patrick.net

Alright, I guess we need a blog "time out" here?

When Randy H is talking about "collateral damage" (re-reading his original thread topic), he seems to primarily mean people NOT employed in the RE/mortgage industry and NOT having actively participated/profited from the Bubble in any way? Is this about right?

If so, then, yes, I wholeheartedly agree these people deserve our sympathies if they end up losing their jobs in the coming recession --through no fault of their own.

I guess what I and others got hung up on was the (possibly mistaken) impression that this group of "innocents" also included neg-am/IO FBs and SDCIA flippers.

That’s what needs to happen, anything less is the slippery slope of socialism is it not?

Insulating the beneficiaries from the pain is a worse mistake compounding all the mistakes leading up to the bubble.

Beneficiaries? Oh sweet mercy. After they're unemployed, remember to remind them about their aforementioned $7.50/hour (sans Med insurance) benefits when they carjack your ass out of your Avalon.

Btw, Robert --are you coming to Surfer-X's on the 3rd? It's right up the road from you and I'd really look forward to meeting you in person. Don't forget Peter P will also be there.

HARM,

Pretty close. Where I go further is that it's hard to really say who's job is loosely supported by this bubble and who's isn't. Perhaps most of us here are only currently employed because of the marginal phantom wealth of the bubble. I even make exceptions for folks who work directly for the industry. We have many who are regulars here. Most of them are decent folks. I never admonish anyone for taking jobs where they must. I am surprised Cote seems to think they should practice some form of self-induced central economic planning. Very uncapitalistic.

What has been most telling for me is that most people here just had an outright kneejerk reaction to the idea of innocents. I didn't realize this was some sort of hegemonic war for so many people. That, itself, distresses me.

Robert Cote,

There are less costly alternatives to learning every single lesson first hand. Not everybody needs to be locked up for murder or embezzlement to learn that murder or white collar crimes are wrong. Some effective government regulation (like the Uniformed Commercial Code) promotes information transparency and efficiency a lot better than the hit and miss private sector approach.

As for supporting badly off kids. Yeah, maybe they won't have their parents' lessons quite as well pounded into them. Or maybe they'll lose all hope and turn to a life of crime/antisocial behavior. Letting the market sort things out is not necessarily the most efficient outcome.

What has been most telling for me is that most people here just had an outright kneejerk reaction to the idea of innocents.

Interesting. I am certainly not innocent.

hellboy,

As I see it, you may have an obligation to provide a sofa and maybe some ramen to close friends/family members, until they get back on their feet. You certainly have no moral obligation to risk your own life savings to fill in holes that family members have dug themselves via expensive purchases.

SFWoman Says:

> Every time I go to Costco (canned earthquake supplies,
> Horizon milk for school lunches,used to go for diapers,
> Novato Costco has really good wine and champagne)
> I end up purchasing $200 worth of books.

I may spend over $500 on wine every time I go to Costo but I have been saving a lot of money by getting all my books used from selers linked to the amazon.com site...

What has been most telling for me is that most people here just had an outright kneejerk reaction to the idea of innocents. I didn’t realize this was some sort of hegemonic war for so many people. That, itself, distresses me.

Randy,

You may be on the leading edge of a change in sentiment. Many of us have been so annoyed by being priced out for so long that we have become angry at the whole system--lenders, regulators, borrowers, etc... We have also become perturbed as the most imprudently aggressive a**hats rubbed it in our faces while blowing their undeserved fortunes on Hummers, plastic surgery, 2nd, 3rd and 4th homes, etc...

We have been waiting, less and less patiently, for this bubble to unwind. But this anger may shift to regret when the devil chickens come home to roost and we see the fallout affect our families and friends and yes, even innocents. You are probably just a little ahead of the curve on this one.

I think it may now be appropriate to put an end once and for all to the "The End is Near" spoiler claims. As we are already witnessing 2005 WASN'T REAL! Very little of 2005's pricing remains. It's off the table.

Can we just put this thing to rest already?

The long awaited correction is finally taking place. Please to notice the rate of descent? Since the rate of descent is far out pacing even the most bearish of projections, we here were infinitely more right than wrong.

What bulls will undoubtedly find equally distasteful is the fact that MSM is determined not to make the same mistake twice. I tuned into CNBC just to listen in on what everyone else seems to be mentioning and they are ALL OVER the the housing crash! All of the comments somehow lead back to the bubble! Every return from a commercial break starts abruptly with yet more news on the bubble's bursting!

DinOR,

Did you also see that bit on CNBC about how Google is so big with so much cash that they need a special waiver to avoid being regulated as a mutual fund? lol.

What has been most telling for me is that most people here just had an outright kneejerk reaction to the idea of innocents. I didn’t realize this was some sort of hegemonic war for so many people. That, itself, distresses me.

This is probably due to the dominant social class evidenced on this page. Most of our peers who have benefited from the bubble don't fall into the innocent category. These same peers were chastizing our cold feet about jumping into the bubble, so the well of sympathy has gone a little dry.

Most of us also have a little nestegg that we'd like to turn into a house someday. The best chance of that happening is would appear to be the blood-on-the-street scenario vs the flat-with-ugly-inflation scenario.

We're all human; admitting that our favored outcome (from a selfish POV) will cause innocents grief is an unpleasant though, thus we dismiss the notion of innocents.

Randy,

Well if I misunderstood you the first time, my apologies. There’s no doubt a lot of undeserving people will suffer from the economic fallout, while a lot of greedy asshats will get away pretty much scott-free. C’est la vie, I suppose.

Even so, wasn’t it you who once argued that most people who claim to be free-marketeers/capitalists really weren’t "real" capitalists? They were only capitalists when it BENEFITTED them, but socialists when the free market HURT them?

This is the idea I think Robert is trying to get across (which I think you basically agree with). If we’re only free-marketeers on the way up, but socialists on the way down, then we’re only distorting incentives, creating moral hazards and contributing to making natural market cycles even MORE volatile. This can result in even LESS socially optimal results long-term, or so the theory goes.

I don't think most the people here are naturally hateful, spiteful people. Just people royally fed up with getting f@cked in the ass then being told, "Stop whining, you're just jealous. You should be enjoying this ass-f@cking!" As the old saw goes, don't pee on my head and tell me its raining.

We are long overdue for validation and economic justice.

HARM,

I did indeed make that argument. And I stand by it. I'll offer the following corollary:

In order to prevail in implementing, reforming, defending free market capitalism, it is imperative to be viewed as compassionate and generally concerned about people's well being. This is best accomplished by actually being compassionate about these things.

Otherwise, the inevitably large number of people who either cannot or do not wish to thrive in this system will come to hate you, instead opting to listen to and follow far worse alternatives. Systems in which they are rewarded by taking away your deserved profits and gains.

...it inspires me to hold my ground, even in the face of I may have a relapse and die before I ever own a home….

Most home-owers w/50 year mortgages will also die before becoming home*owners*. Even many boomers with conventional 30 year financing will need to get reverse mortgages, thus they will never own their homes either.

John M,

I am sorry to hear that. We hope all goes well.

Would I like to have my time back? You bet I would! Although we've been side stepping falling debris (the size of Buicks) as bubble sitters part of me realizes that everyday we lose something. It's another day that should have gone toward building normal equity in a normal way.

Every time I see another "homeowner" on their short-cut path to instant riches I realize that it had to come at someone else's expense. In many cases the GF being the lender that has re-ri's the same property for the third time in two years. In some cases the GF is the next FB in the ponzi scheme. What's maddening is that did any of these fools really believe they were going to be able to keep this money? How many of these @ssclowns will have a DIME of their "proceeds" 5 years from now? Let alone retired comfortably? In the end it was a big empty drill that dropped us on the same block where we got picked up. And another day older. Everybody happy?

Mixed feelings about Costco. On the weekends it's a freakshow for uber suburbia. Go for cheap gas and walk out with 2 gallons of olive oil, 3 cases of Guinness, 4 tubes of toothpaste with bonus floss, another "Learn French in 6 weeks now on CD", belly full of "special barbecue sauce samples, and box of 10,000 condoms.

Robert Cote'

Compassion need not be altruism. It is often in one's own direct self interest to be compassionate, whether to a family member, a neighbor, or sometimes even a rival.

John M,

All eyes will be on that series! I'm stoked!

John M,

Best wishes on recovery.

"DinOR wondered:
What can possibly be less efficient than a yacht?

Two yachts. "

A corporate jet????

"Two Yachts"

(Why does this SP guy always gotta "one better" me?)

Nobody loves boats more than me, but even if the guy could afford it how does this resolve anything in the slightest for a "survivalist"? Especially given he's having it built! Don't they have some kind of pound for abandoned yachts where you can go down and "adopt" one for free?

Besides, I don't know if anyone recalls the story about the Vietnamese guy they found 4 months later off the coast of Panama? Yeah, guy is underway for months after trying to reach HI and encounters huge storm. Mainmast gone. Radio gone. Food, gone. He captures a sea turtle with a baseball bat and drinks rainwater. Boat (all of 27') looks like hell but he's crushed when the U.S Coast Guard sends it to the bottom? THAT guy, was a sailor!

Would I like to have my time back? You bet I would! Although we’ve been side stepping falling debris (the size of Buicks) as bubble sitters part of me realizes that everyday we lose something. It’s another day that should have gone toward building normal equity in a normal way.

Yes, we are all "collateral damage" in that we have had time stolen from us by greedy assholes who wanted something for nothing --and damn the consequences for everyone else. We have become a nation of "SDCIA Jeffs", who all want to be millionaires without having to actually work or PRODUCE anything for it. No one (outside of a few enlightened souls and people on blogs like this) seem to give a $hit that their "gains" are coming at the expense of everyone else and the nation's long-term economic health. Robert Cote's 8:48 am post summed this up beautifully.

@John M,

Wish you the best of luck. I hope you beat this thing and go back to worrying about unimportant things, like "will I or my children ever be able to own in California?"

Pain can be a powerful teacher. Sometimes we must not stand in its way.

Mind you, a corporate jet is very useful for surviving revolutions.

SFWoman,

If you're in a survivalist mode, be careful about insect resistance and plant health. Apples and plums are a problematic without spraying. Nut trees like chestnuts, walnuts, and pecans will also be useful since they can be stored for a long time and provide high calorie foods. Soy beans and olives are also useful on that front.

Also some hunting rifles and ammo. Hunting meat is a lot easier than growing meat.

Punished Says:

A large amount of you are renters waiting for some divine intervention where God himself will come down and smite the people who profited off the housing market. But you don’t realize while all of you are renting and waiting you are causing rent to increase and apartment inventory to drop. But I’m sure you can justify why you feel the need to punish people like me (mostly in the bay area).

Dude,
I don't think anyone here expects God to punish those who profited from the housing market. Most here expect free market economic forces to do it for Him. And personally, I don't have any power to directly punish anyone like you, nor would I want to do so.

HARM/Digger,

What makes matters worse is that even had you, or I bought in say SoCal in I dunno 2003 or 2002 we still would have our time stolen (just on the other end).

I've been on that hellbound train thank you. There is NO room for error! No daydreaming about career changes. Not even a thought of quitting or your mortgage will eat you ALIVE! Don't get any notions about mom staying home either. God forbid you took any equity out to actually do real improvements, now your new cost basis is 2004/2005 when as Surfer X is fond to remind us "you basically re-purchased" your home. It's a total and unforgiving tight rope.

We've brought high stakes venture capital values into our home. We invited them. And now they don't want to leave.

While I'm up, can I get you guys a beer?

@Robert Cote,

I will send email you the directions & contact info --really hope you can make it. Per the X-man, spouses & children are also welcome.

Surfer-X,

Looks like athena & others may want to come as well, but it's your place. Would you object to opening the invite to other regulars?

But, Randy, isn't creative destruction a necessary part of free market capitalism?

Once the bubble bursts, will be nothing left to do? Will there be no more goods/services that people would want?

Isn't it the responsibility of those who lose their jobs to search and find a suitable job for themselves in the modified market conditions?

SFWoman,

Thanks for the tip. Apples are quite difficult to grow compared to pears and persimmons (from a survivalist perspective, persimmons are particularly useful because it can be dried and kept as a delicious high calorie snack). I tried to make apple pie from home grown apples once and ended up throwing away most of the apples because of bugs.

Sonoma will definitely be the northern edge of avocado growth. I believe CA's primary avocado belt lies near San Diego.

Speaking of native American fruits...can you grow pawpaws in Sonoma? They're supposed to be easy to grow and highly nutritious. I've just found a wild patch on my walk yesterday, and now I'm psyched for the fall harvest.

anon,

You are such a wellspring of heartfelt compassion! Really, you should stop before someone accuses you of being a bleeding heart. :lol:

SFWoman,

Please to direct your "buccaneer matey" and his yacht to www.escapeartist.com for all the latest in keeping a low profile in such places as Panama, Bolivia or the Maldive Islands.

(This guy started out by giving dead beat dads and drug dealers advice on how to slip out of the country).

Seems now he's gone legit. The "inside stuff" he still advertises could be had for 1/4 the price by any drunken sailor. Apparently he has an audience though.

We WILL benefit from the crash. There will be a very real and tangible benefit for each and every one of us.

The bubble will cause an overcorrection. Prices will drop BELOW the "real" level. This means that we'll all be able to buy a normal house for much cheaper than we would have but for the bubble, or a much nicer house than we otherwise would have.

I FULLY expect to be in a position to move out of my rented 1BR slum apartment and into a purchased SFH in Beverly Hills. I am quite serious. Even at post-bubble prices the place in BH will still be a stretch and I therefore doubt I'll buy it, but still -- it'll be an option. A real option.

Most of us aren't rich, but in a few years, we'll look damn good to the banks. There will literally be MILLIONS of Californians with foreclosures, trashed credits, and zero savings in a few years. Entire communities in the IE and the Sacramento area will expereince waves of foreclosures that take as many as 60-80% of the homeowners with them. It'll be almost as bad in SF and LA proper as speculators and HELOCed-to-the-hilt Boomers are dragged under. There will be tens of thousands of upon tens of thousands reasonably priced homes in lovely neighborhoods for us to choose from.

People like us, with modest savings, good credit, and no debt, will look GOLDEN in the post-crash environment. We'll be competing for a much smaller pool of mortgage money with all kinds of FB's speculators, and overleveraged spenders. We'll win that competition.

Personally, while I am quite sure that there will be unbelievable bargains in the future, I would not trade the last few years of my life for a nicer house. I wish there had never been a bubble. It has been horrible. My family and I have suffered greviously. I would love to rewind the clock.

But I will certianly enjoy the ocean view from my house in Malibu when it is over!

RE Avocados - make sure you have a male and a female tree, otherwise ...nice trees but no avocados.

Personally, I'm going to try my hand with almonds, once I buy a place with some land.

@Joe Schmoe,

While I would love to see what you described come to pass, I have my doubts. Firstly, homedebtors far outnumber renters and --even more importantly-- tend to vote more often. What's more, people who have feel entitled to spend/live way beyond thier means are not likely to stay silent while the free market teaches them a nasty lesson. They are going to get mighty angry and shrill and start presenting their demands to Washington in a big way. The only question for me is, how far will Wa$hington bend over?

Will there be a F@cked Borrower Omnibus Rescue Act of 2008 that forgives all defaulted mortgage debt, while letting them keep the house? Will there be a Special Savers/Renter's Tax that rewards FBs at the expense of us "unpatriotic, America-hating" housing bears? We obviously hate Amerika, right? Otherwise we would have spent ourselves into oblivion along with the rest of the country.

I really want to see the market dole out karmic/economic justice, reward the prudent and punish the greedy/stupid, but somehow I don't think a group as large and politically powerful as FBs will stand idly by and let that happen. We shall see...

I FULLY expect to be in a position to move out of my rented 1BR slum apartment and into a purchased SFH in Beverly Hills. I am quite serious. Even at post-bubble prices the place in BH will still be a stretch and I therefore doubt I’ll buy it, but still — it’ll be an option. A real option.

I'm not so sure about that. 50% off $3 million is still $1.5 million. Maybe if you had $200 or $300K in cash you could swing it. But I don't think lenders will be giving out any more NAAVLPs--even if you are foolish enough to ask for one. Lenders will want you to have some real skin in the game. And LT interest rates could be a lot higher by then, to compensate for the inflationary Fed, so it may not be so easy to finance the balance.

Although the bursting bubble will clean up lending, it will do nothing to address a lot of the longer term structural defects which have caused the bubble to inflate in CA, such as Prop 13 and NIMBYism. Many of the Malibu and BH owners will sit out the bursting bubble while paying their $3K/year taxes on their $3M homes so inventories will probably never swell the way they have in places where building is less restricted, like the inland empire.

Given today's housing figures, are people revising how long it will take for it to REALLY crash and house prices to drop significantly - or are we still on a three year time scale?

SFWoman,

For your climate, kiwi or banana passionfruit may be better bets than the native maypop. Figs are nice too.

It's nice to know that avocados can survive so far north, though I still think Sonoma might be too cold. You may want to check with your local agriculture extension office before growing them.

Purdue has a comprehensive guide on growing tropical fruits at this location:

http://www.hort.purdue.edu/newcrop/morton/index.html

By the way, I am in Mountain View, CA, from the house listings I have been monitoring they are going for 10% below asking or being reduced by 10% before selling - although some are still selling for way over asking.