0
0

Which school districts will get hurt?


 invite response                
2008 Nov 2, 3:35am   17,932 views  226 comments

by Patrick   ➕follow (55)   💰tip   ignore  

schools

Hello,

I just read an article in the NYTimes that was disconcerting and even frightening.

http://www.nytimes.com/2008/11/02/business/02global.html"> http://www.nytimes.com/2008/11/02/business/02global.html

According to the article, school districts, municipalities, and just about every governmental entity that either has money to invest or borrows money could potentially end up getting sucked into the credit crisis. That means that there could be countless ticking time bombs across the United States in the form of pending financial shortfalls and bankruptcies that will further depress home values in towns and cities across the country.

Imagine buying a home at what seems like a bargain price, only to find that the local school district or government is on the hook for a couple hundred million dollars in losses because a few unsophisticated board members fell for what's turned out to be a global investment scam. Once the word gets out, the town's home values will nose dive. After all, it's the local tax payers who will eventually have to pay the pipers.

The Wisconsin school board in the article might not only lose the $35 million dollars earmarked for teachers' pensions, they're liable for an additional $165 million that the board borrowed on their behalf. Where does a town that can't afford to lose $35 million in the first place come up with another $165 million? What happens to the teachers who lose their pensions? Who wants to buy a home in an area where the schools are forced to lay off teachers, cut programs, and cant afford to purchase books or supplies?

Is there any way to find out what municipalities and school boards are in potential trouble? Can a potential home buyer request relevant information from a town or city? Is there a website that contains this type of information?

As a prospective home buyer I'd have to say that this concern belongs at the top of the list of reasons to postpone buying a home in this market.

Charles

Comments 1 - 40 of 226       Last »     Search these comments

1   Briana   2008 Nov 2, 4:50am  

Hi Everyone,

I've been a regular reader, so now that hubby and I followed patrick, we saved our down payment and are ready to buy a house.

We are looking to buy in the evergreen area in san jose. Can anyone recommed a good, honest agent. Assuming there are any out there.

After reading about all these flaky agents out there, its kinda scary.

Any advise/info would be greatly appreciated.

Thanks,
Briana

2   Peter P   2008 Nov 2, 6:21am  

Briana, there are many honest agents out there. Some will even caution you regarding the current market condition. You need to talk to several agents and get a feel.

3   Peter P   2008 Nov 2, 6:22am  

Perhaps the country will finally realize that school vouchers is the way to go.

4   Brand165   2008 Nov 2, 7:13am  

Peter, why would vouchers solve the problem of underfunded pension plans?

5   Malcolm   2008 Nov 2, 8:41am  

Brand, Justme, I couldn't resist so I posted a reply on the last thread :)

6   Malcolm   2008 Nov 2, 8:42am  

Patrick, you're the man! Congratulations!!!!

7   Peter P   2008 Nov 2, 9:47am  

Peter, why would vouchers solve the problem of underfunded pension plans?

But at least some schools will be functioning.

Defined-benefit retirement plans are not going to work. As I have said before, the coming entitlement crisis may dwarf this current financial crisis.

See, the boomers are just starting to retire and the system is already melting down.

8   Brand165   2008 Nov 2, 11:05am  

Peter, what difference does it make between a defined-benefit plan and a self-directed approach? When people get hammered by taking reckless investments in the stock market, they are going to cry to the government anyway. Social security and other entitlement programs will be boosted to compensate, all ushered through by politicians riding the popular oldster support.

Only a few states are adequately funded for their civil service pensions. The rest are all relying on taxes or bonds. And what happens when the rest of the world cuts up our credit card?

9   Brand165   2008 Nov 2, 11:11am  

Malcolm & all: I got a laugh out of the last few threads. Highly cathartic stuff. Really, what's a Gen-X'er to do amidst all this sophistry and jargon-slinging? I think you just derive some fun out of defiance, create some technology and otherwise wait them out.

10   PermaRenter   2008 Nov 2, 11:15am  

VOTED INDEPENDENT FOR PRESIDENT.

* Can not vote for Democrats since they are socialist

* Can not vote for Republican since they are socialist for the bankers

11   Tango in Uniform   2008 Nov 2, 12:53pm  

Yes, this will be a big problem. There was a minor stink raised awhile back when it was shown that the state of Montana had some dealings with risky SIVs. I think this is a more widespread problem.

From the current article: The school board in Whitefish Bay, Wis., gathered to discuss a looming problem: how to plug a gaping hole in the teachers’ retirement plan.

You see? They wanted to get lots of money for doing nothing. That's what everyone wanted these last 10 years, and it's why we're all in trouble now.

A side note, I got some good comments here when I posted my last real estate video about Billings, Montana. I have a new one out which you might enjoy:

Housing Boom in Billings, 2008

12   Tango in Uniform   2008 Nov 2, 12:57pm  

PermaRenter: Both presidential candidates have shown that they have a ridiculously bad grasp of economics and the current problems we have.

Still, you should vote for McCain. At least there'll be more deadlock than there would be with Obama and the Dems. The less Washington can get done, the better for all of us.

13   kewp   2008 Nov 2, 1:25pm  

So stay in cash, home school your kids and wait for the bottom.

What is so fucking hard about this?

14   PermaRenter   2008 Nov 2, 1:26pm  

>> Still, you should vote for McCain.

I VOTED FOR REPUBLICANS EXCEPT PRESEDENT...

15   StuckInBA   2008 Nov 2, 1:38pm  

Congrats Patrick !

16   Duke   2008 Nov 2, 8:58pm  

Briana
Home prices are still decreasing at 2% per month. That means on a $500,000 home, every month you wait you are getting $10k off.
Now, there ARE some homes in san Jose that are attractively priced. These are mostly REO and you should be very careful. I am not sure, but you as the new owner may be responsible for back taxes? In any event, as you interview agents they better be very good at sales of REO - which is the only stuff right now worth jumping into.
Also, make certain your job(s) are rock solid. Now that lending standards are back, you will have to put 20% down. As the market still has that much left (at least) prior to bottom, if you lose a job (or two) you could end up losing your entire down payment. Again, on a $500k home that is $100k.
All the best.

17   slantedview   2008 Nov 3, 1:40am  

I agree, this is a disaster waiting to happen. My guess is that the story about the Wisconsin district will occur all over the country, unfortunately.

18   slantedview   2008 Nov 3, 1:42am  

The less Washington can get done, the better for all of us.

LOL. Actually, not a bad strategy. Unfortunately I think McCain and the Democratic Congress have more in common than either would prefer to let on.

19   Peter P   2008 Nov 3, 1:57am  

Unfortunately I think McCain and the Democratic Congress have more in common than either would prefer to let on.

This is why Ron Paul (Dr. No) would be a great president.

20   Lost Cause   2008 Nov 3, 2:28am  

It is not just school districts, many transit and other service districts are getting bitten. Taxes, fares and fees are going up.

Peter P and others -- taxes and the government are not going away. You might as well get something back from the hard earned taxes that you will always be paying. An educated public/workforce benefits everyone. If you are so against mutual beneficence, why do you not become a hermit?

21   Duke   2008 Nov 3, 2:32am  

Pretty good ads from the Yes on 8 crowd tho'
Putting SF mayor Newsom on say, "Whether you like it or not. . ."
People have a natural love of punishing hubris like that.

22   Duke   2008 Nov 3, 2:38am  

As for the thesis topic, I think we already talked this out? It was clear that yield chasing was going to crush pension funds, municipalities, schools, heck anyone who had hoped to keep up with inflation in a low yield envirnoment. Sadly, you simply CANNOT tax your way out of this problem and thus services must and will be cut.
Larger class sizes. Old text books. Deferred maintenance.
What they need to do is ask for more volunteers. Will they?

Interestingly, we knew the legal cass would gain momentum. And right on cue. . . We will hear more and more of the "The said it was a safe investment - and it lost 90%!!!!!"

23   Malcolm   2008 Nov 3, 3:44am  

Yesterday, at breakfast I was reminded of something, which I think is pretty funny. A girl in our party asks me, "So did you actually contribute any money to a campaign?"
"No," was my immediate answer and then I remembered giving Ron Paul some money. So now I am thinking, OK I gave a Republican money and I voted for Obama.
Patrick openly had a Ron Paul ad on the page, and now has an Obama endorsement. WTF?

To my credit I did tell her, admittedly they are two completely different ideologies but I think Obama will be good for repairing the damage where as Ron Paul would have prevented it in the first place. Now I feel like that Coke commercial where the marketing guys want to sue themselves.

24   justme   2008 Nov 3, 8:00am  

Should this thread not be titled:

“Bad assumption my frigid Wisconsin(ite) ass! What about the AAA rating from the agencies?"

...add other states and countries as needed.

I'm sensing that the general economic condition is going to make a turn for the worse again. All we had so far was a suckers rally.

NOT investment advice, by any stretch of the imagination.

25   Brand165   2008 Nov 3, 8:47am  

@justme: But how could the credit ratings agencies have known that the securities were bad!

October 32nd, 2008: During recent testimony before Congress, the Moody's chief executive officer responded to allegations of lax assessments by cracking, "Caveat emptor, bitches!" He later recommended hotornot.com if the 'Congress-puppets' wanted to get an honest rating, adding that House majority leader Nancy Pelosi could, "Deregulate me anytime you want, baby."

:o

26   Brand165   2008 Nov 3, 8:48am  

@justme: But how could the credit ratings agencies have known that the securities were bad!

October 32nd, 2008: During recent testimony before Congress, the Moody’s chief executive officer responded to allegations of lax assessments by cracking, “Caveat emptor, bitches!” He later recommended hotornot.com if the ‘Congress-puppets’ wanted to get an honest rating, adding that House majority leader Nancy Pelosi could, “Deregulate me anytime you want, baby.”

:o

Stupid open/close braces. ;)

27   frank649   2008 Nov 3, 11:14am  

@bankster,
Padilla's book is flawed in that he blames deregulation for the S&L crisis, but the video is well worth watching just to see how he stumbles around that first question he gets from someone in his audience. lol.

28   justme   2008 Nov 3, 12:54pm  

Brand, it was fine in BOLD, too :-)

29   Malcolm   2008 Nov 3, 11:01pm  

Patrick, I just read your letter on your support for Obama. That's exactly why I voted for him as well. We're not hypocrites, we're voting for the best choice between the two. Switching from one party to the other depending on the person running is far more open minded than voting the party line. Good job!

30   slumlord   2008 Nov 3, 11:37pm  

I also just read Patricks letter on support for Obama. I also wanted to vote for Ron Paul, but prefer Obama over McCain. One reason was Palin as VP. That was just incredible... and the idea that he graduated at the bottom of his class, 6th from the bottom. It does not inspire confidence when someone brags about how bad they did in school...

31   Duke   2008 Nov 4, 12:36am  

Actually, Ron Paul is an accepted write-in candidate in CA.
I think it sends a pretty strong message when you vote for neither, but still vote. I think Gail Lightfoot is the Libertarian VP pick.

32   justme   2008 Nov 4, 1:09am  

I suggest voting for a person that can win. I think there is a stark difference between the two main candidates, and most people know which one of them they would prefer.

Voting for a candidate that cannot win in effect is a vote AGAINST the mainstream candidate that is closer to your heart. Does anyone really want to do that?

Listen to your heart, but vote with your head.

33   FuzzyMath   2008 Nov 4, 1:27am  

"Voting for a candidate that cannot win in effect is a vote AGAINST the mainstream candidate that is closer to your heart. Does anyone really want to do that?"

Yes, in fact, I do. They both suck. Neither of them agree with me on what I consider one of the most important decisions (bailout) in the history of our country.

If I can't agree with them on the most important thing to me, then fuck em.

34   FuzzyMath   2008 Nov 4, 1:30am  

the pundits are in full force bull mode.

I think once the rug is pulled out from underneath them... probably late this year, we will see the true capitulation. That is when everyone that was watching with interest will want nothing to do with it.

I am now starting to understand the road to a depression, and why so many people get fucked by it.

35   thenuttyneutron   2008 Nov 4, 1:34am  

If people would stop believing that a vote for a third party guy is throwing their vote away, we would get more attention from the mainstream. All we have to do is convince people to not believe the lies about throwing a vote away by voting third party. It is a self fulfilling prophecy that must be destroyed.

I voted for a third party candidate and have no regrets.

36   justme   2008 Nov 4, 1:42am  

I will stop believing that voting for a 3d part candidate is a waste AFTER the election system has been reformed. And that is ALL I will have to say about elections systems today. And that is a promise.

Happy election day to everyone -- I'm headed to the polls.

37   HeadSet   2008 Nov 4, 2:26am  

I agree with those who push 3rd party. The 3rd party may not win this election, but a noticeable non-Demopublican vote would get the attention of those main stream politicos. Also, voting third party now is a way to build for the future. At one time, the Republican Party was a "third party."

38   EBGuy   2008 Nov 4, 2:53am  

I agree with those who push 3rd party.
FWIW, I strongly believe third party candidates gave us both the Clinton and Bush presidencies.

39   Steveoh   2008 Nov 4, 4:45am  

Third party candidates are agents of change!

They sway the undecided. They attract the lunatic fringe votes away from viable candidates. They attract a following and then quit before November so the now angry mob at least stays true to thier "real" party.

Come on... Chapter 3, Bipartisan Campaign Playbook

40   DennisN   2008 Nov 4, 4:58am  

Everyone in California can feel comfortable voting for Ru Paul since everyone knows Obama will win there. It's not throwing your vote away since the outcome is so clear.

Comments 1 - 40 of 226       Last »     Search these comments

Please register to comment:

api   best comments   contact   latest images   memes   one year ago   random   suggestions