What a Bargain

The schadenfruede we feel for knife catchers is different than the feelings we have toward rally buyers. These are the people keeping prices elevated and unaffordable, so compassion for their losses is in short supply.

As you might have guessed, today’s property is a failed knife catcher. I first profiled this property in 2007.

Asking Price: $600,000

Address: 28 Meadowgrass, Irvine, CA 92604

The Great Housing Bubble was recently reviewed by Inman News, a major online real estate news outlet. The PDF is here (InmanNewsGreatHousingBubbleBookReview.pdf)

I want to thank Patrick Duffy of The Housing Chronicles Blog for the review.

Boo Hoo — KT Tunstall

If I was a second too late
Or a moment too soon
Or an hour too long
Tell me baby would you wait a bit longer?
I wonder if you would
Or would you be long gone?

That could be the knife catcher song…

Schadenfreude comes in two flavors: there are the people who bought while prices were rallying because prices were rallying, and then there are the knife catchers who bought while prices were falling because they were getting a bargain. Today’s featured property is of the latter variety.

Why is there schadenfreude in watching knife catchers? There are a number of reasons:

Knife catchers drank the kool-aid. They bought because they worried about being priced out forever, and they believed prices will rise again after they purchased.

There were voices telling them not to buy (like the IHB). The sages forecasting a crash were dispensing data and analysis while prophets foreseeing a rally were reading rune stones. Divination based on data is more dependable.

Knife catchers believed they could pick a bottom, yet they know nothing about what determines real estate prices.

Knife catchers invested their own capital in their ignorance. Lenders were not giving out 100% financing to knife catchers.

For these reasons and others you might think of, schadenfreude has a different flavor after the market peak. You can expect to get a bigger taste as prices keep falling.

{book6}

Asking Price: $600,000

Income Requirement: $150,000

Downpayment Needed: $120,000

Monthly Equity Burn: $5,000

Purchase Price: $710,000

Purchase Date: 8/17/2007

Address: 28 Meadowgrass, Irvine, CA 92604

Beds:	3
Baths:	2
Sq. Ft.:	1,545
$/Sq. Ft.:	$388
Lot Size:	4,512 Sq. Ft.
Property Type:	Single Family Residence
Style:	Cape Cod
Year Built:	1977
Stories:	1
Area:	Woodbridge
County:	Orange
MLS#:	S567115
Source:	SoCalMLS
Status:	Active
On Redfin:	2 days

3 Bedroom/2 Bathroom, 1545 Sqft in a 4512 Lot Size Detached Single
Family Residence in a Nice Nighborhood in Woodbridge in Irvine.

With so few words, you would think they would all be spelled correctly. Nope… Nighborhood.

The photos in this profile are from the listing back in 2007. They are bright and lively and present the property well. Compare those to the current photographs.

28 Meadowgrass 1 28 Meadowgrass 2

Do you think this change in photography tells you something about the state-of-mind of the knife catcher or the realtor. I do.

What is particularly sad (or embarrassing depending on you
point-of-view) is how overpriced this property still is. Even with the
discount, at $388/SF, this property has a long way to fall.

Sales price history:

Date	Event	Price
Mar 13, 2009	Listed	$600,000
Jul 17, 2007	Sold	$710,000
Apr 29, 2005	Sold	$730,000
Apr 25, 1991	Sold	$269,000

This property was purchased from a long-term owner by our first bubble crash loser on 4/29/2005 for $730,000. The property was purchased by today’s knife catcher for $710,000 on 7/17/2007 for $710,000. What a bargain. They got 3% discount on a property that is going to fall over 40%.

The current owners used a $568,000 first mortgage, a $71,000 HELOC, and a $71,000 downpayment. Fortunately for them, they must know a friendly appraiser because a month later on 8/17/2007, they were able to obtain a HELOC for $179,000. This got back their downpayment, paid off the first HELOC, and allowed them to cash out $37,000. Does that smell fishy to you?

If this appraisal represents the peak value of $747,000, this property has declined $147,000 in value over the last 21 months. That is an monthly equity burn of $7,000. The lender is going to absorb that loss, plus they are not getting paid by the underwater borrowers, so the lender is going to lose plenty.

If this property sells for its asking price, and if a 6% commission is paid, the total loss to the lender will be $183,000.

{book7}

If I was a second too late
Or a moment too soon
Or an hour too long
Tell me baby would you wait a bit longer?
I wonder if you would
Or would you be long gone?
Would you be alone?
Would you be alone?

Oh and in the light of day it feels right
Comfortable to the bone, from head to toe
But come the evening when the shadows fall
Well I call your name, but it’s not the same
As having you here
As having you here
As knowing you’re near
As feeling you there
As knowing you care
As whispering in your ear
As my hand through your hair
As knowing you’re there

Oh and in the light of day it feels right
Comfortable to the bone, from head to toe
But come the evening when the shadows fall
Well I call your name, but it’s not the same
As having you here

Mmm…
It’s not the same
Mmm…

Boo Hoo — KT Tunstall

What Can The Federal Reserve Learn from the US Forest Service?

Sometimes important lessons can come from unusual locations. The experience of the US Forest Service has much to teach the Federal Reserve. Will they learn the lesson?

Our featured property is a three-bedroom property in Irvine for under $250,000. How the mighty have fallen…

46 Eagle Point Inside

Asking Price: $247,900

Address: 46 Eagle Point #25, Irvine, CA 92604

{book1}

Burning Down The House — Talking Heads

Hold tight wait till the party’s over
Hold tight were in for nasty weather
There has got to be a way
Burning down the house

Outwardly, the Federal Reserve and the US Forest Service seem to have little in common. The Federal Reserve manages our currency and banking system while the US Forest Service manages public lands in national forests and grasslands, which encompass 193 million acres, according to their website. Nevertheless, they both manage complex systems and the outcomes of their choices are commonly obscured for many years.

Our economy, which is the responsibility of the Federal Reserve, is a collection of interrelated individuals and entities whose behavior impact the system. These participants are also reacting to the system, and thereby they are impacted by it. Our forest ecosystem, which is the responsibility of the US Forest Service, is a collection of interrelated plants and animals that both impact the system and are impacted by it.

Both complex systems under management by these two agencies are unpredictable and difficult to manage effectively. Oftentimes the results of management practices are not fully realized until decades after policies are put in place. The similarities between the missions of these two agencies and the nature of the problems they face make them analogous. Lessons learned by one agency can often be extrapolated to the other, and given the long timeframes in their system’s lifecycles, it is important to review and learn these lessons when they are presented.

What Lesson Did the Forest Service Learn?

For years the US Forest Service was dominated by timber production interests. It was a classic example of regulatory capture. The US Forest Service’s primary objective, and thereby its land management policies, favored timber production. Forest Fires were seen as an obvious threat to timber production, so policies of fire suppression were absolute: put out all fires as quickly as possible, and do not let anything burn. This was forest service policy for several decades.

To its chagrin, the US Forest Service discovered its policy was flawed. By not allowing small fires to burn, leaf litter and other combustible natural growth accumulated. In unmanaged forests, periodic fires eliminate this source of fire fuel. In managed forests this accumulation of fuel fosters fires that get out of control (think Yellowstone).

To combat the accumulation of fire fuel, the US Forest Service changed its policies. Now, small fires in the understory are permitted to burn. By eliminating the excess fuel, the more dangerous and costly canopy fires are avoided. A few trees may get damaged in the small fires, but the forest survives.

What Can The Federal Reserve Learn from the Forest Service?

The interests of the timber industry to the US Forest Service are similar to the interests of Wall Street and other financial market participants to the Federal Reserve. The policy of the Federal Reserve is to stimulate the economy—to put out the fire with lower interest rates—every time there is an economic slowdown.

This policy became known as the “Greenspan Put” during the 20 years of Alan Greenspan’s tenure as Federal Reserve Chairman. This policy pleases business interests, and for many decades, it can look like a sensible policy.

There is a major problem with the “Greenspan Put” policy of stimulating the economy through artificially lowering interest rates. Just like the accumulation of fire fuel on the forest floor, our economy accumulates unsound business plans, Ponzi Scheme financing arrangements, idiotic investment strategies, and behavioral moral hazards. Recessions are supposed to be the small fires that destroy these destructive agents, but when the Federal Reserve manipulates interest rates and stimulates the economy, recessions are not allowed to serve their purpose, and the economic problems pile up.

Many have written that there is an 80-year cycle of economic activity that results in depression-like conditions. They speak of this as if it were a law of nature like the orbital period of Pluto. This is nonsense. The cycle of depressions—if we are to believe there is such a thing—is merely a calendar coincidence. There is no identifiable cause and effect between the passage of 80 years and the cause of an economic catastrophe.

It is my opinion that our problems are caused, albeit indirectly, by the manipulation of our financial system by the Federal Reserve. When our entire financial system gets out of control due to the build-up of unsound business practices—an accumulation caused by Federal Reserve policy—there is a tipping point where monetary policy cannot save the day. The fire burns down the financial house.

One of the functions of the Federal Reserve is to maintain stable prices and promote economic growth. It was formed out of a perceived need to smooth out the extreme economic cycles of boom and bust of the 19th century. Like it or not, it is probably not going away (although many would like it to.) The question they are going to have to wrestle with is how to smooth out the ups and downs without creating the conditions that send the economy careening out of control like it is now. I am not qualified to provide those answers, but in their quest for solutions, I hope the brain trust at the Federal Reserve looks at how the US Forest Service manages a similar problem. They may find guidance in this unlikely location.

{book3}

BTW, did any of you watch the interview with Ben Bernanke on 60 Minutes last night? (part 2 is here) It was very interesting.

I watch the new show Lie To Me on Fox too much. When I watched Bernanke talking, I kept seeing this nervous twitch in his face and lips. Maybe he was nervous because he was on 60 Minutes, but he is in the public eye, so he has been on camera before. Rather than fill me with confidence, it really frightened me to see our Federal Reserve Chairman so edgy when discussing our economy.

Today’s featured property is a crappy condo, but at $228/SF, it is the least expensive way to own a 3 bedroom unit in Woodbridge.

46 Eagle Point Inside

Asking Price: $247,900

Income Requirement: $61,975

Downpayment Needed: $49,580

Monthly Equity Burn: $2,065

Purchase Price: $402,000

Purchase Date: 9/30/2005

Address: 46 Eagle Point #25, Irvine, CA 92604

Beds:	3
Baths:	2
Sq. Ft.:	1,088
$/Sq. Ft.:	$228
Lot Size:	–
Property Type:	Condominium
Style:	Contemporary
Year Built:	1978
Stories:	1
Floor:	1
Area:	Woodbridge
County:	Orange
MLS#:	S567144
Source:	SoCalMLS
Status:	Active
On Redfin:	1 day
New Listing (24 hours) Fixer-upper

3 bedroom, 1 1/4 bath fixer upper. This end unit condo features newer
appliances, large patio and inside laundry hookups. Located in the
master planned community of Woodbridge you can take advantage of the 22
pools, 24 tennis courts, and 19 park areas or relax by one of the 2
lakes and lagoons. Close to shopping, restaurants, and excellent
schools.

Check out the shadow on the inside photo. Did you see the biceps on the realtor? That dude is pumped up.

Notice this unit is not being pumped as light and bright…

This unit has all the appeal of owning your own apartment–which is none.

This property is a good example of how the lenders are getting clobbered. The dollar amounts involved are small because this unit is low end; however, the magnitude of the loss is tremendous. It is foreshadowing losses to come on nicer properties.

The property was purchased on 9/30/2005 for $402,000. The owner used a $321,600 first mortgage, a $80,400 second mortgage, and a $0 downpayment. Now that values have cratered, it is not surprising that she walked.

When the lender went to the foreclosure auction, they only bid $239,250, which is 25% off the amount of the first mortgage, and they still got the property. Nobody wanted it. The auction price is 40% off, and the current asking price is 38% off the original purchase price. We haven’t seen many 40% discounts in Irvine to date. We will see more.

{book2}

Watch out
You might get what you’re after
Cool babies
Strange but not a stranger
Im an ordinary guy
Burning down the house

Hold tight wait till the party’s over
Hold tight were in for nasty weather
There has got to be a way
Burning down the house

Burning Down The House — Talking Heads

Open Thread 3-14-2009

I would like to share with you some interesting blog posts I read this week at The Housing Chronicles Blog, and at the site of local realtor, Shevy Akason, who has been profiling OC properties at or below rental parity.

Home builders now competing mostly against foreclosures

Should economists be ranked on their correct calls?

“Dr. Doom” Roubini says ‘break every mortgage contract.’

Shevy Akason Property profiles:

Lake Elsinore Investment

Deal of the Week

The Bailout Rap

I am surprised none of the proposed or passed bailouts included a
round of “stimulus” checks. I thought this would be a political
no-brainer. Who is going to complain about getting money from the
government?

One of the results of the last round of stimulus checks was that
people saved the money and our savings rate went up. It isn’t what they
tried to accomplish, but increasing the savings rate is a necessary
component of getting people to spend money again. I think failing to
provide a “Savings Stumulus” is a mistake. Besides, I would like to get
some free money…

{book7}

I received my copy of HousingWire Magazine this week. They ran a review of The Great Housing Bubble. Unfortunately, it is not online.

I want to thank Paul Jackson publicly for the review. It is greatly appreciated.

There is one more thing I want to share with you…

My Writer’s Journey

When I began writing for the Irvine Housing Blog two years ago, I did not envision I would still be writing today. I had something to express, and I imagined I would lose interest after I expressed it. I was wrong. The book that followed, The Great Housing Bubble, was an afterthought evoked when I had nearly written a book in the sum of my analysis posts. I never set out to write on a daily basis or become an author. But here I am; I do write every day, and I am an author.

I did not enjoy studying English or Literature in school. I suffered through those classes, and I did not learn the mechanics of grammar. I was fortunate to have grown up in a household where English is spoken well, so I have a natural understanding of the language, nevertheless my technical skills are lacking. For the last two years you, my readers, have had to dig through my carelessly constructed sentences, incorrect punctuation, and recurring written muddle to see the ideas buried beneath. I hope to change that.

My weakness as a writer, particularly as a grammarian, often causes me to change the presentation of my ideas because I am unsure of the correct way to construct and punctuate the sentence. My vague vocabulary often compels me to use the imprecise and expedient word when the exact word that expresses my idea exists, but I am too ignorant to identify it and too lazy to locate it. I don’t use big words to impress, but sometimes an esoteric term is an excellent one.

My weakness as a speller is perplexing. I went astray in spelling rules as a pre-teen, and I have been a shameful speller ever since. I never imagined myself ridiculing other people for their erroneous spelling; although, I also never imagined I would see peddlers getting paid a King’s ransom put their dreadful spelling on public display. I can read and use a spell checker; so should they.

Despite these weaknesses, readers stop by. There are between 3,000 and 3,500 unique daily visitors to the Irvine Housing Blog. If that many onlookers feel the thoughts shrouded in my limited writing abilities are worth unveiling, then I owe it to them to improve my skills. Plus, I am eager to write another book. I have been incubating my ideas for a book on House Spenders for months now. Between daily writing for the IHB and ambitious book projects, it is apparent to me I need to learn how to write.

I am an advocate of lifelong learning. I reached a point in life when good grades no longer came easily and excuses no longer soothed my ego; I found the motivation to learn how to learn. When I want to master a new subject, I take massive action: I assemble the available data, I immerse myself in the topic, I study in bursts, and I review frequently. This process burns the information deeply into my mind and allows time for the associations to form with other topics. I find this process broadens my knowledge and improves my recall. I have learned much about a number of subjects using this technique.

My favorite tool for accelerated learning is mind mapping, and I use a program called MindManager. Mind mapping allows you to freely associate concepts and organize them into coherent patterns. For problem solving (which is the essence of non-fiction writing), it is much faster and more efficient than writing by hand or outlining in a word processor. Armed with my tools, supplied with abundant data, and determined to become a better writer, I immersed myself in grammar, vocabulary, spelling, style and usage.

Words are coming alive for me. When I see a sentence, I see subjects and predicates, phrases and clauses, and various grammatical nuances that previously escaped my notice. I know to judiciously split my infinitives and not to dangle my participles (Dangling Participles sounds like a title for a gay porn flick or a Chippendale’s dance number, doesn’t it?) I still make errors, and there are probably several in this writing; however (conjunctive adverb), I endeavor to improve, and I strive to prevent my mistakes from obscuring any illuminating ideas.

Good writing is good thinking. I have noticed an increased clarity of thought as I work on my writing. The plaque that accumulates in my written work originates in my own mind. By scraping the barnacles from my sentences, the thoughts sail cleanly and quickly through my mind. Clarity of thought provides meaningful insights and new material–at least I hope so. We will see.

Good writing is having the courage to write. Good writing does not hedge; it takes a stand and makes no excuses. I express myself without caring what others might think. Undoubtedly, many realtors, mortgage brokers and delusional homedebtors despise me. I bear them no antipathy, but I am apathetic about their attitudes. I do not write for fear of the other’s opinions; if something is bullshit, I am going to say so. Most writing about the housing market is malignant malarkey, and those who believe it contract a fiscal cancer. Fortunately, some writers are willing to present an unbiased analysis. Without a few real estate bloggers and academics, nobody’s representations of the real estate market would be reflective of reality. It is plain that those players leeching loot from the closing are more concerned with compensation than they are with candor. But I digress…

Good writing is entertaining. There is plenty of informative writing on the web, and if you can keep your eyes open long enough to endure it, you can learn much. Non-fiction writing does not need to be dull. There is humor in the absurd, and the housing bubble has no shortage of absurdity. I harass hapless homedebtors and realtors for one simple reason: it is funny. If these people were simply vacuous, I might feel sad for them; however, when people are both stupid and smug, it is natural to gloat in their misfortune. Schadenfreude may not be spiritually stirring, but it is eternally entertaining.

Why did I write this? Am I looking for affirmation from my grammar teachers from 25 years ago? I hope not. Am I looking for kudos and comments telling me how great a writer I am? I hope I am not that pathetic. Does this mean I have “arrived?” It is easy to arrive when there is no itinerary. Life is a journey, not a destination. Perhaps it is like painting graffiti on a signpost or etching your name in a gas station restroom; you just need to let everyone know you were there. I have spent the last several weeks immersed in writing. If this drivel were my final exam, it would probably fail. The writing is too labored, and it looks like a thesaurus bomb blew up sprinkling unusual words like shrapnel throughout the essay. I doubt I will spend as much time choosing words in future writings. I want to have a life.

Despite its shortcomings, this writing emerged from a womblike place inside. I am pregnant with this baby, and it is time to birth it. I wish I could remember its conception; I must have been dangling my participle.

Was it good for you? I am going to have a cigarette…

I Like Dreamin'

Despite the system-wide economic collapse, many in Irvine think their houses have not declined in value.

The owners of today’s featured property are asking what the paid at the peak. They like dreamin’…

19 Stonebrook inside

Asking Price: $1,185,000

Address: 19 Stonebrook, Irvine, CA 92620

{book5}

I Like Dreamin’ — Kenny Nolan

I like dreamin’ cause dreamin’ can make you mine.
I like dreamin’, closing my eyes and feeling fine.

Did you notice that Irvine real estate is the only asset in our entire financial system that has not declined in value? The people who own these properties are dreaming of 2006 when properties were still appreciating.

Even the realtor propaganda shows there is nearly a three-year supply of high-end homes. The only place these properties have held their values is in the fantasies of the owners.

I wasn’t living in California in the early 90s, so I did not see the slow drip of real estate prices first hand. It must have been a very different time before blogs came along to tell the truth. How did people figure out what was really going on when the media was dominated by the self-serving delusions of local realtors?

There must be some point where the Realtor Who Cried Rally isn’t believed. Whenever I read the drivel these buffoons blanket the media with, I wonder how anyone believes them. The deceptions are so transparent only the most faithful, those who most want to believe, can possibly think these fibbers speak the truth.

I can understand why the OC Register prints this rubbish. Much of their ad revenue comes from the local real estate community. John Lansner has been bearish on our local market for quite some time. I suspect he actually gets a perverse pleasure from allowing these clairvoyants to reveal themselves as frauds and hucksters; although, he isn’t in a position to say so. Thankfully, I am.

Oh, in case you missed it, you can Hear why O.C. may exit housing mess early.

{book1}

It is Friday again, and I want to call your attention to another open house over the weekend. Today’s featured property will be on display on Saturday, March 14, 2009 1:00 PM – 5:00 PM. I don’t know why I am telling you about this as no realtor is paying me. Going to look at nice properties is fun. Wearing your IHB T-shirt while doing it is even more fun.

19 Stonebrook inside

Asking Price: $1,185,000

Income Requirement: $296,250

Downpayment Needed: $237,000

Monthly Equity Burn: $9,875

Purchase Price: $1,185,000

Purchase Date: 12/23/2006

Address: 19 Stonebrook, Irvine, CA 92620

Beds:	5
Baths:	3
Sq. Ft.:	3,032
$/Sq. Ft.:	$391
Lot Size:	6,466 Sq. Ft.
Property Type:	Single Family Residence
Style:	Other
Year Built:	1996
Stories:	2
Area:	Northwood
County:	Orange
MLS#:	P678703
Source:	SoCalMLS
Status:	Active
On Redfin:	2 days

Welcome to one of Northwood Point’s finest gated community. Gorgeous
home is located in the Fairmont tract. Well thought out floor plan
boasts a main floor bedroom & bathroom. Dramatic living room boasts
cathedral ceilings and large windows. Entertain in the formal dining
room, family room, & large gourmet kitchen. Family room features a
fireplace & direct access to the backyard. The kitchen is large
with a huge center island, corian counters, walk-in pantry, & much
more. Cheerful master bedroom features a balcony & a large master
bath. Exquisite touches in this home include: spiral staircase,
recessed lighting, designer paint, wood shutters, and lots of large
windows. The backyard is perfect with a gazebo, built in BBQ, lush
grassy area, and plenty of space for gardening. Resort like ammenities
include: pool, spa, tennis courts, trails, and parks. Attend
Northwood’s award winning schools.

These owners are not distressed. This property was purchased on 12/23/2006–near the peak in Northwood–for $1,185,000. The owners used a $417,000 first mortgage and a $768.000 downpayment. This property will not be going into foreclosure any time soon.

These owners are asking to get out at breakeven. Unfortunately, the they bought at the peak, and this property is no longer worth what they paid. The comps are selling at $307/SF which suggests this property is about $250,000 overpriced. I imagine the owners can justify the extra money as theirs is the finest property in the world. Go to the open house and ask them.

I hope you have enjoyed this week at the Irvine Housing Blog. Come back next week as we
continue chronicling ‘the seventh circle of real estate hell.’ Have a great weekend.

🙂

{book6}

I like dreamin’ cause dreamin’ can make you mine.
I like dreamin’, closing my eyes and feeling fine.
When the lights go down, I’m holding you so tight.
Got you in my arms and it’s paradise ’til the morning light.

I see us on the shore beneath the bright sunshine.
We’ve walked along St. Thomas beach a million times.
Hand in hand, two barefoot lovers kissing in the sand.
Side by side, the tide rolls in.
I’m touching you, you’re touching me.
If only it could be.

Through each dream, how our love has grown.
I see us with our children and our happy home.
Little smiles, so warm and tender looking up at us.
Blessed by love, the one we shared
Till I wake, and reach for you,
And you’re just not there.

I like dreamin’ ’cause dreaming can make you mine.
I like holding you close and touching your skin
Even if it’s in my mind.
Oh, sweet dream baby, I love you.
Oh, my sweet dream baby, you’re in my dreams every night.
Oh sweet dreams, I like feelin you
Oh sweet dreams baby, Don’t keep me waiting all my life.

I Like Dreamin’ — Kenny Nolan

I Pity Alan Greenspan

Alan Greenspan bears some of the responsibility for our economic disaster, and he knows it.

Today’s featured property is one of the biggest discounts I have seen to date on a high-end property.

22 Gray Dove kitchen

Asking Price: $900,000

Address: 22 Gray Dove, Irvine, CA 92618

White Dove — Scorpions

Waves, big like a house
Theyre stranded on a piece of wood
To leave it all behind
To start again

When Alan Greenspan stepped down as Federal Reserve Chairman in 2006, he was highly regarded by most experts and the wider general public as the man responsible for over 20 years of economic prosperity. Guided by his core beliefs in limited regulation and the wisdom of market participants to limit their own risk, he pursued policies during his tenure that have since proven to be disastrous.

If Alan Greenspan had died shortly after leaving office, he would have perished in ignorance of the problems he created. He would never have known the beating his professional reputation would take when the economic system he helped promote came crashing down. Ken Lay died before he could face justice, and his wife got to keep all the money. If Ken Lay had lived on, he would have faced nothing but suffering in his later years. Like Richard Nixon before him, Alan Greenspan will live on to wrestle with his failures, and also like Nixon, Greenspan will likely spend the rest of his life trying to convince a dubious public that his actions were justified and what he did was not wrong.

Alan Greenspan has publicly admitted to making some mistakes. His feeble defense of his actions usually center on the idea that the problems that brought down our financial system were too big for the FED chairman or anyone else to prevent. This is bullshit, and he knows it. The root of the problem is in the deeply held philosophical beliefs that he acted upon his entire career.

Alan Greenspan strongly believes the participants in the economy are aware of the risks they are taking on, and they are carefully managing those risks. In his world, government regulation to curb the excesses is an unnecessary hindrance to economic growth. Like Ronald Regan and the entire Conservative movement that he inspired, Alan Greenspan believed that government is not the solution, it is the problem.

The failures of Alan Greenspan and those who failed to regulate our financial markets have lead to the economic catastrophe we are facing. Everything Alan Greenspan believed his entire career was wrong. He knows that now; although, he will likely spend the rest of his life trying to deny it. He will live out his life in disgrace partly responsible for the suffering of millions of people around the globe.

I don’t feel sad for him. I chose the word “pity” carefully. To feel sadness for someone’s actions, you must feel compassion for their plight. Pity masquerades as compassion, but there is a lack of empathy in the emotion of pity–A lack of empathy often caused by the fact that certain tragedies are self-inflicted. The attitudes, beliefs and actions of Alan Greenspan caused his own downfall. I do not feel sad for him; I pity him.

For more information, please read Greenspan’s Bubbles: The Age of Ignorance at the Federal Reserve

22 Gray Dove kitchen

Asking Price: $900,000

Income Requirement: $225,000

Downpayment Needed: $180,000

Monthly Equity Burn: $7,500

Purchase Price: $1,485,500

Purchase Date: 12/13/2006

Address: 22 Gray Dove, Irvine, CA 92618

Beds:	4
Baths:	5
Sq. Ft.:	3,400
$/Sq. Ft.:	$265
Lot Size:	7,362 Sq. Ft.
Property Type:	Single Family Residence
Style:	Contemporary
Year Built:	2006
Stories:	2
View:	Hills
Area:	Portola Springs
County:	Orange
MLS#:	S566502
Source:	SoCalMLS
Status:	Active
On Redfin:	1 day
New Listing (24 hours)

Highly upgraded largest floor plan of Las Colinas. Private cul-de-sac
location with view from 2nd story. Extra large lot in the
neighborhood.Three bedrooms with own baths, plus huge bonus room and a
casita with its own bath. Rich hardwood, stone and plush carpeting
throughout.Gourmet kitchen with top of line appliances, granite counter
and designer tile back splash and built-in regrigerator. Large walk-in
pantry. Center island with sink and wine cooler. Nice size breakfast
nook with french door to backyard. Custom beamed ceilings in great room
and master bedroom. Upgraded tiles on bath tubs and shower stalls.
Custom window treatments including plantation shutters. Better than
model and deal of the century.

Better than
model and deal of the century? Realtors can’t resist nonsense, can they? This was a decent description until they had to slip in some cheezy realtorese right at the end.

regrigerator?

This was a flip–a dumb flip. The owner paid $1,485,500 on 12/13/2006. He used an Option ARM for $1,188,280 and a $297,220 downpayment. Now, he is going to lose his downpayment and ruin his credit.

If this property sells for its asking price, and if a 6% commission is paid, the total loss on the property will be $639,500.

This property is being offered for 40% off its peak purchase price.

{book4}

Waves, big like a house
Theyre stranded on a piece of wood
To leave it all behind
To start again

And now your telling me
Youve seen it all before
I know thats right but still
It breaks my heart

Well, the golden lamb we sent
Makes us feel better now
But you know its just a drop
In a sea of tears

White dove
Fly with the wind
Take our hope under your wings
For the world to know
That hope will not die
Where the children cry

White Dove — Scorpions