouffée. :)

Peter P Says:
Hola Mexican in Burlingame
But is it upscale Mexican?

It is a shade higher than typical mexican places, but not really the sommelier-and-cheese-tray type of upscale. They have a few dishes that you don't find elsewhere.

The place is a bit... um... festive, but if you can stand the noise, it's worth a try if you're in the 'hood.

SP,

thanks for the suggestions, Creola looks good. I have no problem if it is quite a bit below $100 pp :-)

EBGuy,

unfortunately something urgent came up for the week that I was gonna head up to Nick's Cove so I canceled the reservation. I still plan to go up though, it's just a bit far away so I need to plan ahead. I will definitely write a food review after I eventually make it up there.