Daily Archives: November 7, 2009

As predicted

Teen unemployment at record rate of 27%. Direct result of raising minimum wage. But if they could find a job, then they could support a family of four!

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Freddie Mac posts $5.5 billion loss for third quarter

It says it will need more money, from guess who?

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Come a cropper – phrase origin

fallen jockey thumbnail-thumb Walt asked and he’s going to love this phrase.

Come a cropper – to fail badly

“Cropper, ‘to go a cropper’, or ‘to come a cropper’, i.e., to fail badly.”

For the actual derivation we need to consider the nether quarters of a horse – the croup or crupper. In the 18th century, anyone who took a headlong fall from a horse was said to have fallen ‘neck and crop’. For example, this extract from the English poet Edward Nairne’s Poems, 1791:

A man on horseback, drunk with gin and flip,
Bawling out – Yoix – and cracking of his whip,

The startish beast took fright, and flop
The mad-brain’d rider tumbled, neck and crop!

‘Neck and crop’ and ‘head over heels‘ probably both derive from the 16th century term ‘neck and heels’, which had the same meaning. ‘Come a cropper’ is just a colloquial way of describing a ‘neck and crop’ fall. The phrase is first cited in Robert S. Surtees’ Ask Mamma, 1858:

[He] “rode at an impracticable fence, and got a cropper for his pains.”

By the time John C. Hotten published his A Dictionary of Modern Slang, Cant, and Vulgar Words in 1859, the phrase has come to refer to any failure rather than just the specific failure to stay on a horse:

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Barney Frank needs a better class of boyfriend

barney-frank-sumo

I'm shocked, shocked!

Barney’s in the news with anther troubled lover, this time involving Barney and friend together in Ogunquit, Maine when the police arrived to bust boyfriend for growing pot. Barney swears he didn’t know what his boy toy was up to, didn’t know nothing about no pot and wouldn’t know the plant if it bite him on his ample rear end. This is just about the same story Barney pitched in 1989 when his former page boy, Steve Gobie, admitted he’d been running a prostitution service while living in Frank’s Georgetown townhouse. (Although Frank did admit, in this case, that Gobie had bitten him on his rear end, numerous times, and he’d paid Gobie to do so).

Could Barney really be so clueless, so out of touch? If so, should he be running our country?

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This may prove to have been a bad idea

WSJ: Rich folks used their houses as piggy banks, just like the poor.

LOS ANGELES — In recent years, millions of Americans looked at their houses and saw big, fat piggy banks. And it occurred to them to take out big, fat new mortgages. ….

Traditionally, the super-rich didn’t really bother with mortgages. Home loans were for people who carry lunch buckets, not captains of industry.

That changed in the boom years — and it is still going on. Recent big-time home borrowers include fashion entrepreneurs, hedge-fund titans and baseball-team magnates.

Home loans “are a really good source of cheap capital,” says Robert Maguire, a real-estate tycoon who built some of the tallest officer towers in L.A. He has borrowed some $50 million against several properties, including his beach house, which features huge picture windows framing the Pacific near Santa Barbara, Calif.

He has been raising money with an eye toward regaining control of his property firm, Maguire Properties Inc., which he lost during the real-estate bust. Even as he borrows against his beach retreat, Mr. Maguire is trying to sell it for $29 million.

By hocking the house, so to speak, he and others say they are simply borrowing low in hopes of investing in something they believe will yield a high return.

Like ordinary home loans, megamortgages flourished during the boom earlier in the decade. The number of home mortgages in the $3 million-and-up category soared to about 3,000 in 2007, from only 1,100 or so in 2004, according to LPS Applied Analytics, a unit of Lender Processing Services Inc.

Not surprisingly, mammoth home loans got scarce during last year’s near-unraveling of the world economy. But now they are showing signs of coming back.

U.S. Trust, which is the private wealth-management arm of Bank of America Corp., has seen a 33% rise this year in home loans, compared to last year, with the average size over $3 million. Jan Reuter of U.S. Trust says clients are using the cash to buy stocks and other assets. Other major lenders tell a similar story.

The federal tax code doesn’t smile upon giant mortgages. It allows mortgage interest to be deducted only on home borrowings of about $1 million or less.

But there are ways around that, says David Adamo of Luxury Mortgage Corp., a mortgage-banking firm in Stamford, Conn. If the cash is used for investment purposes, the loan interest could be used to reduce taxes on income from the investments, he says.

Of course, plenty of rich people still avoid home loans. Partly, it is an image thing. Maria Elena Lagomasino of GenSpring Family Offices LLC, a Palm Beach Gardens, Fla. wealth-management firm, says a mammoth mortgage implies to her that someone is “borrowing because they have to.”

One rub for zillionaires who value their privacy: Mortgages are a matter of public record.

One of New York City’s classiest new addresses is 15 Central Park West — which along with the requisite pool, health club and movie-screening lounge, offers “30 climate-controlled wine rooms” with “solid oak cabinetry.” Since the start of last year, five buyers there have taken out mortgages ranging from $10 million and $35 million, according to public information collected by First American Corps.’ RealQuest data service.

Not all megamortgages have happy endings. Since mid-May, about a dozen home loans of $3 million to $9 million have been involved in default or foreclosure actions in Malibu, Beverly Hills and other fancy areas around Los Angeles, according to public data gathered by First American. None of the giant mortgages over $10 million examined in detail are in default.

Max Azria, chief executive of privately held BCBG Max Azria Group Inc. clothing company, took out a $25 million mortgage in April 2008 on a 12-bedroom, 13-bath West Los Angeles mansion, once home to the late TV producer and novelist Sidney Sheldon, according to public records. He bought the house in 2005 for about $16 million.

Last year, Moody’s Investors Service, the credit-rating company, said BCBG could face a cash crunch without financial help from Mr. Azria. A BCBG spokesman said Mr. Azria used the mortgage money for renovations and “additional personal liquidity,” and that the company restructured and improved its finances this year without funds from him.

Israel Englander, who runs the Millennium Management LLC hedge-fund operation in New York, last year pledged a home in a wooded, estate-filled section of Greenwich, Conn., as part of the collateral for a revolving credit line of up to $100 million.

Mr. Englander declined to comment. There is no indication he needed the money for anything other than investment purposes.

Besides signing multimillion-dollar baseball players, Frank and Jamie McCourt have accumulated homes with multimillion — dollar mortgages since moving to Los Angeles in 2004 to run the Los Angeles Dodgers. They bought homes and adjacent properties in both West Los Angeles and Malibu.

Their 15,000-square-foot, 10-bath L.A. manse, located in the prestigious Holmby Hills neighborhood across the street from the Playboy Mansion, was purchased in 2004 for about $20 million. For good measure, the McCourts spent $14 million to upgrade the place, including tearing out the tennis courts to install an indoor, Olympic-size swimming pool.

All told, the homes carry some $28 million in mortgages. The houses, which are in Mrs. McCourt’s name, are now part of a nasty divorce battle between the couple, who are fighting for control of the Dodgers.

The McCourts declined to comment.

Amid the acrimony, the estranged couple did agree on one housekeeping matter at a court hearing Thursday: Mrs. McCourt could have exclusive access to the indoor Olympic pool. Swim hours for her are between 6 a.m. and 2 p.m.

Update: Mr. Englander’s home is at 48 Pear Lane in Belle Haven, assessed for $10 million, FMV at $14. He must have put up some other assets to secure that $100 million.


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Will Crown Lane displace Round Hill as Ignominy Avenue?

steve cohen

Practicing his perp walk

The feds have a former SAC trader by the short hairs and he’s squealing like a pig. No one has ever gone beyond whispering that Stevie Cohen’s been trading on inside information all these years – no proof, no hard evidence at all – but the rules of federal deal making is that you’ve got to give up the big guy if you want to walk, so I’m guessing that their coffee klatch conversations with the unfortunate junior trader are focusing on Steve and his Zamboni. Could be something, could be nothing, but it’s bound to be fun.

Cohen’s sunk something like $50 million into his place on Crown Lane, by most estimates, and unless Jerry Dumas decides he wants to add to his own holdings, there’s no way that money’s coming back. That’s if Cohen is forced to sell, of course, and that’s a wee bit premature. After all, it’s been almost a year since Walter Noel came a cropper and he hasn’t even started packing yet.

Susan Puliam, WSJ:

The widening investigation of insider trading on Wall Street is expected to examine transactions at Steven A. Cohen’s SAC Capital Advisors, one of America’s largest and most successful hedge funds, according to people familiar with the matter.

A plea agreement between the government and a cooperating witness in the investigation, Richard Choo Beng Lee, indicates that Mr. Lee has agreed to provide information to prosecutors about a hedge fund where he worked between 1999 and 2004. That firm is SAC, according to people familiar with the matter.

In March 2009, after striking the deal to assist the government, Mr. Lee sought to get rehired by Mr. Cohen, people familiar with the matter say. Mr. Cohen declined to hire Mr. Lee because he was suspicious about the recent and abrupt closure of Mr. Lee’s hedge fund, Spherix, these people say.

Under the plea agreement, which was signed on Oct. 13, 2009, and made public Thursday, Mr. Lee will tell the government about transactions by other SAC traders, a person familiar with the matter says. Mr. Lee’s lawyer, Jeffrey Bornstein, declined to comment about what information his client “has or will be providing to the government.”

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Somebody robbed the Springfield train

Train_Wreck

Stimulus!

Cos Cobber calls the New Haven – Springfield rail project a boondoggle and he’s surely right. It’s a pet project of our upstate legislators that was slowly going nowhere until Dodd got hisself some Stimulus funds and breathed life into it. Oh joy. I can find almost no information on the train, but common sense suggests that the ridership from Hartford to New Haven or New Haven to Springfield is limited at best. The one “study” I did find is preposterous. In order to come up with a significant ridership pool the study’s authors had to go out to a two-mile walking radius and even then could only find 6,500 imaginary hikers.

Even a Greenwich real estate agent would blush if he were to describe a house two miles from the train station “within walking distance” but when trying to establish a need where none exists, these economists have no shame.

The entire project is about politics and payoffs, not transportation – Connecticut’s legislature will happily divert money from the New Haven line because that serves Fairfield County, the resented golden goose, while feeding themselves up north. Happy feasting.

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The man with the tingly orgasms for Obama has another insight

Chris Matthews: We may never know if religion was a factor at Fort Hood. Well sure, I can see that. I mean, a guy who prays at his mosque five times a day, dresses in sheets, posts rants praising suicide bombers on the Internet, then goes off and guns down thirty people while screaming God is Great” could, you know, have hit some bad weed or something. Bummer man, but you can’t blame an entire religion because of the actions of one guy on a bad trip, you know? Besides, Obama’s a muslim, and he’s not shooting anyone, right?

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A good editorial about Himes and his competition – first one to say something intelligent wins

So far, the state deficit is ballooning, revenues are dropping, the states going down the tubes, and all the announced candidates have nothing to say on the subject except to promise “leadership”.

But in another sense Lamont might as well run if he has something relevant to say, because none of the Democratic gubernatorial candidates with experience do, nor does Governor Rell, who has not yet declared for renomination by the Republicans. So far the public has been offered no guidance with the overwhelming issue facing state government: the collapse of its finances amid the ineffectuality of much important public policy.

Of course Lamont is no more likely than the others to put relevance behind his cliched calls “leadership.” If he did, he might lose most of whatever supporters from his Senate campaign are considering joining his campaign for governor — liberals desirous of bigger and more expensive government, the very problem to be solved. But there is another constituency out there, even if that constituency has yet to command a majority or even a plurality in a statewide Democratic primary — a constituency that isn’t on the government payroll and doesn’t have government contracts but just pays ever-increasing taxes in exchange for a state that in many ways is falling apart.
The other day the state comptroller reported that the likely deficit in the new state budget has reached $624 million, or more than 3 percent of budgeted spending — and just four months into its duration. Unchecked, the deficit could reach 10 percent of expenses by the end of the budget year. Unable to make the necessary decisions with spending and taxes, Governor Rell and the General Assembly abdicated, enacting a pretend budget with phony revenue and spending estimates and walking away.

The major contenders for the Democratic nomination for governor –Secretary of the State Susan Bysiewicz, retiring Stamford Mayor Dan Malloy, former House Speaker James Amann, and East Hartford state Sen. Gary D. LeBeau — have offered no proposals for closing a deficit that large. For it can’t be done without addressing the most expensive policy failures, alienating the interest groups that control the party’s nominating process, or promising much higher taxes, a killer in the election.

Public employee labor policy remains, by arbitration law, beyond control. The compensation of the government class continues to rise even as state income tax receipts, a measure of the public’s income, continue to fall. The concessions obtained this year from the state employee unions by the Rell administration were trivial, which was why they were obtained so quickly, and the governor insisted that state government do nothing to induce municipalities to obtain concessions from municipal employee unions.

The state has embarked on an expensive program of creating regional schools in the name of racially integrating city schools, but this hasn’t integrated the city schools and won’t integrate them. Indeed, the hope seems to be that the lack of integration can be overlooked if only government just spends enough money pretending to integrate. It could pretend just as well without the spending.

Welfare policy continues to subsidize childbearing outside marriage and thus to perpetuate poverty and crime.

Drug criminalization continues to fail just as expensively, but those in office act as if merely discussing “medical marijuana” occasionally is enough.

The governor and the state’s supposed big thinkers want to spend hundreds of millions of dollars to develop commuter rail service in the corridor from New Haven to Hartford to Springfield when there is no market for it and when the commuter rail service for which there is a market, between New Haven and New York, requires huge subsidy even as it is undermaintained and underused for lack of commuter parking along the line. [emphasis added – Ed]

Any candidate with anything relevant to say about these things will be the best qualified even if he has never held office before.

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What, Jimbo Himes won’t help out his alma mater?

Lawrenceville School, other preps suffer endowment losses, cut student aid. Maybe Jimbo’s used all his cash to buy Shay’s house. Still, you’d expect more from the former Managing Director of Goldman Sachs.

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We pointed this out yesterday but again, if the NY Times says it’s so….

Real unemployment rate 17.5%

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Shays sells home in Black Rock, staying in Washington

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Shays moves on

Like everyone else who goes down there. Once a pol sees Paree, there’s no keeping him down on the farm. I don’t blame the man, and this was openly listed on the MLS, but I have a nagging thought that maybe a supporter bought this house, at this price ($1.55 million) to help pay the former Congressman’s debts.

Gail Robinson, a Black Rock real estate agent, [said] this marks the first time since 2006 that a home in Black Rock has sold for more than $1 million in a public sale. The waterfront property has four bedrooms, three bathrooms and a fireplace. It had been on the market more than 200 days and was previously listed with a sale price of $1.85 million.

“It is one of the most beautiful homes in Black Rock with a priceless view,” Shays said in May. “This is a home I expected to live in for years.”

The home has an assessed value of $817,580, with a market value of $1,167,980. According to Elaine T. Carvalho, Bridgeport’s tax assessor, Shays’ tax bill in 2008 was $24,556.

Whatever.

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