Tuesday, March 31, 2009

Soft Landing??? Not so much...

So much nonsense going on in this country, where to start?!?!?

I will keep it simple for now, and I just want to put this article out there for all the 'experts' and real estate geniuses of a few years back. Seems your 'level out' and 'soft landing' theories didn't pan out so well.

Read this: Home Prices in 20 US Cities fell by a record 19%

I have been hustling getting a new business up and running, so I haven't had time to discuss the AIG bonuses, the new 'Government Motors' Corporation, and the host of other things I never thought I would see happening in our Constitutional Republic.

Stay tuned...


Wednesday, February 18, 2009

R.I.P Personal Responsibility...the guvment is in charge now

I want to apologize to all the readers that read this blog and decided NOT to purchase a house. Had I know we could have bought houses that we couldn't afford, at rates that we 'knew' were going to adjust higher, AND that the guvment was going to come in and 'save' us, I would have said go ahead and buy. Seriously, why be responsible anymore?

Who knew that the nanny state was going to step in and force changes to signed legal documents. Who knew they would take 75 billion dollars from people that have their own mortgages and bills to pay and use that money to pay for people that don't feel like paying. Who knew that guvment would step in to artificially 'set' the value of homes by forcefully taking money from people who WORKED to earn it, to give it to people that made bad financial decisions.

SORRY, but the ONLY way to get the REAL value of these homes is to let the free market work. If the guvment artificially sets the value of home prices by spending 75 billion dollars, then you don't have the REAL value of the property!

We all know that guvment has the best of intentions, but we also know that millions of homeowners will work this system for all it is worth. Some people would have taken a second or third job to make things work, but not anymore!! Just go suck on the teet of the guvment and get your 'free' money.

I don't know what to say anymore. If you saved money and were waiting for prices to return to 'market' level, if you were responsible, if you paid your taxes and managed your investments to save for a down payment, then you made the 'wrong' choices for this 'changed' economy that you can(not) 'believe' in.

Somebody tell me what is to wrong with RENTING!?!??!?!? I have been renting for years! I am still alive! I have freedom, less stress, I don't have to pay for repairs, property taxes, or HOA's. I can pack up and go in 30 days notice. Yeah, it did 'suck' when everybody else was doing refi-cash outs and bragging about their 'wealth', but I stayed the course. The real estate boom was irrational, so now it is time to pay the price. For several years there, people were making 100k a year without doing anything. NOW, they are losing 100k a year without doing anything. Oh wait...they spent that 100k when things were good. Not my fault. So suffer the consequences for your actions.

What is sooooo wrong with people foreclosing, and going to rent? Then those 'responsible' people that saved their money can buy homes that they CAN afford. They won't default, and the economy will be more stable. People will stay in homes for that 'standard' 3-5 year minimum as that is what it usaully takes to break even with the transaction costs in a 'normal' real estate market.

For the past 15 years, people have gotten used to 'quick hits' whether it was the stock-bubble, or the RE bubble. Well guess what, the times have changed. You are going to have to produce something and add value to make money from now on. There isn't going to be some 'magical' industry where fast food workers and people with high school diplomas will be able to make big 6 figures. You won't be making millions overnight on a 'no revenue' dot.com or shucking option-ARM loans to mathematically challenged borrowers over the phone.

And don't kid yourself. These same people that 'didn't know what they were signing' are going to have NO trouble finding out how to work the sytem and get their free money from this guvment 'bailout'. Also, do you think the guvment is going to stop at 75 billion if there are some 'poor, hard working homeowners' that didn't get help? Come on, name one guvment social program that hasn't had a budget overrun!

This situation is a mess, but guvment intervention is only going to make things worse. Not to mention that it sets another dangerous precedent as well as being a slap in the face to every responsible person in this country. To all the parents trying to raise their kids properly, this should make you mad. But then again, parents who actually take the time to raise self sufficient children with personal responsibility are in the 'minority' now, so their 'voice' no longer carries as much weight. Too many in the 'dependent class' looking to guvment to solve all of their problems.

R.I.P. Personal Responsibility.... guvment didn't need your vote anymore.

Stay tuned...this sh*t show has just begun


Friday, February 13, 2009

Like many stupid borrowers, Congress ’signs’ something they never read

I don't know what to say. I am really and truly at a loss.

They said they would give 'the people' 48 hours to see the final bill before they voted on it. The 1100 page bill wasn't even complete barely 12 hours before they voted to approve it.

If you think this country is in a mess because a bunch of people didn't read their mortgage documents, wait until you see the fallout from our politicians not reading this 1100 page pile of crap.

Stay tuned...


Wednesday, February 04, 2009

My 'Christian Bale' take on things...F@CK!!!

It's been a while since I last posted. I got it. There have been lots of things on my mind, but I have just been watching and waiting as there is a TON of information to digest. Not to mention I have been working on making a buck so I don't have to be a remora and suck off the guvment which seems to be the 'popular' way to go these days. The straw that broke the camels back has to be this f@cking class warfare game that is going on in this country. My compassion meter is bouncing on empty when it comes to people that can't take personal responsibility for their actions, and the guvment that runs to 'buy votes' from these same people. I don't have time to go into every detail of every problem we are seeing right now, but here is my 'Christian Bale' take on things...

- To all the people whining like Barney Frank after losing a cuddle battle with Brad Pitt over Bank of America spending $10 million dollars hosting a week long Superbowl party, get over yourself!! Let me put this in f@cking perspective for you. They got $45 billion of stupid TARP money. Got it. They spent $10 million sponsoring the Superbowl, which is obviously a very 'high profile' event that garners lots of exposure. So let's see what percentage of 45 billion, this 10 million amounts to. $10,000,000 / $45,000,000,000 = .000222 x 100 = .0222%. WOW, so BofA spent .02% of the 'taxpayer' money to advertise at the Superbowl which I am sure garnered them some business. SO, if you want to get pissed off at BofA 'wasting' .02% of their taxpayer money...I would like to see the same outrage when guvment 'wastes' over .02% of taxpayer funds. I would be f@cking ecstatic if guvment only wasted even 2% of our money. I don't like it that ANYBODY got guvment money, but they signed the Superbowl contract over a year ago, so let it go. Besides, there isn't a company in this country that is any more poorly run than the guvment.

- TARP: what a joke! So let me get this straight...the guvment, Wall Street, and all of these supposedly smart f@cking people didn't see this coming for 5-8 years, but they can figure out how to fix it in 2 weeks of guvment meetings?? HA HA HA that is f@cking laughable! What they should have done is let the system work itself out, and WAIT and see what needed to be done. We are burning throught billions and trillions of dollars at about the same rate that Brett Michaels burns through groupies on Rock of Love. I admit, the whole banking collapse is a mess, and I think VERY few people actually understand what happened, much less how to fix it. But in typical guvment fashion (like there ALWAYS is), there was a massive budget overrun as their 'projections' were off. When are people going to learn that guvment has not ONCE budgeted for anything accurately in the past 100 years.

- I love it how people are so upset when banks that got bailout money take clients out to nice resorts and nice meals. They are in the 'money' business. So, to court people that still have money, they have to go someplace nice. Trust me, it is hard to get somebody to invest millions at your bank if you are taking them to f@cking Denny's for a grand slam after a night of partying at the Red Roof Inn. If you don't like it, don't buy stock in that company. If you are just envious, that's cool too! Just start studying for the GMAT so you can go to MBA school and start working your way up on Wall Street. That is the beauty of this country (at least it used to be), you can do whatever you put your mind to. If you don't want to do that, that is totally cool. Just find some other way to add value and stop f@cking complaining!!

- The first round of bailing out the banks only led to every other f@cking business segment wanting to latch on to the guvments teet. Why not? I mean the economy is bad for everybody right? So if momma guvment is going to throw out a boob, why shouldn't you cop a feel too? I never thought it would come to the point where big businesses would act like welfare queens grabbing at free money. I guess my theory on laziness is correct...if somebody else will give it to you for nothing, why would you want to work for it?

- The new stimulus bill? Somebody needs to explain to these f@cking politicians the difference between creating jobs and creating work. Look at this WSJ article about some of the projects and the 'jobs' they supposedly create. Almost $900,000 for a frisbee golf park that creates 4 'jobs'? What the f@ck is that? Why is the guvment using taxpayer dollars to get into the frisbee golf business? And it needs to be clarified that building that course creates WORK for 4 people, not jobs. What are they going to do when they finish building this course? I can't imagine it is more than a few months to get done. So then what? What do they do with their new 'job' that was created? Oh thats right...it wasn't a f@cking job to begin with. Why not give small business a tax break and let the guys in the miniature golf or arcade business start a frisbee golf course if there is money to be made. Sorry, but at a cost of $900,000 that is a lot of frisbee golf that needs to be played to break even. But wait, guvment never has to worry about adding value, I f@cking forgot.

- About the housing bubble that 'nobody' saw coming. Let the system run it's course. Who f@cking cares about foreclosures?!?!? That is the ONLY way you will get to a REAL market value of property. Somebody forecloses, goes and rents, and somebody else buys a 'new' house (the foreclosed one) at a price that is closer to the real value of the home. So what if you have a ton of people forclosing, they have to live somewhere, so that will stimulate the RENTAL market. But what about all those empty homes?? Well, the market value of those homes will come back in line with what rental incomes will dictate. Then the evil 'investors' will purchase these foreclosed homes where the rental income can provide positive cash flow and use these homes as investment properties. As people recover, they will again be able to buy homes that they can afford with REAL fixed rate mortgages at debt-to-income ratios that are in line with historical norms (30-35% DTI) instead of the inflated 50-55% debt ratios used during the 'bubble'.

- Let me tell you this: GREED is GOOD! No really it is. The problem is greed without INTEGRITY! I am all for somebody running a $50 billion dollar fund...IF they are adding the value and not LYING and stealing from people. Personally, I think it all started with Milken. There were no 'real' consequences for crimes of integrity. Sure, Milken did 22 months in prison...but he had a cool BILLION waiting for him when he got out! If that is the case, lock me up today for 2 years if there is a BILLION dollar payday waiting for me when I get out! Heck, I did 4 years at the Naval Academy for a heck of a lot less, and some would argue the Academy is more stressful than whatever white collar country club Milken got to hang out in.

You want to fix this mess. Every single loan application has the names of the people that 'worked' on it. It has the underwriter, the appraiser, the CPA, etc. Start going through all of the foreclosed home loans and making a record of the people involved. I am sure you will start seeing a pattern and a lot of the same names popping up. Start with the people at 'ground zero' for this thing, then just work your way up through the captial markets and the bankers that were lying their assess off to sell these BS loans. Take thier cars, homes, boats, etc. Have a fire sale with it. The same names will be popping up a lot as they were running their businesses on fraud. F@ck them.....make'em pay!

- Those dreaded Wall Street Bonuses. People need to chill out on the 'bonus' stuff. I get it, no really I do. The 8-figure bonuses and golden parachetes for the high level execs that didn't do squat to add value are not good for business or perception. But my answer to that is don't f@cking whine to the guvment about it, just readjust your portfolio. The system ain't perfect, but if the board and shareholders of the company agree to it, then that is enough for me. Guvment intervention almost always makes the situation worse through the unintended consequences of their 'emotional' actions. That said, for a vast number of the people on Wall Street, their 'salary' is in the $90-150k range. I know that sounds like a lot of money to a lot of people, but for the hours they are putting in, their 'salaries' should be at least double what they are. So when a 100k a year investment banker associate gets a 200k bonus, a big chunk of that is merely 'deferred' or lump sum salary that is paid out partly in the 'bonus'. You see, to pay a 'salary' for a job like that, it would probably have to be in the 175-200k+ range for the 75-100 hour weeks the people are putting in. They own you 24/7/365.

I have several friends that are investment bankers, and let me tell you THE JOB SUCKS!! The blackberry rules their lives. We were all back in Annapolis for homecoming and a reunion, and it was amazing the number of e-mails they received over the weekend and while on 'vacation'. Some had to be pulled away for hours at a time to go get on the internet and make phone calls. Even on a 'vacation' weekend the blackberry is being checked every half hour to an hour. They don't have the luxury of disconnecting completely at any time, so that is why they make more than 50k a year. Yes, these people chose that line of work. And they chose to work the hours so they can make the money. But they don't need a bunch of jealous f@ckers whining to the guvment to regulate their pay. I know the guvment 'forced' the bailout on some of the firms. Since the guvment is a shareholder now, if they don't like it, sell the stock. Guvment needs to get their own waste in check before sifting through somebody elses. Besides, as far as I know, Wall Street pays taxes on those bonuses unlike some of our high-level politicians. Oh I know...it was an accident they didn't f@cking know they had to pay their taxes. Give me a f@cking break!

The only good thing about this '500k bonus' thing that was announced today, is that some of the companies that were 'forced' to take money will be giving it back ASAP now that there are new 'strings' being attached. Goldman Sachs is definitely returning it ASAP, and I am sure that Morgan Stanley will too. I know there are some other more complex regulations that were placed on these companies, but the sooner that any private company can get back to being 100% private, that is better for everybody. But again, all goes back to being 'greedy' but doing it with INTEGRITY! And sadly, nobody has given a f@ck about integrity the past decade or so, only the bottom line...whether it was 'real' or not.

So, there you go. I actually feel better dropping a few F-bombs and telling it like it is instead of sugar coating all of this BS. I actually don't give a f@ck that Christian Bale lost his sh@t on that guy. If you still don't know what I am talking about try going to www.google.com and typing in 'christian bale'. Sometimes people do stupid stuff and their BS needs to be called. Maybe that decade in the military softened me to the 'harsh' language that seems to get a lot of panties in a wad. You haven't heard nothing until a 20+ year senior chief reams somebody for acting like a f@cking retard...or should I say moron, I don't want to offend anybody.

Anyway, I definitely look forward to the comments.

Stay f@cking tuned...


Tuesday, December 09, 2008

New ad for the 'big 3'!

I don't have time for a long post, but I received this 'ad' in my e-mail inbox today, and thought it was entertaining and appropriate to share.

This bailout for the 'big 3' is just ridiculous. I know it won't be pretty if they have to close some plants, layoff lots of workers, and do a complete bankruptcy restructuring. BUT I am not convinced it would be catastrophic and throw the economy into a depression like some are saying.

I just spent some time updating the back-end of the blog and website, so that will help minimize the time I have to deal with spam attacks, etc. It will also make it easier and more efficient to post more frequently and add more pics/videos/etc.

Thanks for stopping by, and look for some more posts in the near future.

Stay tuned...


PS...I know I haven't been posting near as much as when the 'there is no housing bubble' was in full swing, but it is greatly appreciated that when you do your Christmas shopping at amazon.com, you go there through my blog. Thank you for your support!

Monday, November 24, 2008

Automaker CEO’s - making as much sense as 125% LTV stated income loans

Pee on the Big ThreeI know this is a few days late, but I wanted to get a few quick thoughts out on the automaker testimony. I know it has been a while, but I have been trying to decide where to take this blog next. Even though it began as a blog that talked specifically about mortgages and real estate, I think I am going to start talking about all things business and finance related. I enjoy doing the blog, and have been thinking of ways to regenerate my once large audience and get blogging again. The posts will most likely be shorter, but will come more frequently again. Besides, there are more than enough financial issues out there aside from mortgages. I have a few thoughts of my own on our current problems and since nobody knows how to fix this situation, and the people that are offering solutions didn't even see the problem coming, I don't feel too bad giving my opinion on things.

I am sitting here between work trips watching the automaker CEO's and the UAW (United Auto Workers) testify before the Senate Banking Committee. I'm sorry, but I thought for a second there I was watching a stuttering contest. If you can't put together a concise statement without stuttering, or answer a simple direct question without sputtering like a 20 year old trolling motor, then I can only assume you are not confident in what you are saying.

I am not buying the fact that it would be catastrophic if one or two of the 'big 3' went away or consolidated. I would definitely cause some problems in the short term, but I think it is a necessary evil in the long term. Let's face it, the numbers don't work and the 'big 3' are not competitive in this global economy.

One of the things that was most shocking to me was this: a union worker gets 100% of their money when they are working. But let's say a plant is CLOSED and they are not working, they still get 95% of their money!!! Yes, it is a 'great deal' for the 'worker' because they are getting paid for not working. How many people in the non-union private sector can get pay and benefits for NOT working?? People can tip-toe all they want around the 'powerful' unions, but the unions are NOT doing themselves any favors by acting this way. Michigan needs to become a 'right to work' state, and let workers do something complete crazy, and COMPETE for their jobs based on productivity!! Wow, what a concept I know!

It surely wasn't surprising when Barney 'Fannie is a solid investment going forward' Frank's buddy Christopher Dodd said that he wasn't offended by the people getting 95% of their pay and benefits when not working. In fact, he commended the unions for their work in 'taking good care of their people'. Geez...I would like to see Mr. Dodd run a company and offer the same thing to his employees. You get 100% of pay for working, and 95% of pay when you're not....and see how many employees show up to work! I know that isn't exactly the same situation, but I think we can all agree that you can't pay people to 'not work' at a plant that is shut down. I am not talking about being closed for a day or two, or even a few weeks, I am talking about CLOSED. Not operating. No work to be done.

I wasn't impressed with Rick Wagoner from GM at all. He looked like a deer in headlights and had trouble answering simple direct questions. That guy needs to go away faster than a pedofile at a pre-school. He does not help the image of GM one bit, and should step down. He couldn't or refused to answer direct questions asked of him. When he finally answered because he saw that he wasn't going to weasel out of things that easily, he lacked uh, uh, confidence, and uh, showed uh, that he, uh, was uh, void of uh, and CEO qualities. Maybe he shouldn't have taken the private jet, and instead flown first class and use the extra money for a years worth of dues to his local Toastmasters Chapter.

Of the three, Alan Mulally came across the best, with Robert Nardelli in second place. Maybe that is only fitting since the financial health of the 3 automakers was said to be 1. Ford, 2. Chrysler, and 3. GM. Ron Gettefinger from the UAW (United Auto (non)Workers) was also there. It was very entertaining listening to Mr. Union rationalize how the unions are doing a great job and how they have made so many concessions. Give me a break.

Anyway, it seems that a majority of the Senators were less than impressed with these guys. They couldn't say what the money would go towards, and they couldn't guarantee that they wouldn't be back. It only takes about 3rd grade math to realize that at their current burn rate, the 25 billion would only buy them a few months time, especially if they don't make DRASTIC changes to the way they are doing business. And according to Mr. Union, they were NOT going to make any more concessions. So, sounds like a stalemate to me. You can't compete in the this global economy, you aren't willing to make the necessary changes, so why should we help you? Make Michigan a 'right to work' state, and let the workers, NOT the unions, decide if they want to help the situation. Sounds simple, but it will NEVER happen, because the unions don't want to give up their 'good' deal.

Oh well, should be interesting to see what happens with the automakers. Will they make the tough decisions that need to be made, or will they try the 'status quo' of further whining to politicians? Only time will tell.

Look for more insight to the Wall Street bailout and the continuing financial problems right here.

Stay tuned...


Tuesday, October 07, 2008

Flashback: A trillion dollar game of JENGA!! (Dec 9th, 2005)

I am working on some new material, but I have been out of town for the past week for work. That said, I found this post that I wrote on December 9th, 2005. I think it is ’somewhat’ related to what is going on now…but I will let YOU be the judge of that. Here is the link to the ‘original’ time I posted this article. There are some good comments to read through as well. ORIGINAL ‘Jenga’ POST


Friday, December 09, 2005

Trillion Dollar game of JENGA!!

This housing bubble is like a game of Jenga. You can see the blocks going higher and higher, you know it is going to fall down soon, but it hasn’t yet…and you just hope it isn’t on your turn when it does! The housing market is the same way right now.

Some people pulled out of the tower, and are content. Some wanted to “win”, so they kept taking turns and piling blocks on the top. Some just wanted to stay where they were, but all the people piling on the top forced things like property taxes so high, they were forced to move.

BUT, as of right now, the tower is still standing. The “players” are taking more time moving their pieces. Occasionally the ceiling fan rocks the tower and some people yell “it’s crashing!” while others look at it and say the fundamentals are fine…it is a strong table, nothing to worry about, keep piling on.

So the question is, WHAT IS going to push this thing over the edge? and WHEN is that going to happen.

In an earlier post I went over how the ARMs were set to adjust and how I think that will be one catalyst that could finally send the jenga tower falling.

Another thing that could shake the markets is if there is a liquidity crisis in the Mortgage Backed Securities (MBS) markets. These are the people the buy the loans which allow the lenders to keep making loans. They are already starting to demand more premium (interest rate) for the risk they are assuming.

I think this story from Bloomberg says it all. The title is: Housing Bubble Bursts in the Market for U.S. Mortgage Bonds . I’m not going to paste the article here, and I’m sure some of you read it already over on Ben’s blog a few days ago.

This thing is really VERY simple. You have 50-80% of borrowers taking ARM mortgages the past few years. These people got loans when rates were crazy low, and lending standards lacked “old school” criteria like verifying income, reserves, penalizing people for BK’s, etc. When these people run out of “fixed” time on their ARM and they look to refi again, they are going to find higher rates (yes, still historically low, but not super low like they had been), and much tighter lending standards because of the article above.

This combination of higher rates and tightening lending standards (they ARE happening now) is going to leave people with very few feasible options. If they can barely afford their I/O ARM at 50 and 55% DTI’s (debt to income ratios), what are they going to do?!?!?

I predict that things will be slower and prices will start a slow decline through 2006. Hot properties will still move as will properties that are priced right. I look to 2007 and 2008 for things to start looking like this: JENGA!!!

Between now and then (through 2007), there are about 1.5 trillion dollars of mortgages that will be going adjustible. I’m already seeing the tightening in the MBS markets. I was talking to my manager this week about a loan, and they told me that our investors were demanding a lot, so we could not be lenient with rate and loan exceptions. Very few times the past few years have I ever been told that. The old mantra was “we’ll find a way, we’ll make the exception”, now the mantra is “we’re not going to lose money on that loan”.

Only time will tell…but that is where I have my sites set. What do YOU think?!?!??!?



It looks like the liquidity crisis with the mortgage backed securities IS having some problems here in 2008. I know my time frame wasn’t super specific, but I think I was pretty close, especially since it was the end of 2005 and things were still ‘booming’. I don't recall any of the Wall Street firms or financial press warning people in 2005 of a liquidity crisis that might come in 2-3 years in the 2007-2008 time frame. You did hear it from a blogger that only has an Economics Major from the Naval Academy. Oh wait, maybe it isn't just 'economics' that is important, but integrity as well. More on that later...

I don’t know about you, but I can just picture Cramer doing one of his ‘Mad Money’ rants, and at the end he yells ‘JENGA’!!! Pretty much sums up Wall Street and the world markets at this time.

What do you think? I look forward to the comments.

Stay Tuned…


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