Monday, December 31, 2007

Sunday, December 30, 2007

Beverage of Choice

The LATimes has a classic end of year article.

Despite the scary statistics, things could be looking up in '08
By Kenneth R. Harney, Washington Post Writers Group
December 30, 2007

WASHINGTON -- Queen Elizabeth II once famously referred to her annus horribilis -- a horrible year during which almost everything went badly, from royal family scandals to a raging fire that destroyed parts of Windsor Castle.

The U.S. housing market experienced its own form of annus horribilis in 2007 -- a year when all the sins and excesses of the prior six years were visited upon nearly everyone in the system:
Enough. Could 2008 be better? I think the odds are reasonable that it will. Here's why: Even through the grimmest headlines of 2007, there were a number of positive underlying economic forces propping up real estate. If those forces continue, they should help cut the time needed for the correction cycle to bottom out and the historically inevitable recovery cycle to begin.

Happy New Year everyone!

Thursday, December 27, 2007

12 of 360

Costa Mesa's policy results in 360 deportations
Focus on immigration status of jail inmates began a year ago. Other area communities are following the city's lead.
By Jennifer Delson
Los Angeles Times Staff Writer

December 27, 2007

In the year since Costa Mesa became the first Southern California city to have a federal immigration officer at its jail full time, 360 suspects who were in the country illegally have been deported.
Hayes said the problem is that some of these people will sneak back into the United States. Already, 12 have been rearrested, he added.

If 12 get rearrested within a year how many returned and weren't caught? 100? 200? Good thing they only come here to work hard and contribute.

Wednesday, December 26, 2007

U-Haul Index Charlotte

Boston to Charlotte:

Charlotte to Boston:
U-Haul Index 4

Los Angeles to Charlotte:

Charlotte to Los Angeles:

U-Haul Index 2


And for the BalwdGuy: Austin vice San Diego, $1358 vs $477.

Feel free to add your own trip airs in the comments.

New Additions to the Collection

DVDs have done what CDs have not; respond to the market. Below is the Holiday haul in the dawg haus of movies. 29 movies at $14.99 each is a pretty extravagant waste of money. Harry Potter and a few others were $15-$17 but 5-6 were $1.99-$2.99 and 12-15 $3.99-$4.99 and most of the rest were $5.99-$8.99. I'd guesstimate the average price at $5.

There's even an insidious parent motive. No commercials working on my children. No editing for content based on someone else's twisted opinion that a bare bottom or flash of nipple (think Shakespere In Love) is more objectionable than an evil ghost slicing a lawyer in half axi-longitudinally.

Robin Hood - Men in Tights
Bones - The Complete First Season
Talladega Nights - The Ballad of Ricky Bobby
Bones - The Complete Second Season
Casino Royale
The Majestic
The Dark Crystal
The Abyss
Practical Magic
Mystic River
Harry Potter and the Order of the Phoenix
Shrek the Third (Full Screen Version) (US Version)
Harold & Kumar Go to White Castle
High School Musical 2
The Shawshank Redemption
Transformers (DVD) (US Version)
Eternal Sunshine Of The Spotless Mind
Big Fish
Knocked Up
Good Night, and Good Luck
The Producers
French Kiss
The Firm
And Now For Something Completely Different
Bend It Like Beckham

"Stay Put"

"Stay put." Good advice from Lorenzo Martinez in this story from the LATimes front page above the fold.
The steady construction work that had allowed him to send home as much as $1,000 a month in recent years had disappeared. The 36-year-old father of four said desperation was growing among the day laborers with whom he was competing for odd jobs.

What do you think happens to local economies when hard working productive people like Lorenzo send $1000 per month out of the local economy? Construction used to have one of the greatest multipliers of all industrial classes. Now it turns out part of why California is in so much trouble is that there is not only no multiplier effect but a divisor effect. The Divisor Effect. You heard it here first.

The B@st@rds Just Couldn't Wait

Note: moved back up as the holiday was meant to obscure the story in the news and I'm not ready to let it go.

Sorry, I'll change the order of posts shortly to put the seasons greeting back to the top but I'm afraid I've got to ruin some people's holiday cheer.

There are no news references yet but Legislators working on budget solutions announced today that they've come up with a shopping list of loopholes in California tax law that could be closed to help out in the budget crisis. The big one? Eliminate the deductibility of home mortgage interest against state income taxes. They claim it will "generate" $5 billion extra annually. Yeah idiots. And you were so effin' stupid you said this out loud. The mere mention that this proposal was considered serious just took 5% at least from the value of every home in the state. Don't bother numbnuts. It is to late. That 5% is now gone forever. It won't come back. All you can do now is save the next additional 10% by falling on your sword. I mean, here you have an industry nearing collapse and you give it a shove? What were you drinking? I'm sure some junior staffer planned this as a kind of Washington Monument Play to get a sense of urgency but they picked the third rail to piss on. Somebody get a rope.

Update 1:

Here's a news story in the Daily Democrat:
Legislative Analyst Elizabeth Hill's recommendations on tax breaks, which she says mostly benefit the rich and corporations, are drawing attention. She even addressed the largest, seemingly most untouchable tax break: allowing homeowners to deduct mortgage interest off their state personal income taxes.

Hill said in a report that the deduction, which exceeds $5 billion a year, no longer serves its intended purpose of encouraging home ownership. She believes there are more targeted, less costly ways to aid those who need the assistance, without subsidizing wealthy homeowners.
Without commenting on any specific tax break, Senate leader Don Perata, D-Oakland, and Assembly Speaker Fabian Nunez, D-Los Angeles, said Friday the Legislature will seriously consider Hill's recommendations.

And Steve Maviglio, a spokesman for Nunez, said closing tax loopholes - including possibly changing the mortgage interest deduction - will be part of Democrats' broad considerations of deficit solutions.

Well there's the mistakes. They think the HMID is to encourage homeownership and that it subsidizes the wealthy. Go back and read the Exurban Nation answer to these idiots.

Monday, December 24, 2007

Alban Arthan

Wishing everyone a solemn Alban Arthan as we honor the souls of the trees we sacrifice then deify in our living rooms. Hang the revered kerm-oak, drink the blessed wassail. "Yule" feel so much better. The Norse had the right idea taking 12 days for Jole.

Oh and for all you recent religion adoptees a translation: Christmas, Christmas Trees, holly, sacramental wine and the 12 days of Christmas

Changing the name makes little difference; Merry Christmas.

Sunday, December 23, 2007

What Do Dawgs Watch Anyway?

I'm not ashamed. I like to watch television. I even like to watch "bad" television. By bad I don't mean TVLand or Game Show Channel. Bad as in lesser known works of some value. With the hundreds of DVDs I own I can be even more particular.

Wann know like uhhh about uhh the slacker generation and have some gory fun in the process? Seth Green in "Idle Hands."

The duality of eco-sensitivity in its' relation to technology? Bruce Dern in "Silent Running." Do you think it was coincidence that Laura Dern starred in Jurassic Park a generation later? Come on get with the program. These people think like me and relish a good subtext.

My favorite line from "A Boy and His Dog" is spoken by the boy, Don Johnson, in response to the question his dog asks; "Name the last 10 Presidents."

Interested in the variety of the human condition? "The Gods Must Be Crazy."

Perseverance of the human spirit? "The Great Escape."

Practice makes perfect? "Groundhog Day."

Looking for karma? No, not "Dogma" which is scary in its' understanding of the Catholic faith. Instead try "Quigley Down Under." Racism, expansionism, man nature. Excepting perhaps The Great Escape none of these are normally considered "good." More's the pity.

All Old New Again

State's bonds are downgraded again

California debt gets a worst-in-the-U.S. rating from Moody's.

By Dale Kasler -- Bee Staff Writer
Published 2:15 am PDT xxx, xxx 23rd, 200x

Unconvinced that California has solved its budget problem, a second Wall Street firm lowered the state's bond rating Monday.
This time the downgrade came from Moody's Investors Service, which chimed in the first day of business after Gov. Gray Davis signed the new state budget into law. Moody's action, coming two weeks after its rival Standard & Poor's issued a downgrade, reinforced California's plummeting standing on Wall Street as it prepares crucial bond sales to stay afloat financially.

Moody's said it was disappointed that the new budget leaves an $8 billion deficit into the next fiscal year, a gap that could top $10 billion if the state's economic forecasts don't prove true. Although it didn't mention the recall election, Moody's cited California's political gridlock and said "the state will have substantial difficulty closing this gap in the next budget cycle."

Moody's lowered California's bond rating a notch to a worst-in-the-nation "A3," or four notches above junk bond status. It had been "A2," tied with New York and Louisiana.

The downgrade will increase California's borrowing costs but it's not clear by how much. That's because Moody's was far gentler on California than was S&P, the other big Wall Street rating agency.

S&P, acting before the budget stalemate was broken, lowered California a resounding three notches July 24 to "BBB," or just two notches above junk status. S&P uses a different lettering system than Moody's.

Sorry to be such a one note blog recently but I think it is important to get this stuff out and on the record before the shitstorm. There's gonna be so much noise and spin that it will be important to have a roadmap and a feel for what will be tried and what will actually happen before the spin.

So, interesting. The story is already written, just cross out the name of the governor and the date for the next story. This plays out on the theme i've been pushing. California is out of tricks.

Update: Once again the old media is behind on the story LATimes excerpt;

The financial troubles of major bond insurers are rattling the municipal bond market, where about half the bonds issued in recent years have carried private insurance -- including in California.

If you own muni bonds, it might be wise to take a closer look at your portfolio to see how it could be affected by the insurers' woes. But there's a very good chance the bonds you hold didn't really need insurance in the first place, analysts say.

Many states and municipalities have long used private insurance as a way to enhance the appeal of their tax-free securities for investors -- turning, say, an A-rated bond into a AAA-rated one.

Now, Wall Street is worried about the health of the insurers that backed those gilded ratings because of the potential claims the companies face from insuring other bonds, particularly mortgage-backed securities.

"Their ability to meet their claims-paying obligations is being called into question," said Jon Schotz, co-founder of Saybrook Capital, a Santa Monica-based investment fund that focuses on muni bonds.

Some of these AAA insured double tax free munis are 3% trading at par. Any whiff of inflation and 80¢ is wishful thinking.

Saturday, December 22, 2007

Calpers Jumps the Shark

Hey guys! I just had this really great idea. You know how we've got like the largest investment portfolio in like you know the entire world? Well I thought we need to have more real estate and neato stuff like commodities speculation and things. So, waddaya think guys?

WaPo has their version;
Calif. Pension Fund Shifts Away From Stocks, Bonds
By Michael Liedtke
Associated Press
Sunday, December 23, 2007; Page F02
SAN FRANCISCO -- The California Public Employees' Retirement System will sell more than $20 billion in stocks and bonds as the largest U.S. public pension fund aims for higher returns from venture capital, commodities, real estate and several other investment options.
About 10 percent of Calpers's portfolio will consist of real estate investments, up from 8 percent. Hitting the target will require additional real estate investments of about $4 billion.

There actually may be a little method in this madness. If these guys at Calpers have anything better than 20/200 vision they can see the shitstorm that's comin' and making the fund less liquid and more entangled could keep the sharks from taking too big a bit of their pie. Truth told Calpers is about to get a whole freakin' lot of IOUs as every available loose dollar is poured into the Social Services rathole that is California socialism.

Friday, December 21, 2007

Let Loose the Prisoners!

Readers of this blog knew this last week but now the criminals in Sacramento are admitting to the future crime.

AP -
Mass Inmate Release Possible in Calif.
SACRAMENTO, Calif. (AP) — Gov. Arnold Schwarzenegger is considering the early release of more than 20,000 low-risk prison inmates from the nation's largest prison system as a way to save money amid a worsening budget crisis, a newspaper reported Thursday.

And just to keep up with the train wreck in progress, the current projected deficit is $14.5 billion up $500 million in the last 5 days. Good thing the governor is holding off declaring a State of Emergency until the middle of January so as not to interfere with the Presidential Primary election cycle. Expansion on that last. It isn't so much the primaries but the other measures on the same ballot that are what is important. There's another $500m per year in Indian gaming revenues that would perversely result in about $700m more added to the deficit. There's also a transportation funding bill that is way too complex in its fiscal consequences to explain. I'll get to that later.

Thursday, December 20, 2007

Well Duh Serinitis is Contagious

WSJ article via the Phoenix Business Journal:
Bank of America CEO Ken Lewis told editors of the Wall Street Journal that he's worried about borrowers with strong credit scores not making loan payments if the housing crisis worsens.

"There's been a change in social attitudes toward default," Lewis told the Wall Street Journal. "We're seeing people who are current on their credit cards but are defaulting on their mortgages. I'm astonished that people would walk away from their homes."

Apparently even borrowers with strong credit scores are finding it easier to walk away from their mortgages, especially if they put little or no money down on houses and condos purchased for investment purposes.

Let's be clear here Ken. It is your own damn fault. Millions of people have Googled Casey and know that you aren't going to do anything about lending fraud never mind lending mistakes. You destroyed the ethical considerations of the US financial system. Reap what you sow.

California Decanting

de·cant (d2-k#ntZ)
tr.v. de·cant·ed, de·cant·ing, de·cants
To pour off (wine, for example) without disturbing the sediment.
To pour (a liquid) from one container into another.

[Medieval Latin d*canth"re : Latin d*-, de- + Latin canthus, rim of a wheel or vessel ( of Celtic origin).]
de.can·taZtion (d*.k#n-t"ZshMn) n.

Regular readers of this humble blog knew this was coming. When you decant a fine wine you leave the objectional sediment behind. That's what has been happening to this State.

The LATimes reports:

The annual study by the Department of Finance showed that 89,000 more people moved out of California than moved here from elsewhere in the United States. California's population did grow in fiscal 2007 -- but the growth rested on births and the arrival of more than 200,000 immigrants from other countries.

The shift dovetails with the state's weakening economy and is most likely related, said Howard Roth, chief economist for the Department of Finance.

The Ventura Star says:

Ventura County continued to grow very slowly last year, fueled by a steady increase in births coupled with an influx of foreign immigration that barely neutralized the exodus of residents to other counties and states.
...the county experienced a fourth consecutive year of domestic out-migration, meaning that more residents moved out of Ventura County to other parts of the state and country than moved in. They estimated this year's net exodus to be 3,150 people — down from a loss of 3,832 in 2006 and 5,216 in 2005.

The trend, said Bill Watkins, executive director of the UC Santa Barbara Economic Forecast Project, is a reflection of economic reality: high housing prices coupled with fewer opportunities to land a job that pays enough to afford a house.

"Opportunities are declining," he said, noting layoffs at the county's two largest private employers, Amgen Inc. and Countrywide Financial Corp.

What they both carefully sidestep is the mix of exactly who left and who came. That is a sensitive issue best left to bloggers and other honest sources of real reportage. I'll let some other people chime in before rendering my opinion of the magnitude of this disaster.

$150 per Day

That's how much the median home in Ventura County has lost every day for the past year. What would you rather do with $150 per day? Of course that's not the story. What were the carrying costs for the privilege? The house would have cost $580k so $18 per day in taxes and $125 per day mortgage. Now that's not fair because you need to live somewhere so back out $80 per day to rent. Annualized: renter $30,000, homemoaner $107,000. Not a good year to own and now that we have you trapped the real news is that next year will be far worse.

Tuesday, December 18, 2007


See if you can find Waldo in this article.

They said they want the purchase of their home rescinded and their money refunded.

When Mark Moore mows his lawn, he is a sight to behold.

Looking a bit like the rubber-armed Michelin man, he says that in order to get the job done safely, he has to wear a heavily padded leather jacket, filled with four inches of goose-down feathers to protect the vertebrae in his back; a wide-brimmed pith helmet to prevent injury to his head and face; a pair of goggles to cover his eyes; long pants with kneepads; and a pair of long, thick landscape gloves.
After moving into the house in late July, it took about a week for them to realize they had a major golf ball hazard to grapple with, they said.
The Moores lend construction-quality hard hats to their visitors for safety and liability reasons.

"No one told us to ask people to wear helmets. We give people helmets because we don't want anyone getting hurt," said Mark Moore.

Invested everything they had

After living for several years in a town home they own at Mandalay Beach in Oxnard, they purchased their 2-acre, $2.1 million Tuscan-style home near the seventh fairway because of the space and security they thought it offered their family.

Mark Moore said they invested everything they had to acquire the house and borrowed from their parents.

He said his mother is in the early stages of Alzheimer's disease, so his parents planned to move in. But when his mother nearly got hit by a golf ball while eating lunch on the patio, they had to abandon their plans.

Sniff. sniff... So. Where's Waldo? "They invested everything they had to acquire the house and borrowed from their parents." Their investment isn't working out. Notice they aren't trying to sell either. Gee, why do you think that is? Read the whole GMAFB articale in the local fishwrap here.

Update: Not everyone hates the sport:

Monday, December 17, 2007

Place Your Bets 3

The really smart dudes over at Calculated Risk who allow me to hang around for their amusement value have a bet going on.

Who will be the first HB to BK?

Here's the bets so far:

AllenM - KBH
Dawg - RYL
Nemo - WCI
central - SPF

Anyone else?

Sunday, December 16, 2007

I'll Sue Your A$$!

Last week there was a LA Times commentary that was worth mentioning. Good thing I held off as the blowback is funnier than the original. The Times has hired a pretty straight shooter to cover what he calls "consumer confidentials." Last week he covered the Trump University come-on of free seminars that are nothing but 2 hr commercials for his $1495 foreclosure classes.
Original Article
Excerpt: So off I went to Pasadena, where I soon found myself in a hotel meeting room with about three dozen other wannabe real estate moguls. Before us was a banner featuring Trump's typically dour image. "Think big," it instructed.
...Our instructor was a Texan named Steve Goff, 40, who told me before things got started that he had bought and sold about 300 houses since getting into real estate 11 years ago. He said he had never bought or sold a house in California.

I asked Goff if he's a millionaire. He said no. He said he had been through bankruptcy, two divorces and had his own home foreclosed upon.

Funny enough and instructive enough that I apologize for not sharing earlier. Now the kicker. Mr. Trump was not pleased.
Fallout here.
In his letter, Trump seemed particularly upset with my observation that his "primary claim to fame these days has been hosting 'The Apprentice' on TV." He wasted no time rebutting this notion.

"I am worth many billions of dollars, am building large-scale developments all over the world, am considered by many to be, by far, the hottest name in real estate," Trump wrote, "and I have to read an article by a third-rate reporter in your newspaper that my 'primary claim to fame' is hosting 'The Apprentice.' "

Show of hands: How many people think of Donald Trump as, by far, the hottest name in real estate? How many think of him as the guy who fires people on TV?

Thank you.

No Mr. Lazarus, thank you.

Saturday, December 15, 2007

What I don't want for Christmas

Old Republic International (stock: ORI) has got to be poster child for run away now. How many scary things can one company have? Description from Yahoo Finance: Old Republic International Corporation, through its subsidiaries, engages in insurance underwriting business primarily in the United States. It operates through three segments: General Insurance, Mortgage Guaranty, and Title Insurance. The General Insurance segment provides related risk management services that encompass various property and liability insurance coverages. It offers commercial automobile coverage protection, workers' compensation, and general liability for businesses in the trucking and general aviation, construction, forest products, and energy industries; and public entities, such as municipalities. This segment also offers directors and officer's liability, and errors and omission liability, as well as travel insurance. In addition, it provides coverage for hull and liability exposures, as well as additional areas, such as airport facilities and flying schools; and fidelity, surety, and credit exposures. The Mortgage Guaranty segment insures first mortgage loans, primarily on residential properties to mortgage bankers, brokers, commercial banks, and savings institutions. The Title Insurance segment provides title insurance, escrow closing, and construction disbursement services, as well as real estate information products and services pertaining to real estate transfers and loan transactions. Old Republic International offers its products primarily through independent insurance agents and brokers. In addition, the company offers small life and health business insurance through financial intermediaries, such as finance companies, automobile dealers, travel agents, and marketing channels. It also conducts its small life and health business, as well as offers travel insurance in Canada. The company was founded in 1887 and is based in Chicago, Illinois.Gosh, where to begin? Awww youse guyz is smart, you get it already. But wait, there's more! Who has this company in their portfolio? % of Shares Held by Institutional & Mutual Fund Owners: 80%. Fine institutional investors like; AXA JP MORGAN CHASE & COMPANY MAC-PER-WOLF COMPANY Barclays Global Investors UK Holdings Ltd PZENA INVESTMENT MANAGEMENT, LLC RENAISSANCE TECHNOLOGIES CORP VANGUARD GROUP, INC. (THE) CAPITAL RESEARCH AND MANAGEMENT COMPANY FIRST MANHATTAN COMPANY FRANKLIN RESOURCES, INC. But wait there's more! Franklin, Janus and Fidelity have mutual fund positions too.

For our stock picking friends who somehow keep forgetting to hit the tip jar, take a look at the Jan 12.50s.

P.S. For those of you wondering why California still has a certain appeal:

Happy 234th

December 16, 1773

Anyone interested in a repeat performance?

I know you aren't looking at the stamps but tear your eyes for a moment and then ponder the reality of an EIGHT CENT stamp from 1973. Then look lower. No, not her curves, the stamp price curve even further down.

This is an historical graph of stamp prices. Just in case you forgot 1971 is when Nixon stopped convertibility of the dollar to gold.

Anybody ready to toss some tea yet?

MSM Plays Catch-Up

Right on schedule the biggest financial crisis in California is being carefully stage managed like a Hollywood blockbuster. People aren't even remotely close to grasping the enormity of the problems. This isn't Camarillo's bad investment adventure or Orange County's bad arbitrage of decades past. Let's be clear here. If every State employee took an immediate 5% pay cut and hiring is frozen and all unfunded programs are suspended and every authorized revenue stream increased to their limits then we would be facing a critical emergency that would necessitate a Constitutional suspension of existing fiscal limits and a renegotiation of near every collective bargaining agreement extant. That's not going to happen. As predicted the governor has pre-declared an emergency. Arnold has stated his intention to call the actual emergency in the middle of January. You read it here first. It is my intention to keep tell the truth of the crimes before even the perpetrators know their own schemes.

The opening salvos of the all too predictable "Washington Monument Ploy" are fired.

Here's the local fishwrap telling everyone else what EN readers already know:
The emergency will likely mean cuts to schools, colleges, prisons and aid programs for the poor, elderly, and out-of-work that have already spent nearly half their promised funding for the year.
[The deficit is]equivalent to state spending on both prisons and all the University of California campuses in one year.

Our Speaker of the House had two observations. Side by side I think you'll see why there's absolutely no chance of this situation being handled competently.
#1:"This is a serious step for a serious problem," Assembly Speaker Fabian Nuñez, D-Los Angeles, said in a statement. "We look forward to seeing the specific proposals the governor is constitutionally required to put forward in declaring a fiscal emergency."
#2:“After a solid year of hard work and negotiation, we are now only inches away from finalizing the framework for an historic agreement to deliver universal health care for the people of California.

Budget facts;
Revenue $102b. Spending $117b. Out year unfunded obligations ~$11b.

Healthcare facts;
6.8 million uninsured Californians. Funding would include:
-- A $2.3 billion fee on hospitals that would be offset by a big increase in payments made for services for enrollees of government programs.
-- Employer fees that would run from 1 percent to 6.5 percent of payroll and would generate an estimated $2.7 billion.
-- About $5 billion in new federal support, mostly for the Medi-Cal program.
-- A new tax on tobacco products that would cost up to $2 a pack

Can you smell the bullshit? $2.3 billion from hospitals? Are they freakin' insane? They are using kool-aid for their bong water. As noted previously Simi Valley Hospital has stopped accepting Medi-Cal because they weren't being paid. This in context of dozens of emergency rooms closing in Los Angeles alone.

California is already as business unfriendly as possible. Sales taxes run as high as 8.25% and income taxes are 9.3%. There is even sales tax charged on gas taxes. The turnips have no more blood to give. Eternal vigilance, stay tuned.

Friday, December 14, 2007

Healthcare "Reform" on Debt-bed

Apparently ictim #1 from the California implosion of State services; universal healthcare.

Don't get all spooled up about good/bad socialism, whatever. Ain't gonna happen just like CA-HSR ain't gonna happen. Here's a nice overview from the SFChron:

Tick, tick, tick - you hear that? It's the clock running out on health-care reform, and it's set to expire in Sacramento on Dec. 21.
If legislators don't produce a bill that the governor will sign by that date, California's hopes for health care reform this year - probably for the next several years - will implode.
"If we don't do it by then, it won't get done," said Assembly Speaker Fabian Núñez, D-Los Angeles, in a meeting with the Chronicle's editorial board this week. "This budget crisis is going to tie our hands behind our backs for the next six to eight years. And if the subprime problems go the way they're going we could be in the hole for the next decade."
Here are the key elements:
-- All Californians would be required to have health insurance.
-- All Californians would be able to obtain coverage, regardless of pre-existing conditions. HMOs would be required to spend at least 85 percent of premiums on patient care. The state would offer incentives for preventive care and healthy behavior such as smoking cessation.
-- Low and middle-income families would be eligible for state subsidies and tax credits.
-- Employers would be required to either provide health insurance or pay into a pool, which would be adjusted on a sliding scale based on the size of the workforce. The top rate would be about 6 percent of payroll. The smallest businesses would pay 1 percent.
-- New taxes on tobacco and hospitals also would help pay for the program.
-- The deal would be contingent on voter approval of the new taxes in November 2008.

Got that last part? contingent on voter approval of the new taxes in November 2008. Okay, sure. Not.

Near as I can tell there will be a special session of the Legislature right after the Feb Presidential primary with its various bond measures and Indian gaming agreements. The Governor and Legislature will be in meetings all through January trying to hammer together a deal but it won't work. Then they won't be able to wait any longer. This totally screws their Jun 3rd plans for some fancy bond sleight of hand. You'll know when they are taking this serious when they raise the prospects of laying of CHP and renegotiating the prison guard contracts. Before that happens wait for the screams from the counties when they discover their backfill arrangement with the State to supplement lost property tax streams is either cut way back or possibly cancelled outright.

In the meantime there's an interesting groundswell of Latino on Latino tension surrounding immigration. More on that later.

Wednesday, December 12, 2007

California Another $14 Billion Underwater

Arnold let the cat out yesterday. $14 billion. That's $400 per person for everyone in California in overspending. Not the State budget, just the overspending they admit to. They budgeted $2900 and spent $3300. Anyone get their money's worth this year? LATimes here.

Arnold has presided over far more debt issuance and deficit spending than anything Gray Davis got recalled for allowing.

Tuesday, December 11, 2007

Quote O'Note

"Just because you don't like the price doesn't mean there is no market."

Spoken regarding the transparent lies surrounding the claims that the credit markets are frozen. It isn't that markets are frozen but that the markets are sober. [See the picture.]

Monday, December 10, 2007

The Next Shoe

Right on schedule the muni bond and COP market is beginning to crack. From Financial Week we read;

The muni market’s problems, like those plaguing much of Wall Street these days, stem largely from the popping of the housing bubble. That’s threatening two major sources of government revenue—property tax collections and real estate transfer taxes—that are used to pay bondholders. Compounding matters, investor confidence has been seriously undermined by worries over the health of a handful of companies that guarantee munis, and which face crippling losses related to subprime mortgages.
The upshot of all this is that muni deals that would have flown off the shelves earlier this year are now gathering dust. Officials in municipalities across the country are wondering just how much they will have to pay to raise the cash they need as uncertainty drives up interest rates.

Gee, what's another name for investor revenue dependent upon the health of the real estate market?

Density Density Density Pt. 2.0 Perception

Look at these three pictures.

First blush they are seem pretty high density but that's only because you are judging density by looking at what I've chosen to show.
Here are those three again. Golf course, tract crackers and beachfront.

This is perceptual density. Planners have no clue why beachfront commands a premium. Unfortunately planner theory doesn't place any value on many of the built environment amenities people value.

Original V-Dubbs Owner Located!

Density 2.0 in a couple hours. I promise.

Friday, December 07, 2007

Saved By The Westwinds

Last Sunday 42 new homes in South Oxnard were auctioned off. By most accounts the event was a success. 40 houses sold in a fast paced well organized event. Here is a newspaper excerpt:
Ventura County Star:
You wouldn't know there's a housing slump by the frenzy of buying on Sunday in Oxnard.

In an hourlong blitz of bidding in a hotel meeting room packed with about 200 hopeful buyers, auctioneers sold 40 new homes in South Oxnard, albeit at huge markdowns.

Prices were $100,000-$200,000 less than what buyers paid this summer. 40 knife catchers, 110 families permanently underwater. The City of Oxnard would do well to revise its budget immediately. The property tax revenues alone are going to be $200,000/yr short from this event alone.

Tuesday, December 04, 2007

Morning Topic and Schedule

No recession in my neck of the woods. Yet. Sorry the topics have been measly and slow. I have another busy few day. There is often a "flurry" of year-end j-o-b-s for me to attend. While I said no recession yet I am seeing a few unusual things. Lots of traffic on the roads and ongoing commercial and high end construction. High dollar home improvement is also strong. That's why I think 410 Avocado will actually sell within 4 months. I don't see a lot of buying except for videogame boxes. All told it looks like the economy is spending money with the prospect of it being a last gasp. We shall see.

Jim The Realtor raises a good topic at bubbleinfo. He was commenting on the movement to boycott Countrywide to "force" them to grant relief to FBs. An amoral hazard if ever I saw one. CalculatedRisk has cover the mechanics quite throughly. Here I thought a meta discussion would be appropos.

Concerning the Countrywide Bank actions I wrote: I'm all in favor of economic pressure; voting with your dollars . It is a fundamental lever in a capitalist economy. What if the City of Carlsbad managed to ram through a citywide Mello-Roos district assessing every property a few thousand per year? Would you vote with you feet and dollars and ballot? You bet. That said I don't see how to protect the good uses of boycott without being forced to accept the dumb, stupid, dangerous ones like a Countrywide boycott.

On a related note CFC is still in deep trouble. By funding its own loans with its related bank it has been going to the Fed window and the commercial paper markets for the cash AND is stuck with a hefty portfolio overly concentrated in the bubble zones and the more exposed products. Bubble zone because that's where CFC gas located. Concentrated because it has been forced to sell the better loans to keep capitalization margins and operating costs. It might be a good idea not to bank on the deposit side with Countrywide for those reasons. And before you raise deposit insurance, remember that is all it is, deposit insurance. Your $100k 5.7% 3 yr CD might just come back to you in 4 years as a FDIC check for $100k not $120k. $100k 2007 dollars versus $100k 2011 dollars anyone?

• Parts 2.0 and 2,1 of Density real soon now.
• Westwinds auction later today, I have to confirm some things with the City of Oxnard about a rumor.
• Be sure to read the BMIT follow up to the Union-Tribune story about Michael and Suzanne Hornbeek.
• Be sure to read Stag Marks Illusions of Prosperity observations on pennies and I-Bonds.
• Coming later in the week; "An Obituary for Global Warming, We hardly Knew Ye."
• And yes, another rant on immigration, migration, Westwinds and just about all the subjects mentioned above tying together. Note I said "immigration and migration" not illegal immigration. We take the difference here seriously.

Sunday, December 02, 2007

410 Avocado New Price Buy Buy Buy

Can I pick 'em? Just too sweet. If this knife falls any faster some lesser fool is gonna grab it and then I'll have to wait and take it from them when they default. After all who wouldn't want their own Koi Farm? Note that true to form the lawn has gone brown.

REDUCED AGAIN! Los Posas Estate that needs help! Great location, large lot, pool, spa, and two story house with a four car garage that opens to the backyard. So much potential here. Has the remains of a Koi farm with separate breading pools on the right side of property in the back. Check with the HOA regarding the use. Could be a fabulous estate with a lot of TLC.

Anybody witn a penchant for catching knives can look at the listing.

What prompted this update was the drive through my neighborhood this afternoon. In 2004-05 there was no need for "For Sale" signs. If you had somebody on the inside track they might let you join the bidding war or place an additional backup offer. Today the street corners were crowded with "Open House" directionals. A quick perusal shows nearly all of them "Priced To Sit." Looks like we are a year behind North County San Diego. As another indicator today's fishwrap headline was a piece on what Amgen employees are doing after leaving the company. The DQNews tells the story. Well, half the story. Well , half of the half of the story. Sales are half but the scoop is half of those are not "arms length" transactions. An arms length transaction isn't about adjustable rate mortgages but rather the rekaionship of the buyer and seller. Some may be, and I stress only may be buy out packages. Others are gamily transfers, estate dispositions, etc. 810,000 people and 443 SFR/Condo transactions is noise.

And our friend 410 Avocado? $884,900. Almost exactly double my price point. Waiting, waiting, waiting.

Stop Paying Your 2nd Now

I'm serious. The time has come to take the plantation back from the masters. Just because I find the moral hazards the current lending crisis has introduced to be excrementitious doesn't mean I don't see it as a great opportunity. If you have a recent 1st & second and the value of your home is near or less than the value of your 1st mortgage lien then stop paying your 2nd now. Why? Simple. You will make gobs of money with no consequences. Really, what are they gonna do? foreclose? Not hardly. they'd have to spend thousands and thousands only to end up OWING the 1st trust deed MORE than the house is worth. Isn't this great? Then, debt discharged, expenses lower take the paperwork to the county assessors office and have your tax bill likewise reduced by the same of even larger amount. Win-win as our dear departed scamboi used to proclaim. Remember the rulez. Don't sign anything, they'll try to do to you what Countrywide did to Casey and convert a worthless 2nd to a personal debt that survives bankruptcy. Gosh, I wonder if they'd be interested in selling that $50k note to me for $500? I'd put a garnish on his wages for a bit of sweet passive income. Second, stretch things out as far as possible. Lead them on. Part of the plan is to turn this into a movement and hopefully you'll just get lost in the flood. The longer things go unaddressed the less likely it is in their interest in going after any phantom equity. Now here's phase 2. For a few people following my plan the 2nd lien holder may start actually pursuing foreclosure. By this time you've got a tax bill and you've crushed the neighborhood comps and hopefully your neighbors have joined the plan. If the lender is dead set on forcing themselves to take a huge financial hit then it is time to negotiate. You've saved 6-8 months of "their" payments and you've gotten a break on your taxes; a gift that keeps on giving. Offer them the deal to resume payments at a discount. Have them rescind penalties and accruals and you agree to resume paying on a balance half the previous outstanding.

Any questions?

Saturday, December 01, 2007

An Ill Westwind Blows

The local old media fishwrap Star is following what might become a really big deal. An auction of 42 homes in a failing South Oxnard development. Excerpt:
On the day of the auction, there will be a dry run, giving bidders a sense of how the process works.

"It's very open and transparent for the buyer," said Winchell. "It's a great thing for them because they determine the price."
Bullsh¡it. There is the reserve, the prequalification, the auction fee, the closing costs, on and on. Auctions at this stage of the housing collapse are designed to do one thing; generate interest. Everything else is ephemera. And it is working. The Los Angeles station ABC7 carried the story. B@st@rds even title the story: "Sweet Deal for Home Buyers in Oxnard." Gotta love it when the old media starts sounding like Casey.

But what about Oxnard? They've been busy little urban planners. Here's one of their efforts: Federal Housing Assistance. Excerpt:
Total transactions for fiscal year 2002: 262
Federal funding (within this search) for the year : $5,837,500

How is all this working out? The OFHEO knows. Excerpt:
The states with the largest depreciation for the same period were: Michigan (-3.7%), California (-3.6%), Nevada (-2.4%), Massachusetts (-2.3%), and Rhode Island (-2.2%).
Be sure to read the comments following the Ventura County Star article:
No way in hell would I want to live there and it isn't even appealing as an investment property because the area will just trash any new home.

Auction tomorrow, be sure to read about it here on Monday.