IR

Great article in the OCR, that should awake some masses.

Yesterday while driving up Culver I seen some cheeseball with a magnetic sign on his car advertising mortgage repairs, he’s probably got a huge customer base of people he sold this crap to.  I’m sure will start seeing more of these crooks.

See you guys at the signing tonight!  Is there going to be Kool Aid?

A 3500.00 down payment, that is just unbelievable.

That is less money than I had to put down on an 80K condo in Tucson, AZ.

Good article in the OC register. Lookin forward to the book signing at JT Schmid’s. Many moon’s ago I worked at Boyle Engineering - closely associated with The Irvine Company. I remember doing plan checks on the irrigation systems at Vista Filare in Northwood. I even did the design of the drip irrigation systems of asparagus fields for Irvine Ranch which were later developed into what is now called Woodbury.

How about a reminder on time and place this evening?

“If any one of these four things did not happen, they were going to lose their house.”
You hit the nail, IR. Yes, this shows how hypnotized those real estate believers were. Normally, only very desperate people with nothing to lose would place such bets. After all, even basic combinatorics shows us that there is only one chance in sixteen that all events will come true at the same time (I know that this is to simple, because the events are not really independent, and the chances are not even, but it gives a good impression of the low odds). It doesn’t really take a genius in math to see that it was very unlikely that the bubble would srurvive long enough for the gamblers to make a profit. After all, who would be able to buy all those houses if the prices continued to increase at this pace? There simply aren’t enough multi-millionaires to sustain the demand side.

Long odds, indeed! And yet, millions were willing to bet on it. Shocking.

Eighty percent of loan originations in 2005 and 2006 in Orange County were interest-only or negative amortization.

So it begs the question: how many of the homes in OC have these? My guess is if we can find the total # of sales for 05-06, you can get an idea of the percentage of homes in OC that have these homes. Anyone got those numbers?

We will be meeting at 6:30 at JT Schmids at the District.

The amazing thing is the asking price.  $799k?  Is that a deal?  I don’t think so.  It’s been on the market for 250+ days, and not one price reduction.

Maybe a knife catcher will step up, but not at that price.

A 3500.00 down payment, that is just unbelievable.
That is less money than I had to put down on an 80K condo in Tucson, AZ.

That’s less money than I had to put down on my CAR in 2001!!!!!
WTF were they thinking?

I remember looking at these models several years.

I wonder if the buyer of this house had to ask family for assistance in the downpayment ($3,464).  I still shake my head and ask, how is it possible for someone to leverage at a multiple exceeding 329 on a very small piece of Irvine ... WTF?  I cannot believe the banks were this stupid.

One thing is certain, the banks are not going to loan money like this out again in our lifetimes.

I’m exhausted. My well of schadenfreude has finally run out.

I rarely post on this blog because I don’t live in Irvine and I’m not a real estate professional. The only times I’ve posted in the past have been to take stands against trolling insanity.

That said, I’ve enjoyed the site since it was first noted in SLATE maybe 16 months ago. The reason I have found this site so compelling is because it strikes a powerful chord for me - there must be accountability.

Yet as the months have rolled on and the financial disaster has grown, there has been very little accountability. As IR mentioned yesterday, so far there has been little advantage to taking personal responsibility with one’s own finances.

At this point I just want it all to be over. And yet I have the distinct feeling that the majority of Americans as well as Congress just see this as a bump in the road and no reason to start getting crazy and talk about sacrifice. Until this attitude changes we will not see real progress.

Here’s my fear (I’m hoping someone on this site will mitigate it with some sound knowledge and logic): America simply can’t take this kind of de-leveraging and we are headed toward a dramatic devaluing of the dollar, massive inflation and/or default on our debt.

If we owe 10 trillion (it’ll be 11 by next year) and tax revenue is something around 2.5 trillion, how can we hope to keep up with interest payments, let a lone paying down the principal? This isn’t like owning a home. We can’t commit 40 percent of our yearly tax revenue to debt servicing. Can we?

At what point does the house of cards collapse?

This is all to say that I’m simply spent. My hope for rational economics (which was originally sparked by this site) is completely deflated

Everyone needs to watch this THE FORBIDDEN “SNL” SKIT

http://msunderestimated.com/SNLBailoutSkit.wmv

Who makes a downpayment on a car?

“People who were buying or doing cash-out refinancing during the bubble were betting on 4 things: 1. Interest rates would stay low. 2. Loose loan terms would be available. 3. House prices would keep rising. 4. Incomes would keep rising. If any one of these four things did not happen, they were going to lose their house. It would only take one of these four conditions to change for disaster to occur.”

I would add 5. Rents would keep rising.

Also, all 5 of these are corelated.  The probability that they would be wrong on all 5 was 100%.  The only question was whether they would be able to sell before the economic devestation and subsequent social devestation occured.

IR, thanks for the service you provide here.  This blog and Calculated Risk have saved people (and made people) hundreds of thousands of dollars.

At this point I think liquidity is more valuable than purchasing at current rental parity.  I believe fundamentals are being re-written.  We need to try to understand the new basis of housing fundamentals post deleveraging. (rents, incomes, DTI, etc)

soon, everyone
if you want one

I see that the book-signing info was in the article.  Wonder if any realtors will be there?  Maybe an owner or two whose house has been profiled?

By the way, I’ve always wondered why there isn’t a tip jar here at IHB.  Calculated Risk has one.

“Eighty percent of loan originations in 2005 and 2006 in Orange County were interest-only or negative amortization”

Where did you get this info?  Is it available at a finer level of detail, like zip code or city?

” ... After all, who would be able to buy all those houses if the prices continued to increase at this pace? There simply aren’t enough multi-millionaires to sustain the demand side. ... “

I think that the concept was that since they didn’t need to be millionaires to buy the place, the people who would buy them out at even higher prices would just go on using the same technique. After all, you don’t have to be a millionaire to come up with a $3464 down payment, even forgetting all of the others we have seen who bought with no down payment at all, or recovered whatever they did put up with a HELOC within months of the purchase.

What they did not take into account, as with any Ponzi scheme, is that eventually you run out of players. That’s where the hoped-for idiot foreign buyers were supposed to materialize. Of course in this scheme, there were other factors that IR points out that could also bring the house of cards down. Amazing really that it could go on as long and as high as it did.

It wouldn’t be just sales (or purchase money mortgages). It would also include refinances (homeonwners taking cash out).

The property tax and HOA fee add up to more than $1650 a month.  I wonder how many people here pay less for just their mortgage or rent.

I have reached this point as well AbroadThankGod. I just don’t understand how the American public does not get this.

I hate to be a doom and gloom type of guy but similar to the housing crisis I see a much bigger currency crisis on the horizon and I can do nothing about it.

Does anyone have suggestions about how we can inform people or prepare ourselves for what will be the worst economic crisis in my lifetime?

-Tired and Weary

“One thing is certain, the banks are not going to loan money like this out again in our lifetimes.”

There are people still alive that I am sure heard those very words after the great depression. I admit, banks will be tight for some time, but once fear recedes and greed is back, I expect to see another round of stupidity by the brightest our financial system has to offer.

Be ready to yell your heads off at your elected officials about their legislation.  We cannot be silent - be silent at the risk of getting screwed all over again.  Take five minutes now to tell your elected officials that they must address this problem in a responsible manner.  Include a link to this blog - they all need to read it!

http://www.usa.gov/Contact/Elected.shtml

As for today’s featured house, it looks like it has never been lived in. Pure speculation play ... I wonder if the bailout plans will be well enough written to at least preclude this guy from getting anything?

There was one on the site. Maybe now IR would prefer you by the book as a tip?

1650$ That’s under my rent/ bills/ drinking problem while living Irvine.  If i wasn’t such a sucker for sushi on tuesdays, a porterhouse on fridays and a weekly Ducks game I’m pretty sure i could live off that.  The real fun is that pretty soon we’ll all get to see what we can live off of.  I’m guessing it’ll surprise most people, present company excluded.

Irvine Renter love the blog.  Though its my first post i’m a daily reader.  I’ve used your sites analysis to save 2 friends as well as start planning my own triumphant entrance into home debtership circa 2012.

Look like government baled out of bailing out troubled asset. How is this going to impact the housing price?

IF they can get the same interest rates today for that loan.

Wells fargo has 30 year fixed rate jumbo loans at 9.25%.  That would make the new payment close to $7,900 per month.  At 6.5% the payment would be a little over 6k a month.

I would concur with you IR “In short, the borrower is screwed.”

Thats less money then the last bicycle I bought.

Call me crazy, but this is a house where you could touch your neighbor’s house from your bedroom window. It doesn’t look like there’s much of a yard. I’ll pass on the $799K price tag (even if I was able to afford it)

Can’t wait to meet you all tonight! I’m so curious to see the faces behind the regular commenters.

what is the official name for these newer Irvine House / Condos?

Hondos?  Houndos?  I never understood the idea behind building these things, the ultimate in the Irvine illusion.

Hehe.

Normally it’s called your trade-in. That’s if you’re not so cheap that your old car is 12 years old, didn’t cost that much to start with and now is worth next to nothing. In that case they make you put in your own cash.

What’s really amazing is the truly under-water car buyer of recent vintage, who was not only under water through depreciation, but who had rolled their unpaid car debt from their last car into their new loan.

Who knew you could do that? Too bad, gone now.

Where’s Kirk when we need him?

oops, this was supposed to show up beneath the “who pays a down-payment on a car” comment…
odd.

I agree.
It will be interesting to see the age demographic.

Although I’m pretty ugly, so beware. ; )

That would be fun.

The more controversy and conflict we have , the more the book will sell.  ; )

The Great Depression was 2 to 3 generations ago for many of us that read and post in this venue.

Maybe I should have said:

The banks are not going to loan money like this for at least 50 years.

Ha ha!!!
http://ace.mu.nu/archives/277970.php

Now with 30% more baity-switchy goodness!!!

About the notion of complaining to your “representatives”...

Look who just got elected President?  The KING of the credit-card mentality!
“We’re so far in debt, let’s send out a fresh round of stimulus checks, raise spending, and lower taxes for 95% of “folks”!!!”
So there you are- the people HAVE made it clear to the politicians in this country what kind of economic leadership they desire and will support.
Look around- the people vote for MORE of the bubble mentality. By God they don’t want anyone to kill their buzz-

Wait, the most important part of the article. . .

IR you make $100 a month running this site?  Where are my royalties?  J/K

Congrats on the book!!!

Ahhhhh!!!! The kings diet, I love it.

Hey IR, your comment that there are 2 types of Arm’s, I/O and Neg Am is not accurate.  I had a 5 year Arm that was fully amortizing.  Originated in 2004.  I am not sure how prevalent this is.

Also you can take me off your chart of expiring arms as I just closed last week on a re-fi into a 30 year fixed.

There is a book that came out in 1991 titled “The Coming Economic Earthquake” by Larry Burkett. It essentially predicted all the economic woes that are happening today, due to the overwhelming growth of debt.

He stated that we keep whipping our horse (the economy) to avoid the Indians chasing us (the debt). We realize if we keep inflating the economy at this pace it will collapse. But we also know that if the economy stops for any period of time, the debt will overwhelm us. So what does our government do? They keep whipping our horse and hoping for a miracle.

Great, the taxpayers inherit a toxic property.  And I DO mean TOXIC.  The Realtard forgot to mention that, when buying, you must SWEAR in writing (and I’m not making this up):

1) Never plant a garden;
2) Never plant a fruit tree;
3) Don’t let the kiddies dig more than six inches in the back yard.

Why—they dumped 6” of clean topsoil over a highly toxic superfund site.  Eat a carrot grown in the backyard and you’ll likely be rushed to emergency.

A friend of mine was working at the Marine base and said they dumped all kinds of toxic solvents and poisons right on the ground.  They even had a “burn pit” where they dumped hundreds of gallons of raw aviation fuel into a dirt hole and burned it to practice firefighting.

So now the taxpayers inherit this toxic pit?  Maybe we completely forgive the loan and make the borrower live on this toxic waste dump.

Good. Prices are too inflated anyways.  Inflation is the only thing left to prop up these levels.

I am a lot fatter in person.

Me too…mine originated in 2004 as well and I pay principal every month.  Mine expires in ‘09 so I’m guessing I’d still pay principal but my interest rate would go up?

We discussed this a while back.  I think there’s a few of us out there (not you anymore!) that had these conventional ARMs, but I think most that are expiring are the unconventional variety.

In addition to the toxic soil you get to be near major cross-streets and an industrial site that includes a waste dump.  I get a nice whiff every time I drive down Warner.

Scary thing is, 2-3 years ago I was looking at some open houses over here on my morning jog and couldn’t believe all the people looking at these places.  There’s a model that’s over 3,000 sq. ft. that went for nearly $1.3M.  I was thinking who in the hell could by this?  I should have figured it would end badly.

Sorry should have been “buy” not “by”.

The spelling Nazi stands corrected.

I’ll try to stop by JT Schmid’s tonite to say hi and have a beer.

“...there must be accountability.”

We’re all waiting for this. However judging by the selling prices of distressed properties there is still way too much belief that bailouts will keep prices up. I was told exactly this by a real estate agent showing me houses for lease.

No accountability until ... well… it’s over.

Your post is very scary, and is a wonderful reminder of how our failure, as a society, to protect the environment is directly endangering every single one of us.

How many houses are being built on poisoned land across the country? The unlucky buyers of such properties will learn the hard way that environmentalism and pollution controls are not just some leftist-statist-eco-fascist-control-freak things designed to make life miserable for entrepreneurs.

The lesson will really hit home if it becomes necessary for people to press their yards into farm service in order to put food on the table. Given the push for ethanol production, we could reach a pass where food and fuel are in hot competition with each other, and people will need their home gardens desperately.

IR

I saw your article in OCR. In fact i was expecting one before or after Book Signing party. Congratulations! If i were you, i would feel sense of entitlement. Do you?

You make only $100 a month from Ads on IHB? That’s great social service.

As regards today’s featured property, it has been profiled on 03/14/2008 under
REO Clearance Sale
for 899K.
I am following it since than. But I lost interest when I learnt that it is on Superfund site.

Will try to meet you in the evening at The District.

IR: Great piece in OCR!

Will you have books on-hand for us to purchase and get an autograph?  I hope so!

See y’all at the book signing.

“Here’s my fear (I’m hoping someone on this site will mitigate it with some sound knowledge and logic): America simply can’t take this kind of de-leveraging and we are headed toward a dramatic devaluing of the dollar, massive inflation and/or default on our debt.”

Allow me to assuage your fear…

The solution is simple; tell your living abroad homies to buy more American SUV’s!  Its ridiculous!  You go to Europe and everybody is driving tin boxes.  You guys need to experience the luxury and convenience of driving your 50 pound kids to shcool (2 blocks away) in 3 tons of steel!  Plus, you’ll look cool!

HELP!!! If the dollar is going to collapse, and we are to have massive inflation, etc., then what do the smart people do before all of this occurs?  In other words, if I have a good sum of cash saved do I buy physical gold, or diversify into other foreign currencies or what?  I feel panic every time I think about my hard earned dollars being near worthless, and since I’m not an economics major I don’t know what to do.

“when buying, you must SWEAR in writing (and I’m not making this up)”

- You are indeed making that up.  It is completely untrue.  That area has been base housing for decades, never a dump.

- Do you really think that ANYONE would sign paperwork swearing to the above?  Just because you write “i’m not making this up” doesn’t make it any less BS

- The maps are available online that show the range of pollution, which are on the OTHER side of Jamboree near the hangars and runways.  There was no pollution or cleanup or dumping in the area of this house.

Pick up a book by Peter Schiff, who discusses this in detail.  The guy certainly has a grasp on the macro, even if he doesn’t always get the sequence or the timing correct (which is nearly impossible).  Keep in mind he does run a brokerage firm, so there’s some incentive for him to put you in some form of equities (foreign in the case of Euro Pacific), which lately have been absolutely abysmal performers.  The essesnce is this: 

To hedge against US hyper-inflation, which seems like an ever-more likely consequence of monetizing all this debt we’ve accrued, purchase precious metals and foriegn, dividend paying equities in infrastructure-based producer nations.  Reduce your exposure to dollar-denomiated assets. 

The theory is sound.  I think over the long run, the investments I’ve made through his firm will be winners, but if I had it to do it over again, I’d have gone completely cash last year as I was considering, anticipating the markets reaction to the consequences of the credit crunch.  The inflation part, that I’m currently hedged against, I now know would be a consequence of the markets crashing, as the fed tries to pump liquidity into the system to prop it up and further monetize our debt to domestic and international creditors.

I still firmly believe, as Peter does, that savers will pay the most through inflation in the coming years.  I’m just really glad I’m not retiring any time soon.  It might be wishful thinking to assume I’ll ever retire the way things are going.

I read Mr. Schiffs book, Crash Proof, and agree with everything he wrote.
I was buying gold when it was in the $900/oz range, and watched my investment lose value, so I’ve become discouraged with that.
My regret is not selling all of my equites last year and going to cash.  Oh how hindsight is 20/20.  At the time I just couldn’t imagine that things could or would get this bad, plus I didn’t want to pay the capital gains tax.  Now, I haven’t opened my statement for the past two months because I don’t want to go into cardiac arrest.  Sometimes it’s just better not to know.
So, savers like me are going to get hosed.  Do I go buy stuff?  My car is 9 years old…I’d like to have new furniture…could pay off the abode which is the only debt we have????

Those of us that saved are really hosed.

I have a very bad feeling about my 401k now.

happy:

Gold is insurance.  If you need it, $900/oz won’t be an issue.

I know how you feel.  I did the same thing.  In retrospect, I should have anticipated the market would implode before the hyperinflation scenario Peter warns against.  Hang on though happy.  I think that investment will bear fruit in the medium term.

Ha ha part deux

So I’m watching kcal9 right now and someone calls in the “money man” and sez that she has a house payment of $2500/mo. now which will go to $7500 next year and sez she tries to renegotiate but the lenders are “uncooperative”...
Anyone feel like bailing her out?
Which is more awesome, the house she must live in or her sense of entitlement???

I was rather alarmed by this comment at the newspaper site:

trebuchet wrote:
Mr. Roberts is schill for the Irvine Housing Blog which in turn is a schill for Redfin. Redfin got in a load of trouble for abuse of the MLS in Seattle and had to unplug their housing blog. Enter Irvine Housing Blog and Mr. Roberts, a tiny minded schmuck whose prejudices led him to his conclusions for all the wrong reasons. As long as people buy into his disinformation the real reason for the credit crunch and the failure of the mortgage industry and others will remain covered up. As far as I’m concerned the IHB and Mr. Roberts have been doing damage control for the The Guys That Got Us Here by getting people to buy into their phoney “Fundamentals” arguement. If people do not wake up and recognize this as a con by some well place Wall Streeters, Hedge Fund Managers and dealers in CDS then you are just setting yourself up for another fall when they figure a new scam to run

This does not at all seem to be a realistic view, and I fear for the stability of the person who wrote it.

I really wish I could be at the book signing tonight, but I’m a half a continent away from most people here.

Hope you all have a great time.

IR has earned the house of his dreams just by the amount of money and misery his insights and warnings have saved readers of this blog, and the people they connect with. I hope you get your place soon, and at just the right price, IR.

What on earth is “trebuchet” trying to say? It’s so unclear but at the same time so vaguely libelous. This blog is making big money but not selling houses? Ho-kay!

America’s not in this alone—everyone owns U.S. debt and stocks and… as we’re seeing during a crisis… wants U.S. tresuries. With this mind, everyone will do everything to keep us (and therefore themselves) afloat.

Right, but the math doesn’t have to be that complicated.

SOMEBODY generated that 80% of loans number (I don’t know whether IR has that data himself or got that from someone else). All you need to do is go back and back out the numerator.

Put that over the total number of homes in OC (which census is nice enough to provide for us), and voila, % of homes in OC that had toxic loans issued on them.

Of course, SOME of those will have sold by now. People die and people sell and people refinance, even in these down times.

I think trebuchet is just another Zionist conspiracy theorist. You would not believe how many of these kooks are out there. 

This is what happens to these guys, eventually everyone becomes an enemy.

That’s less money than I paid for a good winter coat in Chicago in 1984.

I do like the house, though. Not the location or the yard or the proximity of the neighbors or the price.

I’m far more glamorous and witty in person. As long as cocktails are being served.

The so called “economists” don’t even know what to do.  I don’t think there will be any kind of complete safe-haven. 

Gold is not the end-all-be-all.  In fact I wouldn’t recommend buying actual gold.  The gov’t outlawed owning it once. They will do it again if it comes down to it. 

Just get out of debt. Don’t stress yourself out.

Invest your money in yourself, your business, family, or anything you believe in or value. 

Because in the end, value is only determined by what we all agree upon.

The elected officials don’t listen to us. They listen to the lobbyists and special interest groups.

There were several popular anecdotes about the Tustin Air base when I was a young Marine helicopter mechanic stationed there.  Firstly, one of the two hangars that you see before you today originally burned down (this from my grandfather who was a photographer for bell and worked in the other hangar).  Howard Hughes(the financier) had the remains torn down and buried close by, then rebuilt to what you see now.  The timbers that were buried, were treated with toxic chemicals for preservative.  It was said that the old base housing area (now where the new houses are) was where the timbers were buried.  So…confiscate those sand shovels folks…

I do know this for a fact, having seen it myself thousands of times.  Each time one of those huge helicopters started up or shut down, it would dump at least a gallon of hydraulic fluid mixed with jet fuel directly on the ground.  This helicopter effluent would then either evaporate or soak into the pavement.  We sure werent cleaning it up.

About 16 years ago, I was in irvine Science and technology books off culver.  There were posters for sale of the tustin air base taken from a russian spy satellite.  The fuel and hydraulic stains were used as the central focus of the optics from space…

This is why we did not buy there…this and the crazy asking prices…But….if they were a little cheaper, perhaps we could excuse a few chemical sensitizers and skin lesions…

It seems like it should be tounge in cheek, but I can’t tell for certain.

Who or what is “Redfin”? And does it have any connection with IHB? And the “phoney Fundamentals arguement”

Must be some kind of parody, or satire. These days it’s so hard to tell.

“Dealers in CDs”? Certificates of Deposit? There’s a scam connected with those? Or does he mean the round shiny things which replaced records? I agree, the price is too high. But they do last a long while.

No, Mr. trebuchet’s point surpasseth my understanding, anyway. He seems to confuse telling people about something with advocating that they do it. Perhaps he will explain himself, some day.

You are so probably right. Zionists see enemies and conspiracies everywhere. And even the smallest suggestion that Israel follow the international law (which gave it life in the first place) they regard as anti-semetism. There’s not much you can do about it, it was bound to happen.

There is a huge imbalance right now with a complete lack of physical gold coins and the paper price of gold on the comex. Just try buying a 1oz gold coin anywhere right now. They are all selling for at least 30% premium on ebay and craigslist. In professional gold trading circles there is a substantial minority of traders who believe the comex is going to default on its December delivery. If that indeed does happen the price of gold will double overnight.

Ho ho, you iz teh r0x0rz IrvineRenter man! Just remember to pass down some love to zoiks when you are fabulously rich and on the cover of People Magazine!

Sounds like you’ve been reading or listening to Peter Schiff (author ‘dollar collapse”).  He’s been on MSNBC all last week screaming that these bailouts will destroy the dollar and are insane.  Very scary stuff.

I have an ARM myself, I did a cash out refi in 2003 in which I took out $11,000, thereby increasing my loan balance to 95% of what it had been when I took out the loan (I made large excess payments the first year of the loan).  My loan is an amortizing loan and resets in July 2010.  I wish now that I had gotten a 30-year fixed loan, but I did save about a point of interest compared to a 30-year fixed and if I were to refi right now it looks like I would get about the same rate for a 30-year fixed as when I got the loan.

One significant way in which I differ from the typical ARM borrower discussed here is that I made massive, massive payments for the first 4 or so years of the loan so that by the time the loan resets I will owe about 40% of what it was originally.  So when my loan resets, my payment will go DOWN.  I differ, too, in that I have enough cash to pay off the loan right now.  One thing that’s sort of tempting is taking out an HELOC and using that to pay off the mortgage. I could get an HELOC at even a lower rate than my loan is at now.  Too dangerous, though.

I got offered an ARM and actually applied for it because I didn’t understand what I was hearing when the guy called me on the phone and talked to me about it.  The guy talked about a 1% rate and then something or other happened in 5 years which I don’t remember because I was planning to pay the loan off by then, taking advantage of the lower rate to increase the amount that was going toward principal.  I got the papers and took one look and said what on earth is this?  I didn’t pursue it further and didn’t think about it because I had no idea there were people crazy enough to do that.

ARMS can be OK if they have a longish fixed rate period and if they fully amortize.  Although, a fixed rate loan would have been better for me, I now realize.  But even so, if everyone with an ARM had handled it like I handled mine, we wouldn’t be looking at the problems we’re looking at.

I wonder if Peter Schiff wishes he would have picked another name for his book.  My hubby has followed him for quite some time and finally talked me into investing some money with him.  It was a big mistake for us.  I recommend reading Peter Schiff Hugely Right, Enormously Wrong as Hard Landing Hits China by Mike “Mish” Shedlock.  I only wish the hubby had read the article before we had invested with Schiff.

IrvineRenter, another awesome analysis post.

One minor point, I didn’t see any mention about the acceleration of the schedule for negative amortization loans due to the max neg-am limits being reached early because folks are only making the minimum payment.

Or maybe your point is simply that the timing is not as important as the magnitude of the impact.

If you want to knock off about $1.5 trillion of that $11 trillion debt, then push interest rates up to 20%. But, before this is done, we have to be running budget surpluses so that the government can start buying back treasuries. We don’t want to issue new treasuries at 20%.

Why would jacking up interest rates cut the debt by 13%? Because, in order for existing treasuries to match the new market yield of 20%, the price of existing treasuries has to fall - 10 year notes are currently hovering around 4%. When the price falls to match market yield then the government can buy up the treasuries and retire its debt at a discount.

buster, I had no idea about the dumping on this land. How did you find this out??

God forbid people save up there money and pay cash.

Are any of you worried that we’ll have our assets confiscated by the government in the name of “patriotism” and “for the greater good”?  Argentinians have had their private retirement savings grabbed by their own government.  All it takes is for enough poor, desperate non-savers to vote this into law.  The responsible people will be completely outnumbered.

That’s right! We taxpayers could scrape up a few bucks and hire our own lobbyists. Instead of making individual campaign contributions to any political party, we’d get better bang for the buck by hiring our own bribe-peddlers.

I think someone mentioned Condeau before…