patrick.net

Flippers are after all a good and noble force in the economy, they are sacrificing their money to provide for a better quality of life for renters, what else can you ask for?

A 5gallon water jug shoved up their asses, beaten senseless, the death of 1000 cuts, soaking up to their necks in a pit of excrement? Just a start.

http://sfbay.craigslist.org/sby/apa/176028147.html

this one is classic. A few months back, a troll came here claiming that he bought a new SFH in South San Jose for 950K. And I happened to drive through that area (Basking Ridge South SJ), 5 feet away from the junction of 85/101 on the east side, with a major major power station squarely in sight, situated right on top a pile of dirt with zero vegetation whatsoever. Just imagine the ugliest hill on East Bay and you get what I am talking about, oh did I mention the power lines right over the development? Before I forget, the SFHs are 3 levels because the lot size is sub-1000 sft.

So now this "investor" after paying 950K intends to lease out his brand new POS at 2500 rent. The ads is actually not misleading, it is *close to 85/101*, it is so close that you can literally walk to the middle of 101. The development also looks over a lake - only that you need to look over a major power station before you see the lake.

Even if he is able to get an idiot paying him 2500 rent, the gross return is a handsome 3.1% (wow!), is this even enough to cover the interest on mortgage?

>>The ads is actually not misleading, it is *close to 85/101*, it is so close that you can literally walk to the middle of 101.

Do you think the troll saw what he was buying? Or maybe it was a deal done over the phone?

>>the only way to make money now is buy a 2 br condo and wall in the living room to make it a 3…

Oh that's nice. Why not just split all the rooms in half vertically and fill it up with twice as many short people?

Even if he is able to get an idiot paying him 2500 rent, the gross return is a handsome 3.1% (wow!), is this even enough to cover the interest on mortgage?

And who is the troll now? It only goes up fool, this savvy investor will make at least 250K in two years. How much is your troll ass going to make?

__________
Sarcasm off.

Michael Anderson-

"Why not just split all the rooms in half vertically and fill it up with twice as many short people?"

You laugh now, but that's the direction that all of this is headed. In my neighborhood of 50 year old 3/1 tract homes, little by little the buyer type has changed from "first-time home-owning young family" to "multi-family" as the prices have tripled in six years. The first thing to change is that parking becomes a scarce commodity. Sure, I can park in my driveway, but my guests often have to hunt for parking. Luckily, I am just a JBR so I can leave if things get ugly.

SQT-
The story of your parents' plight is jaw-dropping. My mom has a similar situation but on a lesser scale. It makes you wonder a lot of things. How did they sleep at night while they were in such a downward spiral? Why didn't they "ring the bell" earlier, if not to you, to a credit counselor .... how did their generation get to be so nonchalant about their household balance sheets? Most of the REALLY BAD stories like this I've heard involved a cash-burning business -- I think that's bar none the fastest way to rack up six digit debt. Even faster than a crackhead in law school.

>>How did they sleep at night while they were in such a downward spiral? Why didn’t they “ring the bell” earlier, if not to you, to a credit counselor …. how did their generation get to be so nonchalant about their household balance sheets?

For water to boil, you need a first bubble to get things started. SQT's parents got into trouble gradually. Nothing served as that first bubble until SQT's dad let something slip.

>>How did they sleep at night while they were in such a downward spiral?

I'd guess her dad had compartmentalized the money, and was able to sleep because of it. The losses are over there and the assets are over here. Just as long as he never lets the subtraction happen in his head, he's OK. People are notorious for keeping their little piles of money in seperate mental boxes. "This is the money I inherited." "This is the money I got back from taxes."

>>Why didn’t they “ring the bell” earlier, if not to you, to a credit counselor

Less painful to hope that the business turns around and fixes the problem.

>>how did their generation get to be so nonchalant about their household balance sheets?

I don't think it's generational. I think it's temperment. For each generation, I know people who balance checkbooks and those who don't. People who keep receipts for decades and people who shred them or lose them immediately.

Often, busy "successful" people are the worst offenders. The money rolls in, and it seems to be smarter to concentrate on the money-making than the accounting.

>>and some seem to love to spraypaint roman numbers everywhere, but they dont vote.

CMLXXVI

Like that? WTF?

Randy H - "The fact is that the US is a large-open economy with nominal interest rate power aside from real interest rates as determined by the “market”. This requires an active manager"

Huh? Run that one by us again please. As HARM points out, rates need *only* be determined by the market. Anything else is at best a guess and if wrong, will likely lead to misallocation of resources.

"This natural “”market fair price” you refer to will be set by other countries who do have Central Banks."

And what is the problem exactly?

--“This natural “”market fair price” you refer to will be set by other countries who do have Central Banks.”

And what is the problem exactly?

Sorry, this is getting a bit tiring. You know what, it's a great idea. The whole notion of Central Banks, assurance of payments, counter-party risk oversight, and nominal interest rate management is folly. If we just eliminated Central Banks, fiat money, and hell, all forms of fiscal management while we're at it, then we'd instantly find ourselves living in some kind of Ayn Rand Walden, because everyone knows that no person, corporation or nation would ever attempt to exploit one another or game the system.

If we all drove around without seat belts everyone would be a better driver too.

It is difficult to judge the Fed without knowing what would have happened if a different policy course had been followed. But I think that the Fed always overreacts. Whatever the “right” policy is, they will do too much of it. This in turn requires them to be heavy with the antidote to their preceding mistake.

The huge liquidity move in 2001 through 2004 was excessive. And to the extent that it was excessive and lasted too long it was damaging. I think they should never have gone below 2%, and 2% should have been a six to 12 month affair with rates coming back up starting at the end of 2002. Instead they went lower (to 1%) in 2003 and stayed there until mid 2004. So the pot boiled over.

If only they would have the patience to wait for their medicine to take hold before upping the dose. They know that the lag time is about 18 months for full effect and about nine months for the first real impact of their policy changes. And yet they get impatient and keep upping the dose.

Now (at 5%) the Fed has already raised their target rate above the natural equilibrium level. This is more than enough “medicine” to slow the economy, but it will take a while for the medicine to be digested. Any further increases will intensify the recession that will come soon (2007).

This is a mistake and by early next year they will be cutting rates to reverse the overdose that they have already administered.

"Sorry, this is getting a bit tiring..."

Yes, it does always get tiring at about this point doesn't it.

How about a thread on global warming and how it would affect bay area?

Huh?

Just saw “Inconvinient Truth”.

Please also read State of Fear by Michael Crichton.

Any further increases will intensify the recession that will come soon (2007).

If that is the case, there would be a much inverted yield curve, wouldn't it?

A stronger inversion would be a much more bearish sign. A prolonged flat or slightly inverted curve is also a bad sign. The natural eqilibrium is a positive slope of about 100 to 200 bps from 2 to 10 year treasury. With the 10 year at just over 5% the normal position for the Fed funds target rate would be about 4%. Anything above that is restrictive to the economy. This combined with a slowing housing sector is a recipe for recession. At this point I expect it to be mild. However, the Fed is probably not done with their interference with the natural balance of the economy. Still pushing to correct their prior excessive dosage of liquidity, and proving their anti-inflation credentials.

- water levels rising (putting Alameda and parts of Fremont under water)
- climate changes (very warm, dry, and windy)
- new exotic creatures like mosquitoes coming to bay area

But the theory of Global Warming also requires that:

- the effects are global
- the effects are mostly attributed to human activities

which I do not believe.

I will watch the movie anyway, perhaps this weekend.

Many forms of environmentalism are variants of NIMBYism. I can guarantee that Nature can survive with or without us and that whatever we do will be a non-event to Nature. Much of the world are still in development. It is wrong to deprive them of developmental opportunities simply because we have already polluted enough when we had our turn.

Most environmentalists are idealists with good hearts. Many of my friends fall into this category. I am not saying that we should pollute at will, we should be mindful about our natural resources. However, we must be very careful about any unproved theory that attempts to dictate our growth policies. Hmm... doesn't this sound eerily familiar?

i like gore.

I like him too. I like many people who think differently.

Sorry, this is getting a bit tiring. You know what, it’s a great idea. The whole notion of Central Banks, assurance of payments, counter-party risk oversight, and nominal interest rate management is folly. If we just eliminated Central Banks, fiat money, and hell, all forms of fiscal management while we’re at it, then we’d instantly find ourselves living in some kind of Ayn Rand Walden, because everyone knows that no person, corporation or nation would ever attempt to exploit one another or game the system.

If we all drove around without seat belts everyone would be a better driver too.

Oh, please. So you're giving up just because some of the bloggers disagree with you? Tsk, tsk... This is beyond the straw man --this is just sour grapes.

Not the high caliber of debate I've come to expect from Sir Randall. I'm rather disappointed :-(

The best way to preserve our environment and slowdown the deterioration of the earth is to reduce global population by 95%. War is required to achieve this end.

The 2nd best way is to deprive the 3rd world country of their fair chances of industrialization. This will also lead to war.

Hard medicine. Tough to swallow. But the truth always hurts.

The best way to preserve our environment and slowdown the deterioration of the earth is to reduce global population by 95%. War is required to achieve this end.

Hard medicine. Tough to swallow. But the truth always hurts.

Or we can just wait and see if global warming is real, and if that leads to population reduction or war.

BTW, I never said we need to completely abolish ALL functions that a "Central Bank" typically performs. I just said that most of the USEFUL and NECESSARY functions (such as printing currency/coinage, protecting it from counterfeiters, etc.) is already being performed by the U.S. Treasury Dept.

If we already have an efficiently functioning Treasury Dept., then why do we need the Fed?

I see no reason why they cannot simply absorb what (few) useful functions the Fed now performs exclusively, such as setting reserve requirements and regulating lenders. As far as counter-party risk oversight, and nominal interest rate setting, I'm pretty sure the open market has been able to do this effectively for centuries.

central or reserve banks were actually formed in response to frequent credit squeezes, recession, withdrawal panics (or bank runs), and speculative booms and busts.

http://en.wikipedia.org/wiki/Federal_Reserve_System#History

how well this has succeeded and whether the ideal has been co-opted is a moot point...

see also fractional reserve banking and full reserve banking...

threadmaster,
Please edit that 8-0 to :shock:

Done

how well this has succeeded and whether the ideal has been co-opted is a moot point…

Moot indeed.

extremely moot

SQT,

You haven't weighed in on the thread topic yet. What do you think? Am I "crazy Libertarian" with a capital "L" for wanting to abolish the Fed (and centralized interest rate & money supply manipulation), which I regard as a government-sanctioned cartel of private bankers operating in secret --arguably for political ends?

SQT,

Based on that 2001 appraisal (plus all that other expensive stuff they can sell), I really think your parents may be able to come out of this thing comfortably sitting on seven-figures. As long as they are capable of "downsizing" lifestyle and expectations, they should be able to do just fine on their own. I wish you the best of luck.

@ajh,

is it the Fed. that provides the Lender of Last Resort facility in the US? That’s something that does have to be done

Yes, and I would say this qualifies as a "USEFUL and NECESSARY function" for a Central Bank in any country (see my above post from June 28th, 2006 at 11:49 pm). Again, I don't see why a somewhat expanded Treasury could not handle this function. Hopefully, banking systems (and yes, bank regulations) have evolved to a point where a repeat of your 19th century bank-run scenario would be exceedingly unlikely today.

I never said there was NO regulatory oversight role for government in banking --just that the Fed is not currently fulfilling that role particularly well. And it's performing a number of functions (risk/interest rate pricing) best left to the open market --and doing a poor job of it.

What do you do when the "police" need to be policed as much as the "criminals"?

the thing is, whenever banks and big business have been left to themselves, they also create bank runs, credit squeezes, booms/busts, speculation, recessions, depressions, etc.

one critical view is that the fed only serves to protect other banks interests, so at least the banks won't be hurt by the above-mentioned capitalist phenomena, although everyone else will...

Greenland is losing 52 cubic miles of ice each year, more than anyone anticipated. The amount of freshwater ice dumped into the Atlantic Ocean has almost tripled in a decade. Climate experts have started to worry that the ice cap is disappearing in ways that computer models had not predicted.

RMB Says:
Time magazine? Back in the 70s Time was saying we were heading into the next ice age?

It's called irony, re the quality of reporting in Time. But the Greenland article from the LA Times points out:

"Should all of the [Greenland] ice sheet ever thaw, the meltwater could raise sea level 21 feet and swamp the world's coastal cities, home to a billion people. It would cause higher tides, generate more powerful storm surges and, by altering ocean currents, drastically disrupt the global climate.

By all accounts, the glaciers of Greenland are melting twice as fast as they were five years ago, even as the ice sheets of Antarctica — the world's largest reservoir of fresh water — also are shrinking, researchers at NASA's Jet Propulsion Laboratory and the University of Kansas reported in February.

From cores of ancient Greenland ice extracted by the National Science Foundation, researchers have identified at least 20 sudden climate changes in the last 110,000 years, in which average temperatures fluctuated as much as 15 degrees in a single decade.

The increasingly erratic behavior of the Greenland ice has scientists wondering whether the climate, after thousands of years of relative stability, may again start oscillating."

I think temperatures changing rapidly from year to year will lead to massive die-off of plant species, possibly followed by reductions in the animals that dine off them and live amongst them. Crops may fail on a large scale, as the weather swings around wildly from season to season, jeopardising output from breadbasket farming areas.

It reached 111 here one day last summer, and the manferns outside all but died in that one day. Completely shrivelled leaves.

SQT,

I know this may be of little comfort right now but at least they have each other! Yeah, I know it sounds feeble but ask your husband how many times his "surviving client" (usually mom) had NO IDEA what their true financial picture was like! Poor "mom" is learning of these details at a time when she is ALSO making funeral arrangements. I am SO not kidding.

In more instances than I care to remember the surviving spouse seems shocked to find that medical bills, consomer debt and mortgages devour much of their "savings" forcing some pretty lean choices. At least your folks can work through this together? When things get "raw" (and they will) please to remind them of this?

*Not family advice

Gore is a bad choice as a cheerleader, he does talk the talk, but he definitely is yet to walk the walk.

he invented the internet and discovered global warming... baron munchausen rides again...

>>[Al Gore] invented the internet

Then who invented the algorithm?

The fastest-warming place on the planet is the Antartic - if this ice cap melts, sea levels rise well over 200 feet

in the Jurassic, there were no ice caps, the earth was 16 deg warmer on average, and the seas were 200 ft higher...

why do you think there are sudden die-offs and mass extinctions of species over time?

>>mostly its XIV and XIII. Where do you live that has not been infected by this dog-marking-a-tree crap?

Oregon. But I look forward to this export, as I look forward to all California exports.

Michael Anderson,

Ever been through Woodburn, OR? Yeah, it would be a lot like that, yeah.

"Gore is a bad choice as a cheerleader"

Precisely. I want to see the movie with an open mind about the topic, but it's awfully hard to take a political hack like Gore seriously.

Sure, he's not as bad as Ann Coulter & Michael Moore, but he's still a shill.