Daily Archives: February 1, 2009

Well, it was a round-about way of getting there, but Washington has achieved its goal

Housing affordability index at highest level since 1971. This is what politicians of all stripes, from George Bush to Ted Kennedy to Dodd/Franks all said they wanted to achieve. They didn’t tell us they’d do it by wrecking the world’s financial system but hey – omelets and all that, you know.


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Would a real estate guy lie to you?

Now is the perfect time to invest in Abu Dhabi real estate!

The real estate market in Abu Dhabi has become tempting for investment because of the decline in prices due to the global financial crisis, a member of the emirate’s executive council said yesterday.

Sheikh Sultan bin Khalifa Al Nahyan said the property sector in the Emirate is passing through what he termed as a correct period triggered by the global crisis and the ensuing crash in crude prices.

“The current period is extremely encouraging and tempting for investment in the real estate market in the emirate following the decline in property prices, which have become very attractive compared with the previous period,” he said at the end of the three-day Abu Dhabi Real Estate and Investment Show (IREIS2009).

“This of course was a result of the measures taken by the UAE government to deal with the crisis. I am sure the government will not spare any effort in extending more support and injecting more liquidity into the economy and the banking system to ensure banks function normally.”

Sheikh Sultan said the property sector in Abu Dhabi, one of the richest cities in the world, would further improve in the next few months and this “would make the market even more encouraging and tempting for investment”.

“The message I would like to convey at this show is that the current period is very suitable for property investment given the relatively low prices.”

You might interpret the prediction that “the property sector would further improve in the next few months and this ‘would make the market even more encouraging and tempting for investment’ ” as an admission that the Sheikh thinks prices will continue to fall, but I’m sure it sounds different in Arabic.


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Phew! Madoff dodges a bullet!

A federal inmate’s lawsuit against Madoff has been tossed out of court as “frivolous”.

Jonathan Lee Riches, who is currently incarcerated in a South Carolina federal prison after being convicted of wire fraud, filed a hand-written motion in early January to inject himself into the case against Mr. Madoff brought by the Securities Investor Protection Corporation. In his motion, Mr. Riches alleges that Mr. Madoff took money from him and other inmates promising a 16.8 percent return, but then transferred the funds to a “Swiss account Ponzi.”

Mr. Riches, however, raised red flags about the veracity of his allegation, claiming that he met Mr. Madoff in 2001 via the online dating site eHarmony.com and that the two had an “intimate relationship.” Among other things, eHarmony has refused until this year to match same-sex couples.

But never mind that inconvenient fact. Mr. Riches says in his motion that Mr. Madoff was attracted to his identity theft skills and that he schooled the former Nasdaq chairman on how to commit fraud for two years.

Mr. Riches also claims he has “documents, photos, exhibits and phone transcripts” that contain “juicy details” about Mr. Madoff, now 70, that he wants to share with the court.

For now, any supposedly salacious details about Mr. Madoff’s improbable tryst with Mr. Riches will remain under wraps.

On Friday in Federal Bankruptcy Court, Judge Burton R. Lifland denied Mr. Riches’s motion to intervene in the case, stating that his “asserted possession of ‘juicy details’” was not grounds for intervention.

If Mr. Riches did invest with Mr. Madoff, the judge ruled, he can file a claim with the bankruptcy court like everyone else.

In his order, the judge also noted that Mr. Riches “is no stranger to the federal courts.” Indeed, the prisoner has filed over a thousand lawsuits in the last three years including ones against Martha Stewart, the New England Patriots coach Bill Belichick, former President George W. Bush, the Nascar driver Jeff Gordon and Britney Spears.

It’s just a shame when the Man denies prisoners their Constitutional rights. I feel for this poor guy – would he feel better, I wonder, if I sent him Walt Noel’s address?


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When you hate humanity, it’s easy to cheer on its demise

Global warming nut and Al Gore ally Jonathon Porritt: Use contraception and abortion to limit families to two children

COUPLES who have more than two children are being “irresponsible” by creating an unbearable burden on the environment, the government’s green adviser has warned.

Jonathon Porritt, who chairs the government’s Sustainable Development Commission, says curbing population growth through contraception and abortion must be at the heart of policies to fight global warming. He says political leaders and green campaigners should stop dodging the issue of environmental harm caused by an expanding population.

Last year the book, “The World Without Us” was a huge hit among the granola set even though its author demanded that a world government impose a limit of just one child per couple which would wipe out the human race at a pretty good clip. Our children – our tree hugger children, have been taught to hate their own species and hence their own lives.If an entire generation can be persuaded to wish fervently for its destruction, we’re in trouble. Who’s doing this? More interesting, to me, do they know what they’re doing? Great novel material here, if anyone will be around to read it.


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Chris Dodd, scoundrel

The Hartford Courant continues to bash our Senator Dodd for his repeated refusal to release loan documents showing the details of the sweetheart deal he received from Countrywide Mortgage, once a large contributor to his coffers.

Sen. Dodd:

Release The Documents • Connecticut deserves straight talk about your loans

U.S. Sen. Christopher J. Dodd says he’s got nothing to hide. Yet for months he’s issued confusing and conflicting statements on whether he’ll publicly release documents relating to two loans he and his wife received from failed mortgage giant Countrywide Financial Corp.

He still hasn’t released them. On Jan. 23, Mr. Dodd was asked if he intends to await the conclusion of a Senate ethics inquiry before making the documents public. “Not necessarily,” he told a reporter for The Courant. “At some point soon we’ll do it.”

Mr. Dodd should have released the documents months ago. Countrywide was a major player in the subprime mortgage debacle. Five years ago, it issued the loans to Mr. Dodd, then a member of the Senate banking committee, as part of the company’s VIP program, trimming the upfront costs for refinancing two of the senator’s homes and allowing the rates to “float down” as interest rates dropped.

Countrywide collapsed last year and was acquired by Bank of America. Its failure sent shock waves through the economy and raised the question of why Congress didn’t act sooner to curb subprime lending by Countrywide and others. 

His continued waffling about whether or when he’ll release the documents only fans speculation. That’s a disservice to Mr. Dodd’s constituents, who deserve straight talk and accountability from the state’s senior senator.

That question becomes even more pointed when directed at Mr. Dodd — now chairman of the Senate’s banking committee — in light of his preferential treatment from Countrywide.

The Hartford Courant is taking the lead on this story, which makes sense, as the smarmy politician is from our state. But I wish the national press would realize that the Chairman of the Senate Banking Committee, at this time when all sorts of deals are being cut to bail out the very banks Dodd oversees, should be open and candid about favors he’s received from the industry in the past, particularly Countrywide. The New York Times joined the Courant in calling for release of the documents in this editorial published last October but since the election, I, at least, can find no further mention of the matter.

Dodd, of course, is no dummy. He’s betting that he can continue to stonewall because a Republican has no chance of evicting him from his seat next year and his fellow Democrats won’t dare go after a fellow Democrat with 28 years of accumulated favors to his credit. Charles Rangel has place the same bet, or hadn’t you noticed that the House panel that was supposed to be investigating Rangel’s tax fraud quietly disbanded after the election. Look, this shouldn’t be a partisan issue – there are crooks in both major political parties and I’d like to see them all driven from office. But the only party who can remove Dodd is his own, and it won’t do it. Without public pressure, which, so far, the Hartford Courant’s voice is insufficient to provide. 

Of course, if anyone would track down Dodd’s illegal financing of that vacation cottage in Ireland, progress might be made.

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Cutbacks and layoffs at Sotheby’s as losses mount

No, not the real estate division of Realogy, the art auction house, which no longer has any connection with the house peddlers other than a shared name. Still, if the very people who used to buy our houses are now holding off on adding a Picasso to their walls, it’s probably not great news.


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Rent vs. buy revisited

There’s a discussion going on in the comment section on another posting on the merits of renting vs. buying. I thought I’d move my response over to this main page and invite everyone to chime in. I never claim to be infallible (or I’m lying if I do) but the collective wisdom of the readers of this blog will probably thresh out the truth of things. So what do you think – rent or buy? Here’s my answer to “Anonymous, who first asked:

  • Anonymous, before this meltdown I would have referred you to the “rent or buy” calculator on the right hand side of this page and suggested you plug in appropriate numbers like how long you thought you’d own or rent, mortgage payments and property tax, etc. It produces a nice curve that gradually shifts in favor of buying the longer you stay and the lower your monthly expenses. But the kicker was always the appreciation. Even zero appreciation eventually produced a buy result, but it took a long time. Negative appreciation is something else.
    Paco, above, figured out that he could rent for the same amount as his property tax and forget about a mortgage payment. That’s a great deal. There are intangibles, of course, that homeownership can bring that may outweigh the freedom of just handing a landlord the keys and taking off, but in a declining market, those grow fewer, I think.
    I really don’t believe real estate will continue to fall, though, so my advice is to either rent until it’s clear that we’ve hit a final (for this time) bottom, which will cause you to lose some benefit of the bargain because we’ll only know that the bottom’s been hit when prices rise again and stay up, or buy now at a great price, by which I mean much lower (how’s that for specificity?) than houses sold for in 2005. I showed some houses yesterday that were, respectively, $975,000 and $575,000 less than they asked 18 months ago. That’s 1/3 to 25% off, and that’s a pretty good cushion against further decline.
    I also agree with Paco that houses are a deteriorating “asset”. I tell my clients that, while  splashy new houses will grow old and dated, the land, like “the Dude”, will abide. If they can stand it, I advise they look for an older house on great land rather than a beautiful new house on lesser land. But, understandably, some people like having modern wiring, great new kitchens and comfortable baths. Those don’t matter much to me – I’ve done without them for 50+ years, why go looking for them now? – but I do understand the desire. I just don’t think they make the best investments unless, as is beginning to happen, you can find a house that combines both great land, new, quality construction and a savagely reduced price. Then you have a winner, and should pounce.

    UPDATE: Here’s an article from yesterday’s WSJ suggesting that preventing foreclosures, and thereby keeping homeowners in MacMansions they can’t afford, is the last thing we should be doing. Can’t afford a house? Rent, the commentator says. 


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Obama solving deficit crisis, one nominee at a time

Someone more original than I has pointed out that Obama just picks a Democrat with huge unpaid, undisclosed tax liabilities and nominates him for a cabinet position. Presto. Can we expect Charles Rangel to be our next Minister of Tourism?

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Good thing I wasn’t counting on this blog to secure my retirement

Pajamas Media, a loose collection of my kind of bloggers (small government types, mostly) isn’t cutting it as a business model. The bloggers will keep blogging, which I understand – as I discovered long ago, writers have to write, while more sane folks who just happen to have an ability to write well don’t – but the ad revenue they’d hoped for has dwindled. This is happening throughout the blogosphere, I think as advertisers discover that the “click-through” system doesn’t produce results (see all the links contained within the link above for a full discussion of this phenomenon). I notice, for instance, that Henry Blodgett has fired writers at his own blogging experiment, Clusterstock.alleyinsider.com. Mssr. Blodget, continuing to display the same charm he showed when at Merrill, simply axed employees without notice to their readers and leaving us with no way to contact them – I hope he paid severance and benefits but somehow, for some reason, I doubt it. Well, writing’s never been a steady or particularly lucrative source of income – wanna buy some real estate?

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Before the collapse,Bernie and Peter Madoff’s wives applied for Florida homestead exemptions

Turns out that Dickie Fuld wasn’t the only troubled Wall Streeter who used Florida’s shield to protect his assets by transferring property to his wife. The older Madoffs did too, at a time when Peter Madoff, at least, claims he had no inkling of what his brother was up to. Hmmm. No such behavior seen, yet, by  the Greenwich side of  this, the two Madoff boys, Andy and Mark, but there’s plenty of time.

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