patrick.net

FAB,

interest rate can head down again from here if things get ugly. From 5.25% to 0%, we still have an elbow room of 5.25%. Japan went on ZIRP for over a decade, we could do the same, too.

I am not saying that this bubble won't pop, but it may still take longer than people think.

HARM,

if, theoretically, you believe that everything else will go up 30-50% while the housing value remains the same, it will make sense to take out the maximum loan you can and pay back later in cheap money. The question is where should you park your money when you get the loan. Putting it in a house and getting the mortgage deduction back may NOT be a bad idea, if you have not owned your primary residence yet (since you are going to pay rent anyway, and we assume rent will go up 30-50% too).

Here are two big assumptions this claim is based on: housing value will be the same (instead of heading down), regardless of inflation, and rent will be going up keeping pace with general inflation.

Reasons it “is different this time”

FAB, these are good reasons to think the crash will be much worse than last time. Do you happen to have a links to back up the mortgage stats above? I've found it difficult to locate hard data on anything pre-Internet.

Here are two big assumptions this claim is based on: housing value will be the same (instead of heading down), regardless of inflation, and rent will be going up keeping pace with general inflation.

Precisely. And neither of these assumptions is coming true so far, which makes Randy's "you're better off buying now" scenario even less viable. We're seeing rents in most areas flat to falling (a few prime BA locations excluded), and housing prices clearly on their way down already in AZ, San Diego, Sacramento, FL, etc.

The newest catch phrase of relator's; Inventory! Inventory! Inventory!

I know that the only thing worse than being a FB in the last couple of years would be to become an 11th-hour capitulating bear who loses his cool and jumps in too soon. I refuse to catch a falling knife and end up the greatest fool of all: a hypocrite and the guy who has no one else to blame because he actually knew better.

Exactly.

Which renting poster on this board succumbs to this flawed logic first and disappears soon, slinking off to the neighbourhood or condo association as their new community to replace the cameraderie of this board.

Who will be the one?

HARM,

Fair enough criticisms; but in your spirit of care to back it up, please provide me with calculations that prove your perspective. I have provided mine. For one, please enlighten me as to exactly what you intend to invest your alternative use of funds into that will hold or gain versus inflation without undertaking significantly more short-term risk than a real asset. If your answer is that you'll buy an interest in commercial property and is instead that you'll buy bonds or equities, then that ain't gonna fly. All you've done from a financial perspective then is trade lower sigma for higher sigma.

And please don't assume I have any type of "bubble fatigue". I'm a numbers guy. If you can provide reasonable numbers to the contrary, then I'm all ears.

As to FAB's "data", I have provided links to my hard data, as compiled by HSBC, annotated in hundreds of pages in a PDF, and downloadable as analyses in Excel. I'd like to see FAB's data aside from anecdotals. I'm sure the good folks at HSBC would too.

Which renting poster on this board succumbs to this flawed logic first and disappears soon, slinking off to the neighbourhood or condo association as their new community to replace the cameraderie of this board.

Who will be the one?

I personally just committed to renting for another year, so I'm not arguing anything from conclusion. You guys do realize that everyone has a different discount rate, right? That means that the optimal point for each person to buy in is different. Everyone has different salaries, different upside income upside potential, different wealth profiles, and different time horizons. Someone who intends to buy and hold for long enough will do fine as long as they can afford their payments on a fixed loan with 20%+ down...yes, even if they buy now. This has always been true. The only difference is that if they wait a year or 5 they might get something much nicer for the same $.

Randy, as far as "care to back it up" goes, like I said, I'm not a numbers/finance guy. Even if I made a best effort, I doubt I could come up with anything sophisticated enough to impress someone like you, who makes his living doing this stuff every day, all day long. But there are other professional number-crunchers out there who have made the effort, such as SoCalMtgGuy. And his numbers and conclusions broadly support my position (at least where the CA market is concerned).

...the optimal point for each person to buy in is different. Everyone has different salaries, different upside income upside potential, different wealth profiles, and different time horizons.

This I can buy, yes, absolutely.

Someone who intends to buy and hold for long enough will do fine as long as they can afford their payments on a fixed loan with 20%+ down…yes, even if they buy now. This has always been true.

Also true. However, you've just described a scenario that hardly even exists in CA anymore. 20% down? Anything down? Fixed-rate whatchamahoozie? What's that??? You must be speakin' martian or something.

The only difference is that if they wait a year or 5 they might get something much nicer for the same $.

Or get the same house for less in constant USDs. Either way's a win-win for me. :-)

Or get the same house for less in constant USDs. Either way’s a win-win for me.

You will have to buy when nobody wants to buy. The psychology of "not catching falling knives" will be overwhelming. Are you sure you can manage that?

As to FAB’s “data”, I have provided links to my hard data, as compiled by HSBC, annotated in hundreds of pages in a PDF, and downloadable as analyses in Excel. I’d like to see FAB’s data aside from anecdotals. I’m sure the good folks at HSBC would too

Randy, do you actually have reliable data on what the composition of loans (and down payments) were during the last bubble (mid-late 1980s)? I'm not trying to be "cute" here, I'd really like to know as a point of comparison. Everyone who worked in RE at the time seems to "know" that lending standards were very lax then, too. But this doesn't tell me anything quantitatively. I'd like to know what % were neg-ams/option-ARMs, interest-only, fixed, etc. And what % was the average down payment?

New restaurant alert: "Madison & Fifth" on University Ave in Palo Alto is pretty good. Try it out! It has some NY-style Italian food. Price is quite reasonable.

BTW, Downtown Palo Alto and Mountain View are really thriving. That may cushion the soft landing for certain types of properties.

Yesterday when I was surfing my section of East San Jose in Yahoo Real Estate I saw an MLS listed house where it said in the description of the property that it was in foreclosure and must sell this weekend. That's the first time I've heard of such a thing in that section for the past ten or so years.

During my Saturday errands I planned to drive past the house. It is in the enrollment area that is highly coveted by well heeled immigrants for "Evergreen Valley High School". On the way to see the "evergreen" house that is facing foreclosure, I saw eleven of those "open house" real estate signboards at the intersection of Quimby and White, which is kind of at the northern fringe of "Evergreen", about 300 meters from the foreclosure property. Two of those 11 signboards did not show the name of realtor companies, but instead, something else. One of them called itself "lender" and the other one called itself something like a "mortgage and loan trust". Neither of those two sign boards was for the foreclosure property that we drove by, a vacant house that's about 38 years old with an asking price of something like 669K.

You will have to buy when nobody wants to buy. The psychology of “not catching falling knives” will be overwhelming. Are you sure you can manage that?

Hey, I'm not saying it will be easy --far from it. We will have to organize local chapters of the Patrick.net Buyer Resistance Support Groups. Motto: "Friends don't let friends buy houses while prices are still falling".

Surfer-X will be my local PBRSG brother. I will carry his number around with me at all times. Whenever I see a cool turnkey bungalow in a good neighborhood and get the urge to "buy now!", I will call him up, and he will come over and smack the s*it out of me until it passes.

It can work, trust me... :mrgreen:

Wait a minute, did you mean the psychology of NOT wanting to buy will be overwhelming at the bottom of the market? Hmm... I hadn't considered that. I guess as long as I find a place I can really afford in a nice community where I'm happy, I really won't care what other people think. That's what I hope happens, anyway.

Bubble Battle Fatige
Another one for the dictionary, no?

Yes, consider it done.

HARM,

I don't know what the loan composition was in the 80s or 90s downturns. I think it's safe to say it was a lot less IO and NA loans. Were there even NA loans in the 80s? There were a good number of ARMs in the 90s, because rates were falling.

I don't make any claims about whether this correction will be more or less sticky than previous rounds. I simply contend it will be sticky. It already is sticky.

The reason I rail against you sometimes here is that you're overemphasizing timing and ignoring utility. This is actually the same thinking that got the specuvestors into trouble. A little good, common sense timing is fine. But I recommend leaving ultra-precise timing of any market to geniuses and fools.

Utility is a huge factor in home owning. In my case, renting is tremendously undesirable. All the normal reasons for someone of my age with a young child plus lack of handicapped accomodations for my mother. That means that economically, I will derive more utility from owning a home than someone who is in a different situation, like a single 25 year old with no children or elderly mother living with him/her. That means that I will place a higher value on any given home, and I will be willing to pay more for it than someone who is playing the purely technical game of "don't catch a falling knife".

I am dubious of technical investing. I'm a value investor.

I could find no proofs, models or formulae on that link you provided. If they exist please call them out. I am eager to see how he calculates returns in an inflationary model, overcomes iterative tax benefit and fixed rate advantages, and still proves that real assets are suboptimal.

Randy H,

Take a deep breath, and step outside of yourself for a minute. I like numbers too, but not as much as you. Rely on all the information you have gathered through the years of your life, and see the big picture.

Using a computer model to predict the exact point of a hurricane making landfall 5 days out, is about as accurate as predicting where the economy is headed on D-Day. The exact point if landfall can change within a matter of hours, as was the case with hurricane Charley. All the numerical information crunched by a super computers, could not predict how things would eventually turn out. This is what separates us humans from the numbers. We are not like a race horse, running down a track with blinders on.

I take into account anecdotal evidence and psychology of the market, which numbers cannot crunch. Things like the EAU, Russia, and China wanting to increase their gold reserves from 2% to 10%, buying on the dips. Other things like historical patterns of how previous housing bubbles have played out. National and personal debt, each about 10 trillion dollars. And don't forget political instability and the price of oil.

Although, computer models cannot accurately predict where landfall will be, you can at least see the general direction that a hurricane is headed, and plan accordingly.

Bubble Battle Fatigue (BBF): Term coined by yours truly to characterize the cumulative psychological damage caused by constantly doing battle with housing perma-bulls, trolls and unrepentent specuvestors. May result in sporadic grouchiness, ennui, and the tendency to mumble aloud about "cap rates", "rent vs. buy" & "ain't feedin' no damn squirrels" at inappropriate moments. If left untreated, extreme cases may result in total bear capitulation, where the subject assumes the identity of the trolls he's fighting and may even begin to recklessly speculate in RE.

Randy, hopefully this link should provide at least some of what you are looking for. But neither SoCalMtgGuy or myself have ever bashed traditional financing --quite the contrary. If everyone used FRMs, 20% down, provided proof of income, etc. then there would be no bubble.

Point taken on considering utility along with timing. I have never claimed the power of perfect prescience ;-), and while I have a rough idea of when a bottom *might* happen --just based on previous bubbles-- the prudent thing to do is keep an eye on all the relevant data and consider your particular needs. This we can agree upon.

Randy,

I have a lot of respect for your valuable posts, and most of the time find myself agreeing to your well reasoned arguments.

But I find myself in the camp of not-so-sticky-this-time-around. I definitely do not get pissed by the arguments in favor of stickiness. I just do not find them convincing enough. In spite of the numbers/data you provide, reasons such as FAB mentions just "seem" so much more logical.

But there may not be any disagreements. I see you referring 25% as soft landing. That's not what NAR calls soft landing. For most people it is a crash. I definitely do not expect 50% decline. But I believe prices will revert back to those before or around 2003 levels. And the gains of 2005 will be erased in nominal terms., that much I am willing to bet my money on.

To be more precise, I think by 2008 end, the median price in BA would be below the highest it reached in 2004 - in nominal terms. I am making this prediction in the most unscientific manner. It's based on what I read, what I hear from people around me, and what I expect Fed to do, from where I expect stock market to be and so on. I do not have any data to support this.

Also the evidence I see in the BA market, does not support soft landing as NAR says - 5 to 10% decline, very slowly etc. I have posted numerous listings, their price reduction history and such. The asking price in these listings was dropped 10% or more. And this is just the beginning.

astrid Says:
DS,
I fear the transportation infrastructure and the coming high gas prices will soon make the Gilroy area rather undesirable. Affordable housing you’re thinking about is based on a static comprehension of a recent phenomenon. If the real price of BA houses retrench back 15 years, very few people who want houses will have trouble getting them. I’d advise the affordable housing people to wait this one out to save themselves from paying inflated prices for housing stock, land, and building costs.

that's exactly what i mean -- make an offer to developers, FBs, specuvestors etc to bail the half-finished projects out at bargain basement prices -- don't pay retail. it's a housing fire sale. of course, these places could turn into ghettos if you did that, especially if they're miles from good transport. but the whole point of the boom is that many lower to middle income people can now no longer afford to enter the housing market or have a 'housing career' because of high prices (at least, not without spending 60% of their gross income on housing) who a decade ago could've afforded it, and too many players in the market don't want to see it cool to a socially just level, but it MIGHT cool by itself over a few years through market action, or govt fiat might bring areas back under control. i'm just trying to hasten it along a bit... thus providing better risk management, certainty and control of pricing ...

OO,

I completely agree with you on Morgan Hill and Gilroy. I have been there recently myself. Tracy/Mountain House side and Morgan Hill to Gilroy side are in real BAD shape. I have no desire to buy in these towns whatsoever. But I keep a watch on the "fringe" places, as downward price pressure there will automatically translate inwards.

in fact, i think we should take a leaf from vladimir putin's book, and renationalise a few sold-off industries. just appropriate the whole loss-making gilroy area or similar, take the money back from the developers and offer the purchasers a rebate on their loss, and also claw back some of the money from the original land vendor. if they don't want to play ball, throw them in jail on some trumped up charge like the soon to be ex-billionaire resource oligarchs of russia. if they really kick up a fuss, liine them up against the wall and shoot them. (that's why you have all those arms...)

it's clear by now you can't trust the 'free market' to deliver a sensible outcome in housing, so the govt just has to step in and show them how it's done...

...and some people here have called me left-wing, i still can't understand why...

HARM,

When I read that post, I also suspected a joke. But doesn't matter. That post and the accompanying picture just kicked the grumpiness out of this board.

HARM,

What Randy said is perfectly reasonable for HIS situation.

Here are two main differences. One, he is targeting a slightly different neighborhood from you, prime spots in Bay Area has ALWAYS been stickier than LA, because we do have a relative shortage of land if you are only targeting Marin, Peninsula, West valley/foothill. Traditionally prime spots here with a good school districts do tend to have a lot more moneyed followings chasing after them. I am not saying that we won't have a pop, just that you need to wait longer for a smaller pop in absolute price. Things are VERY different in LA, LA has far more land as opposed to the amount of money available chasing these properties.

Second, he is also at a different phase in life. What is money for? For enjoyment. He obviously is a smart and financially conservative guy who won't get into 0-down, neg-am kind of situation way over his head. So he doesn't need to wait for the absolute bottom to get in, because, you know, life is short. When you have multiple generations living together, stability and continuity is important, moving is already hell if you have kids, not to mention if you have aged parent.

For people who can afford it, waiting for the absolute bottom is losing sight of the big picture. I won't be buying until 2009/2010, but I know this may not be the absolute bottom either. If we are going Japan style RE deflating for another 16 years, I am not going to sit tight throwing away 16 years of my life for that wait, because the kind of property I desire is hard to find in the rental market - who is going to rent me house on a 10-acre land? I will be missing out on the fun with my land.

Now if you throw in the inflationary picture, the wait may even become less worthwhile if one attaches a high utility value in an owned house. In the end, it is not all about counting money, life is about counting utility.

OO said:
If we are going Japan style RE deflating for another 16 years, I am not going to sit tight throwing away 16 years of my life for that wait, because the kind of property I desire is hard to find in the rental market - who is going to rent me house on a 10-acre land? I will be missing out on the fun with my land.

Now if you throw in the inflationary picture, the wait may even become less worthwhile if one attaches a high utility value in an owned house.

Land is usually a good inflation hedge. But not a 2 BR fixer on a postage stamp lot. Better to buy raw land, IMO. One hassle-free way to do this is to buy stock in a company that owns land. I own a few shares of Tejon Ranch Company (TRC). They own a ton of land along the 5 freeway between LA and Bakersfield (about 270,000 acres--bigger than the City of LA). The market cap of this company is only around $660 million, for a non-bubblicious price per acre of less than $2,500. Of course there are problems--the land is remotely located, it is near a fault line (but then so is the BA), and the company earns very little money off of the land currently (Walnut farms and such).

Still, I imagine the stock would do well in an inflationary, dollar crash scenario. And the company has development plans in the works. Has anyone else looked at this stock? Or does anyone have other ideas on how to hedge the inflation risk while waiting out the housing bubble? I know gold and other commodities are options, but these seem less correlated to California housing prices than TRC.

This is not investment advice, of course--do your own due diligence.

HARM, your postings drive me to the edge of wanting to spoon with a man. OK Holmes, we X'rs united against boomers might have to face the fact that we aren't interested in housing as an investment and might just have to move somewhere else. A bitter pill yes, but dude, it's getting fucking ugly here in $B, stabbings are occurring very very frequently and the local news does not report, the independent newspaper does. One is faced with difficult decisions, does one take a job in a border state for a buck ten and a killer house that says "live in me until you die" or does one keep sucking boomer cock in California? Hmmm, personally I suck boomer cock all day long and send my rent check to another boomer, given the choice to bail to a border state and buy on the way down for income times 4, for a place I will live in for the long term future, fuck it. Like I said it's getting very ugly here. This isn't the California of our past, it's the California of the boomer's past reinvented for their second childhood.

I swear to my imaginary friend that I hope a fucking boomer bumps into me because I will drop them.

Schools? Fuck you maggots, teach your fucking spawn yourselves. A Porsche does not mean as much as teaching your spawn well. Crapatino? Fuck off.

Soft Landing in Coastal Calikornia means boomers jacking off all over each other. Of course it's sticky. Ask yourself this, how many boomers are there, and how many of them listened to California Girls by the Beach Boys? Lots. Then ask yourself this, how much boomer cock am I willing to suck. The Coastal areas will drop ~25%, big fucking deal, the valleys will see slaughter. But who the fuck wants to live there?

It all boils down to how much boomer cock you are willing to suck.

yes. the guns will be here next week...

Did you see the news story about how gang members are joining the military to learn professional military tactics to bring back to the homies?

that's one part of the People's Revolutionary Army of Housing Liberation...

surfer-x Says:

"...This isn’t the California of our past, it’s the California of the boomer’s past reinvented for their second childhood...

The Cali I knew is gone. We need a new rennaissance!

a new renaissance and a new rebirth of renewal....

Glen Says:
Land is usually a good inflation hedge. But not a 2 BR fixer on a postage stamp lot. Better to buy raw land, IMO. One hassle-free way to do this is to buy stock in a company that owns land. I own a few shares of Tejon Ranch Company (TRC). They own a ton of land along the 5 freeway between LA and Bakersfield (about 270,000 acres–bigger than the City of LA). The market cap of this company is only around $660 million, for a non-bubblicious price per acre of less than $2,500. Of course there are problems–the land is remotely located, it is near a fault line (but then so is the BA), and the company earns very little money off of the land currently (Walnut farms and such).

Raw land is intrinsically a riskier proposition than land with something on it. It can be rezoned easily away from the purpose you hoped for. And you might be dead by the time it gets developed up and starts to pay off. Assuming we can even consider such squatting on land to be ethical.

Still, I imagine the stock would do well in an inflationary, dollar crash scenario. And the company has development plans in the works. Has anyone else looked at this stock? Or does anyone have other ideas on how to hedge the inflation risk while waiting out the housing bubble? I know gold and other commodities are options, but these seem less correlated to California housing prices than TRC.

There was a conman operating in England and Australia who was selling 'prime land in the English countryside about to be developed. I have inside connections with the royal family.' These guys bought up small farms in areas and spruiked that they would one day be developed. However, local councils had no such plans. Some of the areas were floodplains that would never be developed. They were selling $10,000 shares in this speculative venture, known as 'land banking'.

The conman's previous venture was selling 'aged Scottish whisky' which was actually low grade malt whisky sold at high prices.

This is not investment advice, of course–do your own due diligence.

good advice...

Article "A QUEEN, A PRESIDENT & A SPRUIKER"

Australian property investors take note. ELS has set up an office in Australia.

ELS is an abbreviation for European Land Sales. It’s not a company, it’s a partnership. The boss of ELS is an English spruiker, Stephen James Cleeve.

On February 29, 2000, Cleeve received an eight-year ban prohibiting him from acting as a director of a company. Hence the reason ELS is a partnership.

Two months prior to his eight-year ban, Stephen Cleeve made headlines in Britain’s largest selling Sunday newspaper, The News of the World. He was said to be one of two ringleaders in a whisky scam in which £60 million ($AUS150m) was swindled from thousands of investors.

The reportedly fraudulent scheme involved enticing consumers to invest in barrels of malt whisky which would appreciate in value. According to experts, Stephen Cleeve was selling low-grade malt at top-grade prices.

Glossy brochures offered high interest returns on barrels of whisky which investors believed were worth between £1,145 and £6,000. The real value was between £400 and £600 a barrel.

Today, Stephen Cleeve – through his ELS Partnership – is still producing glossy brochures. Only this time, instead of pushing an investment in English whisky, Cleeve and his salespeople are pushing an investment in English property. Something called 'Land Banking'.

It’s not about ordinary land where homes can be built, it’s about land which is presently zoned for agricultural use only.

The pitch in the brochures is that the land has “a good chance of planning permission at some stage in the future.” ELS buys a few acres and then sells small “plots” (apx 0.05 of an acre) to individual investors. In doing so, Cleeve and his salespeople get millions immediately while investors must wait to get something. Maybe.

Assuming that everything is respectable and that Stephen Cleeve is not the conman that some journalists, many past investors (in his whisky deals) and his critics believe, the key question today’s investors will want answered is this – “How long will it be before planning permission is obtained for the land?”

In June last year, a British journalist from the Guardian was told by Trevor Pillay that planning permission “should take about two years.”

According to a British solicitor, who has been following Stephen Cleeve’s activities from his whisky dealing days to his current land dealings, the land that ELS is selling has “little or no chance of obtaining planning permission in the next 50 to 100 years”. Some of the land is reportedly “on the flood-plain and in the green belt with no development potential.”

In an e-mail sent to an investor in November, an ELS salesperson wrote, “The sites that we offer to our investors are sites where the land value is sure to increase.” According to the spiel, the “value will increase dramatically within a time period of two to five years.”

oops, that's a bit long, sorry...

Here is a recent posting from a local Realtor's blog, in San Luis Obispo County:

"Where are the Buyers???

July is starting off to be another bad month for Central Coast Home Sellers. Since the 1st, we've had
- 257 price changes
- 159 new listings
- 35 Back on market

and just 76 Pendings.

Inventory has increased by 128 homes."

The blog posting from the next day has another chilling topic :

"With the changing housing market, the topic of "Short Sale" is being brought up on Realtor message boards. Here's what a Short Sale is....

Say a homeowner can't make their mortgage payments. They put the house up for sale and get an offer that, when all costs of selling the home are deducted, is lower than what they owe to the lender. Instead of going into foreclosure, the lender accepts the lower amount.

The reason lenders would entertain something like this is because of the costs associated with the foreclosure process. There is a got'cha though. The amount the Seller is short is viewed as taxable income to the Seller."

All indicators are things are going to get MUCH worse. I wonder how many years it will take for this storm to pass, if it ever will, or when things will collectively hit "rock bottom". The bottom of the market, if discernible, will obviously be the time to buy for those who hold out, and a time for owners of properties bought in recent years to have any hope of returning to days when they had some equity.

An Update from Michael Moore (and an invitation to his film festival)

Friends,

Just a quick note to let you know how things are going.

Back in February, I asked if people would send me letters describing their experiences with our health care system. I received over 19,000 of them. It was truly overwhelming as we literally took a month and read them all. To read about the misery people are put through on a daily basis by our profit-based system was both moving and revolting. That's all I will say right now.

We've spent the better part of this year shooting our next movie, "Sicko." As we've done with our other films, we don't discuss them while we are making them. If people ask, we tell them "Sicko" is "a comedy about 45 million people with no health care in the richest country on earth."

But like my other movies, what we start with (General Motors, guns, 9/11) is not always what we end with. Along the way, we discover new roads to go down, roads that often surprise us and lead us to new ideas -- and challenge us to reconsider the ones we began with. That, I can say with certainty, is happening now as we shoot "Sicko." I don't think the country needs a movie that tells you that HMOs and the pharmaceutical companies suck. Everybody knows that. I'd like to show you some things you don't know. So stay tuned for where this movie has led me. I think you might enjoy it.

At this point, we've shot about 75% of "Sicko" and will soon begin putting it together. It will be released in theaters sometime in 2007.

And if you don't hear much from me in the meantime, it's only 'cause I'm busy working. I realize that my silence doesn't stop the opposition with their weird obsession for me! It seems like not a week passes without my good name being worked into some nutty news story or commentary. (I have to say, though, I did enjoy Tom Delay blaming me and Ms. Streisand for why he had to resign from Congress!)

I hope all of you are enjoying your summer. If you're near the state of Michigan later this month, I'll be putting on the second annual Traverse City Film Festival in Traverse City, Michigan. I've personally selected 60 or so movies that I love, many of which did not get the notice or distribution they deserved. Others are brand new independent movies and documentaries that I hope will find a large audience when they are released.

The film festival will take place in this beautiful town in northern Michigan, from July 31st to August 6th. Appearing in person with their films will be David O. Russell ("Three Kings"), Lawrence Bender ("An Inconvenient Truth"), Terry George ("Hotel Rwanda"), Larry Charles ("Borat"), plus Jeff Garlin, Jake Kasdan, and other filmmakers. We're also going to show every feature film made by the greatest American director of all time, Stanley Kubrick. Joining us in person will be his executive producer, Jan Harlan, and actors Malcolm McDowell ("A Clockwork Orange") and Matthew Modine ("Full Metal Jacket").

Tickets go on sale today (July 7) at noon. To purchase your tickets (all seats $7), click here or call 231-929-1506. Last year we had 50,000 admissions, and we expect most films to sell out early this year.

Well, that's it for now. Bush has quietly closed down the special section of the CIA that was devoted solely to capturing Mr. bin Laden, so we can all rest easy now. I wonder who his next scary evildoer will be. A fearful nation awaits its marching orders, sir!

Yours,

Michael Moore
mmflint@aol.com

P.S. Don't forget to visit my website which I update every day with all the news the Bush stenographers (a/k/a "Mainstream Media") fail to put on page one.

oops, i did it again...

I just looked at an old file and found that when I bought an apartment in 1990 with a Home Savings variable rate loan at 2.25% over the 11th District Cost of Funds index (aka COFI) my interest rate was 10.619%. The payment on the $2mm loan was $18,773 per month. In 1994 the payment was down to $12,083 (a 35% drop). Despite the big drop in payments from 1990 to 1994 thousands of property went REO and dozens of CA banks (including every bank based in San Diego) went under.

Below is the 11th District Cost of Funds index showing the drop from 1990 to 1994. Most small commercial loans and many home loans in the 90’s were tied to COFI with the spread over the index usually from 2% to 3%:

January 1994: 3.822%

January 1993: 4.360%

January 1992: 6.002%

January 1991: 7.858%

January 1990: 8.369%

Below is a graph that shows the massive ugly drop in CA real estate values in the 90’s and shows how massive the drop that is just starting will probably end up (the inflation line at the bottom):

http://www.housingbubblebust.com/OFHEO/BubbleGraphs.html

http://www.housingbubblebust.com/Fed/GDPvsHSG.html

Former, I think this is the graph link you wanted to share. Thanks for the interesting site.