Open Thread 10-4-2008

Foreclosure of a Dream — Megadeth

Did any of you see the KCET special on Foreclosure Alley? It was well done. It humanizes the whole foreclosure mess we are all in.


Rise so high, yet so far to fall.
A plan of dignity and balance for all.
Political breakthrough, euphorias high.
More borrowed money, more borrowed time.
Backed in a corner, caught up in the race.
Means to an end ended in disgrace.
Perspective is lost in the spirit of the chase.

Foreclosure of a dream,
Those visions never seen,
Until all is lost,
Personal holocaust.
Foreclosure of a dream.

Barren land that once filled a need,
Are worthless now, dead without a deed.
Slipping away from an iron grip,
Natures scales are forced to tip,
The heartland cries, loss of all pride.
To leave aint believing, so try and be tried.
Insufficient funds, insanity and suicide.

Foreclosure of a Dream — Megadeth

42 thoughts on “Open Thread 10-4-2008

  1. former_irvine_resident

    Yeah, I saw this the other day. It really does humanize the whole mess we are in. I just cannot even begin to imagine the stress one must be under to just walk away and leave that much stuff. It must be such a horrible experience. Such a sad situation we put ourselves in as a country. And unfortunately this is just the beginning.

    1. doug r

      I heard the arrows were for use by Boy Scouts and similar organizations. The arrows used to be about 30 cents apiece, the excise tax was 39 cents. If my math was correct, that’s a 130% increase. Not very supportive for Oregon business.

      1. ochomehunter

        With debt piling and hyper inflation on the cards for the future, our congress ensured that at least we can afford wooden arrows with tax break. Guns and bullets will be too expensive.

        Bows and Arrows will be are means for security now.

  2. Forbear

    My guess is they jumped on a plane and went back to Korea, no time to dismantle the house and sell all the appliances.

    1. freedomCM

      Funny, but I didn’t see anything to make me think that the former occupants were other than native born ‘mericans.

      Did you see something that made you think that they were Korean nationals?

      1. Forbear

        The 5 pound jar of Kimchi in the kitchen, I like the stuff but could never consume that amount; slim chance other nationalities would purchase that much.

    1. Forbear

      “The verdict came 13 years to the day after Simpson was cleared of murdering his ex-wife, Nicole Brown Simpson, and her friend, Ronald Goldman, in Los Angeles in one of the most sensational trials of the 20th century.”


  3. lawyerliz

    Was that the one where they left stuffed animals behind? Everything was thrown away. The goodwill or like agency could have used some of that stuff.

    What a waste.

  4. flyover country

    **The goodwill or like agency could have used some of that stuff.**
    No, they couldn’t. At the end, the dude says the nonprofits never show up on time, and the cleaning contract says he got 4 hours and nothing left on the curb.

    Earlier this week, there was a 978 sqft house for over 300k. It was literally a Katrina Cabin sold by and it could be erected on a $200.00 lot for under 20k. These were sold in Waukegan Illinois in the 1970s as the Lake County Gardens. I used to own one and it was a good life.

    In what sweet Heck would a household making $80k even want the 21 Goldenrod property? Now your Gov Arnie wants a billion dollar handout to maintain this idiocy? Who does everyone think they are, Hank Greedson and Nancy Pelousi?

    We need a depression, and quick. I won’t post again and bother you with reality, but some of this stuff just can’t go on unremarked.

  5. Hard Numbers

    Here is the response I got after writing Congressman John Campbell last week about the Bailout Bill {Part 1 of 2}:

    October 3, 2008

    Dear Mr. [Numbers]:

    You are one of many people who called, wrote, or e-mailed my office with questions or opinions about the Emergency Economic Stabilization Act of 2008. As you probably know, the bill was passed by both houses of Congress, signed by the president, and is now law. The vote in the Senate was 74-25 and included yes votes from a wide range of the political spectrum including both Senators Obama and McCain, both California Senators, and the most conservative member of the Senate, Tom Coburn (R-OK). It then passed the House by a vote of 263-171 which included yes votes from The Speaker, Majority Leader and Minority Leader.

    As you may also know, I voted in favor of the bill and was a strong advocate of it. I hope you will take the time to read on so I can explain why I feel so strongly about this legislation.

    First of all, if you are personally opposed to the bill it is probably because you are against a $700 billion bail out of Wall Street. You should be against that. I am too. But that media term for the bill is a complete mischaracterization of what the bill does. It will not cost $700 billion and it is not a bail out of anyone. Let me explain:

    $700 Billion: This amount will not be spent. It is being invested in hard assets (mortgages secured by homes) which will have an expected cash flow in excess of the purchase price. So the taxpayers should get all their money back that way. But if that doesn’t work, taxpayers will also get warrants (stock options) in the companies from which these assets are purchased. So, if those companies recover, taxpayers get part of profits. And if both of those don’t get the whole $700 billion back, whoever is president in 5 years is required to submit to Congress a proposal to get any loss back from the companies who sold the government the assets. That’s 3 different ways to be sure the taxpayer is made whole and maybe makes a profit. This bill may wind up costing less than one year’s worth of earmarks.

    Bail Out: The assets will be bought from companies at probably 30%-60% of what they paid just a year or two ago. If I offered to buy your house that you bought 2 years ago for half what you paid for it, would I be bailing you out? I don’t think you would look at it that way. These companies will lose lots of money. Fine. They made an investment that went bad and they have to live with it. But they will not be bailed out. Many companies and a number of banks will still fail even with this bill. The purpose of the purchase is to cut out the cancer that is clogging the world’s financial arteries so that credit and loans and cash can flow again. No one is being bailed out.

    1. Laura Louzader

      My questions for Mr. Campbell and the others who voted for the bill:

      If the $700 B is to be not “spent”, but “invested” in the bad mortgages from which taxpayers will get their money back through mortgage payments, then why is this bill even necessary. The reason we have to “stabilize” the institutions owning this crap by buying it from them at “mark to fantasy” prices, suspending normal mark-to-market accounting rules, is because the crap is NOT PERFORMING. That means that we are taking non-performing assets off the banks’ books and moving them to our own. Are we really expected to believe that this crap will ever perform?

      This, and the rest of Campbell’s rationalization, is disingenuous.. If we are buying the assets from the banks at 30% to 60% of what the institutions paid for them, well, no, that is not a bailout, and so what is the point of doing it? Because these assets are actually close to worthless, such as the hundreds of square miles of never-to-be-occupied subdivisions full of 4000 sq ft houses decrepitating from neglect, that might as well just be shoveled under, sitting out in the exurban wastes of greater Miami, Chicago, Las Vegas, and many places in CA. Or the thousands of highrise condos in Miami or Chicago that will end up being auctioned off for 10 cents on the dollar. Or all the abandoned properties in Detroit you can even sell for a $1.

      It’s a bailout, pure and simple, or it wouldn’t be worth bothering with for the institutions involved.

      Just how many lies are we expected to believe out here?

  6. Hard Numbers

    Here is the response I got after writing Congressman John Campbell last week about the Bailout Bill {Part 2 of 2}:

    Wall Street: If we do nothing, expect to see many days on the stock market like Monday, September 29th when the stock market suffered its biggest one day point drop ever. That will devastate the retirement plans of millions of everyday people. All forms of credit have already dried up. If they dry up more, companies small and large will not be able to get standard short term loans to buy inventory and make payroll. That means lots of job losses and layoffs. And people with money market funds and bank accounts may not be able to get their money, even with FDIC Insurance because these entities have to sell a loan to get you cash. And no one is buying the loans.

    Many different proposals were looked at and discussed. I was actually part of a working group appointed by the Republican Leader to develop an alternative plan, which, in fact, developed several provisions that were included in the final bill. Our goal was to develop a virtually cost-free plan to stabilize the global financial markets and save every American’s savings and investments, not a bail out. I believe that the final bill meets these criteria. There is no guarantee that this bill will work. But I have not seen an alternate plan that I thought had a better chance to both work and pass both houses of Congress.

    If the bill works, some banks will still fail and some companies will still not make it. But it will be far, far fewer than would have otherwise occurred. Some of you have asked me why a believer in free markets would support this bill. I have done so because I believe this is a solution to preserve free markets, not replace them. In some ways, this bill is more of a free market solution than other actions that have been taken. The government will not take over any companies here. Even the warrants will be non-voting. No one will be compelled to sell the government their assets if they don’t want to. Even the “reverse auction” process of establishing pricing for the assets, where sellers submit bids to one buyer rather than the other way around, is a market based pricing method.

    No one wanted this bill. No one wished for this crisis to occur. But it is here. This is a worldwide problem and not just an American one. And we had to act. My vote was carefully considered, but made without reservation. I applaud my colleagues, both Republican and Democrat, who joined me in doing so.

    I appreciate the great honor you have given me by allowing me to represent you in the United States Congress.

    I remain respectfully,
    Member of Congress

      1. Chris

        This is the reason that I hoped this would pass. Granted, the House didn’t pass the original version and I was happy about that because I don’t want Hanky and Benny to get a blank check.

        Yeah, there are pork barrels, uh, I meant *earmarks* set up on the subsequent version but doesn’t all bills get passed that way? Without this bill, say goodbye to everything from 401k, IRA, etc, to corporations as they fold because they can’t write new bonds to pay off maturing bonds.

        Frankly, the checks and balances that the constitution had set up is failing us big time nowadays. We really need to bring that back.

        Stock market will continue to go down…why…because reality is gonna sink in now: more than 150k job loss last month and will continue unabated, count on it. Forget subprime/Alt-A, etc. If you’re total prime and you lost a job, good luck trying to keep a roof over your head.

        The spread between current rate and potential borrow rate on anything from corporate bonds to mortgages will be so high (due to risk) that there is absolutely no freaking way jobs will NOT be lost.

        Check out the current rate of tax-exempted MMs….some as high as 5%+, 5 freaking %+. Why would anyone invest if they can get **tax-exempted** 5% on almost guaranteed (almost because MM fund price can go below $1) return with little to no risk?

        You tell me…..

    1. Major Schadenfreude

      “I applaud my colleagues, both Republican and Democrat, who joined me in doing so.”

      Mr. Campbell,

      As an elected official who is charged with looking out for the best interest of the constituents, what actions did you take beginning in 2004 when it was clear that the lending environment had made home ownership an impossibility?

      If nothing, will you “fall on your sword” and forsake another term in office since you (and your ilk) failed so miserably?

      In ancient Roman times, honor and public office shared the same word. Unfortunately, we are a long way from those days.

      -Major S.

      1. Woodbury Renter

        I am sooooo sick of hearing people say that people who experience foreclosure will have no where to live. As if no one has ever heard of renting! The delusional political fantasy of 100% homeownership is what got us into this mess. Home ownership should be reserved for those with the wherewithal to save and to earn. Otherwise we are asking for the trouble that we get.

  7. The Moar You Know

    I had not seen that special. A regular modern-day version of the Grapes of Wrath is what we’re seeing here.

    Good call on MegaDave, that’s one of their better tunes.

    “Now your Gov Arnie wants a billion dollar handout to maintain this idiocy?”

    Not so much. Has nothing to do with housing, he wants the money to keep the state running. Maybe we could do with keeping all the kids out of school for a year or two, but with fire season coming I’d sure like to at least have CalFire solvent.

    1. Chris

      If Arnie doesn’t get that $7 billion, there are gonna be HUGE consequences.

      1) CA muni bond rate will skyrocket as Moody/SP/Fitch downgrades CA. CA would have to be downgraded anyway….I wouldn’t wanna invest in CA munis and imagine the sovereign wealth folks who are probably smarter than I am.

      2) It’ll cost more for CA to write bonds and the current budget will be short for this year (even though it was passed) since interest payment will have to increase.

      3) Where are they gonna take the $$$ from to pay for extra interest? You guessed it. Everything from schools to services, etc, etc, etc.

      4) If your house got robbed and police doesn’t show up, can’t blame them…no moola to work :-)…all for paying interest thanks to Moody/SP/Fitch.

      Why the hell do you think AIG folded?

      It’s gonna be fun watching California extending the Oakland/Richmond boundaries 🙂

      1. Hormiguero

        “all for paying interest thanks to Moody/SP/Fitch.”

        that’s like blaming the weatherman for rain. maybe sacramento’s hell-bent determination to spend over 100 billion a year had something to do with it?

        1. Chris

          Nah, I’m not blaming Moody/SP/Fitch. I’m just stating the fact and put a thank you note to those 3 agencies.

          But then when investment banks packaged Aaa bonds with subprime, they did rate the securities as Aaa. So go figure.

      1. alan

        On market >300 days and counting.

        It might sell at that price, NOT!, $1,125 monthly dues are the killer. Now if it came with a buttler at that price it would be snapped up.

  8. ochomehunter

    Just learned from my friend who got informed by the bank on new lending rules that prohibit folks from speculating/investing into second homes unless their first home has at least 30% equity and they can pony up 20% down payment. LOL, price decline will continue. The new rule went into effect on Sep 21 without any media report.

    With bailout, banks will have little cash to continue their lending operations so expect the toughest lending standards that you can ever imagine. I wouldn’t be surprised if downpayment on second home gets to 30%-40% in the coming months.

    This definitely increases chances of those who have been waiting for their first home on the sidelines.

    1. Major Schadenfreude

      “I wouldn’t be surprised if downpayment on second home gets to 30%-40% in the coming months.”

      I thought Fannie Mae was only requiring 3% down. You think they will increase it so much so fast?

      1. ochomehunter

        This Friend of mine applied under FHA and that’s where he got this notice. He actually applied on Sep 19 and his application is still pending and tomorrow is the decision day. I will give an update.

        I think the best deals on low downpayments will be for the first time buyers, others will have to wait.

  9. KentBrochman

    So the banks actually do a thorough credit history report, and analyze the applicant’s outstanding mortgage debt?

    No it doesn’t really increase chances of private homebuyers — sounds like it guarantees most REOs will be bought up by investment trusts and groups with cash on hand.

  10. lawyerliz

    Iceland is toast due to bad banking.

    Iceland I tell you. They can’t afford imports now. I guess they will be eating a lot of fish.

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