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ajh,
Thanks. I haven't read the comments at Ben Jones's site for a little while, but I know txchick57 by her wise and no nonsense comments. I would be seriously scared to get on her bad side.
If this guy's story checks out even in part, he is in so much trouble that I can't even begin to contemplate his options. Maybe skip country and spend the next 10 years teaching English in Kazakstan or join the US Army (to delay the foreclosures once he deploys). I hope for his poor wife's sake that she didn't co-sign anything.
Astrid said,
"txchick57 by her wise and no nonsense comments. I would be seriously scared to get on her bad side."
Agreed! Safer to cross the Taliban....
Here Here for the Housing Wizard!
More power to you! Anything above and beyond inflation plus a few bps. should be well justified. Want to pay even more? Pony up suckah.
I've been so busy switching arms to bang on my "no more get out of tax jail free card" drum I've lost sight of something that would in all likelihood eliminate the need for it altogether. I further agree that there was a time when the lending community did this out of self preservation.
Now that predatory lending has become the standard if they don't write the loan, someone else will. Great huh?
Mike/a.k.a Sage,
Randy H (back me up here o.k?)
We can attribute much of the incredible (and in many cases unwarranted) dollar flow into hedge funds to what *astrid very accurately describes as "yield starved investors".
Hell, I'm there. Because most of us here are still slugging it out in the trenches (I know I am) we don't often have the luxury of contemplating just how much critical mass is required to live off a 3% return.
Choices:
Continue working.
Hit the lotto.
Marry ridiculously wealthy widow.
Be willing to take inordinate amount of risk to get an extra 75 bps.
You pick.
SFGuy,
Yeah! The last 3 or 4 years really sucked. My boyfriend was/is in a position to buy a condo (which was what all his coworkers and some of his friends were doing) and leverage himself into a substantial paper gain.
Instead, he was rational and realized it was a better idea to keep a low overhead, pay down his loans, figure out his life and sock money into his retirement fund. It'll be a better world when folks like him are not penalized for their rationality and critical thinking abilities.
DinOR,
I'm interested in marrying a ridiculously wealthy widow. How can I make it happen for me?
Randy H
2006 Sep 23, 8:43am
DinOR
There's a lot of evidence building that all but a few select hedge funds either don't consistently beat the S&P, or have inordinate risk (lower sharpe ratios) for the return.
Unless you have $10M to get into Trafelet Delta or something like a BGI Macro, then you're probably not getting a great risk-return. In my own opinion, the credit swap arbs are disasters waiting to happen. And funds-of-funds are going to get regulated into sub-mutual fund returns territory within the coming couple years. You can get into some funds-of-funds with as little as $100K, and liberal interpretation of qualified investor rules. But, lots of funds-of-funds don't diversify away HF specific risk like promised. They (wittingly or unwittingly) amplify the risk.
And then there's the whole fact that too many HFs mimicking each others strategies is working to drive their returns back to mean. I call it the "spiders in the garage" phenomenon. Once there are too many, they just start eating each other and the problem solves itself.
Astrid said:
"I’m interested in marrying a ridiculously wealthy widow. How can I make it happen for me?"
Lick your eyebrows.......works for me!
"Lick your eyebrows…….works for me!"
Okay. As long as I don't have comb down my hair with my own saliva.
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We've had numerous debates on this blog over the past year on what constitutes "appropriate" levels of government, uh, "involvement" in the RE market. Individual views run a wide gamut, but can be roughly categorized and described thusly:
1. Extreme (capital "L") Libertarianism/market-fundamentalism: basically hands-off/no government regulation of or involvement in capital/credit markets whatsoever. Critics have derided this as "cowboy"/robber-baron capitalism and point out that NO regulation of any kind is basically impossible, and leads to all sorts of socially (and economically) undesirable outcomes. Such as: formation of monopolies/cartels that engage in anti-competitive price-fixing (think OPEC/NAR), abusive labor practices (think child labor before the 1930s) and unrestrained/excessive pollution (think "Tragedy of the Commons" and pre-1970 air/water quality).
As a sub-prime lender, you loaned the money to Mr. F@cked Borrower, disclosing the minimum information required by law in the RESPA statements and fine print (where all the critical loan details were buried). If he didn't want to bother to take the time to read/question the paperwork or have a competent RE attorney review them on his behalf, then tough titties! You made out like a bandit and sold the loan (and risk) upstream to some sucker pension/hedge fund as a MBS. Too bad/so sad the MBS holders actually believed that "implicit taxpayer guarantee" when they bought your loan at an extremely low risk premium --caveat emptor!!
2. Limited government/minarchist (small "l") libertarianism: advocates the minimum level of government involvement necessary to limit socially undesirable outcomes resulting from completely unfettered capitalism (aka "externalities"/Tragedy of the Commons). Emphasizes practical, pragmatic, well considered forms of regulation that does not attempt to artificially fix the price of labor/commodities, engage in arbitrary subsidies favoring one asset class over another, and generally avoids what can be termed "social engineering" regulation. Favors developing solutions to socially undesirable "externalities" that the market itself appears incapable of solving with the least amount of government involvement/cost possible. Attempts to regulate in an "asset class neutral" manner (not to pick market "winners" and "losers"). A strong emphasis is placed on aligning risk and reward without dictating what specific levels of risk/reward are appropriate for the consumer/lender.
As a sub-prime lender, you loaned the money Mr. F@cked Borrower and took your (way above standard) fees and profits knowing that the borrower could not possibly repay the mortgage. You also buried all the critical details in the fine print, while glossing over/minimizing all this during your hard-ball sales pitch favoring the NAAVLP. Then you packaged the loan and (mis)represented it to investors as a supposedly "safe" MBS with a very low risk premium, all the while implying that the taxpayer was on the hook if it went bad. Tell me why YOU shouldn't eat the loan vs. the U.S. taxpayer? Oh, and by the way, where's Alan Greenspan, Franklin Raines and David Lereah hiding out these days? We're overdue for another "perp walk".
3. DS-style "Fabian socialism": government heavily regulates capital/credit markets and the means of production/distribution, and may even directly control/fix the prices of labor and commodities directly. Government itself may even be a producer and large-scale consumer of housing stock ("projects"/publicly subsidized housing). Generally regards consumers as too ignorant and/or weak to be able to choose for themselves; essentially views them as victims of capitalist hegemony/exploitation, to be rescued by a predominantly benevolent and wise powerful central government.
As a sub-prime lender (aka loan predator), you have already proven yourself a danger and menace to society. You are a disgusting profiteer and should be permanently barred from doing business --and should go to "re-education" camp. Our Wise and Benevolent Supreme Leader will provide Affordable Housing for all the Impoverished Masses. It will favor high density, discourage mobility/private transport, encourage spartan living and require massive taxation --all for the greater good, of course. Most of the largest contracts to build this Affordable Housing will be awarded to personal friends and family members of Dear Leader, of course (who will keep his lavish lakeside villa far outside the city). All hail Dear Leader! (*cue rousing patriotic socialist anthem*).
Which form of regulation do you prefer? Based on the descriptions above, which one do you think the author (your truly) prefers? :-) What would be "good" examples of housing/mortgage market regulation (if any)? What would be some especially "bad" examples?
Discuss, enjoy...
HARM
#housing