Daily Archives: December 13, 2009
Greenwich Time is out with a story about a “green” houseboat moored at the Delamar by its would-be seller. I’m a noted green enthusiast so I read the story with interest but alas, other than the hull being made from recycled steel – as is my Chevy Suburban – I couldn’t find any particularly “save the planet” details worth mentioning. There are no solar panels, for instance, because they would interfere with the owners sunbathing and using the hot tub. The Viking appliances aren’t powered by hamster wheels and the flat screen TVs are not made from hemp.
So why is this boat noteworthy? Beats me, unless the Delamar publicist has a special relationship with the paper. Big deal.
Life support is expensive. When that troubled borrower gets a 20 percent haircut, his bank has to take a loss, and the bank is compensated for the loss by you, through the $50 billion Home Affordable Modification Program. The Treasury Department has paid more than $100 billion to allow the failed government-sponsored enterprises Fannie Mae and Freddie Mac to keep on guaranteeing questionable loans. Fannie and Freddie, in turn, have been expanding rather than reducing their loan portfolios—the opposite of what you’re supposed to do when you’ve got an unmanageable debt load.
It’s easy to see why interested parties such as the National Association of Realtors would support interventions such as those above and the $8,000 Home Buyer Tax Credit. (It’s notable, however, that sales data in the three years since the beginning of the real estate collapse strongly suggest that a low asking price is by far the most important factor in whether a house sells.) What’s not as clear is why so many other interventionists are convinced that re-inflating the real estate bubble serves the common good.
More to the point, keeping real estate inflated is not an abstract public choice experiment, in which the benefits are concentrated and the costs distributed. The policy has a very discernable victim class: would-be home buyers, whose interests are served not by tax credits or massive debt commitments but by lower asking prices. Perversely, foreclosures are the highest they’ve ever been in American history, yet it’s harder than ever to buy a house. According to the National Association of Realtors, the median down payment by first-time buyers, even after a three-year, debt-driven economic shock, is just 4 percent. One-third of homes are still being purchased with no money down. As we learned (or thought we learned) in 2006, numbers like these are a recipe for cascading misfortunes. Renters should be angrier than ever.
Imagine a yard sale outside the biggest, fanciest house in town. You get there early, eager to buy cool stuff cheap. But every time you see something you like, a police officer comes along with a Sharpie, crosses out the price, and writes in another number that’s two or three times higher. Scale that up a bit, and you have the Obama housing plan.
It’s like Streisand’s advice to her fan (fans?) to line-dry laundry. She doesn’t do it herself, you understand, but the little people should. And New York City’s mayor likes his jets – so there! From the NYT:
A strong case can be made that when it comes to energy and climate issues, Mr. Bloomberg is the most visionary public official in the country.
And a strong argument can also be made that on a personal level, he ranks among the worst individual polluters ever to hold public office.
Mr. Bloomberg owns a helicopter and two jets, both Falcon 900s. He flies everywhere on private jets, by far the least efficient form of transportation on or above the earth. He takes his jet to Bermuda many weekends. He has flown around the globe on it. He uses it to go to Washington. He is planning to get to Copenhagen for the climate conference by private jet, too.
The carbon math works out like this: by taking his Falcon 900 to Denmark, Mr. Bloomberg will be responsible for the release of 37 times the carbon dioxide than if he and his entourage flew on a scheduled commercial flight. The calculations were done at my request by Dimitri Simos, the developer of software used by the airline industry to assess aircraft emission and performance. Mr. Simos said that a Falcon 900 carrying eight people from Newark to Copenhagen would produce 21.6 tons of carbon dioxide. By adding eight people to the scheduled Scandinavian Airlines flight, the aircraft, usually anAirbus A330-300, would produce an additional 0.58 tons of carbon dioxide.
Mr. Bloomberg’s routine trips to Bermuda are even more carbon costly: the private jet produces 130 times more emissions than going commercial. On those jaunts, Mr. Simos said, the Falcon produces 4.3 tons of carbon dioxide; putting another two people on anAmerican Airlines Boeing 757-200 that flies to Bermuda would produce only 66 more pounds.
This is not Bloombergian hypocrisy; it is a paradox, shared by most of humankind. I’ve lived within a block or two of a subway station since birth, yet owned a car since I got a driver’s license. There is a long list of public figures — from movie stars to politicians to journalists — who preach conservation for everyone else, while living in mega-homes and flying in Gulfstreams. It is probably not a good idea for the rest of us to look down our noses at people who cannot resist such temptations until we can afford them ourselves.
Those who have flown in private jets say they have much to recommend them — none of this arriving at the airport two hours ahead of time and taking off your shoes to get to the boarding gate. You drive up to the hangar, get on, and the flight attendant brings a glass of wine and a plate of sushi. The business aviation industry says that its jets are getting more efficient and that they account for a tiny fraction of human-made carbon emissions. They are very expensive to operate, but even when Mr. Bloomberg travels on official business, he always picks up expenses for himself, his staff and the police security detail.
The Times reporter gives Bloomberg a pass on his hypocrisy because the Mayor’s so darn good about telling the rest of us what to do – I am less generous, but I do agree with this observation in the article:
There is a lesson here for everyone, whether they are in Copenhagen or New York or elsewhere. Human beings will produce as many tons of carbon emissions as they can afford. [emphasis added]
No one wants to live in unheated stick huts and subsist on stones and dirt, but for the good of the world, most of us must. The idea the warmists have is that we will do it for them while they fly serenely overhead in their private jets, nodding in satisfied approval. I think that vision sucks.
It has long intrigued me that almost every culture, from American Indian to Asian to Middle Eastern, has a flood story. Maybe this is why? Or not, since the scientists proposing the theory speculate it happened five million years ago. But interesting, nonetheless.
A cataclysmic flood could have filled the Mediterranean Sea — which millions of years ago was a dry basin — like a bathtub in the space of less than two years. A new model suggests that at the flood’s peak water poured from the Atlantic into the Mediterranean basin at a rate one thousand times the flow of the Amazon River, according to calculations published in the Dec. 10 Nature.
“In an instantaneous flash, the dry Mediterranean became a normal Mediterranean like we see it today,” says lead author Daniel Garcia-Castellanos of Spain’s Consejo Superior de Investigaciones Cientificas (CSIC) in Barcelona.
He and his colleagues calculate that at the height of the flood, water levels rose more than 10 meters and more than 40 centimeters of rock eroded away per day. The model also shows that 100 million cubic meters of water flowed through the channel per second, with water gushing at speeds of 100 kilometers an hour. Rather than a Niagara Falls-esque cascade from the Atlantic into the Mediterranean, the team’s results imply a torrent several kilometers wide at a fairly gradual slope.
“It would be an exciting rafting place,” Garcia-Castellanos says.
Although the Mediterranean features in many placid tourist spots around Europe and northern Africa today, it narrowly escaped becoming a desert. The sea separated from the world’s oceans 5.6 million years ago and was desiccated by evaporation in a period geologists call the Messinian salinity crisis.
Luckily, 5.3 million years ago water from the Atlantic Ocean found a way back in to the drying seabed through what is now the Strait of Gibraltar between Spain and Morocco. Geologists figured the resulting flood must have been impressive, but their estimates for how long it took have varied wildly, from 10 years to several thousand years.
“The record of the Mediterranean tells us that the transition from the dry, high salinity situation to the normal open water situation we have nowadays was very rapid,” Garcia-Castellanos says. “But ‘rapid’ in geology could mean many tens of thousands of years.”
Early models couldn’t resolve the flood’s timescale because they couldn’t tell how the volume of water flowing through the Strait of Gibraltar changed with time, Garcia-Castellanos says. Earlier studies, including work by Gupta, had concluded that England was separated from Europe in a similar cataclysmic flood 450,000 years ago based on the U-shaped valley at the bottom of the Strait of Dover (SN: 7/21/07, p. 35). But because of how long ago the flood that filled the Mediterranean occurred, the geological record of erosion from rushing waters was thought long buried.
But Garcia-Castellanos and colleagues found it, thanks to plans for an underground train. Cores drilled in the seafloor as part of preparations for the Africa-Europe tunnel project, which hopes to run trains under the Strait of Gibraltar from Spain to Morocco, revealed a deep channel filled with loose sediment. Using the drilling data and previously collected seismic data, the researchers determined that the channel is 200 kilometers long, between 6 and 11 kilometers wide, and between 300 and 650 meters deep.
The calculations show an upper limit of two years for how long it took to fill the Mediterranean. But Garcia-Castellanos says it could have been as short as a few months. The energy carried in such a flood is comparable to the heat transport along the Gulf Stream in a year, or 4 percent of the kinetic energy of the meteorite impact thought to have killed the dinosaurs.
The flood would have had a dramatic effect on local ecosystems, and could even have affected the global climate. The model suggests that global sea level dropped 9.5 meters as a result of the flood. The team points out that a much smaller flood in North America 12,000 years ago has been linked to a worldwide cold snap, and suggests that the Mediterranean flood may have had similarly significant effects.
70,000 years-old – earliest fossil. Somehow, the bears survived without ice for about 50,000 years, no?
Harsh winter weather strands dolphins, turtles on Cape Cod. Which is good news for the polar bears because now, when they float down there on their melting icebergs, they’ll have plenty to eat.
The Boston Globe has a long, but interesting story today about one Michael David Scott, a developer who promised easy money to investors and – surprise! – let them down. It’s all very sad, but I am (not) astonished to see that the willing accomplices to his fraud are now in court suing everyone right and left, complaining that they didn’t know nuttin’.
Jeremy and Stacey Grieff were typical customers of Michael David Scott.The young couple lived out of state – in Virginia Beach, Va. They knew little about real estate investing, less about Boston, and had an annual income of $84,000 when they got involved.Soon they would be in way over their heads.The Grieffs, in an interview and a lawsuit they filed last year in Middlesex Superior Court, said that in 2007 they were drawn in by Jerrold Fowler of Norfolk, Va., a former colleague of Jeremy’s who worked as a scout for Scott, identifying and courting potential buyers.“He told us it was an investment situation. They purchased the properties, converted them into condos or did repair work to them, and resold them,’’ Stacey Grieff, a middle school teacher, said in a phone interview. “We were told closing costs were paid and we had no obligation.’’Mortgage costs would be paid out of rental income from the units – money Scott and his team would collect and mail to them or deposit directly in an account. The Grieffs expected to ride the market up and sell for a profit within two years, their lawsuit contends.
In the end, the Grieffs agreed to buy four properties – two in Roxbury, one in Dorchester, and one in Watertown – for a total of $1.5 million. In March 2007 they flew to Boston to meet Scott and close the deals. Also present were Michael Anderson, a Stoneham real estate lawyer who represented Scott in many of his property transactions, according to public records, and Marie Firmin, a Dorchester resident who managed some properties for Scott.
The couple said they signed blank mortgage applications and legal documents that gave power of attorney to Firmin to buy properties on their behalf. They obtained mortgages totaling $1.35 million with the help of James Driscoll, a mortgage loan officer with Gateway Funding Diversified Mortgage Services, based in Pennsylvania. They paid no closing costs and, instead, received about $5,000 cash back, Stacey Grieff said.
At first, everything seemed to work as promised. Scott or someone from his team gave them directly or deposited into their bank accounts a total of $120,000 to pay mortgage bills for more than a year, the Grieffs alleged in their lawsuit. Delighted by how easy it all seemed, the couple even referred some of their friends to Scott, receiving $1,000 to $2,000 for each prospect, Stacey Grieff said.Their referrals included Sean Vaillancourt, a Navy enlistee who lives in Virginia Beach. He says he bought two Dorchester properties with the understanding that all he had to do was sign his name; Fowler and Scott would handle the rest. Sheila Debnam, a New Jersey single mother, said the Grieffs helped persuade her to purchase a Dorchester condominium in October 2007 for $270,000.Soon they would all regret ever becoming involved.
The Grieffs started to worry when the mortgage payment checks from Scott started arriving late. They reexamined their paperwork and said they noticed, for the first time, some unsettling details: The mortgage documents they had signed falsely described the properties as their primary residences, a claim that probably helped them qualify for financing. They also were listed as having paid the closing costs, which they said they had not.Months after purchasing their first units, the couple confronted Scott about the late and missing payments. Scott, Stacey Grieff said, told them one of his partners had fled with some money, leaving him short on funds. Soon they could not reach Scott at all.
So a couple with a combined annual income of $84,000 commits to buying $1.5 million of real estate in another state, signs blank documents, under oath, that contain serious misrepresentations and then, when the s— hits the fan, is shocked to discover that they’d been gambling at Ricks! I am not sympathetic.
My conservative gay friends tell me that being both is a hoot, at least in New York City, where, when they disclose their political beliefs, are met with disbelief: “But, but, you’re gay!” Never assume.
PRINCE Philip mocked a hero Army cadet blinded by a terrorist explosion by poking fun at his dress sense.
The Queen asked brave Stephen Menary how much sight he had left but before he could answer, the gaffe-prone Duke of Edinburgh joked: “Not a lot, judging by the tie he is wearing.”
Menary was wearing a red, navy, and yellow striped tie when he met the Royals at London’s Hyde Park. It is the uniform of the Middlesex and North West London Army Cadet Force.
Prince Philip’s tasteless joke was met with an embarrassed silence all-round and Her Majesty gave her husband a disapproving glare.
Hero Stephen was just 14 when he picked up a torch bomb that was hurled into a Territorial Army barracks in White City, west London, by the Real IRA in 2001. He was almost blinded and his left hand was blown off.
Greenwich Democrats want Lyn Lavery back. I don’t – the lady did nothing as a Selectman except expose our children to filthy conditions in our schools by banning real cleaners for “green” homeopathic pixie dust, but whatever; I suspect that she will have lots of time to further pursue her latest passion, reading. It seems significant to me that the GT reporter Neil Vigdor could only find two Democrats to say anything in support of Lavery, Ed Krummeich and Frankie Fudrucker who both (and it pains me to remind my office mate of this) lost elections of their own. It’s possible that Vigdor’s cellphone only has Krummeich’s and Fudrucker’s numbers programmed, or, more likely, they and their pal Lyn are the only Democrats left in town. If there are other Democrats still breathing, not one is willing to publicly encourage Lavery to come out of retirement. Wonder why?
Citigroup sued for lying to investment bankers about other bidders. From reader D.C. comes this tale of perfidy amid the canyons of Wall Street:
Dec. 12 (Bloomberg) — Citigroup Inc. was sued over the 2007 acquisition of EMI Group Ltd. by private-equity firm Terra Firma Capital Partners Ltd., which said the bank misrepresented that another firm was bidding on the record company.
Terra Firma sued to recover “lost equity of billions of dollars” and obtain punitive damages from Citigroup, which stood to garner substantial fees from the deal as investment adviser and lender to EMI and sole financier to the private- equity company, according to a complaint filed yesterday in New York Supreme Court in Manhattan.
When other private-equity firms dropped out of the bidding for EMI in 2007, Citigroup misrepresented that Cerberus Capital Management was actively participating in the auction and that London-based Terra Firma would lose the EMI bid unless it raised its offer, according to the complaint.
Terra Firma said it paid an inflated price for EMI, also based in London, because of Citigroup’s misrepresentation. The bank also interfered with Terra Firma’s investment by rejecting efforts to restructure EMI and attempting “to soften the markets” for EMI in a bid to take control of the record company by pushing it into insolvency, according to the complaint.
“We believe this suit is without merit and we will defend ourselves vigorously,”Danielle Romero-Apsilos, a Citigroup spokeswoman, said in an e-mail.
Guy Hand, Terra Firma’s founder, stepped down as chief executive officer this year after the firm wrote off about half its EMI investment. The label posted a 1.39 billion-euro loss in 2008 amid a continued drop in album sales.
The case is Terra Firma v. Citigroup, 09603737, New York State Supreme Court (Manhattan).
This is about on a par with Kimberly Piccioli’s suit against Whole Foods for letting her buy raw milk. Big, tough buyout vultures were told an untruth by the seller’s representative and they believed it? Why, that’s never happened on Wall Street before, ever! Who’d have guessed? This happens in Greenwich real estate all the time, by the way, but I think it’s a dumb move. Two different agents for different sellers told me that this past fall and, when my buyers didn’t go forward, neither property sold to someone else. The community of agents is pretty small here, and there are even fewer whom I trust. So when someone bluffs like this and that bluff is exposed, I don’t take offense, but the agent definitely moves to the “Bullshit” pile, and all future transactions are handled accordingly.
The NYT interviews Greenwich’s Scott Lawler, of Broadway Partners. After losses of $600 million on the Hancock Tower in Boston and a few odd billion here and there around the country, he still sounds upbeat and very much still in the real estate business but focusing on busted condo deals and other smallish properties (nothing in New York, interestingly). I’m just sorry the interviewer didn’t touch on his not-so-stellar Greenwich plays like Field Point Circle and Khakum Woods. Neither was the Hancock Tower, but close to home.