Contrary Riches

Free Houses for Everyone!! Yippeee!!

2009-12-28T23:19:00.005-05:00

On a holiday eve, the Treasury announces that they will back Fannie & Freddie to unlimited losses. Yes, you read that right...they will not cap how far or how much they'll back bad mortgages, essentially to infinity. This has caused investors and speculation to scramble about what this means...

One potential answer? Free mortgages!! That's right, big loan forgiveness (similar to how student loans can be forgiven) appear to be a-coming. May wanna start buying some homes if you are the gambling type.

“Given this outlook, we believe that the main driver of this significant change is the flexibility it gives the government to take more aggressive action to support the housing market, including potentially going down the road of allowing some form of principal writedown,

Anatomy of a bank takeover

2009-12-13T12:44:00.002-05:00

Ever wanted to know how the process goes down when the FDIC comes to your local bank and says "Move out, we're in charge" to your bank's branch manager? This article goes thru it step by step.

Conservative lending institutions are among the many that are on Calculated Risk's unofficial problem bank list.

American Dream?

2009-12-10T23:02:00.002-05:00

The American dream....buy a big house, live in it for a while, then default on the payments and go rent a similar house for cheaper......

Are you unemployed?

2009-12-09T23:26:00.001-05:00

The biggest RE land rush right now

2009-11-28T21:14:00.001-05:00

Its not here in the US and A...

Its not here in the Northern Hemisphere...

It is not even Australia..

Its...Africa. Farmland is going up for sale and selling in record time. An oncoming food shortage plus CHEAP land plus CHEAP labor makes for a great opportunity for those with big money.

The biggest check ever written..

2009-11-20T18:53:00.002-05:00

9 billion dollar check...wow....somehow, I don't think that this record is going to last too long...its the check that saved Morgan Stanley from cradling under..

The Best Investment for 2010-2020

2009-11-20T18:48:00.003-05:00

The best stock investment for the next 10 years will be whichever bank/financial institution/lending company figures out a way to lend money to small businesses profitably and with little risk.

Simply put, this will be the BEST INVESTMENT of the next decade, short of a company finding a cure/treatment for cancer or heart disease. Why do I say that? The need is there in the form of ample demand, very limited supply, this/these lending companies can be extremely picky with who they have as customers, and they can get every kind of collateral they want. If they are or become publicly traded, these strong small business loans/lines will be the kind of paper Wall St and foreigners will need to buy. Something that is extremely tight with lending criteria, great assets as collateral, strong base of debtors, and above average returns on loans.

Anyone wanna weigh in or am I just nuts?

Anyways, here's a list of the top 10 stocks from 2000-2010 (or until November 2009)

Want Lower Credit Card Rates? Spend 750 bucks every month!!

2009-11-19T22:17:00.002-05:00

Credit card companies LOVE to screw customers. After making them deal with the shock and horror of one time credit rates around 8% get JACKED UP to 29%, Citibank has decided to "make nice" with their customers:

Those who meet the spending minimum , in some cases $750 a month , will be able to get a rebate on their total interest charges for that month. The rebate could cover some or all of the interest rate hike. Customers also need to make payments on time to qualify for the rebate.

Yes, that's right, they want you to spend almost a GRAND every month in hopes to get you trapped further. Unbelievable!

Stupid Americanos....Won't Pay 50 bucks to buy Gold coin worth $1100

2009-11-11T21:19:00.001-05:00

Great video that goes to show you how uneducated Americans are with money.

Gold & the United States

2009-11-07T23:31:00.002-05:00

Will the US ever sell its gold? Err, will the US ever be forced to sell its gold?

I hope not, but that doesn't mean the day won't come when we'll need to finance our vast debt to pay off our expenditures and future costs (such as the health care bill that just passed the House).

Govt giving ya 5000 smackers to buy a golf cart!

2009-10-30T19:19:00.005-04:00

From Doug Casey:

You’re going to love this. I came across a recent story from The Wall Street Journal about how Uncle Sam is now paying Americans to buy, of all things, golf carts. Yes, you too can own that great necessity of modern life thanks to the federal tax credit to buy high-mileage cars that was part of President Obama’s stimulus plan.

Here’s an excerpt from the article:

The federal credit provides from $4,200 to $5,500 for the purchase of an electric vehicle, and when it is combined with similar incentive plans in many states the tax credits can pay for nearly the entire cost of a golf cart. Even in states that don't have their own tax rebate plans, the federal credit is generous enough to pay for half or even two-thirds of the average sticker price of a cart, which is typically in the range of $8,000 to $10,000. "The purchase of some models could be absolutely free," Roger Gaddis of Ada Electric Cars in Oklahoma said earlier this year. "Is that about the coolest thing you've ever heard?"

The golf-cart boom has followed an IRS ruling that golf carts qualify for the electric-car credit as long as they are also road worthy. These qualifying golf carts are essentially the same as normal golf carts save for adding some safety features, such as side and rearview mirrors and three-point seat belts. They typically can go 15 to 25 miles per hour.

In South Carolina, sales of these carts have been soaring as dealerships alert customers to Uncle Sam's giveaway. "The Golf Cart Man" in the Villages of Lady Lake, Florida is running a banner online ad that declares: "GET A FREE GOLF CART. Or make $2,000 doing absolutely nothing!"

Golf Cart Man is referring to his offer in which you can buy the cart for $8,000, get a $5,300 tax credit off your 2009 income tax, lease it back for $100 a month for 27 months, at which point Golf Cart Man will buy back the cart for $2,000. "This means you own a free Golf Cart or made $2,000 cash doing absolutely nothing!!!" You can't blame a guy for exploiting loopholes that Congress offers.

The IRS has also ruled that there's no limit to how many electric cars an individual can buy, so some enterprising profiteers are stocking up on multiple carts while the federal credit lasts, in order to resell them at a profit later. We should note that some states, such as Oklahoma, have caught on to the giveaway and are debating whether to cancel or limit their state credits. But in Congress they're still on the driving range.

Remember, there’s no such thing as a free lunch. When politicians dole out tax credits and other subsidies for their pet projects (green or otherwise), you end up paying for them in the form of higher taxes on other things -- like work and investment -- and a loss of purchasing power of your currency.

Got Perfect Credit? It'll Cost Ya...

2009-10-27T01:05:00.002-04:00

Let's see....banks get money from taxpayers to save their sorry behinds..check...

Now what do banks do to forthright customers who have perfect credit? They charge them for it!!

The banks are starting to charge fees to reliable customers in response to a slew of new credit card industry regulations that will limit when banks can hike interest rates. Cardholders who get a new annual fee notice in the mail will be in a no-win situation.

"They can either pay that fee or they can close the account, and if they have had the account for a while and they close it, they are potentially going to hurt their credit card score," said Woolsey.

FDIC Friday Returns!

2009-10-24T12:51:00.003-04:00

FDIC Shuts Down 7 more banks in one day!

While banks and thrifts are now well along in the process of loss recognition and balance sheet repair, the process will continue well into next year, especially for commercial real estate," FDIC chief Sheila Bair told Congress last week.
As a result, she said, the number of problem institutions increased significantly, to more than 400 during the second quarter.

Now, with unemployment near 10% and credit card default rates about the same, prime mortgage delinquencies are rising, stoking worries among the nation's banks that despite rising stock markets, fundamental banking industry health remains elusive.

The End of Capitalism??

2009-10-20T10:06:00.002-04:00

An excellent read...some confirming suspicions on why capitalism may be long in the tooth.

15 more clues capitalism lost its soul ... is a disaster waiting to happen

Much more evidence litters the battlefield:

Wall Street wealth now calls the shots in Congress, the White House
America's top 1% own more than 90% of America's wealth
The average worker's income has declined in three decades while CEO compensation exploded over ten times
The Fed is now the 'fourth branch of government' operating autonomously, secretly printing money at will
Since Goldman and Morgan became bank holding companies, all banks are back gambling with taxpayer bailout money plus retail customer deposits
Bill Gross warns of a "new normal" with slow growth, low earnings and stock prices
While the White House's chief economist retorts with hype of a recovery unimpeded by the "new normal"
Wall Street's high-frequency junkies make billions trading zombie stocks like AIG, FNMA, FMAC that have no fundamental value beyond a Treasury guarantee
401(k)s have lost 26.7% of their value in the past decade
Oil and energy costs will skyrocket
Foreign nations and sovereign funds have started dumping dollars, signaling the end of the dollar as the world's reserve currency
In two years federal debt exploded from $11.2 to $23.7 trillion
New financial reforms will do little to prevent the next meltdown
The "forever war" between Western and Islamic fundamentalists will widen
As will environmental threats and unfunded entitlements

Free Stuff, Coupons, 1 Time Offers

2009-10-11T16:17:00.003-04:00

From time to time, outstanding offers are made available thru various websites that are out there to help people save a buck. Since saving money by not overextending yourself is one key to becoming wealthy, we here at Contrary Riches will periodically bring the best deals/discounts out there.

1) $55 bucks to start investing in the stock market for those who want to dabble in the Stock Market (available with additional incentives if you are a Costco member)

2) $10 off a $50 purchase at Sherwin Williams for all you real estate minded folk.

3) Free food samples so that you can stock up on food without spending any money.

4) Coupons on household products.

5) Finally, 2 other blogs for you to follow to get the best bargains out there:
Deal Seeking Mom at : http://www.dealseekingmom.com/
Coupon Queen at Big Tent..she feeds her family of 6 for $4 dollars a week by getting discounts galore..read about her here

Truer Words Were Never Said Better

2009-10-11T01:31:00.002-04:00

Materialism has not provided what we needed. As our current crisis deepens, luxury cars and Rolex watches will seem so phony. Childish symbols like yellow rubber wristbands and yellow, pink, and rainbow ribbon stickers on our SUVs do nothing to change the world. When you are walking down the street, look people in the eye and say hello rather than staring at your feet or checking your latest email or text message on your “crackberry”. Deeper personal relationships with family and friends will become crucial. The thieves and crooks occupy Washington DC and Wall Street. We do not need what they are selling. Economy sized dreams of hope will sustain the citizens of this great country. Instead of accumulating stuff, give your stuff to people who need it. Donate your stuff to Purple Heart, the Salvation Army, or any other worthy charity. Donate your time to Manna, Habitat for Humanity, or any other worthy cause. Don’t delegate your role in caring for your fellow citizens to the government. Americans will soon realize that what they wanted was not what they needed.

James Quinn, What's My Payment

Top 7 Fears of Real Estate Investors

2009-10-10T01:27:00.000-04:00

The Top 7 Fears of Real Estate Investors Today

1. Lack of Cash - Personal incomes are dropping. Unemployment is nearing record highs. Renters in most markets are defaulting. Credit card companies

are cutting the amount of cash available even for those who have amazing credit scores and always pay back on time.

2. Lack of Confidence - Many investors are lacking confidence in their ability to get through the next three years of this huge downturn. For example, many investors are finding that it's taking months to close a property deal. If you're working real estate short sale strategies, because banks are so burdened with offloading inventory, you could wait six months just to receive a BPO (Broker's Price Opinion).

3. Loan Challenges - A friend of mine couldn't even refinance

his house for a lower mortgage payment than what he's paying right now because the household income dropped since his wife's death. If he can't refinance his home for a lower payment, what do you think your chances of getting a loan are? What's more, banks have raised down payment requirements on residential and commercial properties to as much as 40%.

4. Can't Find Deals - The majority of housing and condo sales are foreclosures, as homeowners don't want to sell now and lose all the value that they put into the house.

5. Not Enough Buyers - Yes, incentives like the tax credit are beginning to enter the market. Yes, we are starting to see a reduction in new inventories. The key word is "starting." Yet in many markets, investors are finding a lack of buyers even at bargain prices!

6. Takes Too Much Time - Many old-hat real estate investors are spending their days and nights trying to close deals. Most of their time is spent late at night on their computers, or traveling around the country hopping from one airport to the next, in hopes of getting that six- or seven-figure real estate deal done, just to be disappointed again and again.

7. Lack of Knowledge - Old-hat real estate investing requires you to understand negotiation strategies, NLP mind tricks, what's-working-now techniques, real estate contracts, and how to adapt to opportunities in more than one marketplace, using more than one investing strategy.

Why its Time to Get Rid of the 401k (which for many is now a 41K)

2009-10-09T01:40:00.003-04:00

If you have even peeked at your account statements in the past year, it's painfully obvious that something is wrong with the way we save. The tax-deferred 401(k) plan, and others like it, such as the 403(b) and the IRA, have become our nation's go-to retirement piggy bank. Invented nearly 30 years ago as an executive perk — one more way to dodge Uncle Sam — the 401(k) was never meant to replace the employer-guaranteed pension fund, supplemented by Social Security, as the cornerstone of our nation's retirement system. But propelled by a combination of companies looking to cut costs and consumers who wanted control of their retirement destiny, that's exactly what happened.

collectively we pour more than $200 billion into these accounts each year. But retire rich? Don't bet on it. The average 401(k) has a balance of $45,519. That's not retirement. That's two years of college. Even worse, 46% of all 401(k) accounts have less than $10,000. Today, just 21% of all U.S. workers are covered by traditional pensions, and the number shrinks every year. "The time may have come to consider returning 401(k) plans to their original position as a third tier of retirement planning, behind pensions and Social Security," says Alicia Munnell, who heads the Center for Retirement Research at Boston College. "They should not be the thing we rely on for retirement security." And the government seems to agree. This summer, the Government Accountability Office concluded, "If no action is taken, a considerable number of Americans face the prospect of a reduced standard of living in retirement." That's what is known as an understatement.

TIME MAGAZINE

Multi-Millionaire by 24- How One Kid Did It

2009-10-05T00:09:00.002-04:00

Certainly goes to show you that success can come with hard work. Someone needs to tell broke ass Donald Trump to learn some lessons from this kid on how to do successful real estate deals.

Adam Blake made one of his first life-changing decisions as an eighth-grader in Kansas City. He made another just a couple of weeks ago.
Blake, 24, who has made a residential real estate business he started as a sophomore at Texas Christian University into a multimillion-dollar venture, in September closed on the purchase of the historic Electric Building in downtown Fort Worth from billionaire Robert Bass.
Blake hopes it will be the first of several commercial real estate buys. The deal, though, catapulted him into a market dominated by local deep pockets, institutional investors and older developers — right where he wants to be.
His company Atlas Properties was on the latest Inc. 500 list of fastest-growing private U.S. companies, reporting 2008 revenues of $5.8 million, up from $382,778 in 2005. And that’s just one of the nearly dozen companies and investment funds he owns. Another is Blake Venture Corp.
His youth does get in the way of deals, he said. Recently, he wanted to buy a Houston apartment community, but the broker involved asked to see his personal bank statements before he’d accept his offer.
"One guy told me he thought a deal was out of my league because he read on one of my Web sites that I am only 24," Blake said. "Definitely, age can be a hurdle."

Retail Sales over the past 6 years

2009-10-04T12:46:00.002-04:00

Shoppers’ Shifting Priorities

click for readable graphic

courtesy NYT

Risky Business: Betting on a home's value

2009-10-03T17:49:00.003-04:00

There are some sure bets that are prudent to take, such as:
1) Tiger Woods kicking your ass in golf
2) The next Hugh Grant movie likely to suck
3) Kanye West to say something dumb
4) Laws against doing things on your cellphone having no effectiveness on behavior

But one thing that USED to be a sure bet and is no longer....the value of your house. From the Washington Post:

"We have cases where houses are being appraised at less than the cost to build them," Howard said. "People are just being really, really conservative."

Some housing industry insiders also say that the appraisal process has become more complicated since the implementation of a new set of rules, known as the Home Valuation Code of Conduct, in May. The rules, put in place by Fannie Mae and Freddie Mac, aim to shield appraisers from pressure to submit a desired estimate of a home's value to hasten its sale.

Investing in Time Shares PLUNGE!

2009-09-30T00:03:00.004-04:00

One of the worst investments of all time is the infamous time share. Notorious for pushy salespeople that put car salesmen to shame, time shares have always been one of the biggest ripoffs that occur to put people in debt. Now, in a deprecession, the time share boom is finally being exposed for what it is.

U.S. timeshare sales dropped 8.5 percent last year to $9.7 billion from a peak of $10.6 billion in 2007, excluding the luxury fractional business and private residence clubs, according to an Ernst & Young LLP study prepared for ARDA. The decline was the industry’s first since 1975 and is being driven by tighter credit, a higher personal savings rate and the loss of 6.9 million jobs since the recession started in December 2007.

AND
Mark Massarelli, who runs Dynasty Limousine in Boston, has been trying to sell one of two timeshares in Hollywood, Florida, that he and his sister inherited from their mother. He has been advertising a one-bedroom, one-bath unit on Craigslist.org for six months. It’s at a full-service oceanfront property with access to an 18-hole golf course.

Massarelli, 46, hasn’t received any inquiries even after cutting the price twice.

“I am offering it at $3,995 but its value right now is probably around $8,000,” Massarelli said in a telephone interview. “I tried to sell it a couple of times for a higher price but nobody bit. The maintenance and taxes on the unit are getting expensive. So I cut the price to attract more buyers, but nothing so far.”

Hey Mark, if you can't sell it for 3995, then its value is NOT $8000, its whatever you sell it for!!

Are we supposed to be surprised???

2009-09-28T18:13:00.004-04:00

Cash for Clunkers only worked while the cash was available for buyers? You mean it had no carryover effect? Wow, what a shocker!!

U.S. auto sales likely fell in September back to the nearly three-decade lows of early 2009 without government incentives to spur buying, leaving in doubt the timing and pace of a recovery for the battered industry.
Nearly 700,000 new cars and trucks were bought by U.S. customers through the government "cash for clunkers" incentive program from late July through the first three weeks of August, a leap from recession-stunted sales earlier in 2009.
However, none of the largest manufacturers are expected to post sales gains in September, and Edmunds has forecast a 23 percent industry sales decline for the month.

Bye bye, US Dollar. Hello.....(global currency? Renmibi? Euro? Gold?)

2009-09-24T21:20:00.003-04:00

Ouch, baby...very ouch...

"The dollar looks awfully like sterling after the First World War," said David Bloom, the bank's currency chief.

"The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK – debt is racing up to 100pc of GDP," he said

So what does this mean?

"It's almost Armageddon if the Japanese and Chinese don't buy our debt,” Robertson said in an interview. "I don't know where we could get the money. I think we've let ourselves get in a terrible situation and I think we ought to try and get out of it."
Robertson said inflation is a big risk if foreign countries were to stop buying bonds.
“If the Chinese and Japanese stop buying our bonds, we could easily see [inflation] go to 15 to 20 percent,” he said. “It's not a question of the economy. It's a question of who will lend us the money if they don't. Imagine us getting ourselves in a situation where we're totally dependent on those two countries. It's crazy.”

China (remembering the golden rule...he who has the gold makes the rules) has this to say:

China, meanwhile, continues to flex its muscle.

It has proposed that the G20 economies consider setting up an international wealth fund that would invest a portion of its members' current-account surpluses in developing economies.
"These comments reinforce their desire to diversify out of dollars and to encourage other nations to do so as well," said Kathy Lien, chief strategist for Global Forex Trading.
A few Chinese deals were recently seen accepting payment in the currency of the buyer rather than in dollars, especially with Brazil, which the Asian giant is wooing as a future oil supplier.
In addition, China -- the first nation to sign an agreement to buy IMF bonds -- took the unsual step of paying for the papers equivalent of 50 billion dollars with its yuan currency rather than dollars, which Beijing uses for much of its trade and other foreign transactions.

A Change in Lifestyle of the United States

2009-09-22T20:59:00.002-04:00

Consider the following 2 articles:

Meltdown gives consumers a new money mindset:

In ways big and small , from scrutinizing their bills and joining credit unions to scaling back weddings and college plans , people are finding creative ways to deal with the worst recession in a generation. In short, there's a quiet revolution taking place in the way people save, borrow and spend that represents a retreat from old habits, and the first steps toward new ones.

The changing behavior can be seen in other ways:

, Two years ago, the average amount spent on a wedding was $28,000, according to the Wedding Report, a market research company in Tucson, Ariz. Last year's average: $21,800. The second quarter of this year: $16,550 , 42 percent below the 2007 average.

, While enrollment numbers aren't yet available, public colleges reported a 14 percent spike in applications last spring, suggesting some students and their families are shifting from private schools so they can spend less.

Census: Recession had sweeping impact on US life

The homeownership rate fell to 66.6 percent last year, the lowest in six years, after hitting a peak of 67.3 percent in 2006. Residents in crowded housing jumped to 1.1 percent, the highest since 2004, a sign people were "doubling up" with relatives or friends to save money.

_ The share of people who carpooled to work rose to 10.7 percent, up from 10.4 percent in the previous year. Commuters who took public transportation increased to 5 percent, the highest in six years, with Washington, D.C., at the top.

Roughly half the states showed declines in the number of immigrants from 2007 to 2008. Major metro areas also posted decreases, including Los Angeles, Phoenix, Detroit and Tampa, Fla. An influx of workers from India, who came looking for specialized jobs in telecommunications, manufacturing, computers and software, partially offset the national immigration decrease.

When will Real estate return to its peak values?

2009-09-19T13:11:00.001-04:00

From Moody's:

The reality of Cap & Trade

2009-09-18T22:05:00.002-04:00

Trade Wars between China & US?

2009-09-12T23:26:00.003-04:00

Definitely NOT a good thing when one debtor (the US) starts up a trade war with their enabler (China).

China lashed a U.S. decision to impose duties on Chinese-made tires, calling them flagrant
protectionism that sent the wrong signal before the next G20 summit and risked a "chain reaction" that could slow global recovery."China strongly condemns this grave act of trade protectionism by the U.S.," the spokesman for China's Ministry of Commerce, Yao Jian, said in a statement issued on the Ministry website on Saturday.

Random Musings & Clicks

2009-09-11T20:20:00.002-04:00

6 Things I Think:

1) Gold is at an all time high (not inflation adjusted). Gold as a precious metal/hard asset is one of the 5 branches of investment everyone should own. However, now may not be the best time to buy into the market. I fear that if gold goes past 1040/ounce, you'll see the general public run into gold pushing it to 1200+, which means you should sell, as whenver the masses enter the market, the smart money leaves.

2) The tax credit for home purchases is running close to the end (November 30 is the closing date for those to qualify). There is a fear out there that this will either be extended & increased (causing buyers to not want to buy right now) or not renew (causing fools to overpay). It balances each other out. More concerning is the FHA running out of money to be at their reserve requirement.

3) Eviction patrols overloaded with foreclosures. Nuff said.

4) Wells Fargo Executive Parties in Foreclosed Home. Wow, another nuff said.

5) Russian leader demands curbs on alcohol purchases. Yeahhhh, sure. Telling Russians not to drink is like telling a stoner not to smoke it up.

6) Harvard & Yale the big losers in investing. Just goes to show you that an Ivy League education doesn't mean shit....all it gets you is connections & networking. With the advent of social networking, this may make Ivy's a little more obsolete.

Debtors Revolution & How Banks are shhhh QUIETLY Negotiating down debts

2009-09-09T22:30:00.003-04:00

Gotta LOVE this...a debtors revolt is going to happen if this gets passed along!

The Washington Post reports on the quiet practice going on by banks of secretly negotiating with cardholders to let them lower their debt amount & interest.

What's going on in this country

2009-09-08T13:29:00.002-04:00

It's been a while since I've been a guest poster on this blog. Thanks to my dear friend to keep it going. Things have been crazy lately. I am in the process of trying to close what was once a thriving prosperous business. I guess truly it wasn't all that thriving since it was all smoke and mirrors because of much money out there, due to the ridiculous loose lending practices of the recent boom. It is ironic that the ones who created this mess we are in are bailed out by the same corrupt government that encouraged it, and quite possibly forced it. All the while they are getting sweet mortgage deals from the orange man. If there is a hell, Chris Dodd, Pelosi and all the other "put money in my pocket" congressman will have to answer for their sins. Our government has put themselves before the people. They are public servants.

Wall Street's Next Bubble

2009-09-06T12:46:00.003-04:00

Some think the next bubble will be in "green jobs/green economy", others think it will reoccur in real estate, some say in China stocks (which we called for a popping of that bubble here)

So inquiring minds want to know..what is Wall Street's next bubble? Here's a preview:

The bankers plan to buy “life settlements,” life insurance policies that ill and elderly people sell for cash — $400,000 for a $1 million policy, say, depending on the life expectancy of the insured person. Then they plan to “securitize” these policies, in Wall Street jargon, by packaging hundreds or thousands together into bonds. They will then resell those bonds to investors, like big pension funds, who will receive the payouts when people with the insurance die.
The earlier the policyholder dies, the bigger the return — though if people live longer than expected, investors could get poor returns or even lose money.
Either way, Wall Street would profit by pocketing sizable fees for creating the bonds, reselling them and subsequently trading them.

"Buns" Bernanke Can't Be Happy bout this...

2009-09-03T23:12:00.003-04:00

No, I'm not talking about this picture...hat tip to Jrdeputyacct!

Bun, er, Ben Bernanke cannot be happy that the Chinese are gladly putting aside dollar/treasury/Fed note purchases and are finding that they can:
1) Buy gold
2) Buy IMF bonds (the first 50 billion issued)
3) Use their current dollar horde to buy assets around the world

Free For All Links to Interesting Articles

2009-09-03T12:07:00.003-04:00

Top 6 Financial Articles of the Day:

1) Homeowners Becoming Reluctant Landlords

2) Goodbye Fannie/Freddie, hello McGee? Simply put, the MCGE buys mortgages from banks, pools them into securities, pays an insurance premium to a new government fund and then sells them to investors with government guarantees against the default of those securities. So the investors take the interest rate risk but they are not taking a credit risk.

3) Has the Obama administration failed already? Here are 10 things to do to restore their hope

4) An inventive way to clean up foreclosed homes with pools

5) Florida may invest in Florida real estate

6) Making the switch from being nice to banks to being tough on them

Improving your credit score based on New FICO method

2009-09-02T14:17:00.002-04:00

The latest update to FICO's scoring model may result in a very good thing for many people...a higher score. Some changes include:

Under the updated scoring model, called FICO 08, small, missed payments lingering in collections with original amounts of $100 or less will no longer do damage to your credit score.

Consumers also are less likely to be penalized for any single delinquency if it occurred two or more years ago - and if their credit history is otherwise unblemished, says FICO, formerly Fair Isaac Corp., which developed the FICO scoring system.

As noted in this article here, even if you get a credit limit cut, it may not have that much of an impact on your scores.

Of course, if your scores are really bad, you can go into a career of making cover songs about the financial crisis, much like this Pink Floyd remake:

This video says it all...Yes, The Government Can!

2009-09-01T22:18:00.000-04:00

Banks & their foreclosures part deux

2009-08-31T20:16:00.002-04:00

Interesting info from CNBC's Diana Olick:

I spoke with Ted Jadlos of LPS Applied Analytics. He says there is no clear evidence of purposeful accumulation by the banks of these foreclosed properties. They are, he believes, working through the huge onslaught of new defaults as fast as possible, but it takes time. He says they are selling REOs at a fast clip as well, within about three months of taking them as REO.

Jadlos notes: Just getting to the average isn’t saying all that much. We need to be close to the four year low to be fully entrenched in a meaningful recovery. Based upon foreclosure and REO timelines, it’s going to take at least 18 months to flush the system of our current problems. But to flush the problems in only 18 months, more problem loans need to leave the system relative to the new problem loans of today and tomorrow. That does not appear to be the case right now—we aren’t clearing faster than new problems are emerging.

The UnderWear Indicator...

2009-08-30T22:56:00.003-04:00

Briefly, ahem...men's underwear sales typically are a good indicator of the economy. When sales are short and tight, the economy tends to cling down. When sales are riding high, the economy tends to perk up.

Sales of men's underwear typically are stable because they rank as a necessity. But during times of severe financial strain, men will try to stretch the time between buying new pairs, causing underwear sales to dip.
"It's a prolonged purchase," said Marshal Cohen, senior analyst with the consumer research firm NPD Group. "It's like trying to drive your car an extra 10,000 miles."

The growth in sales of men's underwear began to slow last year as the recession took hold, according to Mintel, another research firm. This year, Mintel expects sales to fall 2.3 percent, the first drop since the company started collecting data in 2003.
But the men's underwear index may also have a silver lining. Mintel predicts that next year, men's underwear sales will fall by 0.5 percent, and as with many economic indicators, a slowing of a decline can be welcomed as a step in the right direction. Retailers are reporting encouraging signs in the men's underwear department

A Dickens Tale: 2 Economies, 1 Country

2009-08-30T12:15:00.004-04:00

Seems like everyone is in a Charles Dickens mood this weekend, as many posts on blogs and financial websites are about 2 economies emerging: Marketwatch mentions about how the manufacturing sector is recovering, but the labor market is not.

Mike Shedlock's terrific Global Economics blog makes a great notation about how 2 types of companies have fared well during the credit bubble: Those who stayed away from debt to hoard cash, and those who just relied on bailouts. Companies that were in the middle that did not either have full cash or relied on taxpayer funds have done the worst.

But there's nothing more symbolic of a market approaching a top than when you start reading stories of people abandoning buy and hold strategies for a heavy trading strategy focusing on risky stocks with so-so fundamentals.

The 50-year-old from Naples, Fla., had limited investment knowledge but attended several seminars before starting to trade in May. So far, York said, she's up an average of 40% a month and is trading full time."It's the best job I've ever had, not just for the enjoyment but from the compensation standpoint," said York, who previously sold telecom equipment. "I've replaced a significant six-figure income."

Bear market rally? New Bull Market? bounce?

2009-08-28T00:28:00.004-04:00

Let's see...Gold has been relatively flat this year. Stocks are up 53% since the President told ya to buy stocks. The dollar is down. Oil is sorta up depending on what time frame you look at. Natural Gas is low. Real estate in some aspects is making a comeback. So where are we exactly?

We are in a place where lies permeate and are given credence and truth is shied upon. This is what a bear market rally looks like. And like many astute market observers predicted, it can last a long while. Eventually the truth does come out, but usually after the market makers have sucked the general public in (see tech stocks, housing, and maybe green stocks next).

Just desserts- Bernanke's phony identity

2009-08-26T19:43:00.004-04:00

You reap what you sow...looks like Ben Bernanke had his identity stolen.

You can't make this stuff up....the irony of a guy who is overinflating the US economy had his account stolen and his money was used to inflate other accounts. And best of all, he had his bank account with Wachovia...

At least ONE Fed official is telling the truth about employment:

The real US unemployment rate is 16 percent if persons who have dropped out of the labor pool and those working less than they would like are counted, a Federal Reserve official said Wednesday.
"If one considers the people who would like a job but have stopped looking -- so-called discouraged workers -- and those who are working fewer hours than they want, the unemployment rate would move from the official 9.4 percent to 16 percent, said Atlanta Fed chief Dennis Lockhart.

United Subsidy of America part 2..and your Clunker is Taxable

2009-08-25T23:17:00.003-04:00

First big surprise....trading in your clunker for 4500 dollars is TAXABLE...OOPS, talk about forgetting to tell the American consumer that....

Wow...Subprime lenders getting subsidies to write out loans..what a shocker....NOT...

lenders are eligible for taxpayer subsidies to lower the mortgage payments of distressed borrowers. Of the top 25 participants in the program, at least 21 specialized in servicing or originating subprime loans, according to the center, a nonprofit investigative reporting group funded largely by charitable foundations.
Much "of this money is going directly to the same financial institutions that helped create the sub-prime mortgage mess in the first place," Bill Buzenberg, executive director of the center, said in a statement.

For example JP Morgan Chase, Wells Fargo and Countrywide, are eligible to receive billions of dollars under the program, according to the report.

Preparing for the Worst? Or Expecting the Best?

2009-08-25T20:55:00.004-04:00

Looks like Robert Kiyosaki, of Rich Dad Poor Dad fame, thinks the big mess is no where near the end. Interesting article full of good points, some of which I agree with.

Consumer Confidence Index says the opposite..that the majority of people think things are getting better.

Short run, I think things are looking up...long run, I'm thinking Kiyosaki's ideas are more likely to pan out.

America: Land of the Subsidized Investment

2009-08-18T12:14:00.003-04:00

Can't decide what's worse for our country....

1) The US underwriting offshore drilling in Brazil to help THEIR companies find oil and then sell it to us at market value... OR

2) The US subsidizing Chinese investors to invest into the US at taxpayers expense up to 6x leverage OR

3) The US about to subsidize toxic loans to banks AGAIN

Banks in trouble all around

2009-08-16T23:18:00.004-04:00

The media has done a pretty good job of keeping quiet about it, but we are close to another banking crisis...eerily close. The FDIC is running out of money. Now there is strong news floating out that Guaranty Bank and its 14 billion in assets is about to come to a close.

The good news is that anyone wanting to know possibly which banks may be in trouble can look at this list generated by Calculated Risk (unofficial list)

http://www.calculatedriskblog.com/2009/08/problem-bank-list-unofficial-aug-14.html

All About Housing: Inside Mortgage Agents Report

2009-08-15T08:28:00.004-04:00

Comprehensive 80 page report on housing, the banks that do the lending for housing, and all sorts of useful nuggets, such as:

 The market for home purchases can be divided into segments of 26% for
damaged REO, 23% for move-in ready REO, 14% for short sales, and 36% for
non-distressed properties.
 Forty-three percent of homebuyers are first-time homebuyers, 29% are current
homeowners, and another 29% are investors.
 First-time homebuyers account for the majority of move-in ready REO sales while
investors account for the majority of damaged REO sales.

Plus, a breakdown on how the big banks deal with their short sales.

Five Bank FDIC Friday Returns!

2009-08-15T00:03:00.004-04:00

The biggest failure of the year, plus 4 other banks are making the FDIC's Friday gig a lot more work on a weekend than any other government employee has ever done!

A good article was written about 12 bubbles that are due to pop...I'll add the FDIC's bank closures as another bubble waiting to pop...they will at some point run out of money.

TARP Money for apartment complexes?

2009-08-13T07:30:00.002-04:00

The bill, which is called the TARP for Main Street Act and was sponsored by House Financial Services Committee Chairman Barney Frank (D-Mass.) and Rep.Velasquez (D-Brooklyn and Manhattan), would use TARP funds that have been returned by banks and plow it into programs that, according to the bill, would create "sustainable financing" for the complexes as well as provide funding for property rehabilitation.

No Food in Detroit= Armed Grocery Deliveries! Is Detroit the Next Farmland?

2009-08-12T19:32:00.003-04:00

There isn't a single major chain supermarket in the city, forcing residents to buy food from corner stores. Often less healthy and more expensive food.

As the area's economy worsens --unemployment was over 16% in July -- food stamp applications and pantry visits have surged.

Detroiters have responded to this crisis. Huge amounts of vacant land has led to a resurgence in urban farming. Volunteers at local food pantries have also increased.

But the food crunch is intensifying, and spreading to people not used to dealing with hunger. As middle class workers lose their jobs, the same folks that used to donate to soup kitchens and pantries have become their fastest growing set of recipients.

RipOff City....Bank Overdraft Fees Make them $38 Billion

2009-08-10T20:55:00.002-04:00

Here we go again....banks ripping off the consumer while claiming they are providing a service to their bail out partners.

Remember, these are the same assholes who make

70% of the overdrafts happen at a POS terminal or ATM, not by writing a check.
The last statistic is the clear one: There is no reason whatsoever for anyone to take such a hit. The bank knows before they approve the transaction that the money isn't there in the account.

This is not the same thing as a check, which the bank has no way to warn you about before you write it, as there is no "connection" between your checkbook and their computer.

IF we had honest regulators it would be strictly unlawful for a bank to intentionally approve a debit transaction which it knew you did not have the funds to settle unless you had an established overdraft line of credit (at a reasonable APR.)

Take solace in the fact that 1 in 6 banks in Georgia are in a big bag of deep dog crap.

Life in the Recession...401Ks going, mansions not selling, and recessions finishing

2009-08-09T19:45:00.004-04:00

Life in the Recession
Insightful piece by Michelle Singletary of the Washington Post. With more and more employers opting out of matching employee contributions, the 401K may have a limited shelf life as an investment vehicle for people. Another casualty of the recession?

Recession is also hurting the sales of mansions, as more and more of them are going on the auction block with auction companies setting up straw buyers to prevent embarrassment for the sellers.

Then there are guys like Dennis Gartman, who is a sage pundit who is saying the recession ended last month.

Others say "Beware the Bear"

Free Cash for old stuff (non-clunker cars!)

2009-08-07T20:51:00.007-04:00

Looks like there are a few non Federal programs that let you trade in junk for cash/rebates like the Cash For Clunker programs, as well as several free stuff being given out. Here's a sampling..click the links:

Radio Shack Trade-In Program: Trade your old electronic devices for a gift card
Cash For Refrigerators- Several states are implementing this program
Freebies- Free Food, Free Crest WhiteStrips, etc
Another list of Freebies
A no-penalty Certificate of Deposit...doesn't cost you anything if you at some point need the money and want to close the account or take some out.

Finally, a list of all the places that offer you free money for opening an account, becoming a member, switching credit card accounts, etc.

A look at Underwater Home Mortgages- 50% of homeowners by 2011?

2009-08-06T13:05:00.004-04:00

Courtesy of Deutsche Bank- click for 19 page report

Why Hot Waitresses Are A Bad Economic Sign

2009-08-05T18:13:00.003-04:00

As a person who enjoys eating out, I have noticed, as I am sure many of you all have, that the quality of service in restaurants is getting better and the wait staff are getting more attractive .

The hotter the waitresses, the weaker the economy. In flush times, there is a robust market for hotness. Selling everything from condos to premium vodka is enhanced by proximity to pretty young people (of both sexes) who get paid for providing this service. That leaves more-punishing work, like waiting tables, to those with less striking genetic gifts. But not anymore.
A Soho restaurateur I know recently received applications from “a couple of classic Eastern European fembots. Once upon a time, these ladies must’ve made $1,500 a night lap dancing. At my place, they’re not going to make that in a week.”

Commercial Real Estate, Rent Reduction, and what it all means

2009-08-04T22:12:00.004-04:00

Kudos for Mish for reporting on that office space is down 50% in value, retail vacancy is at 7.5%, and industrial space is at its lowest demand in decades.
Ritholtz has the story on the shadow inventory in housing
But the story of the day belongs to the subject of rent reduction free for all.

Last month, commercial real estate research firm Reis Inc. reported that the steepest rent declines since 2002 occurred at shopping malls between April and the end of June. The threat of vacancies was to blame.
Joe Coradino, who oversees retail leasing for Pennsylvania Real Estate Investment Trust, said last week that "everybody who could was asking for rent relief. It was a free-for-all."

PREIT, which owns Cherry Hill, Willow Grove Park, and other malls, even formed a "lease modification review committee" to handle the influx, Coradino told me yesterday. Requests have finally slowed down, though.

The Gubmint's latest plan to rid of us debt

2009-08-04T22:08:00.000-04:00

U.S. Government Stages Fake Coup To Wipe Out National Debt

America's Crappiest Company

2009-08-04T11:50:00.004-04:00

It has to be said...GE is a giant hedge fund masquerading itself as an industrial & financial conglomerate. Now comes word from the SEC that GE lied about their earnings (what a shocker). GE has admitted that it wants to reduce their earnings that come from GE Capital (their ambiguous financial arm). On top of that, their "financial network" CNBC should change their name to "Continuous Nonsense Blasted Continuously". Not to mention their dealings with Iran.

Don't get me wrong..I like a lot of what GE makes. They are well positioned to capitalize on green energy (although they may not be selling as many windmills as they thought now that T Boone Pickens is backing off his plans for wind farms). They are also involved very nicely in the water industry. GE can improve itself, but it will require getting rid of its piss poor management and focusing on what made it a global titan...making innovative products that are simple yet worthy of a pent up demand. Then, it will become a dividend paying, steady growth company instead of some wacky bizarre mix of light bulbs, appliances, and subprime mortgages. Bear in mind this post is about GE as a company, not as the stock.

Fannie & Freddie: We probably aren't going to pay taxpayers back

2009-08-02T11:34:00.003-04:00

And there you have it, folks. 85 billion down the drain. Fannie & Freddie's regulator says their book is so large that its unreal to expect the quasi government agenices to pay back its debt. When will Social security and Medicare come out with their similar findings?

No matter where you stand on the end of the housing bubble or just a temporary increase, long term it looks like the US made a bad bet in bailing out Fannie & Freddie.

Crap for Clunkers

2009-07-31T13:03:00.003-04:00

Looks like nobody knows how to spend like the good ole gubbamint, eh? How do you manage to lose $1 billion dollars in the span of 4 days? Easy, promise everyone a program that has no need and you'll find out that within a WEEK, you need an additional 2 billion dollar injection to save a program.

And these are the same morons who want to run our health care? The same morons who say they will be able to keep health care spending under control? Here's a better reading of keeping health care that people will like...and it involves MINIMAL involvement of the liberals in government.

Otherwise what you'll get is a new kind of clunker program...one in which the government considers your parents and grandparents to be clunkers to be traded in rather than allowed to live a full life.

Only the Lonely...funny can't make it up real estate stories of the day

2009-07-30T12:47:00.003-04:00

Seems like this stuff is ridiculous but true...

Victor Vangelakos lives in a luxury condominium tower on the Caloosahatchee River. He never has to worry about the neighbors making too much noise.
There are no neighbors.Vangelakos, 45, his wife Cathy and their three children are the only residents in the 32-story Oasis I condo on the east edge of downtown Fort Myers.

At the same time, our idiot Treasury Secretary Tim Geithner can't sell his own house...maybe because, I dunno, its WAY overpriced??? Daily Show skewers him!

The Daily Show With Jon Stewart

Mon - Thurs 11p / 10c

Home Crisis Investigation

www.thedailyshow.com

Daily Show
Full Episodes

Political Humor

Joke of the Day

"Economy Matters" starring Barack Urkel?

2009-07-29T20:42:00.003-04:00

Is the next bubble in China? I vote "Yes"

2009-07-29T20:30:00.002-04:00

The writing is on the wall. China's stock market is up an astounding 79% year to date. Unbelievable, but considering that last year their markets got clobbered, it is somewhat too much too soon. On top of that, Chinese banks are lending like crazy and building everything everywhere while they are still holding loads of US dollars.

In one sense, its a smart strategy in some sense, as John Mauldin pointed out...they are playing a game of "old maid", where they don't want to be the last one holding US dollars. In another sense, they've stimulated too much rather than let natural growth occur. More and more IPO's are hitting their market, which means the top is near and a beatdown is coming. Long term, they'll be a good buy, but not today.

Banks making more $$$ from Foreclosures than Loan Mods

2009-07-28T07:47:00.003-04:00

And now, the truth starts coming out...the banks would rather foreclose than do a loan modification out of a belief that many people are capable of "self curing" their default and don't need to do a loan mod.

The problem is that modifying mortgages is profitable to banks for only one set of distressed borrowers, while lenders are actually dealing with three very different types. Modification makes economic sense for a bank or other lender only if the borrower can't sustain payments without it yet will be able to keep up with new, more modest terms.

A second set are those who are likely to fall behind on their payments again even after receiving a modified loan and are likely to lose their homes one way or another. Lenders don't want to help these borrowers because waiting to foreclose can be costly.

Finally, there are those delinquent borrowers who can somehow, even at great sacrifice, catch up without a modification. Lenders have little financial incentive to help them.

When Your State Goes From NonRecourse to Recourse Mortgages

2009-07-26T21:47:00.005-04:00

Hat tip to Housing Doom on this one...

I smell the law of unintended consequences about to happen here...the state of Arizona, in their infinite wisdumb, have decided to make some mortgages into recourse mortgages (where you have to pay back the entire amount), a change from it being non-recourse. (where you just lose title to the home).

The new law would affect any Arizona homeowner in foreclosure who has not lived in the home for six straight months. This might include landlords, second-home owners and investors who bought homes hoping for quick resales and big profits. Once the home is sold in foreclosure, the homeowner would have to pay back the remaining value of the loan, minus the proceeds from the foreclosure sale. Currently, Arizona homeowners, including investors, who lose a house to foreclosure take a big hit on their credit scores but aren't usually required to pay back lenders.

When Debtors Default: How debt defaults are at levels last seen during "Shay's Rebellion"

2009-07-26T15:13:00.002-04:00

Pretty bad when the most relevant comparison of today's level of consumers not paying on their credit cards is best compared to a revolt in 1786!

The deteriorating relationship between Americans and their creditors has not yet reached the level of Shays’ Rebellion, the 1786 uprising by poor farmers in western Massachusetts during a recession. But the basic issues are strikingly similar, suggesting an eternal tension between creditor and consumer.
Boston merchants, who were suffering themselves, aggressively sought payment from their customers. When the folks could not pay, which was often, they were jailed. The incensed farmers sought “reforms that would permit repayment on less destructive terms,” writes Bruce H. Mann in “Republic of Debtors,” a history of bankruptcy in early America. “Creditors replied with lectures on frugality, luxury, virtue and the sanctity of obligations.”
Shays’ Rebellion provoked mixed reactions, then and now. Were the rebels trying to remedy grievous wrongs in the spirit of the Revolutionary War, or were they threatening public order and the fledgling state — acting as terrorists, in the modern parlance? Shays’ followers were quickly arrested and quickly pardoned, although two were hanged.

Interesting Investment Ideas to Consider

2009-07-26T11:04:00.004-04:00

1) Some dividend stocks are in danger of blowing up their dividend...some names here!

2) A 100% FDIC insured CD that invests in BRIC (Brazil, Russia, India, China) currencies

3) Taking advantage of Circuit City going out of business and cheap rental rates in retail, this electronics retail company is now taking aim at Best Buy and will be one of the few retailers expanding.

4) 10 Questions To Ask When Joining A Startup company.

5) Why you shouldn't lease space to state or government agencies: NY state demands lower rents and that all contractors employed by commercial real estate leased to state agenices are paid "prevailing wages"

Banks Ignoring Foreclosures

2009-07-24T13:55:00.003-04:00

Banks walking away from foreclosures. I saw some of this earlier this week. Properties so run down and overloaded with liens that they aren't even worth doing anything with them. What happens to a property if the lienholder doesn't take it back. I guess it eventually goes to the city for back taxes and municipal liens. What does it become then. Worthless I guess. Who would have ever thought that a building could become completely worthless.

Is It Morning Again In America? Dow, Buffett Say So

2009-07-24T13:51:00.003-04:00

One of the greatest political ads of all time may be ready to repeat itself, Obama-style.

Yes, the DOW is outperforming what almost anyone would have expected months ago when it was toiling near 6500. Warren Buffett is telling everyone "I told you so" about the stock market recovering up nearly 44% from its lows. And it looks like Obama won't get all his wishes, as health care reform seems to be on hold but the country is seeing improvement in overall GDP. Only about 10-15% of the stimulus money has been used so far, which means the economy may get a HUGE bump up/upside surprise in January of 2010.

I am politically neutral and prefer to stick with the facts...and while unemployment is soaring, the reality is that unemployment lags. Housing is likely to hit a bottom this fall. And the 2 year recession may end in December 2009. Not saying a double dip recession can't happen..in fact, it is likely to happen. But you should invest according to the facts, not according to your political beliefs or desire for any President to be proven wrong.

Water, Water Everywhere...Saving $ on it and Making Money Off It

2009-07-23T22:31:00.005-04:00

Water MAY be the next oil...or it may not. Water is in some circles referred to as "Blue Gold" since "Black Gold" is selling for less than 1/2 of its all time high. Regardless of how soon the "water bubble" occurs, all the likelihood of a big run up in water related stocks and water related industries are forming. A shortage, a strong surge in demand, and a feeling of "they are idiot proof investments and everyone needs them" similar to dot com stocks and houses makes me think that there is a big bull market in water in the next 10 years. Businesses are coming up with innovative ways to reduce their water costs in the face of an increase in demand.

Some companies are coming up with creative ways to make money off of reusable "grey" water. Other bloggers have noted how to make money on the water sector.
And of course, you can buy individual water stocks that are highly undervalued.

Another contrarian success story

2009-07-23T21:59:00.005-04:00

Ok I have been talking about a bunch of downer shit lately. Time for a success story. I have some friends. I absolutely love them to death. One day we will be fishing off the back of some BIG BOAT(big boats suck unless you have a big boat) and reminisce about these days. I am about to go work with them on flipping short sales. They have spent the last few years putting a system in place. They are on the cutting edge of the great RE clearinghouse. I truly believe they are a contrarian riches story. They have short sale negotiation to a science, and are putting a system in place to handle the volume. 1 in 8 loans are in the crapper right now. Currently foreclosures are down, but defaults are at a scary level. I know some peeps that can't cover their nuts right now. It's in my world so it's real. If you build the right relationships, there are fortunes to be made. Loss mitigators want files off their desks. They get paid bonuses to clean up files. They are also overwhelmed, and really don't give a crap about the screwed borrower. To them it's just a file, and they are overworked.

I've been told that being sweet, and constant follow up is the skill needed. It can take 4 months to negotiate thru the muck, then you have 3 days to close once you get approval. It's a numbers game and not all work out. You better have impeccable contracts, a kick ass title person, and a marketing force to get rich. If you do you just might. These guys are on to something. If your in a jam and need short sale help it's http://www.shortsalespa.com/ . Good people who really care about the seller. They have an 80% close ratio. If it was baseball, they'd be all stars.

Welcome to economic hell

2009-07-23T16:39:00.003-04:00

I truly respect Karl Denninger as an economist. He thinks we are in for a Japan type recession only worse. He predicts a rebound in the market before the crash. Could this be what we are experiencing here? Read the article. It's good stuff.

Things just don't make sense

2009-07-23T14:33:00.003-04:00

1/4 of a trillion dollars in Treasuries to be sold next week!?!? Who is going to buy all this debt? When is all this deficit spending going to catch up, and why is the stock market continue to go up? I can't figure out anything that is going on now. I guess we will have things looking like they will improve, until all of a sudden it will crash and burn again? I can't believe after all the rampant speculation and fraud over the past 10 years that all of a sudden everything is OK. I think it might be time to stock up on Guns, ammo, food and water. Get a nice garden growing and prepare for the worst. Then hope it doesn't happen. I am starting to 2nd guess myself here. Could I be wrong? Could things actually get better this quickly? Some Wall street guys are calling for DOW 15000 by sometime next year?! I still think they are smoking crack, and will remain on the sidelines a while longer. Something still stinks in the air, but it appears the perfume is covering it up well.

Housing must go down. It's as simple as that

2009-07-22T18:10:00.004-04:00

This one is a pretty basic economic post based simply on supply and demand. More foreclosures are in the pipeline, There are more sellers than buyers, and builders way overbuilt and it will take 3 to 5 years to clean out the excess inventory. There are over 3000 building lots approved just in my county of residence. That is around a 5 to 8 year supply, and possibly more as the buyer pool dries up. With all the government intervention slowing down the inevitable crash I just wonder WHEN IS THE TIME TO BE AN INVESTMENT BUYER ONCE AGAIN? If you listen to the media they would like you to believe the bottom is near. They are trying to mislead the sheeple that it is a great time to buy with low rates and an 8000 dollar tax credit. They are trying to bail out the bankers at your expense. Unless you can buy well below market value, now is NOT A GOOD TIME TO BUY A HOME! It's as simple as that. Read the link. It's an interesting read.

Wrestling with Appraisers On short sales

2009-07-22T16:05:00.004-04:00

I almost had a short appraisal kill a deal for myself recently. The appraiser used a few low ball comps. I pulled a few of my own retail comps to try to help dispute his appraisal. He wouldn't even look at them, and at the end of the conversation I proceeded to curse him out. I am sure he was a part of all the fraud over the previous few years, and now he wouldn't even make a few thousand dollar adjustment on an FHA deal which was the buyers dream home. I guess he's afraid of something. Once again it is government intervention, too little, too late. I always said appraisers should never see an agreement of sale, so we could get a true opinion. Now that all the damage has already been done they change the rules. Now they are killing deals of people just trying to buy a place to live. What a crock of $hitit this is. One of these days I will have something good to post. Believe me I am searching hard for an opportunity to benefit from this trainwreck. Everyday I search the web for info, this is what I find. This could get real ugly. The 2nd wave is out at sea building right now. Don't let the stock market or media fool you. We are in for a long hard road to recovery.

The Commercial RE time bomb

2009-07-22T15:46:00.003-04:00

Commercial RE is something I have always wanted to invest in. After reading this article I wonder. 2 to 3 trillion in bad commercial RE debt that must be turned over. WOW that's a big number. I am hoping to be able to take advantage of some firesale pricing when it hits bottom, but based on Denningers opinion it may never come back. I have seen the for lease signs popping up all over recently. Even in class A space in very prominent areas there must be a 25% vacancy factor. As things continue to get worse I wonder how low it can really go. I see a bunch of available industrial and warehouse space. Who the hell is going to be looking for that type of space the next 5 to 10 years. What about all the car dealerships going out of business. What type of business, other than a car dealer has use for this type of space. What about all the Big box retail stuff. Who is going to take over the vacated K Mart building, or empty ACME supermarket. What will happen to all the employees of these vacated ventures? Their lack of spending will further continue the downward spiral. Never in my lifetime have I seen such an economic decay. The media is seeing light at the end of the tunnel. I wonder if it's an oncoming train.

Pain

2009-07-22T14:41:00.003-04:00

It's been a tough time lately. Our rental properties are doing OK, but my other business is failing horribly. I have been successful in most everything I've done till recently, so I am finding financial failure to be a painful, and depressing experience. Sometimes it's so bad I don't want to answer the phone or talk to anyone. I stick my head in the sand and quite frankly am not sure what to do to end things without losing my shirt. I am not alone. Many of my friends are fellow entrepeneurs. They have real estate, are developers, small business owners, stock and option traders, financial advisors, builders, contractors, used car dealers, mechanics, mortgage brokers, realtors, insurance brokers and a few others. There is one common denominator amongst them all. Business sucks, and I don't know what to do to fix things. Some are losing their homes, having their trucks repossessed, losing their rental properies, selling business assets to try to cover personal expenses. Some are living on credit cards while hoping to find work. These are all very inteligent hard working people, who like myself, have just been strangled by this horrible economy.

I also have friends in the workforce who have had their hours cut, or after 15 years of being a loyal employee, given their walking papers then had their employer fight their unemployment claims. A friend of Mrs. Bottom Feeder had her job cut due to the fact that her employer was a sub contractor for THP builders, and they screwed him to the tune of millions. He couldn't afford to pay his debts and was forced into bankruptcy. He was in business for over 20 years.

I just don't understand how anyone can predict a recovery in 2010 based on what I see going on. Some will have a lifetime of work and investment wiped out, many more may recover but it will take years. I may be forced to take a JOB(if I can find one, I may be unemployable after being self emloyed for the last 10 years) just to cover the debts I will be left with when I finally close the doors. This blog is about how to build wealth in a shitty economy. I'm still trying to figure out how to do that. I do know that there will be big opportunities in the Real Estate clearing house. I'm just not quite sure yet what the right strategy will be.

I guess I wrote this post to get a few things off my chest. I am hoping that if anyone reading this is also feeling the pain, they know they are not alone. I don't blame myself(or at least try not to). Until last September we had a flourishing growing business. Then the financial markets collapsed and credit dried up. I saw a housing crash coming, but I didn't see credit disapearing altogether. Hind sight being 20/20 I should have seen it coming. I shouldn't have been so hungry to be a business owner to put my families future in Jeopordy.
OK time to stop feeling sorry for myself, pick myself up and persevere moving foward. It's just really painful sometimes. I just have to recover from my failure and figure out how to profit from this trainwreck.

5 Important Things To Read

2009-07-21T22:49:00.003-04:00

1) A doctor's prescription for health care reform
2) Using solar energy for a lot cheaper than what is currently offered
3) Best time to buy anything
4) The 400 biggest banks and their troubled loan list
5) Affordability gap between renting and buying a home narrows

I saw some really crazy stuff today

2009-07-21T20:52:00.007-04:00

I was looking at some short sale opportunities today. It's a rather large portfolio with a pretty typical trainwreck story. Today I looked at 20 properties in some old industrial cites of SE PA. It's amazing the decay of what was once some amazing housing stock, as far as craftsmanship goes. It is really sad what it has become, and the destitution of the population living here.

I must admit sometimes I wallow in my own self pity of how a failing business can bring me down. I had a wake up call today. I may have some financial struggles, but I am not struggling to survive. Looking at these properties today I saw what true struggles are. The 1st building we went in to was obvious that people were breaking in to drink, do drugs, and crash. There was no power or water in the house, and it appeared they used candles for light. The next property around the corner was quite startling. The front door was open, and the house was rather clean. The power was on, the water running, and it appeared someone was cooking in the kitchen when we walked in. About 3 trash bags worth of clothing and a few jackets were lying right by the front door. A few dolls and a small doll house were on the living room floor. There was about 3 or 4 days worth of basic food in the fridge. Upstairs there was a single mattress, and a tiny air matress, and TV with DirectTV box hooked up. This is a home that was supposed to be vacant and not cleaned out yet. The tenant was evicted in May. There was even mail sent to the address concerning her food stamps. When we pulled away we saw a woman and small girl appear on the sidewalk from the neighbors. We drove around the block and saw them standing out front. It was obvious they were afraid of what happened.
The next few properties weren't secure either. It appeared all the back doors were pried open, and the locks on the front doors were changed, because none of our keys worked. The one house looked like someone was dealing out of the kitchen since it was tough to get out back, and the train tracks were right out back for a quick getaway. I actually chambered a bullet in the barrel of my pistol. I have never carried it chambered before. The neighbors were all checking us out with concern. Two white guys taking pictures and going in and out of buildings seem to make people nervous. The blight of these areas is worse than ever, yet for one reason or another alot of people still choose to live there. The rent must be really cheap.

These properties were bought between 02 and 04. They were bought pretty well, and it apperars the guy did a lot of cash out refi's(who didn't, I know I raped a few buildings to buy some more) The amount owed on these properties is rather staggering, compared to what they are worth. There was most definetly some fraudulent appraisals pushed through, by greedy underwriters. Our offer prices might be 25% of the debt owed, and even then I don't know if they are worth it. To be quite honest, if these properties go back as REO's I truly wonder if anyone will ever live in these properties again, or will they just be boarded up, and decay to nothing. Slowly but surely a once thriving industrial city will become functionally obsolete, and decay to nothing. I have seen a lot of $hit in the 13 years of being a RE investor and landlord. What I saw yesterday was the worst I have seen.

Investing Based On Teen Spending Habits

2009-07-20T12:58:00.002-04:00

Interesting report by Morgan Stanley about how and what teens spend their money on and how to invest accordingly. Buyer beware: Teen spending habits can change on a dime..make sure its not on yours.

Going Down 7 Reasons why housing will keep sliding

2009-07-19T11:19:00.002-04:00

This article coincides greatly with my own personal thoughts.http://www.ritholtz.com/blog/2009/07/why-housing-isnt-yet-bottoming/. I have been hearing so much BS that the bottom is near, complete with graphs. I just can't see it. I have friends who seem to continue to get in trouble. My one buddy who is a small business owner just fell 90 days behind on his mortgage. That is the 5th person I know within my own sphere of influence in danger of losing his home. I think it is 2 to 3 years before we hit bottom, and I think the prices at the bottom will be painful if you are a homeowner. My RE Broker was sharing data with me that showings are up 200%. I guess that means people are looking. Why then aren't they buying? Could it be they are scared of a job loss, or they couldn't get financing, or is it that something in their gut just tells them it's just not the right time. Something just really smells bad. My next post will be rather insightful. Be sure to check back

5 things that Piss Me Off & Show Why We're In Trouble

2009-07-18T07:30:00.003-04:00

1) Congress is making plans to pass mandatory health care for all Americans. Yet Congress won't eat their own cooking. Anyone ever seen the plans that Congress has for themselves? If not, click here...they have great options, of which 75% are paid by the hardworking taxpayers of the US. I am not in favor of any of what Congress and the President are trying to pass.

2) Goldman Sachs, after sleeping with the government by putting their criminal CEO Henry Paulson in as Treasury Secretary, had the walls cave in on them and depended on the American taxpayer to save them via the TARP fund and becoming a "bank" instead of an investment bank. So how do they repay the taxpayer? By trying to pay back only 1/2 the TARP funds they received and keeping the rest of their RECORD profits to dole out to employees who ran illegal trading schemes that gave them an unfair advantage. Remember how Halliburton was in bed with the Republican administration of Bush? Goldman has managed to be in bed with both Obama and Bush administrations.

3) The BS employment rate...I mean the BLS unemployment rate, which the government says is 9.5% but anyone with half a brain knows is much higher than that.

4) Banks are making record profits but are not lending at all, or making you bend backward, take it in the arse, and then tell you they promise they'll call you in the morning.

5)That until the public had an outcry, the Treasury Department had a job opening for a "humor expert cartoonist"". The job offering has since been cancelled. Among the duties included:

Humor in the Workplace programs that will discuss the power of humor in the workplace, the close relationship between humor and stress, and why humor is one of the most important ways that we communicate in business and office life

All About Short Sales

2009-07-16T22:13:00.003-04:00

No, not the first picture...the 2nd picture

One of the key tools any contrarian investor, especially one buying real estate, must know is the ins and outs of short sales. Without further adieu, our first in a series of education related posts designed to help bring out the inner contrarian in you:

1) Insider's Guide to short sales
2) 10 FAQ's about Short Sales
3) Short sale secrets
4) Questions to ask about a short sale
5) Short sales- the definitive article
6) Downside of Short Sales
Discuss your experience with short sales in the comments below

What's coming next?

2009-07-16T14:02:00.004-04:00

That Winters coming post really got me thinking. I keep waiting for the other shoe to drop, but now I'm starting to see things slowly get worse, not quickly. The foreclosure and default levels are now at all time highs. 1 in 8 American homes is in default. I have a few buddies in the contracting, landscaping and asphalt business. They just can't find work, or are working so cheap to get the job it almost isn't worth it. One of them just fell 90 days behind and just got fired.

On the flip side(pun intended) I have another friend that has successfully flipped 5 homes this year. Each flipped for a decent profit. I know there will be any money to be made in the car business the next few years. There are wants and needs, and people are only spending on needs right now. If you have a car you don't need another one. I hope to be out of business by October.

The government scares me. The things they are doing is only going to stretch out the pain. Cap and Trade, and the health care reform is going to pinch small business in a big way. It will cost millions of jobs. Obama playing "Rob in da hood"(Robin Hood) Taxing the rich to give healthcare to the poor will backfire miserably. Over taxing the rich will cause further investment decay, and possibly the wealthy and their businesses to leave the country all together.

The stock market is sideways, and more cash is on the sidelines than ever. The only way to get a mortgage is through the FHA, other than that banks just aren't lending. Hell you can't even get a credit card, a 5000 dollar personal loan, or lease a car. Until lending comes back we are dead in the water. I see the downward spiral continue for another 3 or 4 years, and an overall crappy economy for the next 10.

I think buy and hold, reasonably low to mid grade rentals the way to build wealth. You need to buy cheap enough(which at 50%LTV you can right now) to be able to undercut your competition, because rental prices are coming down. Household startups are at an alltime low. Kids coming out of school can't find jobs and are just chillin with Mom and Dad. I think that banks are starting to get reasonable enough that you can buy a few flips as long as you can sell below market, and stay under 200k purchase prices. The market may be slow but people are still buying if they see a perceived value.

I would love to hear other peoples comments on where they think this trainwreck is headed, and what they plan on doing to profit from it. I think the next 10 years will be the best time to be a contrarian Real Estate investor, both on the flip and buy and hold side. I think it will be harder than in the past, and you must be willing to play the landlord game for the next 12 to 15 years before you can sell for a big hit. I also think that learning how to short the stock market, and learn how to option trade a sideways market will be good income streams. The next thing I need to do is have a low overhead cash flow business. Possibly home inspections, especially with the cap and trade inspections coming. What's your thoughts on the trainwreck, and what are you doing to profit from?

Fight Da Man!!

2009-07-16T03:47:00.003-04:00

A great look at how every homeowner can use the system against itself...

That's right, ANYONE can lower their property tax bill by following this wonderful article on how to get your property tax lowered.

Initial evaluations are often free at these sites, which include EasyTaxFix.com and LowerMyAssessment.com. For a fee of $50 to $100, users can obtain forms with data already filled in and instructions on how to appeal, and a list of recent sales of comparable properties. Ms. Davidson of Bonita used EasyTaxFix.com to help with her appeal.

Fixed Plastic A Thing Of the Past

2009-07-15T11:31:00.004-04:00

Looks like the days of a fixed credit card are jusssssst about over.

Full disclosure: I have several credit cards with a variety of companies. My cards that are with Chase (aka JP Morgan) all sent me a notice in the past month strong-arming all cardmembers that 1) if you owe a balance, your rate is going up 2) we will bend you over and *$(& you in the arse if you use a balance transfer by charging you 5% of the amount 3) If this pisses you off, close out the account and pay us back.

On the other hand, Home Cheapot increased my credit line by 1500 bucks. Lackluster sales, maybe?

Advanta, which issued cards to small businesses, shut down their company altogether and just wants you to please pay them back. Capital One may be next, which is why they absolutely HAD to buy MD based Chevy Chase Bank.

The days of leveraging credit card advances and playing the balance transfer game. The entire American economy and most of its population (including this author) all fell for the trap of debt and overleverage at some point and in some manner.

Landlord in Chief??

2009-07-14T16:40:00.008-04:00

U.S. government officials are weighing a plan that would let borrowers who have fallen behind on their mortgage payments avoid eviction by renting their homes instead

Under one idea being discussed, delinquent homeowners would surrender ownership of their homes but would continue to live in the property for several years, the sources told Reuters.

Officials are also considering whether the government should make mortgage payments on behalf of borrowers who cannot keep up with their home loans, tapping an unused portion of a $50 billion housing aid kitty. As part of this plan, jobless borrowers might receive a housing stipend along with regular unemployment benefits, the sources said. (Reporting by Patrick Rucker; Editing by Diane Craft)

Simply, the most interesting read on markets/politics/business cycles I've read

2009-07-13T18:28:00.002-04:00

Doesn't get much more interesting than this...lots of wild and zany predictions, some that I can foresee happening...

Hard Times

2009-07-12T22:26:00.003-04:00

Is this a "great recession" or a "soft depression"? Difficult to tell, but here's some food for thought:

1)In 2007, 51 percent of graduating college students had jobs lined up before graduation. This year, less than 20 percent had jobs. 2) State income tax receipts from January 2008 – April 2009 were down 26 percent from the year before, and money wired back to homes in Mexico from America is down 20 percent.
3) 51 million people on social security, 12 million people on SS disability, 34 million people subsiding on food stamps.
4) Seven million people are collecting unemployment benefits, and another eight million are unemployed and collecting nothing! There are 38 million part-time or self employed workers, and 2.4 million people in jail (1 in 100 adults).

By every measure, whether or not we are including the government's unemployment rate (9.5%), Shadow Stats unemployment rate (16.5%) or my personal estimate (12%), there is no doubt that times are bad. Housing numbers, horrible. Credit card defaults? The evidence is there, too.

My take...we are still in a great, great recession that is about 2 news stories away from officially being in a depression. What could take us to that point? Your thoughts are welcome here...

Interest rates going up???

2009-07-09T13:59:00.004-04:00

The yield on Treasuries should be aroung 10%. It's obvious that government manipulation is keeping them low. Mortgage rates are based on the treasuries, The 10 year in particular. It is possible for them to keep rates articicially low for a few more years but when you stretch a rubberband to far it eventually breaks. Now before I continue just know I don't have any degrees in finance and economics. I'm just a guy with some rental properties and a failing car lot. That being said I am going to throw out a hypothetical possibility.

Everybody is talking about a 2nd stimulus, even Warren Buffet. The government is already 11TRILLION(11,000,000,000,000 damn that's a lot of zeroes) in the hole. In order to stimulate they have to borrow or print money. They will sell treasuries to the world to fund this stupid idea. Now if you are an investor in American government it looks like a high risk investment to lend money to someone already over their head in debt, while revenues and cash flows are on the decline. In order to create investment it will become evident that you would have to give a good return. So this will force the yields up in order for investors to fund our debt. So if the yield were forced to 10% that would mean mortgage rates at 11 to 13%. That would cut the values of homes in half. Add in the fact that it is going to take an increase in lending rates to motivate the banks to start lending again I think the Big Picture forces interest rates to rise in order for money to hit the street again. I'm sure people didn't expect double digit interest rates in the 80's, but it happened. Rates have been too low for too long. The economy won't recover until credit becomes available once again, and banks won't lend until the returns are worth it. Do as you choose but I am going to prepare for a high rate enviorment to hit sometime in the future.

As a contrarian investor this is a good thing if you are a real estate investor. High rates mean low prices. My philosophy of fully leveraged cash flow won't change so I just have to buy cheap. When rates lower someday and I can refi that will just make the cash flows even better. Intersting times are ahead indeed. Invest wisely.

How The Government Will Get Us Out of Debt

2009-07-09T01:13:00.001-04:00

US To Trade Gold Reserves For Cash Through Cash4Gold.com

FBI reports 1.4 billion in 2008 mortgage fraud

2009-07-08T16:15:00.003-04:00

CNBC's Diana Olick(she's a hottie) just did a report on the FBI's report of rampant mortgage fraud investigations. Our clueless leader President Obama just signed a half a billion dollar mortgage fraud investigation and prosecution bill. Why the heck would we spend 500 million on this now??!! The damage has been done. This is like trying to put out a house fire by pissing on it. What a joke. Where was the FBI, the SEC and our clueless leaders when Julio(an illegal immigrant) with no verifyable income, and no way to repay a loan was given a mortgage for 500k. Where were they when Joe Blow bought a new Mercedes and a big screen with a 100% LTV cash out refi where the property appraised even though there were no comps to support the appraisal. I remember in 2006 when a client of mine wanted to buy a 1.2 million dollar house. She had a 750 credit score and made about 45k a year selling Amway multi level marketing. She was approved for a 97% LTV option ARM loan even though her entire yearly income barely covered the negative amortized payment. Thankfully I talked her into buying a 300k home for 225k so the sellers could settle a deceased estate. I found the fact that she actually qualified for this loan appalling, and it was at that moment I knew this housing run was caused by pure geed and fraud.
So NOW we find out that there was rampant mortgage fraud LOL. I could have told you that back in 2005. I guess possibly I should be an FBI agent, or even better our next president. I could have save our country billions of dollars by telling them of all the fraud going on. Oh wait, that's right, I did try to tell everyone. The fact is no one wanted to listen.

Extraordinary Circumstances? You mean **** hitting the fan?

2009-07-08T15:34:00.003-04:00

You know they are expecting another shoe to drop when Congress adds in case of emergency, or in case of extraordinary circumstances in a bill concerning FDIC borrowing. Adding these words to a bill concerning the Treasury department lending to the FDIC certainly means that while they are telling the American sheeple everything is OK, they are in reality getting prepared for **** to hit the fan. What is frightning is by adding these clauses it allows the Treasury to make moves without Congress approval? Wouldn't that mean that the government is spending taxpayer money without any representation IN CASE OF EMERGENCY? I am starting to get really pissed off at all the things going on in this dictatorship we put in office! I don't want socialized healthcare. I don't want the government telling me how to build or renovate a house. I don't want to be taxed on my carbon footprint. I don't want shady scumbag self serving bankers bailed out, and I certainly don't want the treasury and the fed to be able to circumvent our legislative body IN CASE OF EMERGENCY. They just said on CNBC that the SEC is planning on putting more regulations on Wall Street. Where the hell was the SEC when The Orange Man was giving money to anyone who could fog a mirror, then bribing the ratings companies such as Moody's to rate these garbage deriviatives as triple AAA. I hate to say it, but things are far worse than the Government wants you to know. We are in A state of very extraordinary circumstances. It's time for America to wake up, put down the Bong or the Budweiser and take a look at the big picture.

Need a good laugh, Hitler the Flipper

2009-07-08T14:22:00.004-04:00

Hitler the Flipper, gets caught by the housing crash. This one is so funny I almost pissed my pants.

The knife is still falling on US home prices

2009-07-08T12:47:00.004-04:00

Ready to buy a home? You might cut yourself on the falling knife. I have been hearing a lot from the real estate cheerleaders(my RE broker, mortgage brokers, people trying to sell their homes) that real estate has bottomed out, and we are turning the corner. I think they are dead wrong. There are a whole bunch of prime ARMS to reset over the next 2 to 3 years. People are still losing jobs, and interest rates are at artificially supported lows. Many banks are trying to avoid foreclosing on non performing loans because it is better for them to have a non performing loan, than an REO in inventory. I know someone who hasn't paid on a vacation property in over 2 years. They still hold title to the property. I have another friend who due to illness and job loss hasn't paid their mortgage in over 18 months. They are still living there for free. Things are so bad the banks can't keep up with the defaults. I've been working on a short sale for over 6 months. I've been waiting for a final approval for over 3 weeks now.
The media likes to paint a rosier picture because the government is encouraging them to try to reinstill consumer confidence, they are even giving you 8 grand if you buy a home today, but truth is it is going to get a lot worse before it gets better. If things weren't so bad, why would they have to give an 8 grand credit to convince you to buy a depreciating debt trap????There are many many more foreclosures to come, and if interest rates were to go to 6.5% to 7% prices will really tank because as the price of borrowing money goes up, the value of the asset been borrowed against goes down. It is much wiser to buy a cheap property with an expensive loan, than an overpriced property with a low rate loan. Prices will continue to fall until all the foreclosed properties are sold off. I see prices falling for another 3 years or so and then going sideways for another 10. If rates go to 7 or 8% the knife will drop hard and be very sharp causing a lot of pain.
I plan on buying 30 or 40 properties to add to the rental portfolio sometime down the road. It is possible to negotiate 40 to 50% discounts on short sales or REO's right now, and the cash flows are starting to make sense again. I'm just not quite ready to jump in the pool yet. I'm sticking my foot in to test the water, but I don't think I need to be in a hurry to catch the wave. I think there will be more properties available, at better prices a year or 2 out.

The house of the Future?

2009-07-08T00:40:00.004-04:00

I'm really starting to wonder if this is reality or not. If solar technology is close this could be a huge transition. The thought of trading power off the grid is bigger than just your house. What could be the ROI on buying 100 of these solar panels. Energy is the next bubble. Hopefully it is the real deal, and energy independence puts the US back on the map as a world leader. The cost of 10 solar panels, and a windmill is a little salty(45 k for a 2000 sq ft home). It comes out to be around a 10 year payback. I like to get my money back on improvements or aquisitions in 3 ears or less. It isn't cost effective unless the price of the technology comes down, or as I fear prices of energy skyrocket. I wonder if the lobby money of the oil companies, and huge utility monopolies can keep this under wraps for another 20 years or so. I'd love to own this home, although I'm not quite ready for an electric car. There is something about the power of combustion engines running on high octane fuel. Although if I didn't have to worry about fuel costs because I can charge my car for FREE?! I might learn to live with it.

It seems this is the wave of the future. I'm not sure if the technology is real or not. It certainly isn't cost effective. If it becomes the real deal it will create a lot of infastructure changes, which will be a huge stimulus for the economy. I think it will be a good idea to become an energy auditer/ home inspector. It wouldn't hurt to learn how to install solar panels, and windmills.

As a rental property owner this excites me, and scares the you know what out of me as well. I am very frightened of increased energy costs, and the costs of improvements to convert. The thought of not having to pay much to power my buildings. That is around a 15 to 20% reduction in operating costs. It will be interesting to see how the government tries to control this process, or if big brother rolls over to the deep pockets of the utilities, and oil companies.
We will find out a lot about ourselves, both personally, and as a nation the next decade. I do think our economy is headed for the beating of our lifetime the next 10 years. That house looks great. I wonder if anyone can afford it???

House of the Future- Sustainable MicroGrid for Each home (CLICK ON THE PICTURE!)

2009-07-07T22:41:00.003-04:00

Contrarian success story

2009-07-07T16:28:00.003-04:00

Just talked to a friend who is a Norristown landlord. He has bought close to 20 homes in Norristown this year for around 40 to 50k a pop. He has added around 9k a month in positive cash flow. At 40k for a property that can rent for 1100 a month sec 8. Depending on how you borrow the purchase money you could have around a 400 to 500 dollar a month positive cash flow per unit.

Here is a hypothetical contrarian riches analysis. Buy 40 properties in Norristown over the next 5 years. You plan on holding and being a Landlord for 10 to 13 years. At 20k per month cash flow it's 240k per year times 10 years is 2.4million cash flow. Now it will be safe to assume these properties will sell for 75k 10 years later. That is fair market value today. On the conservative side we are making a 30k profit per unit pre tax, which will be around 23k after tax. Based on these numbers there is just short of a million dollar profit. All told between cash flow and capital gains the investor stands to make around 3million bucks on less than a 2 million dollar borrowed investment. Anyone got 2 million bucks to lend???? That's the missing link to this 3 million dollar puzzle.

Inflation or Deflation?

2009-07-07T10:13:00.004-04:00

I've been trying to figure out where this trainwreck is headed. The Government money bombs would lead you to believe inflation is around the corner. If that was the case this would be a very bad reccession. The more I look around and see, the more I think we are in for the worse Deflation in the history of our lifetimes.That would mean that this is more like a depression.

Asset and income deflation were gorillas in the great depression, and that is what I see happening. I know that my used car inventory has deflated in a huge way, causing me much financial pain. I also know that sales are down 60% because people have no discretionary income. They are experiencing cut hours, pay cuts, or out right layoffs. The ones that do have discretionary income are choosing to save it instead of spend it.

This creates less demand for goods, which causes business to cut costs and spending, causing a downward spiral. Until the job market turns, and people begin spending again the 500lb gorilla in the room has a name beginning with a D not an I. Love to hear others thoughts on this topic.

Office Vacancies Rise

2009-07-07T10:00:00.004-04:00

I think that one of the biggest opportunities to gain wealth in this coming Depression is in the commercial Real Estate market. Many commercial RE investors will not be able to cover their nuts as vacancies increase. I know my landlord at the car lot owns a bunch of industrial and retail properties. Many of his tenants(myself included) are struggling to pay the rent, and are giving notice they cannot continue operations. I am pretty certain there will be commercial foreclosures ramping up the next few years. Since you can't live in a commercial piece demand will be low, and banks will be offering firesale pricing, and in house financing to get these off the books. If I can get a fully leveraged break even with a bunch of upside potential, I'm in. Here's hoping it continues to get worse.(It's hard to swallow as I write that, but a true contrarian wants to see it hit the fan.)

Plummeting Tax Refunds, Property Taxes May Be Next Shoe To Drop

2009-07-05T20:13:00.003-04:00

Hard to figure out which will have the bigger impact....

1) Delays in getting a tax refund/getting your tax refund in the form of an IOU?

OR

2) Local governments getting swamped by smart people appealing their property taxes?