patrick.net

shrekgrinch says

Where is it unconstitutional to break the contract? Governments break their contracts and even those of others that they aren’t even a party to all of the time.

And these labor contracts are not perpetual. They expire and get replaced by new ones all the time. That means the pension provisions likewise are expired.

I'm talking about existing "vested rights". But you may be right.

From the LHC report:

Courts have held that public employees have a “vested right” to their
future pension benefits as structured on their first day of work,
guaranteed through the course of employment, even though there is no
guarantee that the employee will hold that job to accrue those benefits.
This differs from the law over private-sector pensions, in which accrued
benefits are protected, but modification can be made prospectively
during the course of employment.150
The legal standards in California were derived from case law but not
explicitly articulated in statute or in the state Constitution. Many
consider this issue settled by the courts, though the courts have
provided openings to modify pensions for current public employees. The
extent of these options remains unclear, making this is an area of law
that must be clarified.

elliemae says

I’m feeling antisemantic today.

LOL! Well, if you need some psychotherapy to improve your self-esteem, my rates are quite reasonable. Besides, I make the world's best brisket and kugel. :)

I don't think this death should be taxed. I do not agree with the idea that government shouldn't tax everyone into equality, no point to tax something that has already been taxed once.

Government should only tax the minimum to keep the basics going: (law and order). Anything outside that should be abolished.

APOCALYPSEFUCK says

An electric car with 0-100 MPH in 6 seconds acceleration and a range of 250 miles on a single charge and a sticker of under 20K could clean up.
To get people in large numbers to switch, the car has got to be a threat to law and order.

With gas prices the way they are now I think as long as the car is cost effective and can go far enough on a single charge it would work well. I'm waiting for the time I don't have to spend $12 on gas every day.

Just out of curiosity has the thought ever occured to you that there are people who want to rent? Where do they fit into your world with no landlords? How does your no landlords society work anyway on a practical basis anyway?

Even though I own rental properties (my tenants are usually medical residents on a one year away rotation, they are very happy to rent thank you very much), I'm currently happily renting because I live in an area where the cost of housing is totally out of sync with the cost of renting. I can rent for half of what it would cost me to carry the same house. I just put the difference in the bank. I don't want to own here at all. Would I be forced to own in your world? If not who would be my landlord if there are no landlords.

I'm very confused about your vision. If no one can make money renting houses then there would be no rental market. It wouldn't make houses cheaper, all the unprofitable rentals would be abandoned, squatters would move in, the buildings would fall down, and what was left would be very, very expensive. See what happened to NYC in the 70's. Or would landlords simply be prohibited from being "wealthy" as defined by troy? So if landlords became wealthy would the troy police simply confiscate the excess?.

How would this all work?

bob2356 says

How would this all work?

I'm sure Troy will answer, but the short answer is that one way or another, the increases in value that accrue only because of population increases and scarcity of land, go to the government in some form of tax. Or maybe in many cases the government actually owns the land and rents it out in some type of long term leases to those investors or businesses who wish to add improvements to the land or essentially rent the existing improvements, to then re-rent out to individual tenants.

Why do Liberals hate successful rich people so much? Is it envy? Jealousy? What is it?? Liberals seem absolutely obsessed with rich people. Marx, Engels, Lenin, Stalin, Mao, Castro, etc. were obsessed with rich people as well. Their hatred led the confiscation of the wealth of rich people and transferred it, not to the workers as the dupes were led to believe, but to the ruling elite. In the process, about 100 million people lost their lives. The same winds of Communism are blowing that influences those that are obsessed with the wealth of rich people.

Just before I clicked this I felt an Impending yaaaaaaaaaaaaaaawn coming on. I wasn't wrong. YAAAAAAAAAAAAAWN. I think I'll take a nap.

Another line of thinking is, that low rates are the only thing propping up a sagging balloon. If they rise, it will deflate prices.

This is an odd statement from someone who often says interest rates have to go up.

I don't read Mish that often, and don't particularly care what he says, but you are misrepresenting his position.

...I am confident that interest rates banks offered by banks will stay low....

http://globaleconomicanalysis.blogspot.com/2010/09/only-18-of-americans-confident-in-us.html

And here is is him quoting somebody in agreement:

... interest rates will remain low for a sustained period of time...

http://globaleconomicanalysis.blogspot.com/2010/06/getting-grip-on-reality-reflation-dead.html

Is this a sell signal on gold ?

That looks almost exactly like the scenario presented by some "expert" Glenn Beck had on his show a few years back. Very entertaining stuff. Ah, I love Glenn Beck.

John Mauldin just wrote a piece on Hyperinflation today. Not much entertainment value, with worth the read, especially the last few paragraphs. His book "Endgame" is on my reading list now.

http://www.businessinsider.com/and-here-comes-inflation-2011-3

Its Mish, dangnabit!
Now we’re back into Winter and prices are doing exactly the same thing and the usual suspects are claiming exactly the same thing.
On another thread you stated it's normal to be down 5-10%. The the CS SF Bay Area Index was down (summer peak to December) ~2.5% in 1992 and 1993. These sure as heck ain't typical times.

I'm not sure why anyone listens to Mish. His investment performance since March 2009 has been god awful. His fund has lost 20% since the market bottom in March 09. I'm not sure how you accomplish that given the fact that every stock and commodity has rallied more than 100%. Hell even the bonds that took a 50% haircut in 2009 are up 100%. That's 2 straight years of losses while all markets have done nothing but go up.

Here's Mish calling for a bottom in 2011

http://globaleconomicanalysis.blogspot.com/2009/07/housing-update-how-far-to-bottom.html?ref=patrick.net

More lies. Not biting.

Mich is like other True believers married to his cause. Going down with the ship only makes him more shrill.

Is there any hidden data being held back by the banks that is causing this reduction or can we trust this data?

I wouldn't get out the party hats yet. Fewer foreclosure filings doesn't mean people aren't defaulting. It could mean the banks just aren't acting on the defaults.

Yep... hard to argue... and the bigger question when will people stop reading the headlines and start reading the body of the articles.

"That was the biggest year-over-year decline the company has ever recorded.

"We believe some of the servicers have slowed foreclosures as they wait to see how the settlement talks play out," said RealtyTrac spokesman Rick Sharga, who expects a huge spike in filings over the next few months.

Yet the months of foreclosure inventory keep rising....

My play on Japan was working fantastic until the earthquake. Basically, it was the Marc Faber position. The bond market in Japan will collapse under monetization/desperation to prop up the export market and there will be an outflow into equities. That was well underway and paying off. With the collapse in the Nikkei occurring right now, I think the probability of a bond market collapse has increased because they will need to fund even more public projects. Furthermore, I think the Tsunami's damage to the coastline will devastate the import market that Japan relies so heavily on. They will be forced to monetize, bonds will go down, equities, will go up for the simple reason that they are safer than the bonds. They certainly won't go up based on strength of the economy. I'm jumping in today or tomorrow.

So why are so many of the REO's sitting unsold? I guess banks have to clean up those first before they start filing more...until then happy squating to those deadbeats.

The properties they already have are not selling due to low demand. this is what I see through my business. we have had a few properties over a year now from FDIC through NRT.

Katy Perry says

The properties they already have are not selling due to low demand.

In other words, prices are too high.

gameisrigged says

I wouldn’t get out the party hats yet. Fewer foreclosure filings doesn’t mean people aren’t defaulting. It could mean the banks just aren’t acting on the defaults.

second that.

It’s obvious to almost everyone that SOME AREAS have bottomed. That’s not rocket science. Detroit? Parts of Florida, Arizona, Vegas - most of us are in agreement here.
jt, Just want to make sure we are all on the same page here. The February numbers from Clear Capital show a Detroit and Las Vegas still in free fall. Florida is showing traction in some markets, while others are slower to respond. Arizona may be showing signs of a seasonal uptick in the next month or two. Ohio is actually the state showing the best gains.

Foreclosures have actually increased over the last 6 months, not decreased:

http://www.doctorhousingbubble.com/bad-bank-model-bofa-7-charts-us-housing-market-option-arms-win-worst-performing-loan-7-million-distressed-loans/

"Judicial foreclosure states recorded the most severe drops in foreclosures," said Sharga.
Nothing like some procedural issues to help with extend and pretend.

it's actually the low end areas that haven't bottomed yet because there's too much inventory.

The market that I live in is pretty healthy. With most decent houses selling in less than 30 days that's not a recipe for further price declines.

I just noticed that 1128 Victory Lane appears to have been foreclosed for under $200k in December 2010. I'm not suggesting new lows, but it does seem like deals can still be had at the courthouse steps. Will be interesting to see if flipper margins are still there. Can anybody comment on the nineties downturn: do market dynamics at the bottom allow for both flippers and longer term (rental) investors? Or do flippers need to be driven out by low margins before we can turn the corner?

EBGuy says

I just noticed that 1128 Victory Lane appears to have been foreclosed for under $200k in December 2010. I’m not suggesting new lows, but it does seem like deals can still be had at the courthouse steps. Will be interesting to see if flipper margins are still there. Can anybody comment on the nineties downturn: do market dynamics at the bottom allow for both flippers and longer term (rental) investors? Or do flippers need to be driven out by low margins before we can turn the corner?

The investor dynamic in the mid 90's was different than the current investor dynamic.

In the mid 90's, the purchase model for an investor was positive cash flow only. No consideration was given to the idea of future price appreciation.

Currently there are several subsets of investors:

-The classic positive cash flow investor. I tend to think someone like the poster "robertarias". This I believe is the smallest investor subset at the moment.
-The guy trying to beat the stock market. This guy is bright enough to know that the stock market is in a huge bubble. But he is also dumb enough that he made future plans based on a certain return and now can't get that return in anything without risk. So he buys a property to rent out. Unfortunately this guy nearly always has a mindset of "ZOMG so cheap". If I rent it out at a 6% return, ZOMG I'm doing better than a CD.
-Conglomerates. I honestly don't know much about these. I'd imagine very very ripe for fraud.
-Foreign investors. These guys seem to be going bonkers for property in really depressed markets like Vegas and Phoenix. There are seminars in Australia, China, Japan, Canada, touting the RE in depressed areas of the US. Kinda like the Armando Montelongo things. Future price appreciation is almost always a huge component of the seminar.

Anyway, bottom line is that in the depressed areas, the classic positive cash flow investor is gonna do fine(provided government handouts/section 8 continues in current form). But the guys counting on future appreciation?.....what happens 4 years down the road if the stock market booms. And all these guys have their money tied up...after years of property taxes, paying to fix up the mess their tennants made...etc? Continued oversupply as they look to cut losses and bail.

You go look at any decent house in the san fernando valley and you will realize that most "good" homes all have multiple offers at this point. If you're FHA, slim chance of getting in because 20%down and cash rules. That's just the fact. Nobody is overpaying, or going over asking price, but buyers are there and are buying. Many people have realized that it is actually time to buy. Not in a panic way like "this month or never" but we have arrived at the point where you gotta step up if you want to buy and can afford it. If you cannot afford it then that's not enough reason for the market having to crash further - you just can't afford it and should spent less time on the forum predicting world apocalypse but work harder, save more money until you can afford a house that works for you.

We just found out that our new neighbors of the house we bought are tenants - slightly smaller house than the we bought and they pay $2800/month in rent...more then we pay to own - NO BRAINER.

Disclaimer: I don't know how houses in the 300k range are doing...I am talking San Fernando Valley, south of the Blvd or close to it, Encino, Tarzana, Woodland Hills, Sherman Oaks house prices range 480k-750k

SubOink says

Disclaimer: I don’t know how houses in the 300k range are doing

I do,. they are tanking and IMO so will the 500K-750K homes by 20 percent in less than 2 years. is renting really that bad of an idea? or is the greed keeping people awake at night. the Ego loves a deal I guess?

a fool and his money will soon be parted but at least the Va jay jay is happy! ;-)

Katy Perry says

SubOink says

Disclaimer: I don’t know how houses in the 300k range are doing

I do,. they are tanking and IMO so will the 500K-750K homes by 20 percent in less than 2 years. is renting really that bad of an idea? or is the greed keeping people awake at night. the Ego loves a deal I guess?
a fool and his money will soon be parted but at least the Va jay jay is happy!

You seem confident in your prediction. So prices will fall EXACTLY 20%. Ok. Uh huh. Are you SURE they won't fall 18%, or 17.4%? Or maybe just 10%? Do you have a crystal ball?

If you are so confident that prices will fall 20% - then put your money where your mouth is and short the appropriate stocks that would reflect such a drop. You can probably short the entire index because if prices were to fall 20%, then none of us will have a job anymore and things will be so bad that you will not buy a house even then. Be careful what you wish for. YOU won't make out any better in this than anybody else if such a scenario was to happen because that money you are putting in the bank right now will be WORTHLESS. At least I have a house, an asset with actual value because you have to live somewhere.

You beat me to it.

Gottfried is also famous for his "tasteless" jokes about 9/11 within days of that event. I personally think people are way too sensitive, but I can't blame Aflac for firing him.

SubOink says

You don’t need to prove anything was wrong because you obviously can’t.

No, that's only obvious to ducks and pigs like you. I already proved him wrong numerous times before, and, he never really answered most of my posts directly. Usually, he either weasels out of every situation or comes up with some BS data which is either out-of-date or just plain wrong. Here is another link where I proved him wrong, and he hasn't had the balls to answer me, either:

http://patrick.net/?p=528285#comment-723695

dodgerfanjohn says

Currently there are several subsets of investors:

You forgot the neutral cash flow investor like me. Let the tenants pay off the mortgage in 15 years then take all the rent minus upkeep. Take the depreciation allowance against my current high tax rate. I don't care if the house goes up or down since I won't be selling it. I just want future cash flow after retirement when I will be in a whole lot lower tax bracket.

dunnross says

No, that’s only obvious to ducks and pigs like you.

So now I am a pig. I guess it takes one to know one. Or maybe you are just an angry renter. I get it. I used to be an angry renter myself. Frustrated with the world. Looking at negative news with delight and ignoring any slight sign of positive news because it didn't fit into my angry renter world. Then it crashed, then I could afford it, then I bought. You should do the same.