Oct
30
The Great Disconnect
Filed Under General Thoughts and Comments | 4 Comments
Our government no longer represents the people it is there to represent. That is either shocking news or old hat, depending on your political experience. What is so shocking about it today is how blatant it has become.
The corruption is so widespread and pervasive that it no longer even shocks us. One tactic that lawyers often use to throw their opposition of their tracks is to overwhelm the opposition with information. One lawyer requests 12 months past bank statements and he gets 4 years worth with every canceled check and accompanying financial document. The tactic is meant to overwhelm the other side and frankly to tire them. To sensationalize everything until nothing is sensational. That is precisely what our representatives have done to us. They have been so crooked and such liars that a tax cheat as Treasury Secretary doesn’t even phase us. When did it become acceptable for anyone, let alone a government official who presides over the IRS to evade taxes, mistakenly or otherwise? Haven’t we heard that ignorance is never a valid excuse. I know it wouldn’t be for you or me. What is sadder still is that staunch Democrats may write my rant off as partisanship. How sad has our system become when we all cannot agree that the law is the law and no one should break it. There should be no one (besides his defense attorney) defending him. My point is that special loans from a bank to a Senator don’t seem to matter. Tax cheats don’t matter. Affairs and sexual deviants don’t matter. We have been so overwhelmed by the vulgar, greedy, and illegal acts by many of our representatives that no crime they commit seems to matter anymore, as long as they are in the right party.
The real disconnect though has shown its ugly head in the form of Healthcare overhaul. I just heard that over 70% of the country does NOT want any changes, like the ones proposed, to our health care system. That is 7 out of every ten people telling Congress “No” and still they are proceeding with the most massive government program since Medicare and Social Security. It is absurd. Over the last Congressional recess, town halls indicated the country’s distaste. There is no way that a Congressperson could misread the mood of the people, yet they ignore it’. It used to be that when the constituents that elected you said “no”, you said “no”. Now it seems that when the people say “no”, Congress says, ” let them eat cake” They aren’t even trying to cover up their contempt for their employers.
The disconnect has grown so large as to render the democratic process on life support. We are nearly dead as representative republic and our country is getting labor pains from socialism. I am no radical right winger. I am a citizen. What happened of the tea parties? Was anyone listening? The fall of Rome could be attributed to many things, but chief among them was the devaluation of its citizenry. I don’t know about you, but I certainly feel like no one is listening. If they are listening they certainly don’t care.
May
27
Since Prop 8 has been brought up, I want to enlighten you all to the grand shell game in which you are all players.
The question of gay marriage is a funny one because it shoul d never have been a question. The state has a right to grant unions. People within unions could or should get tax incentives and all the benefits that marriage bestows. That is the state’s right to give. If, however the state grants that right, it must be granted to all, not one group above another.
I don’t think, put this way, that anyone would disagree. Now marriage is a different subject.
Marriage is a religious event and contract. One that only religious organizations bestow. If the Catholic Church does not want to allow gays to marry, that is their choice. A gay person can chose to leave the church. In other words it is a private matter.
The shell game here is that we are all here vitriolically debating the right of gays to marry when we should be debating the right of the state to even bestow those rights. I would argue that the state has no business in saying who can and cannot marry as marriage is a private andreligious affair. The state should only be allowed to grant unions and it should have to grant them to anyone who can legally do it.
The Christian right could then preserve their idea of marriage as it would be a private matter left only for their church to decide. If someone wanted to start a gay church and allow gay marriage that, too would be their right.
The question is of government power. Before we could debate weather or not the state should decide this, we were debating the choice. We should all step back and take this decision out of he public domain and return it to the private domain. This way we are all treated equally and still allowed to maintain ourPrivate and religious beliefs without imposing them on others.
To elevate this point, I would say that many decisions should be taken away from the government and returned to the private citizenry. But that is another blog.
Let’s take the power back. If you were against Prop 8 do it because the state was wrong, if you are for Prop 8, do it to protect your religious rights because once the state has established that they can decide who marries, they may say they can decide who gets baptized, or who can become clergy. It is aslippery slope.
Jan
30
You may think that I am one of those quack conspiracy theorists, but I am not. I have, however, concluded that our government is on a deliberate course of destruction of our economy. It is with forethought and malice. I do not know why they are doing this. I can only guess that maybe it is to make way for a new currency, perhaps, or even a whole new economic form. I am not sure the reasons why they are doing it but let’s look at how they are doing it and why I believe it is with destructive purpose.
First, one only need to look at history and FDR’s New Deal to see that that did not work. Unemployment was higher at the end of the New Deal than it was before. The national debt was much higher at the end of the New Deal. Most any economists could tell you that it did not work. Yet, here we are basically doing the same exact thing except worse.
The current stimulus plan has only 5% of it’s spending on public works projects like road building and bridges. This new stimulus is just another inflated pork ridden budget. $2 billion to National Parks, $400 million to STD prevention, $500 million to NASA. How are these expenditures creating jobs? $275 billion is tax cuts that do little to spur the economy as was proven by Bush’s recent tax rebates. These aren’t permanent tax cuts, these are two year tax credits. What is more wacky is that the credits will also go to people that never paid taxes and to illegal aliens. Anyone with a tax id. (different from a Social Security number) can get one. A ton of money is going to extending unemployment benefits. How does this create jobs? Very little of this so-called stimulus will create jobs. What it does achieve very well, is expanding the number of people who will rely on the government for money in the future. I want to know how allowing someone to stay unemployed a little longer helps me. I want to know how giving $400 million to STD prevention helps me. I am not normally so selfish, but since I will be asked to pay for this, I figure I have a right to know these things
Anyhow, this recession started out as a simple bubble burst. Some banks failed and many people lost their homes. It would have worked itself out as most recessions do. Instead the government got involved and now we are in the worst economic crisis since the Great Depression. In fact this may very well be the end of America, as we know it.
With this all said. They must see all this too, right? I mean the President and our Congress. They must see that the New Deal didn’t work. They must realize that giving money to people who never made enough to pay taxes in the first place won’t help anyone else, right. They must know that $500 million for NASA helps very few. They must know this and still they are doing it. To make it worse they are doing it with money that they don’t have. They will have to take that money from somewhere else. Somewhere that it is probably being used much more efficiently.
If they print it, they lessen the value of everyone’s dollar. That doesn’t help anyone. Printing money is really just another form of taxation. They reduce the value of your money so that they can give money to someone else. It is redistribution of wealth, yet it can be done without a vote and no Congressman gets blamed for it. Most people only get mad about taxes, but they don’t see the hidden tax of inflation.
If they don’t print it, then they may have to borrow it from foreigners who are getting more reluctant to lend it. The Chineese have opennly laughed at us for thinking we can borrow our way out of a problem that we borrowed our way into.Forget about th ineterste on that debt.
If they don’t borrow it then they will have to take it from you and me, by taxing us. So you tell me, who spends your money better? You or Nancy Pelosi? Is paying for STD prevention more important than buying a new computer for your office, or paying for your daughter’s education? How many people does Nancy Pelosi employ, other than her bloated staff that we pay for?
So with all this, how can we not assume that they don’t know what they are doing? I think it is obvious, they are purposefully destroying our economy. I would never claim to be as smart as they are and so if I can see the destruction, they must. It was one thing to have a stimulus plan, but this bill is just a giveaway. That is all any of this money has been. A massive give away to anyone who can afford a lobbyist to go to Washington and ask for it.
Can anyone, please, argue with me, a Democrat or Republican, please someone show me where I am wrong. I plead for someone to show me something good that they are doing. It is very difficult for me to believe that they would do this but their actions speak louder than their words.
I have this one parting question. Are you any better off for the money they have or are going to spend?
Jan
8
How to Fix our ECONOMY
Filed Under General Thoughts and Comments | 4 Comments
70% of our economy is based on us buying things
We can only buy things with money or credit
We get money from working and more money from either working more or raises.
We get credit from credit cards and merchant cards and home equity loans, but we all have credit limits.
While home values were going up , Americans were borrowing against the equity in their homes to consume products. Naturally companies rose to the occasion to fulfill the demand of the consumption. Macy’s, Pottery Barn, Gucci, Target, Circuit City, Linens & Things, etc…
The nature of our economy must change drastically from a consumer economy to a producer economy again. We need to produce products that the rest of the world buys, bringing their money here.
Now that we cannot afford to buy their wares anymore, look at who is closing down. Those employees not only have no credit to buy but no income either. So more companies will have to close. This is a vicious cycle that really may cripple us.
In the past, we built cars that the world wanted. If our economy slumped, we could still rely on other stronger economies to pick us up. We exported planes, and cars, chemicals, clothes, food and medicine. Now, we import most of those things.
When 70% of your economy is based on you buying things rather than making them it is clearly unsustainable. Look at your day today. You can spend all day making money but how much money can you spend today. Personally, if I spent my days spending money, I wouldn’t last a week.
That is the sad state of affairs.
So how do you fix it?
I do know how it won’t get fixed. Giving us all more money to spend won’t fix it. Giving the banks more money to lend won’t fix it.
Creating jobs that produce something will. Changing our economy to be more based on making things and less based on buying them will really fix it.
Basically we have to retool.
Dec
18
What’s the Difference between Madoff and Fannie Mae?
Filed Under General Thoughts and Comments | 2 Comments
So I just finished watching a whole news show about Bernie Madoff, the guy who allegedly ripped off investors to the tune of $50billion. He ran a Ponzi scheme for years, paying old investors with new investors’ money. In the news story they showed an artist who had invested with Madoff and apparently lost all her savings.
I asked myself, “Self, what is the difference between her and someone else who had invested in Bear Sterns, Washington Mutual, Fannie Mae, or Countrywide?” They all lost their money. Why are Bernie Madoff’’s investors so special? Just like these other companies, they had made money for years. Just like investors in other investments, they lost money. There really is no difference. So Bernie Madoff’s investors were lied to. Weren’t the investors in those other companies lied to as well, or at least mislead as to the financial strengths of the investments? Would anyone have bought stock in any of those companies if they knew that they were so close to failure. Madoff paid his investors for years. Many people made money with him. He could have never garnered the reputation he did, had he not.
The poor economy caused the failure of Madoff and legitimate companies alike. Too many investors drew on their money all at once causing massive liquidity problems. Some companies folded, others get bailout money from the taxpayer and Madoff gets arrested. I am not defending his actions, but I do fear that he will become the scapegoat of this whole debacle like Gordon Gecko was for the greed of the eighties.
Take a closer look and I think you may find the line between Bernie Madoff and any other corporate failure slightly more blurred. He blatantly lied and they may have done it in a more subtle manner.
Let’s not let the sugar coating fool us anymore. Politicians have been using it for years. Corporations have too. Let’s all be smarter this time and punish Bernie Madoff, if he has done something wrong, but also punish every politician who has urged lenders to lend to less than lendable borrowers. Punish corporate leaders who urged unscrupulous lending activities, unscrupulous investments, and unscrupulous disclosures to investors. Let’s also let greedy and speculative homeowners be punsihed too by losing their homes. There are few innocent parties.
Dec
15
Because there is a conflict of interest.
While title companies and escrow firms almost always have the same goal in a transaction there are instances when neutrality could be broken. How can a party to a transaction be truly independent if it is a subsidiary or department of another party to the transaction? It simply can’t.
Do these conflicts of interest matter? I think they do. Do these conflicts materialize often? I don’t think so. What is important is that escrow remains escrow and does not morph into something it is not.
Escrow is supposed to be the neutral third party that owes an equal duty to all parties involved in a transaction. Although an escrow company is not tasked with enforcing the law, it does have a responsibility to report obvious and egregious fraud. That duty is not just to the lender but to the process itself.The housing industry may be the largest in America when you figure all the ancillary industries that depend on it from construction to furniture making. In the home buying or refinancing process there are approximately 12 different parties to any transactions from the lender to the insurance broker. Only one of those parties is in contact with all the others and is tasked with a duty to them all. It is a great responsibility that should not, in my humble opinion, be relegated to being a side service that a title insurer offers. It should be held to a higher standard than any other party and therefore should be prohibited from being owned or controlled by any other party.
Dec
3
I recently read a brilliant article on the future of our industry by Marty Frame, General Manager of Cyberhomes. He really knows what he is talking about and he does in a most eloquent way.
Much of what he says resembles what I have been saying. I have been prophesying about the metamorphosis that our industry is experiencing and how much of the change we are going through may be mistaken for the downturn. What I mean by that is that many industry professionals, from agents to title officers believe that things will pick up when home values bottom out and the economy begins to get better. I, along with Mr. Frame, would argue otherwise.
I was recently in Home Depot and the lady that was helping me pick out door locks was a Realtor as well. She told me that she was just waiting for the market to pick up again before she re-entered the game. I didn’t have the heart to tell her that this is the game and it will not pick up to the point where she will want to get back into it. Frankly, this is a culling of the amateurs and faint of heart.
As I said in my previous blog, there will be fewer of us and fewer clients for us.
The economy is correcting and that means that we should not have as many homeowners as we did. Many of our previous clients should have never been our clients and therefore will not be for some time. The home prices are correcting, not just going down. Our industry is shrinking, not just downsizing.
I would like to comment on one other point that Mr. Frame made. He said that the institutions in our industry will be forced to reorganize because of capital. I assume he means capital constraints. He says these reorganizations will not be forced by consumers or technology. I understand that he is talking about their downsizing to reflect the current market. That downsizing might be called re-adjustment to a new, and semi-permanent, reality.
I would still argue that this new reality is still driven by consumers and technology. The consumers are demanding a better service from us all and they are using technology to do it. When most home searches now originate online, that is someting for every agent to note. When the consumer now compares mortgage rates and escrow fees online, that is also is something to note. Large banks can no longer monopolize their clients and title companies can no longer just get their clients from agents. If there was a profit to get the capital will chase it.
Yes the big institutions are having to reorganize and adjust to this new capital-sparse market, but there is still capital where there is profit. There always will be.
Nov
19
So much has happened since my last blog, I don’t even know where to begin.
So we have a new President and no matter how you lean, you can’t help but recognize the new sense of optimism and hope, regardless of weather or not is it misplaced. I have often written on the power of perception over substance in my previous blogs. I have lamented that how we perceive the market makes the market regardless of the reality of the day.
So with that all said, and with this knowledge that President-Elect Obama will change the economy (for better or for worse), in the immortal words of Shean Connery in the Untouchables, “…what are you going to do about it? That is just food for thought.
My real concern is HUD’s final proposal that I am fairly certain Congress will approve. HUD’s stated intent is to make the marketplace more competitive and then have that heightened competition filter down to the borrowers. It is rare that more government regulation ever makes a market more competitive. It is even rarer still that added regulation makes the process cost less. HUD estimates that their changes will save an average of $700 per transaction.
A bulk of their proposition is to have large lenders collaborate with large settlement service providers (mainly the 5 biggest title companies) to bring prices down. In another time this would be anti competitive and thereofre illegal. What is it now?
I frankly don’t get it. Fidelity Title is buying Landamerica and Chicago and Fidelity are already together somehow, so by my calculation there are really only 3 large title companies that control a bulk of the settlement service business in America. Bank of America bought Countrywide and Chase now owns WAMU, so how many large lenders are there? Bank of America combining with Fidelity to conspire to drive down prices to squash any small competitors doesn’t seem like a smart plan to me. Yes, prices will drop for a while for the consumer, but what then?
What will happen when most of the smaller settlement service providers (like me) are gone. Who then will be there to compete with the giants? No One, and without that competetion there will be no reason for them to keep their prices low. Naturally, prices will go up. This really is MacroEcon 101 and it is shocking to me that no one in HUD or Congress gets it.
Well, this industry used to provide hundreds of thousands of well-paying jobs. It really used to be an industry. Soon, if HUD gets it’s way, we will resemble WalMart. We will have hundreds of thousands of mediocre paying jobs and only a handful of well paying ones. If you chose to stay in the industry, you will have little choice. Work for the big guys or leave. Some choice!
Who cares if the average consumer will get lower closing costs. In little time, most of us won’t be able to afford a home anyway because we lost our jobs or companies.
Sep
10
I was perusing other blogs today and came across my friend’s blog about Zillow and the accuracy of it’s Zestimates. More interesting to me though were the reactions and comments that followed it. I hate to say it, but allot of them sounded much the same as comments that I often receive when I speak of the transition that our industry is going through.
Most everyone says that computers can’t replace humans and frankly, I find those comments to be true and false and more importantly, lazy. True because computers can’t replace humans. False because they can replace what we are doing right now, and lazy because many of those comments reflect an unwillingness to change our roles and a gross misunderstanding of our value, as humans, in the transaction process.
First of all, the blog referenced above complained that certain websites that give value ranges of real estate are often way off. Many commentators agreed and said that they are way off because they are not human and cannot process all the information that we can. Bad info in equals bad info out. They miss the point. Zillow and sites like it will learn and grow. Wikipedia, is an amalgamation of many inputs. The site gives a definition of a word and then people from around the world can add to that definition and expand it and make it more accurate. I don’t know the details of how that works but the concept takes full advantage of the internet and proves that information and the processing of it is a process in itself and can be refined.
Zillow will eventually be able to unite the comps by tax records in the area along with people’s comments about a particular home site to arrive at more accurate Zestimates. Again, I don’t know how they will do it. If I did, I would be in the wrong industry. I do know that they will evolve and yes, eventually replace us humans in the valuation process. Let’s face it, even when humans guess at the value of a home, we are not that accurate. True value is in the eyes of the beholder.
This blog, however, is not about home values or internet sites but about the choices we are having to make and how so many don’t want to make them. I see that Zillow is fallable and I also see that it will soon be able to accurately value real estate, so I see that my value as a human Realtor is changing and that I need to tap into the things that I can do. I need to emphasize my humanity and my ability to comfort, guide, reassure and navigate these waters. That is my value in this transaction. It is not just about what I know, but what I know how to get and how I disseminate that info to my clients.
There is so much more to think about and these changes in technology really do require that we begin to rethink our roles in this ever-changing market. It is not enough to just brashly say that computers can’t replace humans and be content that we have job security because we said that.
Sep
2
I just don’t know when. I have spent a great deal of this last Labor Day weekend thinking about it though and, of course, I had to spill my thoughts here. I think that the prevailing wisdom says that we should see another 20% decline in home values before we see a bottom. That same wisdom also says that we probably won’t see the bottom until 2009, possibly 2010. I think a great deal of the numbers and available accurate data support those predictions, HOWEVER!………………… It was not sane numbers or data that got us into this mess and so using George Soros’s theory of Reflexivity I am predicting that the market drops only about 10% more (+/- 1.5%) and that will be the bottom. I further guess that this will happen sooner rather than later, 2009. For the purposes of this argument, it is not important wheather we think this is good or not, in the long term (I think it is not).Reflexivity, if I understand it properly, is Soros’s theory that markets do not always move to equilibrium. They, instead, are influenced by investors and therefore move where investors believe they should. In other words, the markets are not islands. They are influenced by the participants and therefore cannot be described or predicted independently of the market participants. It is a very similar theory to other theories I have read about matter and energy. These other theories suggest that our perceptions of things shape those things. A rock is not just a rock but something that my perception changes. It may have been a rock before I saw it, but after seeing it it is a different rock. A bit like the butterfly effect.Using this theory, I believe that many people are believing that the bottom is near. They want to believe that. When you compare the current prices to the reality we knew a few years ago, it looks like we have fallen a long way.I think that the early part of this decade changed, forever, the way we view real estate and therefore we cannot predict, based on older models, how this downturn will shake out. If the house down the street from me, used to sell for $150,000 four years ago and is now selling for $80,000, I may perceive that as a steep decline and I may believe that it will not go any lower; time to buy. My Realtor may reinforce this attitude. A 46% decline looks like a bottom to the untrained eye. Is it really 46%? The market rose approx. 50% in that timeframe, so 46% is just losing the crazy runnup. The perception is different though. On the flip side, to get back to that $150,000 value, it has to appreciate 87.5%. My point is that the numbers can get confusing and people tend to go to what they know. The equilibrium, in this case is that real estate may start to behave, as much as it can, more like stocks, with more volatility because that is the new paradigm that people believe.Based on the numbers, I would never have guessed that real estate would continue to appreciate past 2004. I was consistently calling the top and I was consistently wrong. I miscalculated the fact that numbers don’t move markets, people do. The numbers may be telling us to be cautious and have patience right now. The numbers may still be very high, but I think that people are waiting on the sidelines, anxious to jump in again. Many of them don’t know any other market but what they saw a few years ago. My guess is that if lenders were willing to lend more right now, you would see the market take off again, even against common sense. So that is my prediction on this 2nd of September, 2008. I predict that we won’t fall as far as we should and as far as we think. I hope I’m wrong
