IHB News 5-1-2010

I enjoy looking at Shady Canyon properties on the weekend. They are very beautiful homes. It's even more entertaining when you see a $650,000 loss….

Irvine Home Address … 59 GRANDVIEW Irvine, CA 92603

Resale Home Price …… $2,999,000


You always wanted a lover

I only wanted a job

I've always worked for my living

How am I gonna get through?

How am I gonna get through?

I come here looking for money

(Got to have it)

And end up leaving with love, oh, oh

Now you left me with nothing

(Can't take that)

How am I gonna get through?

How am I gonna get through?

Pet Shop Boys — What Have I Done To Deserve This?

The Writer's Corner

The posts this week left me feeling a bit uneasy. I am afraid I have unleashed a financial weapon of mass destruction. I was both amused and disturbed when I reasoned through the problem and figured out what I had done.

I am of the opinion that once the substance of the post, How Hedge Funds Could Crush the Banking Cartel and Keep Original Buyers in Foreclosures, gets around the net, strategic default is going to come to the forefront of the national problems of lending and the housing market. I am not alone.

I have been contacted by a few readers and confidants more knowledgeable in banking and finance than me, and they have expressed their concerns over this idea. Not because it won't work, but because it will.

I didn't set out with the goal to discover a way to short real estate and crush the banks. I was merely exploring options for finding good renters on Inland Empire properties. Ideally, the portfolio manager wants a renter who feels like they own the place so they will take care of it and never leave. The former owner is a natural rental candidate. Even after considering the former owner, I didn't fully realize what would happen until I asked myself, "what would make an owner pay more in rent and stay on longer?" The obvious answer was to give them the option to repurchase their home later once their credit improved. When the purchase option came to me, I saw the short trade and the huge incentive to walk away it creates. It frightened me.

The only thing really keeping underwater home owners from defaulting in large numbers is the belief that they will need to leave the property. Once borrowers believe they can stay in their homes and have their housing costs reduced to rental rates, it's over. They will all walk.

If a big money player began doing this on a big scale, and there is no reason it couldn't be scaled up nationally, it will crush the banks, the housing market, and in the short term, the national economy. Personally, I think it would be a great thing for the long-term prosperity of the country because the excessive debt serves no one, but short term, much pain will be involved.

I'm not quite sure what to do with this idea. Perhaps I should do nothing. Perhaps I think it is more dangerous than it really is. I don't know. I feel a bit like Robert Oppenheimer or Alfred Nobel, both of whom did create weapons of mass destruction and lived to regret it.

The thing is, if I were operating a fund in Riverside County buying properties, I would be doing this. My fiduciary responsibility to the fund would demand it. It would be irresponsible to turn away a good renter who would treat the property well and pay more for it. It is quite an interesting set of circumstances.

What concerns me the most is the pressure this will put on banks for principal reductions. Principal reduction without foreclosure is the worst of both worlds — it rewards HELOC abusing squatters without doing much to lower prices. It would be less expensive for the banks than having the Cartel Crusher convince everyone to default because they can control the damage and prices will remain higher with fewer sales, the current status quo.

Turning Cartel Crusher into Family Home Savior

It was fun writing about the Cartel Crusher from the point of view of anger toward the banks, but the Cartel Crusher will be worshiped as a godsend by loan owners in default. Cartel Crusher will keep more owners in their homes than any government program or bank loan modification program. It is true redemption for hopeless borrowers. I may write a post for next week renaming the Cartel Crusher and portraying it as something soft and fuzzy and a little messianic. Whatever its called, loan owners are going to love it.

I'm not really that angry

I want to share a little secret. I laugh at my own material. My wife thinks I am goofy as I sit at my computer and break down laughing. My favorite sequence from last week sounds very angry — with a little help from Arnold Schwarzenegger — but every time I read it, I burst out laughing:

What is best in life?

To crush the banks, see them driven into oblivion, and to hear the lamentation of their bondholders.

And although Monday seems like ages ago, I also enjoyed this cartoon:

It is difficult to get dialogue that matches the people in the pictures. I'm never quite sure if others see the same personalities I do, or if I capture the essence I seek. My best effort of the week was inspired by Soylent Green Is People. It took me several iterations to get the dialogue right and to sequence it to be easy to follow.

Housing Bubble News from Patrick.net

Housing Recovery Hoorah! Or Is It a Decline? (housingwatch.com)

Housing Rebound at Least 3 Years Away (businessweek.com)

Not all is well on the housing front (mybudget360.com)

Laguna foreclosures jump 66.7% over year (lagunahomes.freedomblogging.com)

Four of nation's top 10 foreclosure cities in CA Central Valley (centralvalleybusinesstimes.com)

Tustin base project called worthless bc of falling land prices (lansner.freedomblogging.com)

Redmond, WA Condo Association Votes to Mass Default (Mish)

South Florida foreclosures way up in first quarter (miamiherald.com)

W Hotel's developer says it is bankrupt (boston.com)

Realtor: What is so wrong with renting? (realtytimes.com)

For Many Horse Breeders, a Losing Bet in Kentucky (nytimes.com)

Hedge Funds Could Crush Bank Cartel, Keep Buyers in Foreclosures (irvinehousingblog.com)

Provision would break up nine biggest banks (marketwatch.com)

Goldman looking to settle SEC fraud case (nypost.com)

Gosh, didn't we learn all of this in 1933? (bayarearealestatetrends.com)

Housing Bubble Didn't Faze Irrational Housing Thoughts (theatlantic.com)

Australian bubble still in full force despite rate increase (money.ninemsn.com.au)

Pandora's box of lending toxics (theautomaticearth.blogspot.com)

Care to donate money to the US government? (pay.gov)

"Existing house on lot is older and has no inherent value." (patrick.net)

South Florida house prices drop (miamiherald.com)

FL Housing prices: no bottom in sight (wap.myfoxtampabay.com)

Is Strategic Default a "Menace"? (city-journal.org)

New Tahoe Ritz-Carlton hotel in default (rgj.com)

Santa Monica rent vs buy (doctorhousingbubble.com)

NJ/NY Area house prices fall 4.1 percent (northjersey.com)

U.S. Households Lost $100,000 From Crisis (bloomberg.com)

Bernanke Says Budget Gap Might Raise Interest Rates (bloomberg.com)

Lost in the market mayhem, the Fed was meeting (latimesblogs.latimes.com)

The Fed: Bubble makers (network.nationalpost.com)

The 13 Bankers Who Control Washington (dailybail.com)

Goldman Sachs' Fabulous Fab's Testimony Body Language (geldpress.com)

Senator tells Goldman executives they had conflict' with client's interests (kansascity.com)

Chicago renters could get security deposits back in foreclosures (chicagobreakingnews.com)

How Senate candidates would fix Wall Street, or not (lasvegassun.com)

Counties can tax American Indian land, but cannot seize it for nonpayment (wktv.com)

Bush Family Buys Hideaway In Marijuana-growing Area Of Paraguay (trufax.org)

Paraguayan President Sends 1,000 Troops To Area Where Bush Bought Land (latindispatch.com)

Mass. foreclosure activity is up sharply (boston.com)

FL houseowners associations recoup losses via fees on new buyers (orlandosentinel.com)

Palm Beach, FL prop values fall 12 percent (palmbeachpost.com)

Dodging Social Pressures, Renters Enjoy Flexibility (npr.org)

House Tax Credit a Costly Failure (calculatedriskblog.com)

Federal government is lending $9 of every $10 of new mortgages (newobservations.net)

Houses lost, but some 2nd-mortgage debts remain (sfgate.com)

Buyers have no moral duty to lenders (azcentral.com)

Goldman execs deny inflating housing bubble (tvnz.co.nz)

Goldman Sachs Lawyer Advises Long Pauses, Rambling Answers (abajournal.com)

Sen. Levin Gets Testy With Goldman Executive — "That Was One Shitty Deal" (dailybail.com)

U.S. senators accuse Goldman of betting against clients (torontosun.com)

Goldman grilled over mortgage business (financialpost.com)

Blankfein, Pecora and the blinding limelight (theautomaticearth.blogspot.com)

U.S. Stocks Set to Fall on Deepening Unemployment (bloomberg.com)

China: Red hot real estate (economist.com)

Real Estate Sales Girl In China Says "You should buy two" (timiacono.com)

Australia's Housing Shambles (scoop.co.nz)

Taibbi: Lunatics Who Made a Religion Out of Greed and Wrecked Economy (alternet.org)

The Economic Elite Vs. The People of the United States of America (ampedstatus.com)

Is It Really a Good Time to Buy a House? (washingtonindependent.com)

Look out below: U.S. pain not done yet (calgaryherald.com)

Texas has rational law limiting equity withdrawl to 80% of value (slate.com)

Fannie Encourages Strategic Default by Reducing Punishment Time for New Loan (irvinehousingblog.com)

CDO's For Dummies (zerohedge.com)

Fitch Downgrades Resource Real Estate Funding CDO 2007-1 (benzinga.com)

Berating the Raters (dealbook.blogs.nytimes.com)

Goldman's "Fabulous" Fab's conflicted love letters (finance.yahoo.com)

Canada's Bubbilicious Mortgage Deals Continue (seekingalpha.com)

China's real estate fever is rising (latimes.com)

China Stocks In Biggest Drop Of The Year As Asia Slumps (marketwatch.com)

How much do average Americans make after the Great Recession? (mybudget360.com)

Recessions, Housing Bubbles & the Real Unemployment Rate (trendlines.ca)

How to screw buyers with deceptive pricing (inman.com)

Government and media are largely controlled by corporate dollars (patrick.net)

Banks Control Washington DC (old but good) (theatlantic.com)

Tsunami of Red Ink – Global Look at National Debt and Who Owns US Debt (Mish)

The national debt and Washington's deficit of will (washingtonpost.com)

College Graduates' Debt Load May Outstrip Ability to Repay (bloomberg.com)

Unofficial Titusville, FL Tourism video (youtube.com)

It would take 103 Months (8.5 Years) to Clear Housing Inventory (blogs.wsj.com)

Where is the real, organic demand for housing? (novakeo.com)

Chicago back to organic house price slide (csmonitor.com)

Why I'm Waiting Until After 2012 To Buy A House (millionairemommynextdoor.com)

Facing foreclosure at $5 million and up (mortgage.freedomblogging.com)

FHFA House Price Index Declines in February (calculatedriskblog.com)

Credit Rating Firms Failed to See Rising Risk in Mortgage Products (ecreditdaily.com)

Former Employees Criticize Culture of Rating Firms (nytimes.com)

The Consensus on Big Banks Starts To Move (baselinescenario.com)

Jimmy Stewart is dead: Break up the banks (theautomaticearth.blogspot.com)

Obama's push for financial reform (latimes.com)

America must face up to the dangers of derivatives (georgesoros.com)

Reforming Housing Finance (nytimes.com)

E-mails show Goldman boasting as meltdown unfolds (news.yahoo.com)

Funny how the SEC porn story released just after Goldman investigation (latimes.com)

Chinas House Prices to Fall 20% This Year (businessweek.com)

Learning How to Fight the Debt Collector (nytimes.com)

Why is housing so expensive in Silicon Valley? (old but interesting) (PDF – scu.edu)

Does any real wealth exist?

It wasn't many years ago that when you saw a $3,000,000 home, you knew the owner probably owned it outright or with a minimal mortgage. Mortgages over $1,000,000 were not common because (1) borrowers didn't want them because they can't deduct all the interest, and (2) banks didn't want to underwrite them because so few borrowers qualify. Well, we all know what happened to lending standards, so now we have many, many high-end properties with enormous loans. A classic example of bubble inflation.

The high end is not stable. There is too much debt and too many pretenders that invaded these wealthy neighborhoods and drove up prices. Now they are squatting because the banks can't afford the write downs. From what I observe, the upper middle class is obtaining the greatest benefit from the amend-pretend-extend dance.

The loan owners occupying today's featured property borrowed $3,199,000 of their $3,474,500 purchase price. That is only $275,500 down. They could have made that selling a condo in 2006. So it isn't like they ported a great deal of equity into the property. No, they pretended and borrowed it.

To make matters worse, Washington Mutual loaned them $3,350,000 in a refi on 10/31/2007. WTF were they thinking? In the end, these borrowers had only $125,500 of their own money in a $3,474,500 property.

When people are successful and "arrive" they are supposed to do it with cash. Californian's arrive early with borrowed prosperity and fake it until they either make it or experience the The Unceremonious Fall from Entitlement.

The success of pretenders is amazing. Other people really believe California is a land of endless wealth. It is all an illusion. Did you know that almost 80% of the BMWs and Mercedes on the road are leased? That is pretending.

Irvine Home Address … 59 GRANDVIEW Irvine, CA 92603

Resale Home Price … $2,999,000

Home Purchase Price … $3,474,500

Home Purchase Date …. 8/31/2006

Net Gain (Loss) ………. $(655,440)

Percent Change ………. -13.7%

Annual Appreciation … -3.9%

Cost of Ownership


$2,999,000 ………. Asking Price

$599,800 ………. 20% Down Conventional

5.16% …………… Mortgage Interest Rate

$2,399,200 ………. 30-Year Mortgage

$632,333 ………. Income Requirement

$13,115 ………. Monthly Mortgage Payment

$2599 ………. Property Tax

$600 ………. Special Taxes and Levies (Mello Roos)

$250 ………. Homeowners Insurance

$410 ………. Homeowners Association Fees


$16,974 ………. Monthly Cash Outlays

-$1932 ………. Tax Savings (% of Interest and Property Tax)

-$2798 ………. Equity Hidden in Payment

$1220 ………. Lost Income to Down Payment (net of taxes)

$375 ………. Maintenance and Replacement Reserves


$13,838 ………. Monthly Cost of Ownership

Cash Acquisition Demands


$29,990 ………. Furnishing and Move In @1%

$29,990 ………. Closing Costs @1%

$23,992 ………… Interest Points @1% of Loan

$599,800 ………. Down Payment


$683,772 ………. Total Cash Costs

$212,100 ………… Emergency Cash Reserves


$895,872 ………. Total Savings Needed

Property Details for 59 GRANDVIEW Irvine, CA 92603


Beds: 6

Baths: 6 full 1 part baths

Home size: 5,562 sq ft

($539 / sq ft)

Lot Size: 12,471 sq ft

Year Built: 2006

Days on Market: 114

MLS Number: S600991

Property Type: Single Family, Residential

Community: Turtle Ridge

Tract: Lacm


According to the listing agent, this listing may be a pre-foreclosure or short sale.

Views! Views!! Views!!! One of the Most Spectacular View Homes in the Summit at Turtle Ridge! Charming Indoor and Outdoor Spaces Created around a Central Courtyard. Open Air Dining Loggia with Fireplace Provides a Glimpse of this Home's Brilliant use of Outdoor Space. Gourmet Kitchen and Pantry with Top-of-the-Line Appliances. Luxurious Main Floor Master Bedroom and Bath with Spectacular Views. Great Room with Fireplace, Opens to a Beautifully Landscaped Backyard with Gorgeous Views. Extra Large Bonus Room leads to the Central Court Yard. The Casita, a Completely Separate Living Suite with a Fireplace, is Generously Sized, creating a Private Oasis. Super Size Laundry Room, Four Car Garage, Travertine Floors, Upgraded Carpet, Granite Counters, and Many More Upgrades, add to the Luxury and Comfort of this Home. Upstairs includes Bonus Room, Two Bedrooms, each with Views and Full Baths, and a Separate Living Room with Kitchenette and Private Access to the Outside.

Why are so many of those words capitalized?

Irvine does have some beautiful properties.

22 thoughts on “IHB News 5-1-2010

  1. ElvisInMiami

    If the hedge fund is a good idea why not let the government run it? Sort of a way for them to dig out of debt while saving the housing situation. IHB for prez:)

    Seriously, a couple of years ago (mid2007) when the first round of help for foreclosures were being discussed, my first thought was:
    “why not just let the homeowners rent their house and that keeps it out of foreclosure”

    I never put the sell it back to them later idea there, but most people argued that homeowners turned renters would feel that they are not making the money they thought so would either trash the place or be poor renters.

    Seriously how can you trust somebody to rent (when it takes 6+ months to kick them out) if they have a history of stopping payment?

    In addition, the change to renter (which I personally have done after selling my house a couple years ago due to relocation) could allow for greater location flexibility (I want to live closer to the city or my job) and finding a better deal for their money.

    If you had a deal to pay $3K/month for you $1.5M (purchase price, now work ~$1M) it is too good to be true. Problem is you could find similar houses for the same price and wouldn’t be as tied to your current home.

  2. Alan

    There are plenty of examples to choose from, where a company/industry has the fiduciary duty to make profits, not worry about who is getting burned by it:

    It is the fiduciary duty of the health insurance companies to make the most money that they can – deny coverage to unhealthy people or those with the greatest risk of problems, dispute claims as long as possible, etc. are tools to get there.

    The banks are out there to make money for themselves, not to get 15% returns for pension funds.

    If your hedge fund idea works by chewing up the bad decisions of the banks, let them enjoy the feeling.

    1. Contango

      The other thing to consider is the total amount of capital required to obtain a significant percentage of foreclosures. If there are 100 million US households, 10% are distressed and the average value is $270,000, there is a total of $4 trillion of hedge fund capital required to buy out the defaulting housing debt. These numbers might be conservative as strategic defaults may increase like IR said.

      The total net worth of US households in 2009 is $55 trillion. So this means, almost 10% of all US wealth would have to go to Crusher LLC to completely buy out the housing market. As IR pointed out only a limited few actually invest in hedge funds which makes 4 trillion in capital even harder to come by. I know these numbers are rough, but the idea is to show the shear volume of capital required to completely buy out the housing market.

      IR I’m sure your idea will work to some extent, but I don’t think it will have the capital required to demolish the banks. However I hope it hurts them and as they still need to learn a painful lesson.

      I trust Wall Street like I trust the government; I have inherent trust the banking system will act in their own best interest. Your writing is extremely valuable and it’s thinkers like you who aren’t motivated by Wall Street bonuses and political forces that our society was once founded upon. I don’t think you need to need to be concerned about your “weapon of mass destruction” as the banks lost their moral obligation to society.

      1. IrvineRenter

        I shared a number of emails with Mish, and he made the same observation,

        “I agree with you that it is a good thing.
        Never said otherwise.

        It’s like a 1% solution with limited impact.”

        He is right, of course.

        I had lunch with a transaction attorney on Thursday who was intrigued by the idea. As we discussed the matter, we both noted that the market is so large that keeping this idea to myself isn’t necessary to have a successful fund. I could deploy a hundred million dollars and it wouldn’t make a dent in the problem. Maybe the coordinated efforts of funds with a hundred billion might have some impact, but Cartel Crusher LLC couldn’t do it alone. An entire cottage industry would need to spring up to tackle this problem.

        1. Alan

          I wonder what percentage of the properties in distress are 2nd, 3rd, etc. investment properties of speculators and flippers? They never have and never intend to live there, in spite of what the loan papers may say. Of course there may already be a renter, but who would not care to pay above market rates to stay on.

          I do think as well that some number of people stuck in underwater mortgages would move for various reasons, if given the chance to get out.

          So Cartel Crusher would not actually be going after the entire underwater market, though that might not be any comfort to the banks.

  3. theyenguy

    Joy Shenn reports in an April 29 Bloomberg article, that decisions by homeowners to walk away from mortgages they can afford, are accounting for more defaults, according to Morgan Stanley. About 12% of all mortgage defaults in February were strategic, up from about 4% in the middle of 2007, analysts led by Vishwanath Tirupattur wrote.

    I enjoyed the Couple With Photo captioned: We bought so much stuff had great vacations, cosmetic surgery, and the house paid for it all … I would have added in there … boob job … but that may be too-much, like in bad taste, but it would be the truth.

    You relate: When the purchase option came to me, I saw the short trade and the huge incentive to walk away it creates. It frightened me. What concerns me the most is the pressure this will put on banks for principal reductions. Principal reduction without foreclosure is the worst of both worlds — it rewards HELOC abusing squatters without doing much to lower prices. It would be less expensive for the banks than having the Cartel Crusher convince everyone to default because they can control the damage and prices will remain higher with fewer sales, the current status quo.

    My response is that the current status quo will not be maintained. Solyent Green Is People is coming very soon, most likely October, November or December of this year, due to liquidity evaporation, when equity and bond values collapse and interest rates literally skyrocket, just like they did in Greece. People will not be able to obtain access either money market accounts or brokerge acounts, because of liquidity issues, real estate values will plummet, and a hyper-inflation rush will come to currencies and consumer goods.

    Doug Noland in Safehaven.com article relates the landmark date of Tuesday April 27, 2010, that being the day the dislocation unfolded in the European Credit default swap market, which portends serious issues for sovereign debt markets globally. Mr Noland relates: There’s hope that European policymakers and the IMF can come up this weekend with a credible plan for Greek aid. I would tend to believe that the “genie is out the bottle” and that global markets are in the early stage of adjusting to new uncertainties and risk realities. Many that have planned on using derivatives markets to hedge future market risks may begin to reevaluate their approach to risk taking and management.

    I believe even if the asset bust and hyperinflaiton rage were not to occur, the economy will tank from here on out, as stocks and bonds, fueled by yen carry trade investing, investment bank purchases, and the Federal Reserve TARP facility have ended, now that Goldman Sachs is being investigated for criminal wrong doing. We are going into a double dip recession, as the homeowners tax credit has expired, and higher consumer spending in Q1 still lacks vigor, the consumers will not bounce back with sustained strength; there is not enough underlying economic strength to catapult economic growth beyond 3.2 percent.

    For individuals, wealth and liquidity, can only come by physical ownership of gold coins, and gold at BullionVault.com, and by renting a residence rather than buying one; strategic default is the way of the future.

    1. Inflation is on the way

      I think inflation is on the way but things won’t get as bad you relate. How much inflation and for how long is the question. We may have a 10% annual inflation (arbitrary estimate) for 2 or 3 years which will shrink the real value of the U.S. sovereign (government) debt and also get banks’ debts and assets into balance, and then try to have soft landing back to normal inflationary environment of 3% or so per annum, thereafter. I think the Federal Reserve Bank will need to keep rates low to achieve that, and low rates will also serve the purpose of keeping home prices flat or high. It’s a win-win situation as far as the Federal Reserve Bank is concerned.

      Needless to say, the above scenario will shrink the wealth of cash savers as well.


  4. tonyE

    (1) Goldman Sachs Krusher LLC.

    I figure that Goldman Sachs is already on the ball on this. Not only are they likely shorting their own stock but they likely also have access to a billion bucks with which to start GS Krusher Inc… in this case, I hope they do sell a mutual fund on it because I want in.

    (2) A mortgage over a MIL.

    Not so long ago (couple of years) the LA Times had an RE article where smug real estate agents were proclaiming that “10 MIL” were the new “1 MIL” because 1 MIL was sooo commonplace.

    Now, I just can’t wrap my head around that. Never had. What would the payment be on a 2MIL mortgage. Even on a teaser rate that would have to be 10K a month? That’s insane. I mean, even if I made 500K a year I would not want to pay so much in mortgage payments. Given our tax laws it’s a counterproductive way of using your money.

    OTOH… maybe these fools were really gaming the market… drive up the prices, stop paying, save money and then invest in GS Krusher LLC…

    (3) TRidge BBQ anyone?

    Since these morons are squatting and we’re gonna pay for it, I figure us peons own the place.

    That’s a nice BBQ out by the “casita”. So I say we load up on fine prime steaks and wine from Costco and we march on up to this fine chateau and help ourselves to OUR fine BBQ facilities.

    I mean, if they call the cops, we’ll tell the cops about the stunt these people are pulling and we invite them to some filet topped with stilton cheese and brown sauce. Offer them sparkling water with a twist of lime.. since they can’t drink while in duty.

    Bring some cake so the squatters can eat their own cake, not our steaks.

  5. newbie2008

    The “banks” are officially owned by the shareholders, but the banksters run the banks and get first feeding at the trough. If the banks win, the shareholders are rewarded but not before the banksters get their majority cut. If the bank loses, the shareholders are left holding the bag, but the banksters are rewarded with retention bonus and resetting of options for another near guarnteed win for the banksters.

    The hedge funds you describled will be owned by the banksters of GS and other banks, the majority ownership will not be the shareholders of GS. It will only become shareholders of the banks when the profits have been squeezed out and the properties are a liablity instead of an asset. At that time the properites and/or hedge funds will allow investment by pension funds. Just another round with a different name or business model. You can’t pay people 10 million and expect real profits for the shareholders and healthy economy. There’s just too much incentive for manipulating the books and making bubbles in the stock market.

    1. GS Stock

      I would not buy GS stock regarless of their legal issues. If I’m not mistaken, when they had windfall profits a few months ago, they made sure much of it went to GS employees, management…etc. If one was a shareholder, he/she did not participate in sharing the windfall. I guess this is similar to “privatize profit and publicise losses”.

      1. Alan

        Bankster bonuses come out of revenues. They tap into the money stream before such trivial details as profit or loss get worried about. Since there are always revenues, there are always bonuses. Shareholders of course are kind of stuck at the far end. Warren Buffett knew better than to buy common stock in GS.

        1. newbie2008

          You’re right, the banksters take the money off the top. Their brand of socialism (government ran industries), but technically it is fascism (corporate ran government). Either term, excessive welfare for the banksters.

  6. E

    I’m absolutely flabbergasted at the number of $3,000,000+ mortgages.

    How easy was it to get these mortgages?

    I’m reminded of the Hollywood HELOC abuse post where the long term owner (probably without sufficient income) was able to refinance to over 3 million.

    I guess if a strawberry picker could get a $700,000 loan, then someone making 100k could easily get a $3MM loan?

    WTF is right!

  7. Walter

    “Did you know that almost 80% of the BMWs and Mercedes on the road are leased?”

    I own my BMW outright. It has 97,000 miles, but I figure it has another 100,000 miles in it. Then I can buy another cash with what I have saved driving this one into the ground.

    1. E320

      Mine is a Mercedes E320 with 100,000 miles on it. It’s paid for as well. I figure I will drive it another 2 or 3 years more.

      1. newbie2008

        I sold my diesel MB with 150,000 miles (third care with only 2 drivers). The buyer expected at least 200,000 more miles for the little tank.
        I expect to run the other 2 into the ground. If you can pay cash for the cars, you likely can afford them.

  8. Freetrader

    You are become Death, the Destroyer of Worlds!

    (Oppenheimer’s A Bomb Bhagavad Gita reference)

  9. Chris

    “Did you know that almost 80% of the BMWs and Mercedes on the road are leased?”

    Where did you get this information IR?

  10. BigD

    “Did you know that almost 80% of the BMWs and Mercedes on the road are leased? That is pretending.”

    I laughed so hard at that, I farted…

    So TRUE, in SoCal.
    The best PLACE to be a PHONEY. 😉

Comments are closed.