patrick.net

OO :

I think we will see a big cut at the meeting, and even a "surprise" cut before the meeting if the markets continue to explode all around the world.

Problem is neither the cuts, nor the TAF is working. Heck, even those Ambac rumors are not working. How can we live in a world where rumors are no longer dependable ?

Time to hit the “reset” button?

This is a really interesting perspective. Do we really want to save the status quo? Are we ready to accept the pain suffering torture and death that would inevitably result in a transition to a new order?

That's always a conversation worth having, but what do we end up with on the other side? There are those that would argue a 90% decrease in homo sapiens on Earth would be a very good thing. For some, sure. Obviously not for all.

I'd also argue there is very little way to predict winners and losers in a financial meltdown endgame. Chances are the predators among us will again find themselves in positions of advantage. The realization of some justice through a "hands off" collaspe is an impossibility.

I don't know if I've really examined my own beliefs deep enough, but I think I'd rather see the system "saved" somehow. I care about total meltdown because I know that peace and stability brings greater contentment and happiness to a larger measure of humanity. In a total financial meltdown and collaspe, violence and suffering will occur on a grand scale.

You speak of revolution HARM, they are watching you closely! ;-)

BA is special. Yes.

Inventory based on ZipRealty :
Gilroy very close to 600.
Morgan Hill over 400.
Evergreen nearing 500.

Can someone please remind me that this will not have any effect on the Fortress ? At least please tell me that it will have *only some* effect. I love the reasoning. Please. Please say it again.

If that is not the case, and you actually wish for for everyone else to eat it, so you can do better, then I would question your character.

Yep, I want those who ran up prices by running up debts to pay the bill. I will see joy when a FB loses his $1 million home to forclosure, and a saver picks it up for the $450k it should have sold for in the first place.

Deflation is good for those with stable income, cash and no assets. Like myself (unless the state of California becomes insolvent).

The problem I see is the economic fallout of hundreds of thousands of unemployed debt-security brokers. These people were all making over 100k a year and essentially have no transferable skills. HR departments don't even want to hire them.

So yeah, even if you are the best small business man in the world, odds are lots of your customers were paying for your services with bubble money.

Headset,

.... not entirely. Harry Figgie (former CEO of Spaulding Sporting Goods) was on Reagan's "Grace Commission". While none of their rec's were actually followed, it did bring the deficit front and center making it a top priority for Clinton. So a 'cautionary tale'.

I'll be your Huckleberry..

Those stats will have no effect on Fortress because it is special (see chronicle for details or ask the nearest realtor - they'll be glad to enlighten you). In addition, people who buy in the fortress have millions in stock options which they exercise and buy in cash. They don't even need a mortgage most times. They just bulldoze the $1M shack and build a mansion for $2M. Then they go back to work for $300K/yr. People who buy in Gilroy etc are dyslexics and others with hard to pronounce names who have no idea what they're doing. We were bound to run out of them sooner or later.

northernvirginiarenter Says:
I don’t know if I’ve really examined my own beliefs deep enough, but I think I’d rather see the system “saved” somehow. I care about total meltdown because I know that peace and stability brings greater contentment and happiness to a larger measure of humanity.

Holy Krap - you are thinking way too deeply about this. A real estate crash with a side-order of credit-deflationary collapse is not the end of the world. Don't buy into the 'doom-and-gloomers' who insist that:
1. it will hurt you personally if Joe McDebtor gets into trouble
2. you are evil for not volunteering all your savings to help Joe

Examining your beliefs?! Good grief, relax!

Honestly what I fear in a fallout situation is escalating crime rate.

We are able to contain the crime rate in certain armpits and pockets of the more desirable areas (e.g. BA) because we have robbed enough of the world's resources to keep these people at home munching potatoes watching American Idol.

Now if some of those who were making $100Ks above worker bees who were living a self-disillusioned upper middle class lifestyle in decent neighbrohoods suddenly find themselves in the same shoes as those we were able to isolate in, well, East Palo Alto, then we have a very very big problem. As the bottom class of the society swells, I think we all have a good reason to fear.

This is not Japan, this is America. Bankrupt people don't kill themselves and their immediate families out of shame, we American heroes come out with a rifle to randomly whack people out. The pattern of mass murder is very distinctive here, the murderer will take out as many people as possible before he kills himself simply because he went through a divorce or lost a job. Well, it usually doesn't operate this way elsewhere in the world. People in Hong Kong or Japan just kill themselves, and I have no problem with absolutely no bailout in that sort of society.

am I making unpatriotic comment again? darn

SP,

I'm sorry? What were you saying? I was in deep meditation trying to get "in touch" with how I felt about all of this.

"dyslexics and others" LOL!

"This is a really interesting perspective. Do we really want to save the status quo? Are we ready to accept the pain suffering torture and death that would inevitably result in a transition to a new order?"

I'm not. Especially since I don't think it will do any good. The same behavior that might bring this empire down will just pop up again in the next one.

It would be pretty much pointless. Except housing will be cheaper in this new world.

it did bring the deficit front and center making it a top priority for Clinton.

I remember Clinton saying on a TV debate that he was unconcerned about a balanced budget. I believe he achieved a balance budget not because it was a priority, but as a result of his push through of NAFTA, GANTT, and tax revenue from the tech boom.

Oops, mispelled GATT

At least please tell me that it will have *only some* effect.
Didn't you get the memo on the CA court's "war on homeschoolers" -- everyone is fleeing to Crapertino :-)
Closed out my Wells short this morning (hopefully, if E*Trade comes through). Quite a rush to take on Buffet for the short haul.
Headset, always good to have someone waving the Deflationista flag around here.
TAF seems to be getting more coverage these days. Nice to see Bloomberg is reporting on the number of banks taking advantage of TAF (which has always been a question of mine):
Repos allow the central bank to inject funds into primary dealers, a group of 20 banks that trade securities directly with the New York Fed. By contrast, the TAF operations offer funds to deposit-taking institutions; the most recent auction included 72 banks.

@SP

So, why is a real-estate crash my problem?

Its not unreasonable to assume that violent crime will skyrocket. Very admirable and congratulations on your success and planning. In the serious downturn we are about to face, all bets are off. It matters to you because your daughter could be raped walking home from the market, your neighbors foreclosure turned into a violent crack house, your assets could inflate away to nothing, whatever "vehicle" your savings are in are not as safe as you may think. Civil liberties? Freedom? Good luck with that. You may not even have access to patrick anymore due to the spread of insidious ideas there.

Believe me, a housing crash matters to you. Its not really about a housing crash anymore, its about the destruction of trust in our financial system. It is a very big deal. And I'm sorry if you don't see it coming. Heck, if I'm really hungry and you look well fed and plump I might be coming in your backwindow for your cupboard myself :-)

The world in which we live is about to change radically. For instance, I understand financial assistance for higher education is becoming scarce, expensive, and more difficult to obtain. This is not isolated and I see no clear path back to where we were in this area. The world is changing. This is very serious and a very big deal.

kewp,

I agree, a lot of goods/services probably WERE being paid for w/ bubble-bucks. Then again, so many of their competitors wouldn't even BE around had it not been for the easy financing bubble-bucks offered?

Even among the realtors the common refrain was "You just wouldn't believe how many new agents there are!" In fact I believe that while NAR commissions peaked at around $60 bil. in 2005 (avg. realtor income went down)

Can someone get Ayn Rand to bake a damn pie already!

"A real estate crash with a side-order of credit-deflationary collapse is not the end of the world"

you keep saying that SP. Want to go into some of the reason why it's not? We've seen some pretty drastic results across the board just from the small contraction that's happened so far. Even conservative estimates don't even put us 1/4 of the way to where it's headed.

I'm not claiming I know. Just interested in the "it's not that bad" opinion, because I'm just not seeing it.

And NO, I do NOT want a f&$% bailout.

I was in deep meditation trying to get “in touch” with how I felt about all of this

lol. Well done.

Headset,

I'm sure Clinton probably didn't care? It was always fairly easy for him to simply say that Hawks ran up the defense bill and it wasn't his doing. (Others weren't ready to let the topic die that easily). One way or another we worked our way through it just like we'll work our way through this mess.

Back to meditation! Uhmmm.... Uhmmm..

BayAreaIdiot :

:-) OK. I understand about Gilroy. But wasn't Evergreen going to be the next Cupertino ? Are we still on that plan or has anything changed ?

“Great Depression of 1990″ by Ravi Batra

“Bankruptcy 1995: The Coming Collapse of America and How to Stop It” by Harry E. Figgie and Gerald J. Swanson

Excellent examples - I used to own Batra's book, and yeah, it was about as good a predictive tool as Dow 36,000.

The world is *not* coming to an end just because some well connected rich guys made some big, bad bets and are losing money as a result. It's also not coming to an end just bause Joe Howmuchamonth can no longer bid up the price of basic shelter to insane heights and fill up his new 3-car garage with Chinese made crap. Far from it.

I care about total meltdown because I know that peace and stability brings greater contentment and happiness to a larger measure of humanity. In a total financial meltdown and collaspe, violence and suffering will occur on a grand scale.

I view this as something of a false dichotomy (e.g., "Either we keep spending or the terrorists win."). I do not believe we have to choose between economic Armaggedon OR maintaining the status quo. I also do not believe that hitting the "reset" button on our (hopelessly corrupt, dysfunctional, cheap credit-addicted) financial system necessarily means extreme pain for everyone. That is the whole point of this thread.

We have other options, people.

Remember though, Figgie was from an entirely different era of businessman. One of the most profound experiences of his young life was as a G.I in post-war Germany watching housewives use a wheel barrow to have enough money to buy a loaf of bread.

That impression is bound to stay with a guy. Harry was just a guy that loved his country and didn't want to see that happen here.

G.I in post-war Germany watching housewives use a wheel barrow to have enough money to buy a loaf of bread.

You may want to check your dates. The "wheelbarrow" was pre-war, not post war, Germany.

SP Says:

> So, why is a real-estate crash my problem?

Then northernvirginiarenter Says:

> Its not unreasonable to assume that violent crime
> will skyrocket.

Crime always goes up in every economic downturn.

> It matters to you because your daughter could
> be raped walking home from the market,

You just need to stay away from the markets in bad areas since more women are hit by lightning each year than are raped outside Whole Foods stores in yuppie neighborhoods…

> your neighbors foreclosure turned into a violent
> crack house,

If you live in a neighborhood where people don’t smoke crack you have nothing to worry about (it will be a cold day in hell before a crack house opens near me in Presidio Heights or near my parents in Hillsborough)…

> your assets could inflate away to nothing, whatever
> “vehicle” your savings are in are not as safe as you
> may think.

Every day one asset class will either out perform or under perform the market so if you diversify you will be fine (cash and stocks have lost value this year but commodities and rents are up this year)…

> Civil liberties? Freedom? Good luck with that. You may
> not even have access to patrick anymore due to the
> spread of insidious ideas there.

My liberal friends always complain about the loss of “Civil Liberties” but can never name anything specific that they want to do they want to do but are prohibited from doing. If you make a little effort you can read Patrick.net in China so I don’t predict that it will go away any time soon in the US.

> Believe me, a housing crash matters to you. Its not
> really about a housing crash anymore, its about the
> destruction of trust in our financial system. It is a very
> big deal. And I’m sorry if you don’t see it coming.

It is a big deal, but most people still trust the financial system and over time they will just learn that the financial system let them may bad decisions (like the ability to buy a home with no money down and a neg am loan)…

> Heck, if I’m really hungry and you look well fed and
> plump I might be coming in your backwindow for
> your cupboard myself

Most hungry guys will pick another back window when they hear a single pump from the pistol grip Mossberg…

> The world in which we live is about to change radically.

The world is always changing, Dinosaurs don’t roam the earth any more and you can’t just head west and get free land like you could less than 100 years ago…

> For instance, I understand financial assistance for
> higher education is becoming scarce, expensive,
> and more difficult to obtain.

Every school I went to is currently offering more financial aid than ever and all have endowments that are bigger than ever (Stanford is now FREE):
http://www.mercurynews.com/crime/ci_8322329

Sure the real estate crash will suck for a lot of people, but if you were not stupid and continue to work hard you will be fine…

Believe me, a housing crash matters to you. Its not really about a housing crash anymore, its about the destruction of trust in our financial system. It is a very big deal. And I’m sorry if you don’t see it coming.

The "destruction of trust" in our financial system is already a fait accompli, regardless of what I or anyone else here thinks --and is well deserved. You can thank 30+ years of reckless deregulation and creeping corporate socialism for that. And yes, it IS a very "big deal". But manning the Bailout Pumps won't put Humpty Dumpty back together again.

Some things once done cannot be easily undone.

@ StuckInBA

I will enlighten you because you seem rather out of touch. I don't know where you got this propaganda that Evergreen = Cupertino but it is false. I'll let you in on a little secret: all the "truly cool" areas of Silicon Valley and the South Bay have Spanish names (Palo Alto, Los Gatos, Saratoga etc). No one will even bother with anything named Evergreen. Frankly this is part of the secret code longtime residents understand. I'm surprised you aren't up to date on that. That's why East Palo Alto is crime ridden whereas Palo Alto proper is heaven on earth - all its good juju was sucked out by that Anglo word. There are exceptions to each rule of course (e.g. I hear parts of Belmont are good) but those are just that: exceptions. Don't be a "looser".

Headset,

My bad. You're right. By the end of the war only the upper crust of society could afford luxuries like that! LOL!

And what FAB said :-).

Oh, and I second that welcome back to skibum.

Crime always goes up in every economic downturn.

Didn't crime go down during the Great Depression?

Everybody is getting creative now. This from Martin Feldstein:

The federal government would lend each participant 20% of that individual's current mortgage, with a 15-year payback period and an adjustable interest rate based on what the government pays on two-year Treasury debt (now just 1.6%). The loan proceeds would immediately reduce the borrower's primary mortgage, cutting interest and principal payments by 20%. Participation in the program would be voluntary...

Anybody think this is a good idea?

# StuckInBA Says:
But wasn’t Evergreen going to be the next Cupertino ? Are we still on that plan or has anything changed ?

Not much has changed. Only that we are now expecting Cupertino will become the next Evergreen. :-)

FuzzyMath Says:

“A real estate crash with a side-order of credit-deflationary collapse is not the end of the world”

you keep saying that SP. Want to go into some of the reason why it’s not?

Because, as HARM put it, it is a false dichotomy.

The loan proceeds would immediately reduce the borrower’s primary mortgage, cutting interest and principal payments by 20%.

Gee. Prices will not have to rise as much for the debtor to HELOC again!

Evergreen is on the wrong side of the Bay Area.

All the cool areas have to be on the west side.

’ll let you in on a little secret: all the “truly cool” areas of Silicon Valley and the South Bay have Spanish names (Palo Alto, Los Gatos, Saratoga etc).

You forgot Los Bano.