Who got the better deal in this decline;l you or big money

User Forum Topic
Submitted by SD Realtor on August 28, 2009 - 5:19pm

File this under the ouch category... Many of us piggs, (I for one) sincerely hoped that during this downturn we would get our opportunity to buy a home a great price. Now don't get me wrong, many of us have but those of us who have not, (like me) are stinging from the upturn. Some of us are still in denial but personally I have not.

In the Rally is For Real thread Rich posted CAR posted some interesting comments of rumors about the institutional buyers and such.

Now there is a great article about the PPIP. Here is the link...

http://www.ritholtz.com/blog/2009/03/ppi...

So the moral of the story is... well it is he who has the gold keeps the gold, or gets more gold. He who is a normal joe slugging it out in this world gets a pansy 8k credit.

After you read this article make sure you tape your head with tape so it will not explode.

Submitted by patb on August 28, 2009 - 6:45pm.

big money of course.

Submitted by moneymaker on August 29, 2009 - 11:23am.

Let's say when you play, when you lose, you lose everything. This would be more realistic. I remember back in 2004 when an old friend of mine was "investing" in real estate,he started in Phoenix and ended up buying in Florida as well. Well being a good friend he wanted to let me in on it. I was in a 3 way phone conversation with him and an accountant friend of mine and we told him "it's not a matter of if, just when the bubble will bust",of course there was no convincing him. Inevitably we will all pay in our taxes, that is a certainty.P.S.-anybody buy a Lottery ticket tonight? If you did, then thank you, as the government will get 40% of it and hopefully that will decrease our taxes just a little bit down the road.

Submitted by patientrenter on August 28, 2009 - 8:39pm.

It's a very good explanation in layman's terms of how the PPIP is designed to overprice assets, whilst giving the impression that they are just helping to set the 'right' price.

I think the truth is that those who knew anything already knew that, and the rest of the public is unreachable, even with the best explanation. Besides, the public wants their homes to have as high a market value as possible, along with their equities. As the saying goes, "it's hard to get a man to understand something when his salary [or wealth in this case] depends on him not understanding it".

Submitted by Allan from Fallbrook on August 28, 2009 - 9:16pm.

PR: Taken one step further, this is the government's way of attempting a "soft landing" in terms of market valuation on those toxic assets.

We all know exactly what would happen if, simultaneously, all of the banks were forced to divulge, on a mark-to-market basis, the true (or salable, to be more precise) value of those same toxic assets. The answer is complete systemic collapse and largely due to the fact that those assets, while not valueless, would be discounted significantly, in many cases by 50 - 75%. This true, market-driven valuation would blow holes in Balance Sheets throughout the banking industry and you would see the list of FDIC troubled banks skyrocket. The word on the street is that as many as another 2,000 banks and financial institutions may bite the dust by 2012 and what Geithner and the FDIC are doing right now is controlling the crash as best they can.

So, Geithner and the FDIC play a little game with the money (and there is no fear that the FDIC will go broke, the Treasury will just continue printing money for Bair and Co. to throw at insolvent banks) and they keep the fiction alive, while Bernanke talks about "green shoots" and averting Great Depression II.

The real question now becomes how much of an impact the potential collapse in Commercial RE might have, as well as the rapidly rising default rate on those mortgages that aren't subprime, such as Alt-A and Prime.

Submitted by patientrenter on August 28, 2009 - 9:38pm.

Allan from Fallbrook wrote:
...this is the government's way of attempting a "soft landing" in terms of market valuation on those toxic assets.

If I were not a cynic, Allan, I would believe this. My cynical side says that what's really going on is redirecting the consequences of bad actions from the principal orchestraters and beneficiaries to the innocent bystanders. In other words, my cynical side tells me the soft landing is marketed as a rescue for us all, but it's really a smokescreen for a painless escape by the primary perpretators.

Submitted by SD Realtor on August 28, 2009 - 9:48pm.

Great points pr and Allan...

I guess what I was really trying to also illustrate is the potential for the tsunami to get swallowed up by the PPIP, or at least reduced. Lets say some player wants a 100B in assets. So he buys them at say 40%... Okay so 40B right? However if you follow the example in the PPIP he pays 20B of which he can get the Fed to finance some of that right? So at the end of the day the guy puts in what... 10B AT THE MOST right?

So why should he HAVE to put those properties on the market? Geez he could rent them out and make money couldn't he? He probably does pretty darn well income wise... So then he holds them awhile and when the market turns he KILLS!

Anyways yes it is all really distressing... I learned a hell of alot from this cycle and am still learning every day. However what I learned was what I feared most, was that yes the little guy will get some crumbs, AND darn if you have to be ready to grab those crumbs when they come, but the big guys will always do better. Yes a few lambs were sacrificed but now I have to wait for some interest rate shock to happen before pricing is gonna come down to where I want it...

That bums me out and I hope I am wrong.

Submitted by patientrenter on August 28, 2009 - 10:05pm.

Patience, SDR. We can only be patient, and ready to pounce. It is very frustrating at times, but ya gotta distract yourself when that happens.

Submitted by SD Realtor on August 28, 2009 - 10:11pm.

Yep I agree 100%. Gotta view this as an opportunity to make some money and build the pile up bigger because if (when) interest rate shock does come, cash will be king king king... You are right PR.

Submitted by CA renter on August 29, 2009 - 2:43am.

patientrenter wrote:
Allan from Fallbrook wrote:
...this is the government's way of attempting a "soft landing" in terms of market valuation on those toxic assets.

If I were not a cynic, Allan, I would believe this. My cynical side says that what's really going on is redirecting the consequences of bad actions from the principal orchestraters and beneficiaries to the innocent bystanders. In other words, my cynical side tells me the soft landing is marketed as a rescue for us all, but it's really a smokescreen for a painless escape by the primary perpretators.

So true, PR.

SDR, that must be a trick question, right? ;)

Of course, those with the gold make the rules, and we peasants on the ground can just hope that a few crumbs fall our way.

It's most unsettling to see all this going on, and the worst aspect of it all, is that is being done in broad daylight, for the most part. They're giving taxpayer money, hand-over-fist, to the very parties who caused all the problems...and nobody in power seems to have any problem with it.

Whatever happened to Hank Paulson's claim that we would look for the guilty parties when the "crisis" is averted. Gosh, with all the green shoots an' stuff, you'd think they'd be beating the bushes already looking for the "guilty perpetrators."

Frustrating, frustrating, frustrating.

...oh, but the conversations I've had that led to my post actually do give me hope. It sounds like lots and lots of "investors" (both small and large) are buying real estate right now; and every one of them is expecting to sell it to some greater fool for a profit sometime in the future. Now, THAT is what I'm waiting for. :)

Submitted by Allan from Fallbrook on August 29, 2009 - 7:40am.

CA renter wrote:
Whatever happened to Hank Paulson's claim that we would look for the guilty parties when the "crisis" is averted. Gosh, with all the green shoots an' stuff, you'd think they'd be beating the bushes already looking for the "guilty perpetrators."

CAR: Paulson's claim is going to rank right up there with O.J.'s claim, post-acquittal, that he'd be beating the bushes and looking for Ron and Nicole's murderer. Of course, beating the bushes was code for playing golf.

The American people have shown themselves willing to be gulled into just about anything, whether it's standing by idly and watching as our civil liberties are stripped from us (FISA, Patriot Acts I & II, wireless wiretapping) or allowing the government to fully co-opt shareholder/bondholder owned businesses (Chrysler and GM) or spend our money to enrich or bail out their cronies (everything from Carlyle Group and Halliburton under Bush to AIG and Goldman under Obama).

And we've stood by and done nothing. When we have protested or dissented, we've been referred to as un-American (Pelosi) and this while engaging in the most American activity of all.

Submitted by Allan from Fallbrook on August 29, 2009 - 7:48am.

patientrenter wrote:
Allan from Fallbrook wrote:
...this is the government's way of attempting a "soft landing" in terms of market valuation on those toxic assets.

If I were not a cynic, Allan, I would believe this. My cynical side says that what's really going on is redirecting the consequences of bad actions from the principal orchestraters and beneficiaries to the innocent bystanders. In other words, my cynical side tells me the soft landing is marketed as a rescue for us all, but it's really a smokescreen for a painless escape by the primary perpretators.

PR: Hell, I wasn't trying to say this soft landing was engineered us for us commoners! Nope. Why should it be? We're neither the main perpetrators, nor the main beneficiaries, of this global swindle as you correctly pointed out.

However, if there were to be a global systemic collapse, they (the favored) would get caught up in it right along with the rest of us. Can't have that happen.

So, the "tale" is "spun" (think Bernanke giving Scott Pelley of "60 Minutes" (my favorite party organ) all that "unprecedented access", all while spinning that folksy tale of his humble beginnings and speaking enthusiastically about the green shoots), and We the People sit here and swallow it.

I swear to God, my new response to everything is going to be singing The Who's "Don't Get Fooled Again" over and over.

Submitted by equalizer on September 1, 2009 - 10:22pm.

Allan from Fallbrook wrote:
CA renter wrote:
Whatever happened to Hank Paulson's claim that we would look for the guilty parties when the "crisis" is averted. Gosh, with all the green shoots an' stuff, you'd think they'd be beating the bushes already looking for the "guilty perpetrators."

CAR: Paulson's claim is going to rank right up there with O.J.'s claim, post-acquittal, that he'd be beating the bushes and looking for Ron and Nicole's murderer. Of course, beating the bushes was code for playing golf.

The American people have shown themselves willing to be gulled into just about anything, whether it's standing by idly and watching as our civil liberties are stripped from us (FISA, Patriot Acts I & II, wireless wiretapping) or allowing the government to fully co-opt shareholder/bondholder owned businesses (Chrysler and GM) or spend our money to enrich or bail out their cronies (everything from Carlyle Group and Halliburton under Bush to AIG and Goldman under Obama).

And we've stood by and done nothing. When we have protested or dissented, we've been referred to as un-American (Pelosi) and this while engaging in the most American activity of all.

Allan,
I don't know much about history so I found the excerpt of Morris Dickstein's "Dancing in the Dark: A Cultural History of the Great Depression" in Slate enlightening:

"In the inner lives of Americans, a deep strain of depression was one mark of the Depression, a tendency for people to turn the crisis inward, to blame themselves, to target their own shortcomings and failures, not those of the system. This self-blame, rooted in American individualism and self-reliance as well as in Protestant notions of personal accountability, was where the still-dominant American success ethic played its baneful and destructive part. As one psychiatrist who had trained with Freud later told Studs Terkel, "Everybody, more or less, blamed himself for his delinquency or lack of talent or bad luck. There was an acceptance that it was your own fault, your own indolence, your lack of ability. You took it and kept quiet." .... Thanks to this "kind of shame about your own personal failure ... there were very few disturbances."
There was anger and rebellion among a few but, by and large, that quiet desperation and submission." Unlike Europeans who turned to Fascism, Communism, or militarism in those hard times, most Americans remained passive, even self-accusing, in the face of Depression conditions. They neither rebelled nor submitted to the despotic rule of a would-be savior. This looks even more remarkable today than it did then."

I think many would argue, like you Allan, that people today are all about the blame others and not themselves these days. I would agree there is a difference but not enough to make it meaningful; there will be riots for any reason in USA. People have moved from self-blame to indolence?

http://www.thebigmoney.com/articles/hist...

PS
TG may work up some witty prose from this quote:
"Thanks to both the economics and the psychology of depression, the early 1930s saw a decline in the marriage rate, the divorce rate (people couldn't afford to separate), the birthrate, and even, as far as it can be known, the frequency of sexual relations. "Sketchy evidence suggests that due to the tensions of hard times, sex within marriage decreased," writes Susan Ware. "Fear of pregnancy was a major factor, but feelings of inadequacy on the part of the male and lack of respect for the unemployed man from his wife also played roles." One woman told Lorena Hickok of her fear of pregnancy, balanced by a fear of withholding sex from her depressed husband:

I suppose you can say the easiest way would be not to do it. But it wouldn't be. You don't know what it's like when your husband's out of work. He's gloomy and unhappy all the time. Life is terrible. You must try all the time to keep him from going crazy. And many times—that's the only way."

Submitted by Allan from Fallbrook on September 1, 2009 - 10:43pm.

Equalizer: Well, I fear TG and I occupy the same gutter. I read your post and found it very interesting, especially the part about self-blame and the Protestant work ethic.

Then I got to the part about sex and the Great Depression and my response went right out the window.

"You must try all the time to keep him from going crazy. And many times - that's the only way".

That sentiment right there underpins my entire theory about how to combat radical Islam: If those guys were just getting some sex on a regular basis, a lot of this crazy terrorist shit wouldn't be happening!

Kidding aside, I have heard from more than a few of my friends and acquaintances that sex with their significant other has either dropped off precipitously or disappeared entirely and, to a man, they're ascribing it to the downturn. Nearly all of these guys have been hit hard by the times, whether it's losing their job or suffering as income/credit has contracted significantly.

One of my friends, whom I coach with, told me his wife had responded to an entreaty for sex recently by saying, "I don't put out unless I get dinner and a movie!". They haven't been out to eat for months now.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.