OT: Wall Street goniffs - where are they now?

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wrote:

I'm not doing well explaining this. I watched my real estate taxes skyrocket and my IRA's plummet as a result of the real estate bubble, mostly, that tanked the economy. I didn't have anything to do with buying into a red hot housing market - although I wanted to and for a while, it seemed that if you DIDN'T get in soon, the prices would only skyrocket some more. When that many people take a bath, even the spectators get splashed. Even the prudent got sucked in to some extent if they needed to move for any reason. That's just what houses cost and you can try to lowball like I do, but I recall in 2007 even chicken coops were commanding outrageous prices. The smaller the house, the less you've risked at those high prices. But you'll still take a beating in most cases like the last bubble, especially towards the end of the bubble.

Because panics eventually subside and prices have "ratchets" built into them in that they fall far more slowly than they rise as people try to put off reconciling their losses.

"As people try to put off reconciling their losses." (-:

Good advice for the time. I believe the housing market will recover. Some people will make deals, some will hold out as long as they can but the overall effect will be to restore prices to the slope of the historical and moderate yearly rise in house prices. I believe it was Kurt who said something to that effect. We've had an excursion way above the normal rise in prices, and now we'll see that bubble slowly deflate until it settles back down to the traditional incrementation of value of housing.

The Japanese made that mistake en masse. They had a long tradition of "salarymen" having employment for life if they served their employer well. The rapid changes of the 20th century put that notion to death and created quite a social crisis that country that has yet to fully play out.

It takes a lot to admit that. I've just ordered a book that talks about how highly we think of ourselves in terms of making good decisions that result in prosperity. Part of the book examines stockbrokers and their ability to pick winners for clients. Turns out that most are no better than a coin toss at picking good stocks. Yet they mentally compensate by "forgetting" the bad choices they've made and over-estimating the good ones. They attribute the good choices to their skill and the bad ones to some external market force and not some problem with their forecasting ability. Even when they can examine the facts in detail, they still believe it was some great intrinsic skill that made them pick winners.

I hope the book explains in detail WHY so many people either don't understand the role luck plays or minimize it. The review of the book suggested that our sense of mastery over the environment is very important to us psychologically, and we use a number of "Jedi mind tricks" to convince ourselves that we control far more that happens to us than we actually do.
Sort of like privatizing gains and socializing losses. It can be summed up with: "If I prospered, it must be because I am smart, if I lost out, it's because some evil person or force did me dirty!" We derive a strong sense of comfort from believing we're the captains of our own fates, and not just a cork bouncing over the waterfall of life.
-- Bobby G.
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By around 2005 most people with kids could see home prices was all a mirage. Maybe earlier. I could barely qualify for my "mid-level" mortgages in 1997, with 10% down. And I was making good bucks. I was surprised I didn't need 20% down, as for my first house. By 2002, it was clear my kids couldn't buy my house unless they went with one of the bogus mortgage deals. Zero down! Interest only! And they would also need a high-paying job. At the same time all this off-shoring of jobs gained speed. Writing was all over the wall. You lose your job, you can't pay a mortgage. Your kids' future doesn't look promising. Nothing complicated about that. I wonder how many of the foreclosures are due to job loss and nothing else. I've heard of people who had their homes almost paid off, then took out equity loans to the max for $40k pickup trucks and vacations. Then they lost their jobs - and their houses. Lots of stories. Many people have no financial sense. Chickens waiting to be plucked.
--Vic
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On Nov 3, 10:26am, "Robert Green" > It's just a matter of personal responsibility.
Gee, I thought it was all Wall Street's fault. That's what you've been saying here consistently. Now, suddenly there is the issue of "presonal responsibility". That's a start.
I know people with

That is obvious from all the economic nonsense you've posted here. Since you admit you don't know anything, why don't you just shut up?

Neither can you from most of your other posts.
They don't know the power of compound interest and how

Pet the other thread, you too are clueless as to wealth, it's defintion, and how it's created. You think the world is one big zero sum game.
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wrote:

Life is.
R
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On Thu, 3 Nov 2011 10:26:31 -0400, "Robert Green"

During the height of the "bubble" some people would spend large amounts to "improve" their home before selling. Jacuzzis, granite counters, oak cabinets, stainless appliances, etc. When sold, their house was torn down and a McMansion was erected.
--Vic
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On Thu, 03 Nov 2011 10:19:36 -0500, Vic Smith

burst side of the bubble, one *has* to "improve" one's house to get any traffic; that "competition" thing.
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On Thu, 3 Nov 2011 15:16:31 -0400, "Robert Green"

Women don't even have to own it. We used to drive past one nice frame home in Glenview, Il that my wife loved because of the full front porch with rockers and hanging bench swinger. One day that was gone and soon there was a McMansion there.

This (north and west Chicago suburbs) was a hotbed of teardowns. Perfectly good homes in desirable area were flattened. Home builders would pay market value for well-built 1500 sq ft homes. Tear it down and put up a +4000 sq footer using illegal labor. Turn a $300k investment into $800-1m, less-costs. As the bubble burst some sat unoccupied or half built for a while.
I still see some that look empty. Many look nice, except hardly any yard space. No idea about construction quality. I mostly shiver when I see them, imagining the RE taxes and heating/cooling bill.
The one that really struck me was near my dentist's office in Park Ridge. Side street full of various nice 1 1/2 story homes on normal sized lots. Then I saw a McMansion had been built, taking up the entire lot and totally obliterating the sun for the house next to it on the north. Bet that homeowner was highly pissed. I was really surprised the village allowed that. Most likely greased palms.
My immediate neighborhood is small brick ranches about 1300 sq ft. There's only a couple McMansions within a half mile or so. Most of the houses are pretty much the same, with minor variations and different exterior design cues. Across the street new owners with kids had a story added, and about a block away a guy bought the house, did the same, and sold it, never living in it. Gives them a boxy look, but 2nd story facade work helps alleviate that a bit. Knowing the space limitations in my house, the stairway to the 2nd floor must really cramp the 1st floor. But to each his own. My view is if you want a 2 story house you buy one designed as a 2 story.
--Vic
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<stuff snipped>

When I worked in DC, there was a single townhouse surrounded by modern multi-story buildings. The owner was a slightly deranged elderly man who didn't want the money, he just wanted to stay in the house he had lived in for decades until he died. Real estate agents threw themselves at him the way teenage girls did the Beatles.
<stuff snipped>

Yabbut - a company converted the cramped, angled roof attic of the one of the Cape Cods around here to a larger 2nd floor than the first. Did a great job but it still looks way out of place. Maybe it needs company.
I think that's going to happen more and more as people "wait out" the market and decide to put off that day of reckoning by enlarging the space that they have. I think it makes sense since the houses are too small to start with here and this gives you quite a bit more useable living space by converting the "you can only stand up straight right under the ridgeline" attic to space that's got uniform ceilings.
We were thinking about it but our second floor was modified by a fairly skilled cabinetmaker into two rooms with built-in beds, toy bins, closets, shelves, chart drawers, etc in a nautical sort of theme that kids find fascinating. They don't hit the angled ceiling as much as adults either. Will probably be ripped out by the next owner but neither of us could bring ourselves to do it. (-:
-- Bobby G.
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Of course they do, that's a core and essential part of the business. How far do you think we's get with say an IPO if Wall Street had to carry the risk of the company, as opposed to getting INVESTORS to take the risk?


The securities you are bitching about were sold almost exclusively to sophisticated institutions. IF they didn't understand the risk, who's fault is that? Also, if the buyer didn't understand the full risk, why do you assume the seller did? It's like the guy that buys a 10 year old used car and 5 days later, the car won't go into third and the tranny is shot. The buyer then claims that the seller must have known the engine was bad. Of course, like in the securities example, the buyer didn't take the car for a test drive or to a mechanic for an inspection. And had the car gone 100,000 miles and another 10 years with no problems, he wouldn't be back offering to give the seller MORE money because the car turned out great, would he? And how far would he get in small claims? He'd get booted because it's an "as is" sale.

They certainly did, they bought it. It's like in the car example saying they really didn't want the car that later turned out to have problems.

That part is true. But clearly part of that was that there had not been a case of such a substantial collapse in real estate prices going back to at least the Great Depression. So, for analysts not to expect a 40% decline in prices doesn't seem all that unusual. And then it fed back on itself, taking lots of loans that were perfectly sound with it too.

Classic liberal thinking. Everyone else is stupid and needs the lib and big govt to take care of them. The concepts that got people into trouble don't require college. They are very basic. Let's see, I make X, my payment is Y for Z years. Can I afford it? What happens if I lose my job? What happens if my wife loses her job? etc.

That goes on everyday. It's occuring right now on the futures exchanges in NYC and Chicago. Part of the basics, which you don't understand. Here's a simple example that I've given you before. Suppose I own stock in company X. I bought it at 20, now it's at 35. I've done my due diligence and think the stock is now overvalued. Looks like the business climate will get more negative overall too. So, I sell the stock and at the same time I buy put options to profit if it goes down. That goes on every day and is PERFECTLY LEGAL. Did I have an obligation to tell the buyers that I think the stock is headed down? Of course not.
Horsewhipping

No one here is forgetting anything. I, as have many others, have told you a hundred times that there is a whole list of people responsible and who should have known better. Everyone from the buyer of the house at the very beginning, to govt which encouraged those purchases, to whomever issued the loans to begin with, to the parties that bought the CMOs in the end. You are the one who focuses exclusively on Wall Street.
>Experienced, professional eyes that should have seen

Poor? Who's blaming the poor? Plenty of people who got caught up in houses they could not afford came from the middle class. And you assume everyone knew how it would turn out. How about this. You think just maybe that instead of evil capitalists being involved, there might have been some bright eyed libs, like you. You know, someone in Congress or the regulators or working at a bank or mortgage company thinking about how great it is that they are helping some poor person get a loan. A loan so that they could get their piece of the American dream. Where house prices always go up and you can't lose? Why, if 3 years in they need to sell the house, they can just break even as usual, right? Let me help them get ahead by making that loan.....
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On Wed, 26 Oct 2011 13:53:42 -0700 (PDT), Higgs Boson

If you're going to piss and moan about something the least you could do is learn how to spell what it is that's bothering you. The proper spelling is "Gonifs."
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HB
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