Entitlement Leads to Socialism

The Ponzi Scheme spawned a societal sense of entitlement. It is likely that social safety nets will be created and enlarged to pander to this new demand.

33 Ridgeview   Irvine, CA 92603  front2

Asking Price: $2,128,500

Address: 33 Ridgeview Irvine, CA 92603

So he chased the wind
Thats all his silly life required
And the days of vanity
Went on forever
And he saw his days burn up
Like paper in fire

Paper in Fire — John Mellencamp

Major cultural events like The Great Housing Bubble change people’s lives. The populace built mountains of paper through burning consumerism; paper that is now smoldering in the ashes of our economic fire. Statistics measure the economic fallout, but more interesting is the impact on the people.

One trend in our consumer society has been an increase in our collective sense of entitlement. People came to believe in the permanence of the supply of consumer goods they enjoyed, the exaggerated sense of self-importance they created, and the unsustainable level of lifestyle spending they deserved. Since this sense of entitlement was only enabled by a massive Ponzi Scheme, many people in the aftermath must adjust to a new lifestyle that is considerably less affluent than the one to which they feel entitled.

Rather than retreat from a sense of entitlement, it is likely we will enact even more social safety nets to pander to this societal desire. Good or bad is in your perspective. Many European countries are suffering less because they have an expensive safety net that supports those in need. The European Socialist model may prove less traumatic to the society and the economy because the safety net provides liquidity and consumer demand — at a tremendous cost. With Democrats in full control of the House, Senate and the Presidency with a filibuster-proof majority, nothing stands in their way. We will almost certainly take a step toward Socialism.

These circumstances have precedence. During the 1920s, laissez-faire economic policies with little or no financial regulation resulted in a massive Ponzi Scheme in the stock market, widespread currency deflation, and a near collapse of our economic system. the deflation of that credit bubble was exacerbated by the passage of the Smoot-Hawley Tariff Act (enacted June 17, 1930) which decimated international trade. The resulting Great Depression saw a dramatic political shift with the landslide election of FDR in 1932 and the creation of much of our current and inadequate safety net; it was our first step toward Socialism.

Since the conditions now are so similar economically and politically, it is reasonable to expect the same response. Many of the social programs Conservatives fear most will be enacted or expanded. If these programs fail in the eyes of the electorate, Conservatives and Republicans will come back to power to “fix” things; however, if Progressives and Democrats succeed, they may consolidate power for a generation.

We live in interesting times.

When I saw today’s featured property with only two pictures of the same view, I saw the artistic value in the presentation.

andy warhol marilyn monroe

33 Ridgeview   Irvine, CA 92603  front2

Asking Price: $2,128,500

Income Requirement: $532,125

Downpayment Needed: $425,700

Purchase Price: $3,880,000

Purchase Date: 12/11/2006

Address: 33 Ridgeview Irvine, CA 92603

Beds: 5
Baths: 6
Sq. Ft.: 5,900
$/Sq. Ft.: $361
Lot Size: 0.28


Property Type: Single Family Residence
Style: Other
Stories: 2
View: Bay, City Lights, Mountain, Ocean, Panoramic
Year Built: 2006
Community: Turtle Ridge
County: Orange
MLS#: P696338
Source: SoCalMLS
Status: Active
On Redfin: 2 days

Spectacular view from this home! Make this your own palace! Prep
kitchen located behind the open family kitchen. Downstairs bedroom
perfect for guest/maid/mother in law. Main floor study, living room,
dining room, laundry room and family room. Upstairs family room in
addition to bedrooms. Unbelievable views from the master bedroom and
bathroom. Sold As-Is with no warranties expressed or implied.

The banks can’t be looking forward to taking back more properties like this one… This property was purchased on 12/11/2006 for $3,880,000. The owner used a $3,000,000 first mortgage and a $880,000 downpayment. A week later he opens a $350,000 HELOC, and a year later he expanded it to $477,000. These are probably just HELOCs to access money, and they may not have been used.

Then, this happened:

Foreclosure Record
Recording Date: 07/09/2008
Document Type: Notice of Sale (aka Notice of Trustee’s Sale)
Document #: 2008000326533

Foreclosure Record
Recording Date: 03/31/2008
Document Type: Notice of Default
Document #: 2008000148091

The lender finally took the property back on 1/21/2009 for $2,635,000. They have been sitting on it since then trying to figure out what to do. Based on the date of the NOD, there has been no payment on this loan since 2007.

At the current asking price, if the property sells and a 6% commission is paid, the total loss to the lender will be $999,210. Let’s call it a million.

93 thoughts on “Entitlement Leads to Socialism

  1. Carl

    A couple of things: Smoot-Hawley was a conservative, Republican initiative by Mr. Hoover’s own party – I think-I would have to rewatch Ferris Bueller’s Day off and see Ben Stein explain it again. Clearly it was ill conceived.

    Second, wasn’t taking he nations wealth and giving it to the big banks to protect them from the consequences of their poor financial decisions “socialist”? If so, the the Geo. W. Bush administration (again, Republican) brought socialism to a new level of hubris. If not, and you want to define socialism only as the government helping the little guy, then your definition is arbitrary and makes little sense. After all, trickle up should work just as well as trickle down.

    Finally, the people who bought 33 Ridgeview bought four other properties including 45 woods trail. My understanding is that four of the five properties have been repossessed.

    1. Dan in FL

      1. Government continuing to bailout the banks is wrong and bad for the country, but it is a policy that has continued under the new administration. There might have been a brief excuse for it during the end of the Bush term, in order to avoid a complete economic collapse. Currently, there’s no excuse.

      2. IR never defined socialism as the gvt helping the little guy, so your statement that he did is arbitrary and makes no sense.

      3. Why do socialists consider themselves the protectors of the little guy. They’re really just the controllers of the little guy. Let the little guy have freedom to choose his own way.

      1. winstongator

        It would be impossible to, in a single post, explain socialism as helping the ‘little guy’ whilee profiling a property that sold for nearly $4M. What we have now is lemon socialism. One thing we got after the GD was the FDIC. The FDIC provides insurance but also regulates its member institutions. The problems spun out of control when we pretty much extended similar insurance to entities that were not regulated.

        Look at Fannie/Freddie. Say a GSE mortgage was 6%, while another non-GSE was 7%. What element of risk disappeared with that 1%? None! The risk was only shifted, to you know who.

        Many of the social programs conservatives feared most are the most popular today (Medicare), and are programs that they use to fearmonger against current initiatives – ‘health-care reform will hurt your medicare benefits’.

        The ‘socialist’ elements that are needed are adequate bank regulation and a real consumer protection agency. Bait-and-switch marketing, through teaser interest rates and onerous penalty fees cuts off the fingers of the invisible hand.

        I’ve read that Obama’s plans will kill the free market, but those saying that haven’t paid attention. The free-market committed suicide.

        1. AZDavidPhx

          Many of the social programs conservatives feared most are the most popular today (Medicare), and are programs that they use to fearmonger against current initiatives – ‘health-care reform will hurt your medicare benefits’.

          Has everyone noticed the steady drumbeat of corporate-healthcare propaganda making its way through the mainstream commercial media?

          The other night, an ad ran where some poor lady was talking about her nightmare experience with the Canadian health care system. She was told she would have to wait a long time to get her life saving surgery and was forced to flee to the U.S to receive it. The viewer is led to believe that this is what we can all expect if we try to make healthcare available to everybody. It also fails to explain how this lady paid for her treatment. Perhaps she sold out and did the pro-USA ad in exchange for the healthcare industry paying her medical bills. You never know.

          Then this morning, somebody planted a blame-fatty piece of tripe out there. The crossed-legged NEWS babe begins the delivery:

          A new study just released indicates that 10% of all healthcare costs are related to obesity. GASP! The viewer is intended to immediately froth at the mouth and pound his chest! “I’m not paying for that fat f**ker’s health bills! I won’t go along with socialized health care! How dare that fat guy expect me to pay his bills while he sits around eating cheese doodles and potato chips on the couch while I am out working hard!”

          The non-caveman response would be: “So what?”. We cannot solve this problem by any means other than letting them die when they get sick?

          Suppose we wave a magic wand and make everybody skinny. What will be 10% of our healthcare costs then? Cancer? Are you going to complain about your tax dollars being used to treat Cancer and insist that we continue the policy of telling these people that they sponges on the system?

          1. Dan in FL

            My concern would be the opposite thing happening…the federal government, realizing they are going broke on federal medical care for all, starts to cut costs. They begin by trimming out care for people who have self-induced problems. Skydiving accidents, bungee cord problems. Then smoking related problems, because everyone knows smoking kills, and you decided to smoke anyway so you can pay for your ills.

            Then obesity. You knew eating cheese doodles three times a day would lead to problems. Since you caused your own pain, the federal government surely isn’t going to foot the bill.

            Federally run medical care is government control of your body. It may be the one thing to drive me away from this country all together.

          2. winstongator

            I would assume either your parents or grandparents use Medicare. How do they like it? Have they opted out of it?

          3. Anonymous

            Re: Obsesity – could always go the European route and push the energy taxes way up and push the minimum wage way up. Nothing like not being afford to drive and have a fridge 1/4 the size and have to walk from the subway and buy food daily at the market, and cook because eating out is way too expensive. Honestly, I think that’s why the Europeans are thinner than us.

          4. Gemina13

            The other night, an ad ran where some poor lady was talking about her nightmare experience with the Canadian health care system. She was told she would have to wait a long time to get her life saving surgery and was forced to flee to the U.S to receive it.

            You can check Crooks & Liars on this one. The woman claimed she had a life-threatening tumor. In fact, she had a slow-growing, non-lethal cyst. She could well afford to wait a few months. (I, too, have a slow-growing cyst, located on my thyroid. I’ve waited over 2 years, but not because the government has mandated a particular surgery date; I need to save up for surgery costs my insurance may not cover.)

          5. AZDavidPhx

            You can check Crooks & Liars on this one.

            There you go. Thanks for the info. Please post a link.

          6. tazman

            Well said about govt healthcare = govt control of your body. I am also terrified about a bureaucrat in washington deciding what level of care I get. i’ve experienced govt run healthcare already as a military vet. believe me, most of us got second or third opinions by paying out of pocket before following the treatment plan.

            also, the 50 million uninsured in this country are largely children, something not often talked about. the vast majority of kids are healthy and only need routine treatment for “childhood diseases,” not catastrophic problems requiring long term care or treatment. when understood in that context it becomes obvious that govt run healthcare is just another way of the govt exerting more and more control over you in a stalinesque kind of way.

          7. AZDavidPhx

            Looks like Tazman gets to go down in the history books as a member of the group on the wrong side.

            A century from now Tazman’s descendants will be really happy that they live in a better country than the one grandpa tried to leave them.

          8. Freetrader

            Well – and this may not be directly related to your point – we would WELL IN EXCESS of 10% of current health costs a year if so many Americans weren’t obese. Obesity leads to heart disease, diabetes, strokes, cancer, and just about every major health problem. Given that about 50% of the adult population is not obese, the dollars are huge. It is a classic American problem — we spend millions to be fix the symptoms, but you are a ‘sizeist’ if you suggest politely that most people ought to lose some weight.

          9. Mikee

            Dan in FL says “I might leave this country” because of socialized medicine.
            Where, then, would you go? We are the least “socialist” society in the first world, especially when it comes to healthcare.

            “I don’t want some beaurocrat in Washington deciding what I can do” How about a beaurocrat in Hartford? Only they get bonuses for denying you coverage. Look up ‘Rescission’.

            “That’s why the French are skinny”. God forbid we take mass transit and cook fresh food every day. That’s just un-American!

            I don’t necessarily think Congress is going to come up with the Grand Solution to all this – and any program should a) cut costs b) provide a base amount of care for all c) allow personal choice and private companies to compete, but the arguments above are not GOOD arguments against reform.

          10. Soapboxpolitico

            Knock yourself out Dan. No ones holding you back. You are free to make that choice. Out of curiousity, where will you be heading? Can’t think of too many “free” countries off the top of my head that don’t have some manner or another of federal regulation and controls be it healthcare, taxes or even fuel economy standards.

            Good luck with your move!

          11. Soapboxpolitico

            Good grief. Do you guys see the boogieman around every corner? You may want to up your meds (provided you can get your HMO to OK the increase in treatment costs).

            Let’s get a couple of things straight. It is a HUGE leap to go from gov’t assisted healthcare or even gov’t paid healthcare to “control of your body”. If that isn’t grandiose paranoia, frankly I don’t know what is. Take a deep breath and think rather than jump off half-cocked.

            More importantly the “government” is OUR government. We elect these people so legally they are accountable to us, you know … “We the People”. That means if we don’t like what they do or how these programs might be structured we can REPLACE them both. Now, do you enjoy these same rights with your HMO or current health insurance provider? Nope. They are beholden to shareholders who may or may not be you. And even if you do own shares, it’s highly unlikely you own enough to have any say whatsoever during board meetings or shareholder meetings.

            Not everything in this world should be a for-profit enterprise and for-profit doesn’t necessarily equate to efficient. Some things are basic human needs and a civilized society is measured by how well it looks after ALL it’s citizens, not just the priviledged.

      2. Art Student in Atlanta

        If you take away the catchphrases like “socialism” and “protectionism” the acts really settle into a blanket concept that the government is trying to provide a way of life to the public that cannot be sustained otherwise.

        I think this is what IR was referring to. These acts are all the same thing. If consumer spending (C) and private investing (I) have receded so much that the lifestyle enjoyed by a majority of Americans is endangered then, it falls upon the last pillar of GDP(CIG) to save it. Government. Whether this is right or just means very little. Unfortunately, the dye is cast.

        A government bubble will eventually arise out of this. It will last quite likely for about 5 to 10 years. We had real estate and stocks. Why not government? It is a part of human activity a producer of products and services just like anything else.

        I do not think the Republicans will be the party that takes control after the bursting of this bubble. A new party will likely form from their ashes.

        As for little guys, I don’t believe there is such a thing. I think it is a mechanism to discount other people and ourselves by underestimating our significance/responsibility.

      3. Get Real

        Government has to bailout the banks. Think of it as a single card going down in a house of cards. FDIC is an illusory promise and if the masses of people ever figured out the fact that bank deposits are NOT REALLY PROTECTED by anything, the whole system would crash and burn…right now we are only smoldering and stamping out small flames.

        There are laws on the books already that prohibit banks from withhodling REO inventory and require them to give honest numbers but no one is enforcing them. I wonder why.

        The gov is deathly afraid of another run, this time on a larger bank. Pay no attention to the little man behind the curtain, while the wizard of Oz tries to delay the inevitable and keep this thing going a little longer with some spit and scotch tape… byt the time the SHTF for real, the higher ups will have bonused themselves into financial safety for a few years, after which they will buy assets for pennies on the dollar and profit from the mess they created.

        …Except for the gov officials who own $600M of Goldman stock (Um, did anyone think this might affect his judgment?) and used our money to bail our Goldman/AIG. THey don’t need to bonus themselves anything and certainly don’t give a rat’s a$$ about what happens to the rest of us.

    2. HB Reader

      “… taking the nations wealth and giving it to the big banks to protect them from the consequences of their poor financial decisions “socialist?”

      Giveaways are not synonymous with Socialism, although conservative “talking heads” may want that idea to be popular.

      Two political ideologies come to mind, first is Plutocracy: Here is a reference from Webster’s Dictionary online.

      Plutocracy (plutarchy) is rule by the wealthy, or power provided by wealth. In a plutocracy, the degree of economic inequality is high while the level of social mobility is low. This can apply to a multitude of government systems, as the key elements of plutocracy transcend and often occur concurrently with the features of those systems.

      The second ideology is Fascism, this is a hot button word and is not used anymore unless you are in reference to WWII. Below I quote it from Wikipedia. Notice Mussolini cited as calling his nation the “corporate state.” Does that have a familiar feel? Ohhh yes!

      “Fascism, comprises a radical and authoritarian nationalist political ideology and a corporatist economic ideology. Fascists believe that nations and/or races are in perpetual conflict whereby only the strong can survive by being healthy, vital, and by asserting themselves in conflict against the weak. Fascists advocate the creation of a single-party state. Fascist governments forbid and suppress criticism and opposition to the government and the fascist movement. Fascism opposes class conflict, blames capitalist liberal democracies for its creation and communists for exploiting the concept. Fascism is much defined by what it opposes, what scholars call the fascist negations – its opposition to individualism, rationalism, liberalism, conservatism and communism. In the economic sphere, many fascist leaders have claimed to support a “Third Way” in economic policy, which they believed superior to both the rampant individualism of unrestrained capitalism and the severe control of state communism. This was to be achieved by establishing significant government control over business and labour (Mussolini called his nation’s system “the corporate state”).No common and concise definition exists for fascism and historians and political scientists disagree on what should be in any concise definition.”

      There utility in not letting ideology labels to get tortured too much, so we can see this country at this time for what it has become and not what it advertises.

      1. Soapboxpolitico

        Well said! I’ve been making that distinction for years largely falling on deaf ears. You can almost make the argument that the current United States is a fascist plutocracy. 🙂

        I’d laugh only that’s not the least bit funny. Let’s hope this never comes to pass because then everyone here will be praying for a socialist agenda.

    3. Freetrader2

      The fact that the protectionists used to be Republicans isn’t really relevant – these days the protectionists are the Democrats. Free trade is a “conservative” position, because protectionism is a philisophy that stands for the principal that the government exists to protect people from the market. Say what you will about GWB, he was no protectionist.

  2. winstongator

    If it has 1.5 yrs of unpaid interest, you could estimate that at another $315k. I’d say the owner tapped the heloc because it coincides with the payments stopping. More ‘conservatively’ the loss on this is ~$1.7M…if they can sell for list.

  3. mav

    “During the 1920s, laissez-faire economic policies with little or no financial regulation resulted in a massive Ponzi Scheme in the stock market, widespread currency deflation, and a near collapse of our economic system….Since the conditions now are so similar economically and politically, it is reasonable to expect the same response. ”

    A picture says a thousand words…..


    1. Lee in Irvine

      Thanks for sharing … here’s a few of my observations~

      Look at the expanding debt with the GSEs. When you study it, you can see just how America has been ripping itself off … and our way of life. Call me old fashion, but I think it’s important for mom to stay home with the babes. When mom went back to work, it created more income for the house, and that additional (new found) income was quickly sucked up by inflation real estate prices. Also, a case can easily be made that when mom went back to work, it caused more social and criminal problems in society.

      I really thought America would try to clean up its act after the most recent credit debacle, much like the Fed did with inflation when Volker was in charge. In other words, we sacrifice economic activity now, in order to place America back on a sustainable path. But that ain’t gonna happen … the only thing we’re doing now is kicking the can down the road, for an even larger financial calamity in the future (perhaps near future).

      Doing the right thing, is often the most difficult thing. What president wants to govern over a slumping economy, and do so willingly, for the greater good of the country. Obama doesn’t — he has the same goal as Bush had … win a second term.

  4. winstongator

    Let’s say an average person works for 40 years, 25-65, and is retired for 10, 65-75. They need 1/2 of their working age net income minus savings during retirement. Guy sticks cash in the mattress and there is no inflation. What savings rate would be needed? Are our ‘investment’ choices really good enough to make up for the abysmally low savings rate?

  5. C Delroy Spuckler

    The bank better get used to taking back more properties like that one. That street is a mess. 2 homes are already REO, one has an NOD. Pull up the loan history of the remaining homes on the street… those 3 will have company.

    The poor guy who has his home listed at $5mil is going to have a lot of competition at half of his asking price.

  6. no_vaseline

    The irony of today’s post (the topic Socialism, “social safety net”, and a 2-4M house – depending on when it was sold) is apparently lost on many users……

    1. AZDavidPhx

      American Socialism is cool so long as it does not include everbody and you are in the group that benefits.

      It has to be implemented correctly to ensure that the safety net protects only the upper class and is paid for by the army of peon-class workers that are systematically indoctrinated into a pretend-capitalist system that instructs them to “work hard” and take “pride” in what little they have.

      And they are going to get their way too.

      1. Lee in Irvine

        “American Socialism is cool so long as it does not include everbody and you are in the group that benefits.”

        Oh … you mean Goldman Sachs. Right?

  7. AVRenter

    So, you buy a house for $3.8 large and make payments for one whole year? That on top of half-a-mil HELOC? I’m sorry my reservoir is very deep. How there isn’t a nationwide shortage of pitchforks and torches is beyond me.

    1. AZDavidPhx

      How there isn’t a nationwide shortage of pitchforks and torches is beyond me.

      It should not be beyond you. The reason is very obvious to me.

      The #1 reason is because there is not enough true homeownership.

      Suppose that 50% of people owned their home debt-free. That makes half the population less-inclined to be out screaming and demanding JOBS JOBS JOBS like a crackhead trying to get the next fix.

      People who own their homes have much greater security and can spend more of their time reading, vacationing, etc because they are not living month to month, payment to payment.

      We are a nation of crackheads trying to keep the high going and constantly hustling for a few more dollars to make it happen.

      In this type of system – who has time to grab a pitchfork and light a torch? It’s not like back in the farming days when you planted your crop, harvested it, and then had a few months on your hands to go off and shake things up while nothing was going on back home. Nor is it like the farming days when it was all a communal effort and everybody had a stake in enforcing the social order.

      Today we are drones just trying to “get by”. The government keeps us all nice and busy with our makework jobs so that we are too concerned with making our payments than getting all uppity and challenging the system.

      This is why nothing will change and people will remain docile as long as the government keeps the high going with some more makework jobs and a few more buckets of KFC.

      1. AVRenter

        “…and a few more buckets of KFC.”

        You really know how to talk dirty to me. Trust me, I have no delusions of the extent and cause of our proletariat apathy. Pass the pipe, homey.

  8. Dawn

    IR, I love you, but really?

    “With Democrats in full control of the House, Senate and the Presidency with a filibuster-proof majority, nothing stands in their way. We will almost certainly take a step toward Socialism.”

    This president and the vast majority of Dems in congress have no interest in Socialism. They are not liberals – they are barely even Democrats.

    We’ll see if you are as correct about this as you have been on so many other things. I have my doubts.

    1. IrvineRenter

      It isn’t that Democrats are die-hard socialists, but they are reactionaries who will respond to the people. The people will demand increased social services and a bigger safety net. The Republicans have been the only party that historically has said “No,” but even they gave up on that. From what I see, there is nobody to say “no” to Socialism any more.

      1. winstongator

        When retirees complained about prescription drug costs, what happened? I don’t remember many Republicans saying no.

      2. Robert Cruickshank

        IR, I have been reading this blog a LONG time, mostly lurking. I was born and raised in Tustin and although I don’t live there any more, I’ve seen and heard much of what you describe in Irvine happening just across your northern border.

        You are at your best when you stick to facts and analysis.

        But you’re WAY out of your depth on all this. This post is full of assumptions that suggest a basic lack of familiarity with Socialism, the Democratic Party, the agenda in Congress, etc.

        Democrats have hardly proved themselves to be “reactionaries who will respond to the people.” Time and again they have ignored the popular will in order to advance the cause of either the banks (Obama was the key figure in pushing through the bailout last fall) or health insurance companies.

        More importantly, Democrats are a deeply divided party, with a large and influential segment that flatly refuses to listen to “the people” and makes a virtue out of doing what they want to, usually to benefit this or that wealthy interest, even in the face of massive public opposition. Senator Dianne Feinstein is a classic example of this – and one ought to note she has not gone along with Obama on health care reform.

        Health care reform seems to fuel many of the cries of “Socialism!”. But in fact the Democratic Congress is looking at no such thing. The bills coming out of committee resemble the bailout more than they resemble Canada. Government health insurance would be an option available only to a few, would be forced onto nobody, and would be partnered with a mandate that all Americans purchase health insurance – which 9 times out of 10 will be a private insurance policy.

        The notion that Republicans have been a party that says “No” is flat-out absurd, as they said “Yes” to the Great Housing Bubble at every possible turn. Democrats did too. And if you want to confine your point to social spending, one only needs look to Sacramento to see Democrats saying “Yes” to massive cuts in social spending. We will see this happen in DC as well, as Obama is determined to cut Medicare spending.

        Finally, you mention the 1930s, without really examining how the policies of the New Deal helped provide the basic architecture of the sustainable and rational housing markets of the 1950s and 1960s – or examining how those policies built a middle class able to afford such housing.

        I don’t ask that everyone share my political preferences. But I thought this site was one of the few places that prized hard-headed analysis of the facts over ideologically-fueled wishful thinking and assumptions that lack evidence but fit one’s own agenda.

        It would be a real shame if that has been tossed out the window. I don’t write much about the housing markets because I don’t understand the evidence or the mechanisms. I think you would probably do well to refrain from writing on socialism, the Democrats, and social spending policy until you can show a grasp of the basic facts on the ground.

    2. AZDavidPhx

      Eventually, we are all going to be living on social services as we are getting extremely efficient at eliminating sources of income for our citizens and concentrating the wealth amid a small group at the top while referring to it as “economic efficiency”.

      Even the staunchiest moron of a Republican has to eventually realize that large numbers of hungry unemployed people will part with their free-market half-baked delusions and Dittohead views in order to put some food in their stomachs.

      Hungry unemployed people are a big nuisance to the government as leads to crime and social unrest. The government has to have a plan for dealing with this. There are different options ranging from government doing nothing or providing social services.

      Doing nothing is not tenable as eventually the social unrest will deteriorate into the lower class forming militias and conduct foraging parties at the properties of the wealthy.

      Given that the wealthy Republicans enjoy their status on top of the foodchain, it is in their best interest to have a contrite lower class in order to preserve the system from breaking down into anarchy.

      What we have right now is a hybrid system of government welfare and makework job system to keep the masses busy. Most of our farming and industry is all gone so we have come up with meaningless makework jobs to substitute that are in-essence welfare jobs.

      Our makework jobs are now vanishing…

      Now what?

      1. Dan in FL

        Wealthy democrats don’t enjoy their status on top either? There’s only 1 party of the rich?

        The government doesn’t create jobs…it can help the public sector to create them, or it can destroy them. The government doesn’t make anything but paperwork, so until our government lets people make things again, no jobs, no cash to pay our debts, no food.

        But I do see the pillaging and burning happening.

        1. Geotpf

          The government makes:

          1. Civil protection (police, fire, etc.), criminal justice (courts), and punishment (jails).
          2. Defense from foreign enemies (armynavyairforcemarines).
          3. Education and scientific research (K-12 schools, colleges, universities, NASA, etc.).
          4. Infrastructure (roads, freeways, airports, sea ports, public transit, sewage and water systems, etc.)
          5. Package and letter delivery (USPS).

          …amoung many, many other things.

          You want to live somewhere with no government? Move to Somalia.

          1. AZDavidPhx

            You want to live somewhere with no government? Move to Somalia.

            Nice straw-man, Geotf. The way you ripped its head off and spit it out for me to see was down-right amazing.

            Let’s go over your list and separate the wheat from the chaff:

            1. Civil protection (police, fire, etc.), criminal justice (courts), and punishment (jails).

            Bloated pensions for ex-Fire Chief?

            Lawyers mucking up the legal process? Endless litigation?

            2. Defense from foreign enemies (armynavyairforcemarines).

            How many schools could be built for the cost of a single nuclear missile? Do we really need to spend way more money than the rest of the world searching for new ways to kill people? Perhaps we could scale back a little.

            3. Education and scientific research (K-12 schools, colleges, universities, NASA, etc.).

            Grade inflation? The Bachelor’s degree is the new High School diplomoa. Why send everybody to college and take on all the debt to become real-estate agents and mortgage brokers? We’d be much better off getting these people into their trade early on and dispense with the college charade.

            4. Infrastructure (roads, freeways, airports, sea ports, public transit, sewage and water systems, etc.)

            Bridges to nowhere? Endless road construction on perfectly fine roads?

            5. Package and letter delivery (USPS).

            Endless credit card offers and marketing crap being stuffed into your mailbox? Trees being chopped down, people sitting around coming up with clever slogans to bombard your mailbox with?

      2. Major Schadenfreude

        “Eventually, we are all going to be living on social services as we are getting extremely efficient at eliminating sources of income…”

        My advice to graduating high school seniors would be to research H-1B visas to see what industries they are preponderant.

        The seniors would quickly realize that the high tech industry is not the place to go. They would ask themselves why go through the trouble of getting that degree in a difficult field and then be thanked by our country by having to compete with the creme of the crop from other countries.

        It would be a lot easier to get the degree in “business” and go into advertising – preferably for a drug company or some other industry that spends a fortune on lobbyists.

        1. winstongator

          I advise you to attend a graduate EE course at UCI. How many of the students are Americans? Most programs have lower standards for US students, and still they cannot fill their programs. The problem is the kids that are best at math were funneled into financial ‘engineering’, and look at what we got. I’d like to think more people would go into engineering, but even during the tech boom times and option-millionaires were abundant, EE programs were still mostly foreign students.

          1. tonyE

            Because they know that no matter how many engineers this country produces they will be undercut by H1B visa holder.

            Big business, while moaning that they don’t have enough engineers, keep asking for more H1B visa holders who’ll work for peanuts.

            And if, God Forbid, Congress says enough, then Big Business moves the engineering jobs to India and China.

            Why in hell would a kid coming out of school today take a job in such a field?

            And, I should know, I’ve been in that field for 30 years and I’ve seen the changes first hand.

          2. Freetrader

            What a ridiculous statement. It is illogical on its face — the reason we have to give out H1B visas is that we can’t find enough American-born students willing to work hard enough to get EE degrees. Competing ‘with the creme of the crop’ of the foreign students should be exactly what a bright young student should want to do. If American competitiveness is undermined, it will be becuase the government is giving out too few visas to smart people — who then relocate to China or India instead.

            For your further information, those people who accept the visas generally stay here and become Americans, so your “Us versus them” screed sorft of falls to the ground at that point. It is hard working foreigners — Mexican immigrants at the low end, Doctors, Engineers, and Scientists at the high end — who allow the US to keep growing, and who allow us to sit on our asses in cushy sinecures and complain about the high cost of Southern California living.

          3. Major Schadenfreude

            “…the reason we have to give out H1B visas is that we can’t find enough American-born students willing to work hard enough to get EE degrees.”

            This is about as valid as saying “the reason we need GSE’s is because the free market won’t support the home mortgage industry.” The free market WILL support the home mortgage industry by assigning an approriate risk factor. The consequence may be smaller loans and therefore lower house prices, but so be it! The market would undertake the risk and not the tax payers.

            By the same token, if there were no H1B visas, the supply of engineers would be smaller, their pay scale would commensurately increase, and this would encourage more people to get into those fields.

            I’m not advocating the elimination of H1B visas. I just want to see the playing field leveled by introducing more of them in all fields.

          4. Freetrader

            Sorry, that is incorrect. If the price of engineers in the US were to rise due to a shrink in supply, the US would simply become noncompetitive in that area, as with some others, and the supply would shift to other countires. More importantly, the industries on which the US depends, on in which we are the world leader — software, aviation, high tech — would no longer be viable in this country. Not to mention the impact it would have, long term, on our ability to defend ourselves. The US is not the whole world.

          5. tonyE

            Me ridiculous? Hell, you’re ignorant!

            I’ve been in many companies -as a consultant- where I saw good engineers laid off while they were hiring foreign engineers with H1B visas.

            So I speak from first hand experience.

            H1B visas are used to keep wages low, and if that doesn’t work then the jobs get shipped overseas.

            Only in the aerospace world, where employees MUST be US citizens do you see good wages for engineers.

          6. Freetrader2

            Um, are you saying that EEs DON’T get good wages in the US? Really? That is obviously wrong, since I’m from Silicon Valley and am pretty familiar with what engineers make. You apparently think that wages are only “good” enough in a when there is an artificial restriction on the supply (i.e., Aerospace — which has the add on effect of increasing the cost of ALL engineers).

            Obviously, wages have to be competitive. If a foreigner can do you job more efficiently (i.e., at less pay) then he or she should have that job.

            Nothing wrong with that.

    3. tonyE

      The current crop of American Democrats (since the Wilson) are socialists and fascists.

      They may be “nice” fascists and “nice” socialists but the “progressive” movement was born in the early 20th century (with roots in the late 1800s) and is indeed socialist.

      1. Geotpf

        There are some Democrats who are vaguely socialist (Kucinich, for example), but the vast, vast majority are not. None are fascists.

        In any case, it doesn’t really matter what they are-there is approximately a 90% chance they will control the presidency and both houses of Congress for at least the next seven and a half years, so you better get used to them being in charge. As long as the Republican Party is controlled by crazy birthers, religious wingnuts, Sarah Palin, and other assorted lunatics, they have no chance at regaining control of either house of Congress or the presidency.

          1. Wade

            Jonah Goldberg? PUH-leeze. If it wasn’t for his mommy Lucianne, little Jonie would living in obscurity where he belongs.

          2. tonyE


            The funny thing about Goldberg is that his critics never dispute his comments. Instead the attach him personally.

            I think his points are quite valid and I’ve yet to see a cogent counterargument.

          3. Wade

            Well, then obviously you have never read the reader comments regarding “Liberal Fascism” on Amazon.com, nor the comments posted in response to his LA Times columns, nor the comments posted regarding his essays in the National Review. The criticism is not difficult to find if one looks for it.

          4. darms

            Here ya’ go – David Neiwert
            Contrary to tonyE’s assertions, this is a scholarly critique/dissection of Mr. Goldberg’s claims and no, it’s not pretty

    4. Lee in Irvine

      “This president and the vast majority of Dems in congress have no interest in Socialism. They are not liberals – they are barely even Democrats.”

      Didn’t we just have this conversation with the republicans in charge? Yes, yes we did!

      It’s impossible for any politician to share the best interest of the majority, while protecting the interest of financial parasites. BTW, the number one contributor to the Obama Campaign was none other than Goldman Sachs.

  9. Alan

    Looks like they added a mailbox, and the weeds grew, hence the 2 photos. Shows how this place has potential. What more do you want for $2.1 million? Hopefully not much, since we’ve been warned as far as warranties go. No pretending the price is due to ultra-high quality construction.

    I’m not sure that I follow the jump from consumer and display of apparent wealth society to socialism. European socialism is more about giving the lower classes support, in terms of health care, unemployment payments, public housing, public transport, retirement pensions, …

    Conservatives and Republicans get all bent out of shape that some significant proportion of the beneficiaries are undeserving and if faced with living on the street would be forced to actually do something instead of living off the handouts. They pretend to ignore that the “something” may well be criminal, and the also significant proportion of beneficiaries who actually really need support, wether temporary or long-term.

    I don’t know where socialism involves getting Mercedes’ and $800K or more houses into the hands of posers to the affluent class.

  10. WaitingToBuyByAndBy

    The lack of a proper education creates many problems. The government is often too eager to create and expand programs to protect the ignorant.

    There should be programs to provide for and protect the innocent, but not the ignorant.

    Better citizens make a better society.

    1. bigmoneysalsa

      Steve Thomas has a very serious missunderstanding of what the terms “demand” and “supply” mean.

  11. DAve

    What y’all are missing is the Olympic-class piece of topiary reflected in the two pictures-

    Please notice how effectively the artist trimmed the shrub on the left side of the front yard to look like a pair of mailboxes.

    Sincerely, Where’s Waldo Gold Medalist 1986

  12. avobserver

    Hasn’t this country been socializing “losses” for decades already? I can still remember S&L crisis, LTCM debacle, and the now infamous Greenspan Put… and the on-going bailout of large financial institutions is probably the mother of all socialism. So we have already had some form of socialism in place for years, but the problem is we have a system that socializes losses but privatizes gains, and it encourages excessive risk taking and casino mentality. So people who milk the system thru high leverage, wild gambles get to keep their gains when they win, but are able to spread the losses to the rest of population when their scams inevitably collapse in the end. We don’t have a pure socialism, but our brand of socialism (on losses only) is worse than the pure socialism that socializes both gain and loss.

    Social safety net in this country was created out of necessity during Great Depression. Any programs that provide subsistence level support (unemployment benefits, basic health care, etc) to general population should be viewed as a positive thing in a humane society. Many people who lost their jobs or other financial means to support their families are part of the collateral damage of the credit bubble and its ensuing economic depression. The question is – where do we raw the line – i.e., how do we limit the safety net to a temporary relief at such a minimum level (for those who inadvertently get caught in the collapse of the bubble economy) that it will not engender moral hazard.

    Keeping people in the house they can not afford is NOT social safety net, it’s part of the ongoing “socializing loss” scheme that has become epidemic in our society today. And I think both Republican and Democratic parties have deliberately tried to mask their “socializing loss” agenda as providing a genuine social safety net to the public.

    1. Dan in FL

      What do you consider “subsistence level” medical care? Don’t we have that already with Medicaid?

      Stopping the socialization of losses will do a lot of this country in the long term.

    2. winstongator

      We will never totally stop socializing the losses. Would we really have been better off with 10 Lehmans – Citi, BoA, Wachovia, Goldman, Merrill, etc? The FDIC is a valuable entity, but IT’S NOT FREE. The businesses that will be bailed out should pay into an insurance fund AND be subject to strict regulation. All others, oh well. That system only works when it’s implemented from the start, but if you belive markets are self-correcting and self-regulating and depressions are a thing of the past, why would you have extra payments into an insurance system or stiffen regulation.

      1. Geotpf

        If the markets were properly self-correcting, the recent bubble and subsequent crash would not have occurred.

        1. winstongator

          I don’t believe that but Sir Alan did, which is one reason he was not concerned with much of what contributed to the bubble. If you don’t even acknowledge the probability of losses, you won’t protect against them.

        2. Dan in FL

          The markets were not self correcting, which is what caused the bubble. “Socialized losses” means no correction for the makers of the problem. No risk of loss, no correction.

          A hot stove is self correcting to a 4 year old…until you equip the four year old with insulated gloves (bought on credit). The gloved child no longer gets any correction from improper action.

          1. darms

            And I’d be a lot more sympathetic to the richest 1% if they had been paying income tax rates of 40% and up on their multi-million dollar incomes. Instead thanx to tax shelters, ‘loopholes’ and capital gains tax rates of 15% or less, not to mention the SS tax capping at $107K or thereabouts. I & mine have been paying almost 30% of our income in federal taxes alone, a larger percentage than the AIG & hedge fund fraudsters.

          2. Freetrader

            Your comment about taxes is incorrect on many counts. If you are paying over 30% federal tax that means you have quite a high income and yet do not own a home. You have my sympathy then but your plight is hardly typical. While the richest investors do pay long term capital gains tax at the low 15% federal (plus California at 8% or so) rates, the folks at places like AIG who were paid bonuses pay at the full rates, which certainly exceeds 30%. I’d be interested to know what ‘loopholes’ and ‘tax shelters’ you believe are allowing the rich to avoid paying tax? I would like to understand that, since I am a CPA and am unaware of them.

            Also, Social Security is a pension plan where the contribution is capped because the benefits are also, so to take the cap off wouuld be illogical. It

            If the government eliminated ridiculous middle-class subsidies, such as the home mortgage interest deduction, there would be lower taxes for everyone.

          3. darms

            We do have a good income (~110K) & we do own a paid-for house but we don’t have kids. Sorry Bub, the wages paid to the hedge fund execs are counted as capital gains and are thus subject to a max of 15% federal tax rate. As far as whether or not they pay FICA, that I do not know. But someone taking home $100M/year pays no more in FICA than we do.

        3. Lee in Irvine

          I believe your statement is correct. But what does it really mean????? It means that banks are responsible for the money they loan, without GSE backstops, passed off leverage and hedged debt. But that wouldn’t be good for the bubble economy, would it? No!

          I wish we had a true FREE MARKET, one were banks are held to account for their decisions.

          1. Freetrader

            But Lee, the shareholders of the banks have been all but wiped out. Seems to me that in a general and highly imperfect way the banks are being held accountable for their decisions.

          2. Lee in Irvine

            I’m generalizing here … banking shareholders that were wiped out were lazy and/or naive investors. I don’t understand how anyone with an economic interest could have missed the future problems with the banks. The wise investors redirected their bets, when it became obvious that something was very wrong.

            I like the 3-6-3 rulebanks borrow at 3%, loan at 6%, then tee off at 3 o’clock. Real easy and simple. Stock performance should be based on underwriting performance, NOT ability to pool, hedge, then bullshit investors.

            But that’s jmho. It’s not sexy, but it’s effective.

          3. Freetrader

            I agree there was definitely a classic ‘agency’ problem when the bankers were incentivised to generate fees on the deals under the theory that the risk would be hived off on someone else. The buyers of the debt, in their turn, relied on the underwriting procedures of the bank which, as we all know now, we not very good or at least based on many wrong assumptions.

            Someday things will probably settle down to a point where unless you want to pay a userous interest rate, you’ll have to put 20% down, have good credit, good income, and extra money in the bank, or you won’t be getting a home loan. House prices should be more realistic and less volatile as a result.

  13. tlc8386

    The problem is the level of corruption and it’s so massive that to comprehend it and get new controls in is a daunting task.

    1. ceo’s taking out the majority of profits as in United Health care ceo paying himself over a billion in pay while ignoring 450 thousands in claims-

    These people had insurance until they dropped them and refused their claims this is why Universal health care sprung up.

    If insurance companies paid their bills there would not be such a need for over haul.

    And you see it in HEALTH South–another big fraud case–

    and the list goes on——Those at the top did this to our country their greed is huge.

    Just as in our housing crisis the over price of these homes during the bubble because of lack of lending standards and zero downpayment is why we are in the mess we are in.

    The herd mentality with flip this house caused many to become speculators and thus cheap money fueled the expansion and TIC made their fortune.

    GREED and or Corruption is the only word you need to know—-

    1. Dan in FL

      True, except you don’t hear people wanting to socialize the entire housing market over the fraud.

      1. AZDavidPhx

        The housing market is socialized. Just look at purpose of Fannie and Freddie. Of course that kind of Socialism is cool because the elite profit from it. I call it “limited Socialism” where limited implies that only the elite get to benefit from the Socialism and the rest of us do not. The flag waving, USA Chanting, Free-Marketers have no problem with this kind of Socialism. It’s only when Socialist systems are proposed that do not generate money for them do they cry Socialism.

        1. avobserver

          There is no doubt the housing market is socialized. The biggest problem with socialism in general is the way it distorts incentives. If you socialize losses you create a casino economy like ours; If you socialize gains you take away people’s incentive to be productive, the former Soviet Union, China before 1980, etc.

          I would call the system we have “selective socialism” – socialistic policies get dished out in an ad hoc fashion to cater for the special political needs at a given historical moment, whether it be to provide elites and powerful interest groups with covert stop-loss protection at one time, or push for progressive social agenda at another time. The unadulterated free market capitalism doctrines our policy makers keep peddling look more like the emperor’s new clothe…. Or is that just a ruse to cover up the fact that our government no longer operates with a set of clear principles?

          1. AZDavidPhx

            It’s the reason that I cannot understand why anybody even bothers to invoke the word “Socialism” anymore as a weapon to win arguments. That pool has been pissed in so many times that calling something “Socialist” nowadays just doesn’t pack the same punch that it used to. The propagandists are going to have to come up with a new word to scare people.

            I must say, as someone who grew up hearing about how awesome Capitalism is compared to Socialism – I must say, we sure seem to have a lot of this evil Socialism in our Capitalist system.

            Of course, we wave flags and pretend. We tell the masses that we really do have a Capitalist system; relying on the fact most people are too lazy to bother lifting up the covers and seeing for themselves.

          2. Dan in FL

            We have a socialized banking system, but we do not have (yet) a socialized housing system.

            The government has not yet started declaring who can live in which home. There is at least some free market to the purchasing of home.

  14. Art Student in Atlanta


    I just looked at the link to the listing you posted. The listing was just recended.

    This happened on another property you featured.

    Are real estate agents removing the listing when you feature them?

    1. IrvineRenter

      Sometimes I write them a few days in advance, and they go off the market between the date I write the post and the day it appears.

    2. Dan in FL

      He won’t say it, so I will…yes, properties that get profiled here get taken down from redfin by the sellers/realtors to avoid some “bad” press.

      1. Property Owner

        I did not remove my property when it was profiled. 🙂
        I was initially surprised it made it on but then was very interested to see the discussion about it.

  15. occdude

    Ithought you were onto something when you commented on how credit influences society at large.

    Credit buttresses the true cost of things, you can observe the difference between peeling off hard earned dollar bills versus whipping out the painless credit card and its effects on your behavior. You tend to think very hard about what you buy when its linked directly to your earning ability and tend to get sloppy when easy money is literally thrown at you.

    I believe that societies values have been degraded because credit has distorted what is valuable and what is not. Relativistic statements like “everything is a matter of opinion” puts the mind to sleep trying to figure out solutions to problems and relegates people (and economics) to believing that “animal spirits” and peoples opinions are whats responsible for how the world works. The economies in the toilet because credit inflated faster than peoples ability to pay it back. This is not a matter of perspective, but the fundamental limitation that nature puts on mankinds infinite desires.

    Anybody erroneously blaming free market economics for this dilema has to ask the question, what without the government, would the free market want to do now? If you answered “kick the crap out of a few bankers” you’d be right. If the government would get out of the way, the smart people could take over the assets of the dummies for pennies on the dollar, and you could rebuild this system with the smart guys in charge.

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