Daily Archives: January 27, 2010

Slouching toward Bethlehem

The lawyers are trying to do to carbon what they did to asbestos, silicone, lead and tobacco: bankrupt every single corporation that was ever involved with it. Asbestos and lead were gold mines for these people because the stuff was ubiquitous. Carbon, the basis for all life on this planet, will make those early attempts at enrichment look amateurish. And just wait until the EPA files its own regulations on CO2 – the pounding of pig hooves rushing to the trough will drown out all voices of reason.

Kivalina, an Inupiat Eskimo village of 400 perched on a barrier island north of the Arctic Circle, is accusing two dozen fuel and utility companies of helping to cause the climate change that it says is accelerating the island’s erosion.

Blocks of sea ice used to protect the town’s fragile coast from October on, but “we don’t have buildup right now, and it is January,” said Janet Mitchell, Kivalina’s administrator. “We live in anxiety during high-winds seasons.”

The village wants the companies, including ExxonMobil,Shell Oil, and many others, to pay the costs of relocating to the mainland, which could amount to as much as $400 million.

The case is one of three major lawsuits filed by environmental groups, private lawyers and state officials around the nation against big producers of heat-trapping gases. And though the village faces a difficult battle, the cases are gathering steam.

In recent months, two federal appeals courts reversed decisions by federal district courts to dismiss climate-change lawsuits, allowing the cases to go forward. InConnecticut, environmental lawyers joined forces with attorneys general of eight states and the City of New York seeking a court order to reduce greenhouse gas emissions.

In Mississippi, Gulf Coast property owners claim that industry-produced emissions that contribute to climate change increased the potency of Hurricane Katrina in 2005.

And although a federal judge in Oakland, Calif., dismissed the Kivalina suit in October, the village is appealing the decision.

Tracy D. Hester, who has taught a course in climate lawsuits at the University of Houstonlaw school, said that with the issues “very much in play” in three circuits of the federal court system, “the game pieces are being set for eventual Supreme Court review.”

The cases need not even get that far to have an impact, said James E. Tierney, the director of the National State Attorneys General program at Columbia Law School. Kivalina alleged in its complaint that the industry conspired “to suppress the awareness of the link” between emissions and climate change through “front groups, fake citizens organizations and bogus scientific bodies.”

It’s notable that the Eskimos bringing this Alaskan suit live on a barrier island, by definition a temporary, always moving geological structure. If they can win damages for the result of living on earth, who can’t?

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Ha!

The Obama budget plan, summarized:

Obamanomics in Six Words    [John J. Pitney Jr.]

The president is proposing to freeze one-seventh of the budget while letting the other six-sevenths grow. The proposal sounds like what an unsuccessful dieter would order at McDonald’s:

Big Mac, large fries, Diet Coke.

— John J. Pitney Jr. is the Roy P. Crocker Professor of American Politics at Claremont McKenna College.

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Building lots are selling again

In addition to the Indian Head Road property, another contract of note was posted last week, 2 Wooddale Road, an amazing five acre parcel fronting Lake Avenue. It has subdivision approval from the town but I think its best use is as one lot with the second lot used as a land bank, so to speak. It started off at $5.495 back in 2008 when no one was buying and eventually dropped to $3.9 million. That price reduction and an improving market seems to have done the trick.

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Times are tough all over

Come visit Cornwall!

Prince Charles charges future daughter-in-law and parents 3,000 lbs to stay in his Cornwall vacation home.

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The world is ending

From the WSJ’s James Taranto’s Best of the Web:

Life Imitates the Onion–II

  • “Congress Passes Americans With No Abilities Act”–headline, Onion, June 24, 1998
  • “Employer Told Not to Post Advert for ‘Reliable’ Workers Because It Discriminates Against ‘Unreliable’ Applicants”–headline, Daily Mail, Jan. 27, 2010

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More on Plainfield fund in Greenwich Time

Teri Buhl’s got the story.

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Missed an opportunity here

66 Indian Head Road and one of its two adjacent one-acre lots is under contract. I wrote about this land last summer but I couldn’t find a buyer, darn it. The opportunity to have a 2+ acre spread in little crowded Riverside won’t come again. I’d have bought that third lot too, if I were this buyer but I suppose there’s a limit to everyone’s budget.

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Bad move?

Bloomberg: Treasury will try a third time to bail out underwater homeowners.

The changes would be at least the third lease on life for the program, which began in October 2008 during the Bush administration and has so far helped just 96 of the 400,000 homeowners originally targeted.

With home prices down as much as 30 percent from their peak in April 2006, more borrowers are walking away from their homes even if they can afford the payments, administration officials and analysts have said. The Treasury Department is looking for a solution for the more than 10 million underwater homeowners that analysts estimate may willingly let their mortgages slip into default, which would push home prices even lower and hamper the economic recovery.

The decline in home prices has left 15 million borrowers owing more than their homes were worth in the third quarter, according to Loan Value Group, an advisory firm in Rumson, New Jersey. It says 10 million of those loans are at risk of so- called strategic default, citing data on mortgages that have loan-to-value ratios higher than 115 percent and where the borrower can afford the payment.

“Strategic default is a rational decision,” Frank Pallotta, a managing partner of Loan Value Group, said in an interview. “Are you going to pay a $500,000 mortgage when the house is worth $250,000?”

“Walking away is money in your own pocket,” he said. “If you’re not getting money from the government, it’s your own self-stimulus for borrowers.”

President Barack Obama’s primary anti-foreclosure plan, the Home Affordable Modification Program, or HAMP, has helped fewer than 10,000 underwater borrowers cut their outstanding principal. HAMP is separate from FHA’s Hope for Homeowners program,

HAMP has been a “failure” so far at converting temporary repayment plans into permanent loan reductions, said Bose George, an equity analyst at Keefe Bruyette & Woods in New York. Of the 787,231 trial modification plans, 66,465 have been approved for permanent repayment through December, according to Treasury data.

Lowering Payments

HAMP is designed to lower monthly mortgage payments by reducing interest, lengthening repayment terms and deferring principal repayments for up to five years. Less than 10 percent of the trial modifications through December actually cut outstanding principal as opposed to deferring interest charges on it, according to Treasury officials.

“It looks like that’s not enough for many of these borrowers, especially the ones with significant negative equity,” George said in an interview.

FHA’s Hope for Homeowners program was designed to reduce outstanding principal primarily by extinguishing home equity debt, or second liens, in exchange for a cash payment from FHA. Participation is voluntary and pays second-lien investors 3 cents to 50 cents on the dollar.

In helping people with negative equity, Treasury’s Barr said “you have to be very careful not to design a program that would change people’s fundamental behavior across the country in a destabilizing way or would be widely perceived as unfair to people who are continuing to pay.”

There will have to be more efforts to reduce mortgage principals, as 42 percent of borrowers may be underwater by the end of the year, said Karen Weaver, the global head of securitization research at Deutsche Bank Securities Inc. in New York.

“At the end of the day we’ll see more of it, because the government’s attempt — through modifications and the schemes and paradigms that have been in place — I think anyone has to conclude has been a failure,” Weaver said in a Bloomberg Television interview.

“I don’t think we’ve seen the last of government policy trying to address this.”

Apart from the fairness issue, which is huge: Pal Nancy and I financed our kids’ college in part through a second loan and we’re paying it back while someone who used his equity to go to Hawaii doesn’t have to? – the other objection to this is why it is a good idea to artificially prop up real estate prices? As prices have dropped, buyers are coming out of the woodwork – young couples who had been renting, people who wanted to live in Greenwich but couldn’t afford to before, etc. Why penalize them and reward others?

I sympathize with home owners who are underwater but again, why should they get relief while someone else who lost just as much in value but whose mortgage isn’t in jeopardy gets nothing? The $2 million house that sells for $1.4 million is a loss for one lender and one owner, but is a gain for another lender and the new owner. Why is the government interfering with this game of musical chairs and picking winners and losers?

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How to take a price cut

36 West Brother Drive

This is a beautiful Milbrook home but when it was listed last July at $6.2 million it found no takers, so the owners wisely dropped it $400,000 in September to $5.8. That still didn’t work so today they dropped it all the way to $4.950. Its assessment is something like $4.3 so it’s definitely in the ballpark now but more important, a reduction this size catches attention – it caught mine – and creates new interest for an otherwise stale listing. Smart move. Nice house, too.

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It’s more fun to swim naked, too

Just do it

Study: bare feet better for running than cushioned running shoes. My inclination towards naturism is not only hedonistic, it’s healthy! I’m so relieved.

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Coming to a state near you – including Connecticut

Oregon voters approve new taxes on “the rich” and corporations.

Measure 66 increases Oregon’s personal-income-tax rate by two percentage points for households earning over $250,000 a year. Measure 67 calls for an increase in the state’s minimum corporate income tax, currently $10 a year, and imposes a tax on gross revenues for corporations that do not report a profit.

The Oregon Legislature approved both tax increases last year, however opponents of the measures—chiefly business groups—sponsored a referendum campaign to put them to a statewide vote. Voters in this heavily Democratic state supported the legislators.

“Passage of these measures means we keep core services of education, health care and public safety that Oregon families, businesses, and communities count on,” said Oregon House Speaker Dave Hunt, a Democrat who represents Clackamas County. Defeat, he said, would have forced the state to cut nearly a billion dollars more from such services.

The twin ballot measures also served as a gauge of anti-business populism and highlighted a nationwide debate over whether to fix state budgets by targeting the affluent. But they also fueled resentment of “tax and spend” legislators, as well as public-employee unions whose members enjoy job security at a time when thousands here have lost jobs.

By targeting out-of-state corporations in campaigning for the new taxes, proponents of the measures persuaded many voters that much of the new funding needed to close the state’s budget gap would be born by outsiders. Opponents disagreed with that analysis, arguing that only 3% of the targeted revenue would come from corporations with headquarters outside Oregon.

Kevin Looper, campaign dIrector for the organization Vote Yes for Oregon was jubilant. “It’s an incredible victory for some very courageous political leaders, who in the middle of a recession decided to protect schools and vital services,” he said.

“Oregon voters said ‘no’ to more 4-day school weeks and bulging class sizes and ‘yes’ to corporations and the wealthy paying their fair share,” added Gail Rasmussen, president of the Oregon Education Association, one of the public-sector unions that campaigned hard for Measure 66 and 67’s passage. “Tonight’s results are a credit to the hard work of parents, educators, and thousands of Oregonians from every walk of life who stood up to protect our schools.”

The temptation to force the rich and “outsiders” to keep spending where it is here in Connecticut – or more likely, higher – will prove irresistable, I predict. Texas, anyone?

 

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Valbella’s North

You're in good hands

North Porchuck Rd construction goes up in smoke – all 14,000 square feet of it. Oops.

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Hartford is about to find out that Fairfield County can’t fund their dreams

Connecticut has a $500 million deficit this year, a $12.5 billion deficit coming before 2014, a $40 billion unfunded liability for state employee pensions and health care, and the federal government just got out of the bail-out business.  All the accounting shenanigans used in the past to hide what was coming  have been exposed and judgement day approaches. What will our legislators do? Probably pass a resolution praising motherhood, retire and flee to a low-tax state. We’d be fools not to join them.

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It doesn’t surprise me, but I’m not an economist

New Home sales fall.

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New to or back on the market

72 Sawmill

The interior shots have more appeal to me than this exterior of a Sawmill Road property up for sale today at $3.9 million. It sold new for $2.1 in 1999 (after asking $3), sold again for $2.6 in 2001 and has not been renovated since. Assessment is $2.6 million.

Then we have 39 Edgewater Drive, that abandoned house in Old Greenwich that has been on and off the market for years as a pure land sale, even though it’s just 0.15 of an acre. Listed for $895 during the boom, it received many offers but the owner, a Florida resident, was cantankerous and wouldn’t deal. He may have died, because it’s back today, at $850,000. That seems like a high price for such a tiny lot but the drive

 to live in Old Greenwich south of the Village is powerful, so perhaps they’ll get it.

39 Edgewater Drive

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Being arrested by the FBI is bad for your looks

Round Hill’s own, Raj Rajaratnam, appeared a bit distressed when arrested for insider trading but his co-conspirator Danielle Chiesi looked like day-old cat barf. Released on bond and a trip to her hair stylist later, she looks a bit better – at least, one could, with an effort, begin to believe that she traded sexual favors for information. Strategically, this is a bad move: had she retained her booking day look, no jury in the world would have believed the prosecution’s theory.

Would you give this woman the time of day?

"Oooh, Raj, you are soooo smart!

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