patrick.net

“Last week, civil rights groups called for a six-month moratorium on foreclosures resulting from high-risk loans given to people with shaky credit, arguing that lenders could face lawsuits if they don’t help borrowers. ”

What does foreclosure have to do with civil rights? It may be Social Darwinism, a necessary process in civilizations.

Now, I could understand a suit based on illegal practices, like this one

They should put law-breakers away but stupidity must not pay.

I think we have terrible ethicists, they can't figure out what to do with poor stupid people (let them starve? sterilize them? let them take over?)

We should euthanize ethicists.

I think I may be catching whatever Peter P has...

Muther fuckers just can't get their fucking real estate cheerleader uniforms off

From NY Times

In much of the country, including large parts of the Northeast, California, Florida and the Southwest, recent home buyers have faced higher monthly costs than renters and have lost money on their investment in the meantime. It’s almost as if they have thrown money away, an insult once reserved for renters.

Ok, lets go through it again, recent home buyers have faced higher monthly costs than renters and have lost money on their investment in the meantime

then It’s almost as if they have thrown money away, an insult once reserved for renters.

huh? Is this the 1900s? Is this a Hearst Newspaper?

I saw the aftermath of a gang shooting in Rome many years ago. Not pretty. :(

I think I may be catching whatever Peter P has…

Multiple Persona Disorder?

My bioethics TA said that I probably should not become an ethicist in a hospital though.

What city is Oxford st in?

I think we have terrible ethicists, they can’t figure out what to do with poor stupid people (let them starve? sterilize them? let them take over?)

Another perspective: the anti-evolutionary aspect of humanity (some like to call it compassion) is a solid case for Intelligent Design. :)

What city is Oxford st in?

London.

Or just a short run snafu soon to be resolved via evolution.

"It’s almost as if they have thrown money away, an insult once reserved for renters."

No worries. They can just sue their lenders and claim their civil rights were violated.

Or just a short run snafu soon to be resolved via evolution.

Humanity is that snafu.

“It’s almost as if they have thrown money away, an insult once reserved for renters.”

LOL :lol:

That's what I meant.

theotherside clearly didn't even bother to look at the NYT model before slamming it, or she'd have seen that it doesn't allow 0.5% precision on rent inflation, only on the discount rate.

Well, I just ran the NYT "bubblizer" for my situation. I even cranked up annual home appreciation to 5% per year, and rent inflation to match at 5% per year, which is twice the rate it's been for the past decade. I also assumed I'd take all my equity-in-waiting plus every other liquidatable dollar I can find, and plow it all into the home (making the payback period shorter).

The result is it is NEVER better to buy than rent over 30 years. The interesting thing is my curve peaks (narrowest spread between renting and owning) in year 9 with renting being $40,335 better per annum than owning (year zero is $178,089). But then it falls, ending back at $57,571 in year 30, showing that the holding costs of the home are greater than the costs of renting, even assuming I build a full equity position.

This model accounts fully for taxes, CAPM and transaction fees if you hit the Advanced Settings tab. Though changing those for Northern California circumstances will deteriorate the Buying case considerably from the default.

The conclusion: the NYT model is marginally harsher than my Bubblizer at default settings, and much harsher if you change the values of advanced settings. I think this is mainly because my model is conservative with inflation differentials (assumes rents inflate, but not CAPM costs, for example) and because my model allows for "Present Value of Intangibles". That is, I allow the buyer to say "hey, I'll pay $20K/year to not worry about renter headaches".

BTW, if they really do hold bond investors liable, financing will dry up even more quickly. Any bailout of this sort is likely to be a money pit. People tagged for non-renewal in social evolution will get into financial trouble again as soon as the new loans are settled.

Randy, ToS does not bother to care what you say. Calm down already. :)

What are the best ways to play the market right now?

Not seeking investment advice

I think this is mainly because my model is conservative with inflation differentials (assumes rents inflate, but not CAPM costs, for example) and because my model allows for “Present Value of Intangibles”. That is, I allow the buyer to say “hey, I’ll pay $20K/year to not worry about renter headaches”.

Randy, perhaps you should have a formula for Implied Present Value of Intangibles given other standard assumptions.

Just like the Implied Volatility of an option, the value will tell how expensive a house is.

Another perspective: the anti-evolutionary aspect of humanity (some like to call it compassion) is a solid case for Intelligent Design. :)

Actually, as a social animal, it helps to have idiots around that you can talk into doing the dangerous jobs.

Getting rid of the dangerous jobs is what puts us awash in idiots.

There is no case for Intelligent Design. Evolution is a better case for the existence of God than Intelligent Design.

No worries. They can just sue their lenders and claim their civil rights were violated.

Their lenders, the MBS holders, and the President of Antarctica! :o

I would recommend that all mortgages require a demonstration of English comprehension, an essay on the math involved and then an IQ test. But then some activist group would sue me for discriminating by refusing mortgages to people who couldn't read the loan docs, don't understand the math or aren't smart enough to open a pickle jar.

If you protect stupid people from their own stupidity, just remember that you are discriminating against them.

I gotta HELOC! Woo hoo! My equity is liberated!
But Dad, you wouldn't know a full recourse negative amortization loan from a Krusty Burger!
Mmmmm... Krusty Burger.

It’s almost as if they have thrown money away

The operative words here are highlighted. The MSM wants to say it but cannot say it. I don't remember anyone using those qualifiers while insulting renters.

I need to get onto Brand’s idea and email my representatives.

Brand,

I in fact emailed Schumer, Boxer and Feinstein (and a while a go Christopher Dodd, Connecticut senator) about this. It's easy to do. I won't post links to all their sites, but each one has a similar "email me" page (Boxer's below):

http://boxer.senate.gov/contact/email/policy.cfm

Feel free to use my letter, although take it with caution since it might not be to your liking:

**********

Senator X,

I am writing to voice my opinion, which I know is shared among many, many Americans. I am highly concerned about your proposal currently making the news to provide financial relief to those under threat of home foreclosure due to the fallout from the subprime mortgage crisis. While I feel sympathy for those who may have been misled by unscrupulous lenders, I believe that any proposal to provide financial or other relief to this group is misguided.

First, the truly misled likely comprise a small portion of those subprime borrowers facing foreclosure. What about those who knowingly abused the system, taking advantage of "liar loans," using these loans for investment properties, or who used the extra cash gleaned from serial refinancing and home equity extraction to buy luxury items? Do you plan to "bail" these people out as well? I refer you to a particularly egregious example at www.iamfacingforeclosure.com.

Second, I applaud your efforts to help those who may have been duped by unethical members of the real estate/mortgage industry. However, please bear in mind that your efforts as I understand them absolve many of these people of financial obligations they willingly signed onto. This presents a significant moral hazard. So should we all now obtain subprime mortgages with the intent of not paying them off, in antipation of a bailout? I hope not.

I also ask you to look beyond the political posturing to present yourself as a champion of the working class and to realize that many, many upstanding voters find your proposal appalling and misguided. We do not wish to have our taxpayers' money going to bail out those who are too irresponsible to manage their own finances.

Thank you for you time and consideration.

Randy H,

RE: the NYT rent vs. buy calculator, I've been wondering if they got the idea from your bubblelizer. I am getting the distinct sense that more and more of the MSM are lurking in this and other bubble blogs. Bill Gross' latest newsletter speaks of Second Life (!?!!) in relation to the subprime mess, and now this.

Makes me wonder. If so, they should give credit where credit's due.

I refer you to a particularly egregious example at www.iamfacingforeclosure.com.

What is the probability that Casey Serin runs for Senate in the future?

Another perspective: the anti-evolutionary aspect of humanity (some like to call it compassion) is a solid case for Intelligent Design.

But compassion and team-building and co-operation is what helps the tribe survive. Lack of compassion means that chimpanzes just walk away from orphaned chimps in the tribe and leave them to die.

Between social animals (bees, ants, some primates and people) and asocial animals (such as cheetahs), the social animals often get a better time of it, which is why they have evolved that way.

(Of course, once man has become wildly successful and tamed the environment, evolutionary pressure decreases -- when the environment no longer presents a challenge, biological evolution slows down. However, there is a further social stratification process that tends to select for intelligence, for instance.)

Of course, people show many abilities chimps do not, for which we should also be grateful -- the ability to make and appreciate music, do mathematics, build things, demonstrate advanced learning skills and communicate effectively for joint effort. We would not have buildings and PCs and space shuttles if not for the ability to write things down and pass them on and learn and therefore produce far more with joint effort than any individual ever could acting alone.

No man is an island, entire unto himself... so send not for whom the bell tolls, it tolls for thee...

So thievery, fraud & misrepresentation = Capitalism? Maybe this is true to some (DS), but I like to think we can do a little better than that.

But we aren't... :P

skibum,

I am getting the distinct sense that more and more of the MSM are lurking in this and other bubble blogs.

If I was an MSM editor or producer today I would have at least one staff member scanning the blogs (and not just the bubble blogs either) on a full-time basis looking for leads.

And I reckon I would have a watertight business case if management queried what the scanner was doing.

Oh, and while watching CNBC a couple of hours ago (7:15pm our time) there was a segment based around the NAR prediction of a Calendar Year Median price FALL in 2007, albeit only of 0.7%.

One of the guest analysts pointed out that there was no way the NAR would make such a prediction unless they were certain that a fall was inevitable. It was also stressed that this would be the first such decline since the NAR started keeping national statistics in the 60's, and probably the first since the Great Depression.

My take from this analyst's words was that he felt any refinement of the estimate would be to the downside. The 3 CNBC co-hosts (this is a US/Europe/Asia segment, maybe you don't get it) didn't challenge the estimate and analysis at all, just asked the analysts some questions about the implications of such a fall on the wider economy (and got 'bear lite' responses more or less ending 'we have to wait and see').

The WSJ has run an article on this NAR estimate.

I suspect every housing bubble blog in the world is going to be putting up a thread on this one. :)

OO Says:

> FAB, not long ago (3 or 3.5 years ago), I drove by
> El Camino in San Mateo and witnessed the aftermath
> of a gang shooting (someone lying in blood). I am just
> having a problem with this street by street kind of
> “niceness”, because I can’t predict how this niceness can
> be safely contained in a 4x4 block zone, what is preventing
> the problems beyond the 4x4 block from invading such
> a “safe haven”?

Gang members don’t move around much about 10 years ago a full 50% of the murders in the entire city of San Francisco over a full year were within a couple blocks of the Double Rock Housing Project in Hunters Point.

I live just a few blocks from a SF Housing Project packed full of gang members, but I have never seen a gang member even a block from the projects (where they hang out dealing drugs and drinking 40s). I was talking to some long time residents of my street and when I commented that I have never seen a gang member north of California St. (three short blocks from the projects) they laughed and said they have never seen one north of California St. since they bought their home 40 years ago.

As a kid my Dad used to send me down to the apartments in San Mateo on my BMX bike when a manager called to say a gang wrote their name on a building. We have never had a gang name on a building west of El Camino and just a few times west of the railroad tracks more times east of the tracks and even more east of 101. I’m pretty sure that there has never been even a single gang member living in anywhere in Burlingame, Hillsborough or San Mateo (West of El Camino). There has always been a small pocket of black gang members in San Mateo east of the tracks around San Mateo High (a good rule of thumb is that you never want to live anywhere near a Martin Luther King Park or a Martin Luther King Drive) and a pocket of Mexican gang members east of the tracks that used to hang out and sell pot around a little grocery store south of the DMV. Across the freeway in San Mateo there are mostly Hispanic gangs and some Pacific Islander gangs.

Despite the gang activity in San Mateo over the past 40 years I have never heard of anyone even spotting a gang member in Burlingame, Hillsborough, San Mateo’s Baywood or San Mateo Park or even in Burlingame east of the tracks (just three blocks north of Martin Luther King Park)…

FAB,

To echo your point, two observations. Never in my years of visiting University Ave on the PA side of 101 have I ever seen a gang member hanging out, doing crimes, or whatever, even though if you cross into EPA, you immediately see low riders blaring rap music w/ gangbanger types driving, only 100's of feet away from Crescent Park.

Similarly in Boston where we lived (South End) was a very interesting mix of yuppies (unfortunately we probably fell into that category), gays and gang members from the housing projects sprinkled throughout the neighborhood. This was a result of the brilliant Boston city government deciding in the 1950's to build housing projects in the middle of the largest contiguous collection of historic brownstones in the country. On the other hand, each of these 3 groups generally kept to themselves, even though they literally walk shoulder-to-shoulder on some of the main streets.

skibum,

Try to remember, gang members and illegals are simply committing crimes most Americans won't DO!

If they weren't here, who WOULD do these crimes?

@theotherside

Do you contend that 5%+ inflation for the next 21-30 years is reasonable? If you are relying upon long-run equilibria, then why are you assuming an abnormally high long-run inflation rate?

The NYT model is a 30 year present value model, so you should take the average inflation, not the maximum inflation.

I'll be the first to say that if inflation is 5% for 30 years, by the end of that period probably only 20-25% of Americans will be home owners. Sustained inflation that high implies mortgage rates well over 10%, maybe even 15%, and you continually assert that housing purchases are very sensitive to mortgage rates (which isn't supported by historical correlations, but that's besides this point).

"the type of economic violence that is being discussed every day on this blog"

Huh?

I'm not sure what you mean by "economic violence" but if being torqued off by the fact that we're even entertaining a FB bail-out (very seriously I understand) then yes! I suppose I DO advocate "economic violence".

What about the type of economic violence that is being discussed every day on this blog? Should that be regulated?

As you can tell, I’m trying to make he point that a “free market” very often is not the best solution to a problem.

The only person here arguing for anarchy and calling it a free market was one of our local realtor-trolls. While often libertarian-leaning, you won't find anyone here seriously advocate market anarchy, myself included.

I don't know what "economic violence" refers to, and apparently neither does Google. I assume you mean "market winners and losers" whereby the winners somehow inflict harm on the losers.

I don't need to connect the rest of the dots to see where that line of reasoning leads. But go ahead and cheer for Royal if that suits your tastes.

Randy H,

In that case, if you have the gumption, knock on the door of this house and ask the neighbor innocently, "I was wondering," feigning interest in buying the place, "if I could get a tour, as I'm in the market. Who's your agent? Can I set up an appointment?" Whether or not they divulge, you can see how they respond. And in a Columbo kind of way as you're leaving, "and by the way, do you know your MLS number offhand, so I can peruse your home's stats at a leisurely pace at home?"

If they (a) are indeed listed, you have your innocent answer. If they (b) are "pocket" listed, you have the agent's name to report to the local Realtor (TM) board.

DinOR Says:

> Try to remember, gang members and illegals are simply
> committing crimes most Americans won’t DO!
> If they weren’t here, who WOULD do these crimes?

Don’t forget that without gang members the companies that make malt liquor in 40oz bottle, cheap handguns and “grillz” would have a tough time.
http://www.misterbling.com/grillz-c-29.html

FAB,

Even the Governator is going gangsta-style (with a Green (TM) twist, though):

http://www.allhiphop.com/hiphopnews/?ID=6912

misterbling.com

Lord, what next! LOL!

True, and police officers would actually be able adjudicate some of their time performing safety training and enforcing traffic violations rather than breaking up backyard parties and drawing chalk outlines on the sidewalk.

Muggy,

Biblical Mortgage Company?

Old Testament prohibits paying or collecting interest, New Testament says to give all your money to the poor.

Which principle do you think he will follow?