Re: Proud and relieved
- Original Message - From: xponentrob [EMAIL PROTECTED] To: Killer Bs (David Brin et al) Discussion brin-l@mccmedia.com Sent: Friday, November 07, 2008 4:54 PM Subject: Re: Proud and relieved - Original Message - From: Deborah Harrell [EMAIL PROTECTED] To: Killer Bs (David Brin et al) Discussion brin-l@mccmedia.com Sent: Friday, November 07, 2008 3:20 PM Subject: Re: Proud and relieved Jon Louis Mann [EMAIL PROTECTED] wrote: snip I had obama on a redeye flight from d.c. to chicago two years ago, just before he declared. he was in my section so we chatted for over a half hour. he was very gracious and charismatic... Oh, cool - he appears to be a really interesting person to talk to, so I think I'm envious... He's putting his team together quickly, as indeed he ought, given the gravity of multiple problems we face. Goodwill ought to help out a bit, as Rob's cites suggest, but it will certainly call for more than us 'shopping 'til we drop.' snort Debbi World Relief Maru http://flickr.com/photos/barackobamadotcom/sets/72157608716313371/ Lots of special comments for individual pics by viewers. Answering to my own post again.G http://change.gov/newsroom/entry/president_elect_obama_speaks_on_the_eve_of_this_election/ To all who opposed Obama, I invite you to watch his acceptance speech and then hold his feet to the fire if you detect any dissembling or variance from his stated goals. After all, we all elected him based on his rhetoric and it is only fair that we expect him to live up to it. I certainly would be disappointed and angry if he does not work to unify us and lead us to a better future. Side stories I'd like to share: I talked with my Mom the day after the election and she was deliriously excited about Obama's election and how it indicates a break from the past. In the course of our conversation she related several stories of her youth in which institutional racism played a role. Several of the stories were striking, but one made me very proud of her. When my Mom was a teenager, her family went to the neighborhood Baptist church. One Sunday the preacher was railing about how Niggers will never darken the door of this church. (An African-American family had moved into the neighborhood the week before.) My mother looked around and saw the church-goers nodding approval. So she gets up and leaves, and in the over 50 years since has only entered a Baptist church one time, and that was for a family wedding. The ironic twist is that the neighborhood is now all black and it is unlikely that any white people ever darken its door. The 50's are regarded by so many as some kind of golden age, but for many Americans it was a dark time filled with danger. People of African descent could be killed for little reason and with small hope of justice. And you know, it wasn't just bad for Blacks. This kind of xenophobic culture was harming anyone who was *not white*. It was how some were forced to live their lives, always wary of the white majority and their unwritten rules. My Mom used to ride the bus to work in downtown Houston. One day and old Black woman got on the bus, she was bent and gnarled, in more than just a little pain. My Mom stood up and offered her her seat. The woman glared at her with hatred and anger. It was several years before Mom understood, but the event stayed with her and came to mind often. My mom was sitting in the white section of the bus in the front (actually more like the middle), and her act of attempted kindness was no kindness at all. The old woman would likely been thrown off the bus had she accepted the seat. Events like these illustrate the true reason why Obama's presidency is so historic. We have come a long way with a distance to go before all citizens of our nation are fully empowered as equals. Certainly under the law we are equal, but culturally we suffer with division and inequity. I note that even at my job, when I talk to an African American about the election result, we tend to be careful about who's presence we are in. I see their furtive glances towards other whites and I get the sense they are glad to find a kindred soul in me, a white guy. Other times, I get the feeling that Blacks are reserved, as if unsure they can safely speak their mind to a white guy. (Not that they feel the potential for harm, but that they are unwilling to suffer the burning glance of someone's prejudice. Such things don't always roll off your back and some people are not inclined to have their day ruined by dwelling on hurtful things.) We still have a distance to travel. One of the things that appeals to me about Obama is that he is fearless in the face of these remaining prejudices and is determined to unite us in spite of them. Personally, I believe that even if Obama is just a mediocre president the majority of these small prejudices will starve away as people get used to the idea of an
SL failures
-Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of John Williams Sent: Sunday, October 26, 2008 10:56 PM To: Killer Bs (David Brin et al) Discussion Subject: Re: My contribution to the bail-out Dan M [EMAIL PROTECTED] First, it isn't that simple, Yes, you do tend to oversimplify. the SL mess (which also came after a spell of regulators looking the other way because government regulation was bad.another of many coincidences, I suppose). Actually, a large contributor to the SL failures was poor government regulations. When inflation shot up, the SL's were prohibited by regulation Q from paying high enough interest on deposits to attract enough money. Hmm, I have a hunch you know, but choose to ignore the main problem with that argument. It is true that the regulatory environment that was reasonable for SLs to work in from the '30s through the mid-70s became problematic in the late 70s to 1980 for the reason you mentioned. As a result, in 1980, the limitation on the interest offered by SLs was lifted. In 1980, the prime rate was around 20%, so I could see that being problematic. It was recognized as such, and the law was changed. There were a few SL failures in the early 80s, and I won't argue against the proposition that this law was a very significant cause of those early 80s failures. But, the fertilizer hit the fan in the late 80s, where regulators (who were following the boss's viewpoint that government regulations were evil and the free market would solve everything) loosened the regulations on SLs as much as possible, and looked the other way when they violated basic rules (like lower limits for equity on hand). In particular, their moving from the mortgage business to the high risk/high gain business loans, and then their failure to accurately account for the value of the business property heading south in the mid to late '80s was the reason that the government had to spend so much money. If you are allowed to cook the books, (like companies did when Reagan told them it was OK to raid the pension funds of their employees using funny math to justify the theft), then it is possible to hide all sorts of bad things until they get so bad that people can't help but notice. I was at ground zero when it happened and watched very closely. In particular, I remember the same arguments you've been giving as the reason why this would not result in either the employees or the government losing money by the acceptance of shady accounting practice as the new norm. Guess what, both did. So, at face value, your argument is that we should ignore this and focus on what happened ten years before. It appears to me that this is only logical if one assumes a priori that government regulation is bad (as happened in the 80s) and then immunize one's arguments from virtually any empirical falsification by appeal to complications. Furthermore, SL's were required to make mortgage loans mostly to customers within a small radius of the SL. With little ability to attract new deposits, and almost no geographical diversification, it is no surprise that they made a lot of desperate, bad investments that ultimately led to many SL failures. The overwhelming number of failures came years after restrictions were _removed_, and the regulators looked the other way while the safeguards that were technically in place were ignored or worked around with imaginary numbers. But, I'm sure you know all that, so let me ask you a question. Why were restrictions that were removed in '80 cause very few failures before '85, but many failures from '86 to '92? Why dismiss a gigantic change in the value of Houston real estate'85-'86 time frame that was papered over, when simple arithmetic shows how it would affect the books? You dismiss the fact that the values of the properties that were used as collateral for the loans went way under water in that time frame, right? You do know that the SL's hid this, and that the regulators looked the other way, right? Thinking carefully through the market solution at the website you referenced, I have distilled it to the following: Allowing banks and other regulations to skate closer to the edge of insolvency, and when they skate too close, and the ice breaks under them (e.g. when the assets they count on to be solvent lose 40%-70% of their book value), allow them to hide this fact and tell people they are still solvent. I cannot imagine how this is a solution. I pointed out that I was around when and where it was tried, and have pointed out it was a disaster. So, to conclude this part of my response, let me ask you a question: do you think that lowering margin requirements, and then allowing banks to hide the fact that a significant fraction of the loans they have outstanding are under water (the value of the property is less than the value of the loan) is a market solution to the problems we have been
European bank failures
John Williams wrote Dan wrote: I assume you were referring to subordinate debt. No, I was referring to all debt, subordinate to senior. OK. Let me pull up a couple of different types of balance sheets for Deutsche Bank to illustrate what I mean. The first one is given at http://annualreport.deutsche-bank.com/2008/q2/consolidatedfinancialstatement s/balancesheet.html http://tinyurl.com/5effsm Now, I realize that the Germans don't use the same categories I'm use to but their accounts payable are at 200 billion euros, and their total current liabilities exceeds one trillion euros. Their assents, as you see are mostly long term investments. Thus, a run on the bank would result in folks not getting the money they thought safe. Even though, at first, Europeans were laughing at the US's sub-prime mortgage lending as irresponsible, http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3260052/Eu rope-on-the-brink-of-currency-crisis-meltdown.html http://preview.tinyurl.com/5btrw5 shows, there is a lot of exposure to bad loans by European bank. There is a complicated set of rules that determines who gets paid and who doesn't, but generally customers (depositors) get paid first and equity holders last. Usually it goes something like customers, creditors, senior debt, subordinated debt, preferred shareholders, common shareholders. As you say, it is likely that the short term assets are not enough to cover a run on the bank. But in every balance sheet I am familiar with, the senior debt on down is more than enough to cover the depositors and creditors. Well, I looked on this balance sheet, and didn't see that. Further, isn't senior debt a debt, not an asset? What I think you mean is that it's big enough to absorb all the loss involved in liquidating assets. So, to look at that, I looked up deutsche bank senior debt and got http://annualreport.deutsche-bank.com/2008/q2/notes/informationonthebalances heetunaudited/long-termdebt.html http://tinyurl.com/62cgfg We see that subordinate + senior debt is less than 200 billion Euros. It would just take some time to get them their money (or to arrange a takeover of the viable portions of the bank). It would just? ROTFLMAO. You just brushed off the essential problem at the heart of bank runs with a it would just. Let's say a company kept payroll money at the bank. I don't know about you, but my dad, from the time I was little, was paid by check, not cash. The check would be no good. He wouldn't get any pay until the problem was fixed. Multiply that by tens of millions and you will see one aspect of the problem. Second, when bank failures have happened in the US, it's been a big bank taking over a smaller bank with the US government eating the bad assets as part of the deal. But, as the Iceland problem shows, it can grow to such a large size that even the government itself isn't big enough to make this type of arrangement. Checks from in-state banks which always cleared overnight took eight days to clear. When we closed on our house, the buyers had to reconfirm that they had the loan the day of the closing Oh, the horrors! No, as before, the measurement. It appears from the pattern of your writing that you don't like measurements inconsistent with your theories. I guess, as an experimental physicist, I have a different bias: towards data when discussing empirical phenomena. I'll go back to another example of this: the fact that the spread between interest on A and AA paper jumped up to almost 5% as the bailout was being passed, and is now dropping as it is being implemented. If it were the actions of someone playing the odds rationally, that would mean that all the companies with A paper have about a 5% higher chance of default than those with AA paper. But, since the default rate over the last 25 years have been a small fraction of a percent, and no one had presented data that indicates a hundred fold increase in short term defaults, one takes this as a measure of general fear: the mirror image of the irrational exuberance of the folks who made loans that would only be rational if housing prices would continue to spiral up with no ceiling. To me, that is a measure of the credit market freezing. So, to go back to my point: if the main European banks have runs on them like the Iceland bank did, the world financial system is in a lot of trouble, with no clear solution on the horizon. Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
RE: choice...
it was not my preference to accept the banks terms. my options were limited to signing the loan. or not buying a home. i did what the realtor said because that is the way the system works. Let me jump in here. You know I've been arguing against John a good deal on this subject, but let me now look at things from another perspective, since I think that the sub-prime mess is not just about deregulationthat other fundamental problems are involved. I'm not sure when you bought your house, but I originally bought mine late in '92, and was able to obtain a beautiful 3000 sq. ft. house in a desirable neighborhood with a mortgage payment of about $850/month. I followed the market, including refinancing, and was always able to borrow 80% of appraised value for 7% interest. The terms were always 30 year, with no balloon payment. I did take a variable rate on my last loan, but that was because I knew I would be selling the house by now. This was all in the Houston area. To my surprise, a couple of years ago my daughter was able, in mid-Virginia, able to obtain a 5% down loan for an interest rate that was, IIRC, in the 6%-7% range, fixed with no balloon payments (I asked before she took the loan). So, I'd be interested in exploring why our experience has been different from yours. I have some possible candidates, but I think this exploration would reveal some of the contributing problems to the present housing situation. Finally, now that we are renting, we are paying for 1300 sq. ft. less than the mortgage our buyers are paying for 3000 sq. ft. It doesn't make financial sense to rent here if you plan on staying put. Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: choice...
On Nov 8, 2008, at 12:24 PM, Dan M wrote: it was not my preference to accept the banks terms. my options were limited to signing the loan. or not buying a home. i did what the realtor said because that is the way the system works. Let me jump in here. You know I've been arguing against John a good deal on this subject, but let me now look at things from another perspective, since I think that the sub-prime mess is not just about deregulationthat other fundamental problems are involved. I'm not sure when you bought your house, but I originally bought mine late in '92, and was able to obtain a beautiful 3000 sq. ft. house in a desirable neighborhood with a mortgage payment of about $850/month. I followed the market, including refinancing, and was always able to borrow 80% of appraised value for 7% interest. The terms were always 30 year, with no balloon payment. I did take a variable rate on my last loan, but that was because I knew I would be selling the house by now. This was all in the Houston area. To my surprise, a couple of years ago my daughter was able, in mid- Virginia, able to obtain a 5% down loan for an interest rate that was, IIRC, in the 6%-7% range, fixed with no balloon payments (I asked before she took the loan). So, I'd be interested in exploring why our experience has been different from yours. I have some possible candidates, but I think this exploration would reveal some of the contributing problems to the present housing situation. Finally, now that we are renting, we are paying for 1300 sq. ft. less than the mortgage our buyers are paying for 3000 sq. ft. It doesn't make financial sense to rent here if you plan on staying put. Dan M. The difference can often be one between a realtor who is genuinely motivated to act as his/her buyer's agent and negotiate aggressively for a good deal for the buyer, and one who is motivated more by a desire to get the commission from the sale and inclined to push the buyer into a fairly adverse deal just to close the sale. The population of actively working realtors in this country does include a fairly significant number who are best described as unethical slime (not my words, those of a realtor friend who sees the worst of the business every day), and a fair number of others who are basically honest but largely incompetent, and even a few who are fairly unethical *and* not all that good at navigating the business for themselves, let alone buyers/sellers. I always wonder what's going on when I hear about a buyer or seller who did what the realtor said, because it seems to me that that power balance is exactly backwards if that's how it's really working for them. (And there are realtors who won't talk to you until they have a signed buyer agreement from you, and after that point, feel free to do a least-common-denominator level of work for you because they know they have you contractually bound to them and they literally *can't* be fired at that point.) ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: choice...
On Nov 8, 2008, at 12:24 PM, Dan M wrote: I'm not sure when you bought your house, but I originally bought mine late in '92, and was able to obtain a beautiful 3000 sq. ft. house in a desirable neighborhood with a mortgage payment of about $850/month. I followed the market, including refinancing, and was always able to borrow 80% of appraised value for 7% interest. The terms were always 30 year, with no balloon payment. I did take a variable rate on my last loan, but that was because I knew I would be selling the house by now. This was all in the Houston area. I was going to say the $850/mo sounded like a pretty amazing deal, but then you mentioned it was in Houston. :) Most of the houses I've seen in Houston have tended to be at least in the 3000 square foot range, mostly on very large lots -- it seems like Houston got pretty well established in the pattern of large single story houses on very large lots some time back and a lot of the housing built before about 20 years ago seems to fit that pattern, so 3000+ square foot houses aren't all that unusual there. (It also takes about forever to get anywhere in Houston because of the long distances you have to drive, in most cases.) Houston just seems to have been built on a theme of large footprints for just about everything. (That whole business of no zoning laws also leads to some weird stuff, compared to other cities, but Houston is kind of unique that way .. lol) ___ http://www.mccmedia.com/mailman/listinfo/brin-l
RE: choice...
-Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Bruce Bostwick Sent: Saturday, November 08, 2008 12:39 PM To: Killer Bs (David Brin et al) Discussion Subject: Re: choice... On Nov 8, 2008, at 12:24 PM, Dan M wrote: it was not my preference to accept the banks terms. my options were limited to signing the loan. or not buying a home. i did what the realtor said because that is the way the system works. Let me jump in here. You know I've been arguing against John a good deal on this subject, but let me now look at things from another perspective, since I think that the sub-prime mess is not just about deregulationthat other fundamental problems are involved. I'm not sure when you bought your house, but I originally bought mine late in '92, and was able to obtain a beautiful 3000 sq. ft. house in a desirable neighborhood with a mortgage payment of about $850/month. I followed the market, including refinancing, and was always able to borrow 80% of appraised value for 7% interest. The terms were always 30 year, with no balloon payment. I did take a variable rate on my last loan, but that was because I knew I would be selling the house by now. This was all in the Houston area. To my surprise, a couple of years ago my daughter was able, in mid- Virginia, able to obtain a 5% down loan for an interest rate that was, IIRC, in the 6%-7% range, fixed with no balloon payments (I asked before she took the loan). So, I'd be interested in exploring why our experience has been different from yours. I have some possible candidates, but I think this exploration would reveal some of the contributing problems to the present housing situation. Finally, now that we are renting, we are paying for 1300 sq. ft. less than the mortgage our buyers are paying for 3000 sq. ft. It doesn't make financial sense to rent here if you plan on staying put. Dan M. The difference can often be one between a realtor who is genuinely motivated to act as his/her buyer's agent and negotiate aggressively for a good deal for the buyer, and one who is motivated more by a desire to get the commission from the sale and inclined to push the buyer into a fairly adverse deal just to close the sale. First of all, the buyer rarely pays the realtor. Thus, the realtor I have used the most in my life (once to help me find a rental property, twice to buy a house, and once to sell a house) told me explicitly that legally she represented the seller when I was the buyer/renter, so I should not count on her to look after my interest. Further, I didn't go to my realtor to get a loan. The second time, I had a loan guarantee set up before I did my serious house shopping. I followed the interest rates carefully, and knew what was available. Isn't it the job of buyers to shop? I know, when I go to my regular bank location, they have advertisements for their mortgage rates in the lobby. They are the second biggest bank in the nation (Chase), so they certainly fund a lot of mortgages. So, while I think this is part of the problem, something else has to be going on. For a purchase as big as a house, it has to be worth a few hours on the phone or in the car asking banks about their loan terms. Dan M. The population of actively working realtors in this country does include a fairly significant number who are best described as unethical slime (not my words, those of a realtor friend who sees the worst of the business every day), and a fair number of others who are basically honest but largely incompetent, and even a few who are fairly unethical *and* not all that good at navigating the business for themselves, let alone buyers/sellers. I always wonder what's going on when I hear about a buyer or seller who did what the realtor said, because it seems to me that that power balance is exactly backwards if that's how it's really working for them. (And there are realtors who won't talk to you until they have a signed buyer agreement from you, and after that point, feel free to do a least-common-denominator level of work for you because they know they have you contractually bound to them and they literally *can't* be fired at that point.) ___ http://www.mccmedia.com/mailman/listinfo/brin-l ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: SL failures
On Sat, Nov 8, 2008 at 8:56 AM, Dan M [EMAIL PROTECTED] wrote: free market would solve everything) loosened the regulations on SLs as much as possible, ROTFLMAO! As much as possible. Hahahaha! was the reason that the government had to spend so much money. Had to spend? No, foolishly spent due to poor underwriting. Clearly the government had not charged enough for the insurance. The government is exceedingly bad at that sort of thing. If you are allowed to cook the books, (like companies did when Reagan told them it was OK to raid the pension funds of their employees using funny math to justify the theft), Another example of fine government regulation! I see why you have such faith in government control. It appears to me that this is only logical if one assumes a priori that government regulation is bad (as happened in the 80s) and then immunize one's arguments from virtually any empirical falsification by appeal to complications. LOL! You're hilarious. Yes, assuming that government regulation is good and will save us has never been falsified, since we had that stretch of 10 years when government regulation prevented all crises, yes, that was in, uh, wait, when was that again? ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: choice...
On Nov 8, 2008, at 12:54 PM, Dan M wrote: The difference can often be one between a realtor who is genuinely motivated to act as his/her buyer's agent and negotiate aggressively for a good deal for the buyer, and one who is motivated more by a desire to get the commission from the sale and inclined to push the buyer into a fairly adverse deal just to close the sale. First of all, the buyer rarely pays the realtor. Thus, the realtor I have used the most in my life (once to help me find a rental property, twice to buy a house, and once to sell a house) told me explicitly that legally she represented the seller when I was the buyer/renter, so I should not count on her to look after my interest. Hmm, realtors in your area may deal with that differently than they do here. The local realty boards here went through a pretty massive overhaul of how they handle relationships with buyers and sellers some time back, and we actually do have contractually bound buyer and seller agents, and buyer agents are actually obligated to look after the buyer's interests. Your local board may do it differently. (Texas did that because what was happening up until then was that the listing agent would act overtly on behalf of the seller, but a lot of buyers weren't aware that the realtor they were working with was *also* acting on behalf of the seller and not representing them, and there were a lot of things that weren't getting disclosed because people assumed the realtors they were working with would tell them up front if something was wrong with the deal, and people were getting some really raw deals. So the state board stepped in and established that actual buyer-agent role in its contract system, because that was the perception anyway and some of the slimier realtors were taking very unfair advantage of it. I got a rather fascinating education on that in the past couple of years.) ___ http://www.mccmedia.com/mailman/listinfo/brin-l
RE: choice...
(That whole business of no zoning laws also leads to some weird stuff, compared to other cities, but Houston is kind of unique that way .. lol) Actually, it wasn't Houston the second time, it was the Woodlands. This is important because it was a planned community that is now at 100k in size and transitioning from being an unincorporated area with a deed covenant to a town. Houses here are cheap for several reasons: 1) There aren't rules/laws that artificially inflate housing prices. 2) Land is plentiful and fairly inexpensive. 3) Labor costs building houses are low (illegal labor is probably involved here) What is really interesting is that there's been tremendous demand for housing here. In the 16 years we were here, the Woodlands grew by a factor of 3. Yet, prices have only gone up slowly. After adjusting for inflation, and the investment I made in the house (by investment I mean something new that improves the house, not maintenance like replacing the roof), I broke even selling the house. And that was after the housing _increased_ in value over the last year by about 5%. Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
RE: SL failures
-Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of John Williams Sent: Saturday, November 08, 2008 1:02 PM To: Killer Bs (David Brin et al) Discussion Subject: Re: SL failures On Sat, Nov 8, 2008 at 8:56 AM, Dan M [EMAIL PROTECTED] wrote: free market would solve everything) loosened the regulations on SLs as much as possible, ROTFLMAO! As much as possible. Hahahaha! As much as the Reagan administration could squeeze through by subverting the law, my apologies for not being specific, but I thought I was stating what was well known. If you are allowed to cook the books, (like companies did when Reagan told them it was OK to raid the pension funds of their employees using funny math to justify the theft), Another example of fine government regulation! I see why you have such faith in government control. Ah, the point is that after 50 years of successful government control, it was virtually eliminated, then bad things happened. Your point is that because, technically, the government still regulated, bad things happened. Let me ask again, do you think it is wrong for governments to require that companies follow prudent accounting practices when managing pension plans for their employees? Or that governments enforce their own rules when regulating banks? It appears to me that this is only logical if one assumes a priori that government regulation is bad (as happened in the 80s) and then immunize one's arguments from virtually any empirical falsification by appeal to complications. LOL! You're hilarious. Yes, assuming that government regulation is good and will save us has never been falsified, since we had that stretch of 10 years when government regulation prevented all crises, yes, that was in, uh, wait, when was that again? No, because we had a government that had X regulations and we had few problems of this type for most of the last 75 years. There have been two exceptions to this, and really bad things happened when both exceptions occurred. Both times, the administration in power agreed with you explicitly on the inherent evil government regulationsand reduced them whenever possible. Then bad things happened. If you reduce A and B increases, I'd say that A and B anti-correlate. Correlation doesn't prove causality, but anti-correlation is a counter-indicator for causality. And, when correlations do exist, it's the first place to look for causality. Well, at least that's what I was taught in grad. school. Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Choice...
The difference can often be one between a realtor who is genuinely motivated to act as his/her buyer's agent and negotiate aggressively for a good deal for the buyer, and one who is motivated more by a desire to get the commission from the sale and inclined to push the buyer into a fairly adverse deal just to close the sale. The population of actively working realtors in this country does include a fairly significant number who are best described as unethical slime (not my words, those of a realtor friend who sees the worst of the business every day), and a fair number of others who are basically honest but largely incompetent, and even a few who are fairly unethical *and* not all that good at navigating the business for themselves, let alone buyers/sellers. I always wonder what's going on when I hear about a buyer or seller who did what the realtor said, because it seems to me that that power balance is exactly backwards if that's how it's really working for them. (And there are realtors who won't talk to you until they have a signed buyer agreement from you, and after that point, feel free to do a least-common-denominator level of work for you because they know they have you contractually bound to them and they literally *can't* be fired at that point.) i seem to have encountered the unethical slime type of realtors, bruce. My first purchase was a condo in concord for my son while he was at berkeley. i had no credit because i always pay cash, so the owner carried the loan, when my son graduated, i hired a rental agent and he put in tenants who would trash the place and i would have to evict them. he referred me to a realtor (my first mistake) who found a new tenant while it was listed and after two years it still had not sold. i suspect he was putting in bad tenants to coerce me into accepting his offer. i went to another realtor who said it was not a good time to sell and offered to take it off my hands. by then i was fed up and just wanted to get out. i told the first realtor, who then raised his offer, but said i had to accept it right there, or it would be off the table. i found out from the home owners association that three days after closing, he sold it for over twice what he paid me. evidently, that little corner of concord was incorporated into walnut creek and he had sent me old comps anyway, i had close to $20,000 in equity after closing, so i used that for a down payment on a tiny 800 sq. ft. house in santa monica, just before housing prices took off in the late 90s. if i had gone in with my girl friend at the time (a title rep for fidelity) i would have gotten a much better rate, but i didn't want to commit. the lender told me i could always re-fi later, when my credit improved. for some reason the lender keep changing, but i was able to keep the house by paying the interest, taxes, and a little toward the principal. i knew the day was coming when i would have to start paying more on the principal so i got out while i still could. by then i had enough in equity to pay cash for my house in eureka, which has since gone down in value. i have learned a lot from my experiences in home buying, that you can NOT trust anyone, including the board of realtors and lawyers you hire to sue unethical slime. i have also learned that you don't have to sign the standard contract, you can make changes, and if the agent doesn't like it, you can go to someone else. the moral of this story is sometimes you lose when you trust unscrupulous agents, and sometimes, IF you're lucky, you come out ahead... jon ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Choice...
Let me jump in here. You know I've been arguing against John a good deal on this subject, but let me now look at things from another perspective, since I think that the sub-prime mess is not just about deregulationthat other fundamental problems are involved. I'm not sure when you bought your house, but I originally bought mine late in '92, and was able to obtain a beautiful 3000 sq. ft. house in a desirable neighborhood with a mortgage payment of about $850/month. I followed the market, including refinancing, and was always able to borrow 80% of appraised value for 7% interest. The terms were always 30 year, with no balloon payment. I did take a variable rate on my last loan, but that was because I knew I would be selling the house by now. This was all in the Houston area. To my surprise, a couple of years ago my daughter was able, in mid-Virginia, able to obtain a 5% down loan for an interest rate that was, IIRC, in the 6%-7% range, fixed with no balloon payments (I asked before she took the loan). So, I'd be interested in exploring why our experience has been different from yours. I have some possible candidates, but I think this exploration would reveal some of the contributing problems to the present housing situation. Finally, now that we are renting, we are paying for 1300 sq. ft. less than the mortgage our buyers are paying for 3000 sq. ft. It doesn't make financial sense to rent here if you plan on staying put. Dan M. hi dan, thanks for the insights. i just responded to bruce's informative post, but can add here that when i bought my house in santa monica, i agreed to the terms and accepted the house as is. my realtor was trying to get me to drop out, but my girl friend, at the time, found out, through her connections, that two other people had made a higher offers AFTER mine had been accepted, and the seller's agent wanted a bidding war. when i put the house back on the market, the original agent, tried to tell everyone coming to the open house that the house was not worth what i was asking. she was wrong... jon ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: European bank failures
On Sat, Nov 8, 2008 at 9:53 AM, Dan M [EMAIL PROTECTED] wrote: Well, I looked on this balance sheet, and didn't see that. Further, isn't senior debt a debt, not an asset? What I think you mean is that it's big enough to absorb all the loss involved in liquidating assets. So, to look at that, I looked up deutsche bank senior debt and got http://annualreport.deutsche-bank.com/2008/q2/notes/informationonthebalances heetunaudited/long-termdebt.html http://tinyurl.com/62cgfg We see that subordinate + senior debt is less than 200 billion Euros. Sorry, I assumed from the way you were speaking that you had a decent understanding of the balance sheets of banks, so I was speaking loosely. I'll be a bit more precise now. A bank's balance sheet may be divided into assets and liabilities. Assets can be loans, mortgage backed securities, cash, etc. The liabilities include deposits, REPO's, long-term debt, etc. It is an accounting identity that assets = liabilities + equity (that is the balance part of the name). If the assets lose value (for example, bad MBS's) then the balance is maintained by reducing the equity. If the equity becomes negative, the firm is insolvent. I'm not familiar with the bankruptcy laws in Europe, but if they are anything like the US then all the debt holders will lose their money before the depositors. Basically there is an ordering of the liabilities, with the depositors near the top, and in bankruptcy, after all assets have been liquidated, the depositors are paid off first, then the next creditor on down the line until the money runs out. The balance sheet you referenced has total assets of nearly 2 trillion euros, and 422 billion euros of deposits under liabilities. As long as the losses on the assets do not exceed about 79% (loss of 1.6 trillion), then the depositors could get their money back. You just brushed off the essential problem at the heart of bank runs with a it would just. I'm not talking about preventing bank runs. The issue I am addressing is whether the depositors would be able to get their money back in bankruptcy. If the depositors won't be able to get their money back eventually, then that is a more severe crisis than just an insolvent bank. Second, when bank failures have happened in the US, it's been a big bank taking over a smaller bank with the US government eating the bad assets as part of the deal. That is a gross oversimplification. But there are two huge mistakes that the government can make that contribute greatly to the problem: 1) Bailing out the bondholders. If banks find it harder to borrow, then they will have a more difficult time reaching excessive leverage. But if the government bails out the bondholders, then the bondholders will be eager to lend to the banks even if they have excessive leverage. 2) Not charging high enough premiums for insurance. One thing that is obvious from the past year is that the government considers some financial institutions too big to fail. If that was the case, the government should have been charging much higher insurance premiums (in some cases, higher than zero) for insuring these institutions. Big mistake. Government excels at big mistakes. I'll go back to another example of this: the fact that the spread between interest on A and AA paper jumped up to almost 5% as the bailout was being passed, and is now dropping as it is being implemented. Do you make these things up, are you just remarkably ignorant, or are you just going on blind faith in government? If none of the above, please list how the $700B bailout slush fund has been spent so far. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: SL failures
On Sat, Nov 8, 2008 at 11:17 AM, Dan M [EMAIL PROTECTED] wrote: Ah, the point is that after 50 years of successful government control, it was virtually eliminated, then bad things happened. Your point is that because, technically, the government still regulated, bad things happened. I am beginning to see a pattern of how you make gross simplications to try to make the situation fit into your pigeonhole of how the government can save us by making simple and effective regulations to control the simple financial systems. Unfortunately, the reality is that there have been thousands of cases of government interference in the markets for decades now, and each one can and does have many unforseen consequences. It is incredibly naive to assume that eliminating or adding to a ridiculously complex system of regulations will immediately result in disaster or salvation. Not everything fits into your simple physics models, and you (and government regulators, and I) do not know anywhere near as much as we need to if we are to play god with millions or billions of people interacting in a market. No, because we had a government that had X regulations and we had few problems of this type for most of the last 75 years. ROTFLMAO! You really should consider a career in comedy. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Government regulations and complex consequences
http://www.econbrowser.com/archives/2008/11/the_new_improve.html James Hamilton writes: ...That means a couple of things for Fed watchers. First, fed funds futures contracts, which are based on the average effective rate rather than the target over a given month, are primarily an indicator of how these institutional factors play out-- how much the effective rate differs from the target-- and signal little or nothing about future prospects for the target. Second, the target itself has become largely irrelevant as an instrument of monetary policy, and discussions of will the Fed cut further and the zero interest rate lower bound are off the mark. There's surely no benefit whatever to trying to achieve an even lower value for the effective fed funds rate. On the contrary, what we would really like to see at the moment is an increase in the short-term T-bill rate and traded fed funds rate, the current low rates being symptomatic of a greatly depressed economy, high risk premia, and prospect for deflation ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: SL failures
Where do government regulators come from? Recently, bankers who got rich before the government bailed out their companies. http://blogs.usatoday.com/ondeadline/2008/11/fed-hires-ex-be.html ___ http://www.mccmedia.com/mailman/listinfo/brin-l
RE: Government regulations and complex consequences
-Original Message- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of John Williams Sent: Saturday, November 08, 2008 2:16 PM To: Killer Bs (David Brin et al) Discussion Subject: Government regulations and complex consequences http://www.econbrowser.com/archives/2008/11/the_new_improve.html James Hamilton writes: ... On the contrary, what we would really like to see at the moment is an increase in the short-term T-bill rate and traded fed funds rate, the current low rates being symptomatic of a greatly depressed economy, high risk premia, and prospect for deflation Out of curiosity, do you agree with what you've quoted, or think it is utter nonsense? If the former, have you changed your mind about the validity of measurements in a complex economy? Dan M. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Government regulations and complex consequences
On Sat, Nov 8, 2008 at 12:26 PM, Dan M [EMAIL PROTECTED] wrote: Out of curiosity, do you agree with what you've quoted, or think it is utter nonsense? Do I think that the government should try to act in the way James Hamilton says? No. I think it is rather obvious that the consequences of previous actions are unpredictable. It is interesting that an expert can write a few paragraphs about how utterly surprised he was about what was happening, and then a little later come up with a solution. But that is typical of advocates of government interference. Playing god is seductive. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Who is John W?
I am beginning to see a pattern of how you make gross simplications to try to make the situation fit into your pigeonhole of how the government can save us by making simple and effective regulations to control the simple financial systems. Unfortunately, the reality is that there have been thousands of cases of government interference in the markets for decades now, and each one can and does have many unforseen consequences. It is incredibly naive to assume that eliminating or adding to a ridiculously complex system of regulations will immediately result in disaster or salvation. Not everything fits into your simple physics models, and you (and government regulators, and I) do not know anywhere near as much as we need to if we are to play god with millions or billions of people interacting in a market. ROTFLMAO! You really should consider a career in comedy. john, you are the one who has the pattern of using simplication and specious argument to fit your biased rationalizations into pigeonholes...i have been warned by other members on this list not to respond to your provocations, or engage with you because it only lowers me to your level, but i genuinely would like to know why you are so rude? does it give you pleasure to bait people and arouse their anger? people with your degree of arrogance, condescension, and paucity of social skills are often compensating for an inferiority complex. have you ever been diagnosed with a personality disorder? you still haven't answered my questions who you really are, what is your income bracket, and what you do for a living that affords you so much time to be so antagonistic??? i am also curious why you are on this list and what other aliases you have used? there are some instances when government regulations can control financial systems in beneficial ways, and sometimes there are times when government should stay out. if it is true that some government regulators have bailed out their own former companies, don't you agree that having the foxes guard the henhouse is a conflict of interest? what if we had regulators that had no stake in maintaining the status quo that got us into this mess? it is quite obvious that appropriate regulation could have prevented the current economic collapse. there is plenty of blame, and perhaps it is even true that some of those mistakes were due to an effort to help people in my income bracket become home owners. why do you think that is so terrible, and why is it not so terrible to bailout the crooks who caused this mess? anyway, there are a lot of factors to consider, and i have noticed how you conveniently ignore arguments you can't refute. jon ___ http://www.mccmedia.com/mailman/listinfo/brin-l
pow, zoom, straight to the moon!~)
Actually, I don't know what you mean,
which is why I asked. If you don't like
the terms of the loan, then why borrow
the money?
Because your wife said If I have to spend
another month in this {deleted] apartment
instead of a real house, I'm going to take
to take the kids and leave you?
. . . ronn! :)
actually, you are not far off the mark, ronn. my girl friend, at the time, was
pressuring me to make a commitment and i felt some obligation because she was
motivated me to get off my ass and use my capital gains to become a home owner
or lose the tax deduction.
it is to my eternal shame that i married another and allowed her mother to
manipulate me into selling the house (just before the real estate bubble in
santa monica really took off) because it was too small for her daughter.
so it goes...
jon
___
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State of Discourse
I'd like to make a few comments on the state of the discourse on the list. I'm not a conservative, far from it, but I wouldn't for a second try to get someone to shut up and go away because they were more conservative (or libertarian or whatever) than I was. I wouldn't call anyone names because they continued to argue with me and I wouldn't conduct an inquisition if they wanted to keep parts of their lives private. I have no problem with telling other members that they were full of sh** (in so many words) if that's what I thought about something they posted as long as I substantiated my opinion, but I'd like to suggest that we remain focused on attacking the argument rather than the person that posted it. If the list was even more politically homogeneous than it is now it would be a pretty boring place. So let's have hearty arguments, strong opinions, good research, interesting insight and a diverse set of opinions, but lets lay off the sarcasm, the name calling and the nagging. IAAMOAC Doug i agree with you in principle, doug, but it is hard not to retaliate in kind when our troll goes overboard with his insults and sarcastic repartee. i understand his intent is deliberate and he gets his jollies by provoking anger in others. whoever he really is, he must have a very sad life and only has his computer for company... ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Franklin Delano Bush
I have long used this as an argument for more, rather than less government spending. When the government spends money like it did during WWII, the economy soars. And that's just buying things that you KNOW are only going to be destroyed. Imagine if the government spent like that for things we need that will last. And we'd have a highly stimulated economy. Dave i have long wondered, dave, why the government does not spend out taxes more efficiently. it is why i've run for city council here in santa monica 8 times. we have over half a billion dollars in revenues for a city of about 86,000, located in approximately 8.6 sq. miles, much of which is soaked up by administration and bureaucratic waste. santa monica would be a utopia if that budget was put to good use... jon ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Franklin Delano Bush
On Sat, Nov 8, 2008 at 1:32 PM, Jon Louis Mann [EMAIL PROTECTED] wrote: i have long wondered, dave, why the government does not spend out taxes more efficiently. I have long since stopped wondering and simply accepted that the government does not spend our money efficiently. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: State of Discourse
On Sat, Nov 8, 2008 at 1:20 PM, Jon Louis Mann [EMAIL PROTECTED] wrote: he must have a very sad life and only has his computer for company... My computer, and wonderful people like you to correspond with and brighten my day! ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Franklin Delano Bush
On Sat, Nov 8, 2008 at 7:19 PM, Dave Land [EMAIL PROTECTED] wrote: And on the basis of such acquiescence, the waste continues. Of course, if the government spent less money, there would be less waste. ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: Franklin Delano Bush
On Nov 8, 2008, at 1:41 PM, John Williams wrote: On Sat, Nov 8, 2008 at 1:32 PM, Jon Louis Mann [EMAIL PROTECTED] wrote: i have long wondered, dave, why the government does not spend out taxes more efficiently. I have long since stopped wondering and simply accepted that the government does not spend our money efficiently. And on the basis of such acquiescence, the waste continues. Dave ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: European bank failures
On Sat, Nov 8, 2008 at 5:56 PM, [EMAIL PROTECTED] wrote: Hopefully these things are not made up An expert's expert! :-) ___ http://www.mccmedia.com/mailman/listinfo/brin-l
Re: European bank failures
Do you make these things up, are you just remarkably ignorant, or are you just going on blind faith in government? If none of the above, please list how the $700B bailout slush fund has been spent so far. Hopefully “these things” are not made up and the generation of youth including these on this board will be in tune with the difference between the banking balance and personal or micro-economic balance sheets. The basic difference is that the personal balance sheet tend to measure the creation of wealth and that of the bank tend to measure the creation of money. Money is not wealth but the means to transfer wealth. Money have various functions among these are a measure to count value, a store of wealth, medium of exchange. It is the varying functions which might create confusion in the general public and lend to the ease in which money is used as a tool of theft by inflation and the collapses of banks like the colossal failures which the world is using to transfer the wealth of nations back to the capitalist, socialist moguls or what ever you wish to call them. The difference between the personal balance sheet and the bank balance sheet is based upon what these sheets measure. In the case where the balance sheet analyze wealth we discover an asset to be real property, commodities, inventories, money on hand [only in a short time period call the current period] ect the bank balance sheet evaluate these things in retrospect [deposites loaned out to purchase personal assets]. In this view present evaluations use money to count the assets. It may be considered ignorant to miss this point but yet a person might be smarter than a fifth grader and yet have problem with this sharp different. Accounting FASB allow accountants to differ widely in these evaluations while the banking institutions must use more strict measure like interest [prime lending rates] to structure their asset evaluations. Ultimately bank assets drive the expansion of money between member banks and the Federal Reserve Banks. General Assets create contractions by absorbing money. We might see these facts in the various segments of accounting i.e. general as apposed to financial accounting. Again even the experts tend to differ but a good president should be smarter than a fifth grader and grasp these sharp differences and if he/she is not then hold your jockey strap you are in for a ruff ride. A=L+E now become two different monsters. The A in the general accounting term need L/E to measure the debt equity ratio and determine the production of wealth. This formula is a key to understanding the problem which America faces when wealth occurs and very little E is in the hands of a few private citizens. The source of E is the existence of real income which is the difference between gross income and the cost to produce this income divided by inflation in t1 against an index bread basket cost. The private American suffer because the tools for producing wealth [capital, labor, the mix] keep slipping from his grasp. The plantation economy in America pooled wealth in the hands of a few gentlemen planters. The Washington’s and Jefferson’s were not the only creators of wealth because houses up north were being built by slave labor and the expansions of industry was fuel by the very genius which wished to break away yet be a part of the slave system creating the wealth. The duality of early American wealth evolve from the slave freemen bureaucracy. In some spheres free men contributed to the creations wealth which they claimed as their possessions. The slave holders gained the advantages from the triangle of trade which drove the industries of Europe and transferred 87 years unchallenged wealth to the Founders and their kind. The industries of steel and oil came to be molded after the images of Fulton, Stevenson, AJ McCoy, Grandville T. Woods and many men of various hue and tint. These men again struggle to compete for their own intellectual wealth as they fueled the Civil War. The new politics for the wage slave rose from these new enterprise. The nations first order of business after the 13th, 14th, and 15th, amendments was the 16th amendment. This income tax act tied the A of the private citizen to ownership by those in control of the government. Although we wish to say representative government again an advantage was given to some citizens over others. The break away republic was fashioned well before the 16th amendment because a new world order had taken place and the politics of the time needed to catch up. Money and banking grew by leaps and bounds during this period and the wealth of America was measured by the expansion of the AP systems which opposed the gentleman planters and Masons. So the perfect person to lead the nation was Abe Lincoln not because of his love for the slave or his desire to see him free but because he was a railroad lawyer turn congressman who could cool the
Re: Franklin Delano Bush
Of course, if the government spent less money, there would be less waste. There would be less government waste for certain, but I suspect there would be a comensurate increase in private sector waste. The only reason the government makes bad decisions is because it is made up of people. The private sector is made up of people too. Regards, Wayne ___ http://www.mccmedia.com/mailman/listinfo/brin-l
