October 11, 2008

Burbed’s Voter Guide for 2008: California Propositions

One of the best and biggest advantages of living in California is that you are able to make a giant impact through Propositions! For example, in 1978, voters ignored their callous politicians (who they had elected), ignored greedy corporations like Bank of America and Standard Oil that the idea would lead to ruin, and enacted the world famous Prop 13 – ensuring that real estate prices would stay high forever, ensuring that our schools and services would have no funding, ensuring that corporations would have a huge tax loophole forever, and ensuring that once you own land in California, you are king. Strong family values.

Well, it’s now that time of year again! Election season! Time for you to make an impact. Here’s Burbed’s guide to the Propositions!

Proposition 1A. Safe, Reliable High-Speed Passenger Train — State of California (Bond Act – Majority Approval Required)
To provide Californians a safe, convenient, affordable, and reliable alternative to driving and high gas prices; to provide good-paying jobs and improve California’s economy while reducing air polution, global warning greenhouse gases, and our dependence on foreign oil, shall $9.95 billion in bonds be issued to establish a clean, efficient high-speed train service linking Southern California, the Sacramento/San Joaquin Valley, and the San Francisco Bay Area, with at least 90 percent of bond funds spent for specific projects, with federal and private matching funds required, all bond funds subject to an independent audit?

Vote No! This will destroy some of our most fragile downtowns – like Mountain View, Burlingame, and others. Furthermore, do we really need access to SoCal? Clearly there’s no reason to go down there, the Bay Area is the most important part of California. Thus, this is being proposed so cultureless SoCal’ers can come up here. Forget about it – this won’t help boost real estate values in the Bay Area. Now… if they were going to build a high speed rail to Moscow, Shanghai, or Mumbai to attract more foreign dollars which are pouring in to buy real estate in world famous Cupertino – that’d be a different story!

Proposition 2. Standards for Confining Farm Animals — State of California (Initiative Statute – Majority Approval Required)
Shall certain farm animals be allowed, for the majority of every day, to fully extend their limbs or wings, lie down, stand up and turn around?

Vote Yes! This will require farms to expand, thus causing land to become even more valuable and expensive. This will help real estate prices for sure!

Proposition 3. Children’s Hospital Bond Act. Grant Program — State of California (Initiative Statute – Majority Approval Required)
Shall $980,000,000 in general obligation bonds be authorized for construction, expansion, remodeling, renovation, furnishing and equipping of eligible children’s hospitals?

Vote No! Come on! Californians voted for Prop 13 30 years ago to send a strong signal: children are not our future. Not only will this not help our most valuable citizens – the baby boomers, our future retirees, this will hurt them by preventing more seniors hospitals from being built. And seniors are the kind of people we need to attract! Can you imagine if we had more world class elderly hospitals? Think about all the cash and equity rich retirees that would be pouring in from Florida, the United Arab Emirates, New York, and London! Think about it: do children have money? No! So why do we want more?

Proposition 4. Waiting Period and Parental Notification Before Termination of Minor’s Pregnancy – State of California (Initiative Constitutional Amendment – Majority Approval Required)
Shall the California Constitution be changed to prohibit abortion for an unemancipated minor until 48 hours after physician notifies minor’s parent, legal guardian, or, in limited cases, substitute adult relative?

Vote Yes! We need to eliminate abortion. Think about it: more fetuses, more people, more need for houses. Eliminating abortion can only help boost real estate prices (though we may need more police as well if you believe in Freakanomics….)

Proposition 5. Nonviolent Drug Offenses, Sentencing, Parole and Rehabilitation — State of California (Initiative Statute – Majority Approval Required)
Shall $460,000,000 be allocated annually to improve and expand treatment programs?

Vote Yes! Just think about how amazing it would be if we could turn these small time drug dealers into something more productive and relevant: mortgage brokers and realtors. Exactly! This is the future right here! With their skills, even more people will be talked into buying houses. “What are you chicken? All the cool kids are buying condos!” Also, with more criminals out and rehabilitated, there will be more demand for housing. Real estate wins again!

Proposition 6. Police and Law Enforcement Funding. Criminal Penalties and Laws — State of California (Initiative Statute – Majority Approval Required)
Shall of minimum of $965,000,000 of state funding be required each year for police and local law enforcement?

Vote Yes! Just incase Prop 4 and Prop 5 pass – this may be helpful. Besides, more police will help house prices.

Proposition 7. Renewable Energy Generation — State of California (Initiative Statute – Majority Approval Required)
Shall government-owned utilities be required to generate 20% of their electricity from renewable energy by 2010, a standard currently applicable to private electrical corporations? Shall all utilities be required to generate 40% by 2020 and 50% by 2025?

Vote Yes! Who doesn’t like clean skies? This will raise real estate prices.

Proposition 8. Eliminates Right of Same-Sex Couples to Marry — State of California (Initiative Constitutional Amendment – Majority Approval Required)
Shall the California Constitution be changed to eliminate the right of same-sex couples to marry providing that only marriage between a man and a woman is valid or recognized in California?

Vote No! We need gays and lesbians to marry! Why? Once people get married, they will instinctively want to settle down. And what does settling down mean? That’s right! Switching from renters to homeowners. More married same-sex couples will mean more demand for homes. And more demand means higher prices!

Proposition 9. Criminal Justice System. Victims’ Rights. Parole — State of California (Initiative Constitutional Amendment and Statute – Majority Approval Required)
Shall notification to victim and opportunity for input during phases of criminal justice process, including bail, pleas, sentencing and parole be required? Shall victim safety be a consideration for bail or parole?

Vote No! We need more people outside of jail – not behind bars. What good are people behind bars? They have free housing! We need to get them out, and get them into some sub-prime mortgages! Sorry victims!

Proposition 10. Alternative Fuel Vehicles and Renewable Energy. Bonds — State of California (Initiative Statute – Majority Approval Required)
Shall $5 billion in bonds paid from state’s General Fund be authorized to help consumers and others purchase certain vehicles, and to help research in renewable energy and alternative fuel vehicles?

Vote No! We all want cleaner air and less traffic. The solution is to make sure that only those who can afford to drive clean air cars are allowed to drive! If that were to happen, the Bay Area would be even more progressive! And progressive areas attract the smartest and richest people. Win win!

Proposition 11. Redistricting — State of California (Initiative Constitutional Amendment and Statute – Majority Approval Required)
Shall the authority for establishing state office boundaries be changed from elected representatives to a commission comprised of Democrats, Republicans, and representatives of neither party selected from the registered voter pool in a multilevel process?

Vote Yes or No! Who cares?

Proposition 12. Veteran’s Bond Act of 2008 — State of California (Bond – Majority Approval Required)
Shall a nine hundred million dollar ($900,000,000) bond be issued to provide farm and home aid for California veterans?

Vote Yes! Duh. This might as well say “Do you want the future generations to pay for homes for veterans of today and boost your real estate prices?” Duh!

Well… these are the official stances of Burbed.com on how you should vote on this year’s Propositions!

Agree? Disagree? Let’s hear ‘em!

Comments (81) -- Posted by: burbed @ 5:47 am

81 Responses to “Burbed’s Voter Guide for 2008: California Propositions”

  1. Confused Says:

    Burbed,

    Are you legally trained (no pun intended)?

  2. burbed Says:

    I watched a lot of Law and Order.

  3. Pralay Says:

    I would say vote YES on Prop 8. Think this way – married gay couple buys one home. Two unmarried gays buy two homes – separately. So more unmarried gays means more demand for homes.

  4. Pralay Says:

    Prop 5:
    Just think about how amazing it would be if we could turn these small time drug dealers into something more productive and relevant: mortgage brokers and realtors.
    ——-

    Apart from this interesting viewpoint, let’s think about other ways – more drug dealers means more meth labs, growing marijuana inside house. That translates to more demand for homes.

  5. DreamT Says:

    “Thus, this is being proposed so cultureless SoCal’ers can come up here. Forget about it – this won’t help boost real estate values in the Bay Area.”
    Sounds counterintuitive to me. More SoCal’ers moving up north will increase local demand for housing and real estate prices. Burbed are you sure you’re not biaised against this one for another reason than real estate? :)

  6. Tyrone Says:

    Off-topic:
    Is Rodeo, CA the Bay area? Looks like an Alt-A time-bomb is about to go off in (or near) the bay area.

    Mortgage Meltdown in Rodeo
    .

  7. Lionel Says:

    TECHTONIC SHIFTS
    Daniel Lyons
    Down in the Valley

    The storm is on Wall Street, but it’s rippling out to Silicon Valley and causing investors to be more cautious.

    As if waking from a dream, Silicon Valley has suddenly realized that the collapsing economy means trouble for tech companies, too. Especially at risk are the new startups created in the wake of the last dotcom crash in 2001. The signal traits of these Web 2.0 companies are cutesy logos, odd-sounding names—Twitter, Zooomr, Digg, Ning, Loopt—and flimsy business plans based on a vague notion of luring millions of people to free Web sites and someday selling advertisements. Most lose money. Some have raised enough venture-capital funding to survive for a year or more. Some may be able to raise more from venture backers, albeit at onerous terms. But many are going to flame out.

    The correction is long overdue. Over the past two years, valuations on some Valley startups have soared to ridiculous levels. Facebook, the social-networking site, last year raised money at a $15 billion valuation despite being profitless and only three years old. Ning, another social-networking site, has raised $104 million and was most recently valued at $500 million. (Cofounder Marc Andreessen, a Valley veteran, said earlier this year he was raising money to ride out a coming “nuclear winter.”) Slide, a maker of software widgets that let Facebook users “Poke” and “SuperPoke” each other, earlier this year raised $50 million at a $550 million valuation. Just as in the original dotcom boom of the late 1990s, Valley types claimed these valuations were perfectly reasonable, and insisted there was no bubble. Those who have raised war chests remain upbeat. “Not to sound obnoxious, but this downturn could be good for us,” says Max Levchin, founder and CEO of Slide, in San Francisco. “Some of our competitors are going to go out of business.”

    Worth reading…

    http://www.newsweek.com/id/163443

  8. anon Says:

    Gosh! Without overvalued stocks, how will people buy over valued properties?!

  9. Pralay Says:

    You know we don’t care about stocks, we have bags of cash in sidelines.

  10. Real Estater Says:

    >>Silicon Valley has suddenly realized that the collapsing economy means trouble for tech companies, too.

    I think it’s important to distinguish between a “collapsing economy” and a “collapsing credit market”. As of now, Silicon Valley companies are still creating and selling new products, generating revenue and profits. Since the crisis began, I’ve not seen any drop in local real estate prices (if anybody has seen it, please let us know!); Stanford mall is still jam packed on the weekends (just went there, couldn’t find parking), and there’s still a mandatory 5 minute line to get latte in the morning. We are very lucky to be living in a nearly recession-proof area.

  11. Pralay Says:

    Wow! On one side this Newsweek article and another side Chuckie is not finding parking at mall.
    I am trying to figure out which one is more reliable gauge for future economy of Silicon Valley. I am so confused. ;)

  12. burbed Says:

    Sorry everyone – had to turn spam protection on again. :(

  13. Herve Says:

    > Sorry everyone – had to turn spam protection on again.

    Oh great, just when I had put my abacus away!

  14. Lionel Says:

    “We are very lucky to be living in a nearly recession-proof area.”

    What an absurd comment. As this recession sinks its teeth into our economy, the last product anyone will buy is software, and the advertising revenue that flushes through google and facebook will have dried up too.

  15. RealEstater Says:

    Lionel,

    Not so fast. Stock market is staging a strong recovery as I expected.

    As I told everyone here, I bought on Friday, and expect to make some easy money.

  16. R Says:

    A morning where the Dow is up 5% after being down 22% in just the preceding week alone constitutes a strong recovery? If so, we are more screwed than I thought.

  17. Lionel Says:

    “Lionel,

    Not so fast. Stock market is staging a strong recovery as I expected.

    As I told everyone here, I bought on Friday, and expect to make some easy money.”

    I’m in SSO at the moment, so I’m with you. But I’m dumping tomorrow. This market has still not corrected completely. When DOW is around 5000, this gunk will have finally worked its way through the system. Anyone who thinks the bear is dead is in for a big surprise over the next six months.

  18. WillowGlenner Says:

    I know you are trying to be funny with that high speed rail but I totally agree. A high speed rail project would be a fine idea if it was underground in the west bay somewhere. Instead to save money the proposal has the thing going through the existing caltrain infrastructure which means it will be ABOVE GROUND going through downtown Burlingame, San Mateo, Mtn View, Willow Glen etc. Except as a HSR, it does not stop in these places it just drives through them. HSR above ground will cause the entire ground infrastructure to shake, and this provides NO VALUE to commuters. With the pricetag where it is I am thinking it can’t pass but you never know. BART in San Jose is another story, thats a worthwhile endeavor. But not this.

  19. WillowGlenner Says:

    I read in the voter pamphlet that Prop 8 intends to amend the CA constitution to disallow gay marriage. That is not necessary, even if you don’t believe in gay marriage. Vote no on 8.

  20. Pralay Says:

    Here we are just joking WG. Did you hear amount of recent Prop 8 supporters ads in radio? Gosh, they are pouring lots of money.

  21. WillowGlenner Says:

    Yes I think prop 8 will win. Their ads are better – Little girl- ‘Mommy my teacher says I can marry a princess’. The pro gay marriage people made some mistakes by changing the application for a marriage license in SF to say “Party A” and “Party B” instead of bride and groom. Thats going to upset a lot of people. But I think this is much ado about nothing, who cares? Let everybody get married whats the harm? And I was raised Catholic, with my kids going to Catholic schools. I just don’t care. I think it will win though.

  22. RealEstater Says:

    R,

    Do you still want to argue there is no strong recovery in the stock market today?

  23. nomadic Says:

    They changed the marriage license back to include both Party A/B and bride/groom. All I hear on the radio are the vote yes ads and they’re so frickin’ annoying! (Of course, having to listen to KBAY is annoying no matter what.)

    It’s dismaying to think that a constitutional amendment to LIMIT personal freedoms could pass. Especially here in CA. I agree that it’s much ado about nothing and they should have same rights as everyone else. Heck, they can pay the marriage penalty in taxes too. It’s only fair. ;-)

  24. madhaus Says:

    You know why there’s so many Prop 8 ads? It’s the flippin’ Mormons. Only this time instead of admitting they’re behind it, they’re asking their members to contribute to the campaign, but they are the money force behind this thing.

    I am laughing over their attempt to put up “a million yard signs” on a particular date, around September 22nd I think. Well, the company who ordered the signs from them didn’t deal with a US shop and sent the order out to China, and it’s still tied up there. I’m starting to see Yes on 8 signs so they may have arrived this week. A little late for their huge event, though.

  25. R Says:

    R,

    Do you still want to argue there is no strong recovery in the stock market today?
    —————
    What is this a day trading website? yippee, back above 9000. Recovery complete. A bull market is upon us. Time to buy overpriced real estate again.

  26. RealEstater Says:

    After listening to those radio ads, I am more determined than ever to vote No on Prop 8.

    This country wastes too much money/effort on this issue. This is one of those totally unimportant issues, particuarly at this time when there are so many real problems to contend with.

  27. DreamT Says:

    Plus burbed will be happy that you publicly back his choice on prop. 8 – Mega-credibility!

  28. DreamT Says:

    I was stunned to read this:
    http://www.mercurynews.com/realestatenews/ci_10701409

    “They depleted their 401(k)s to spend $120,000 improving their backyard. (…) In July, they received a notice from the bank that they had 72 hours to leave. Their $270,000 investment was gone, and they were filing for bankruptcy.”

    I know it’s a harsh thing to say, but some foreclosures are WELL deserved in my opinion.

  29. burbed Says:

    As much as he worried about his neighbors, Cantrell never thought he would become a casualty of the housing crunch. He was a retired Navy man with a solid pension. He had a job in construction management and, with his impressive work ethic, was making $250,000 a year, plus a hefty bonus. His credit rating was in the 700s. So in 2006, he bought a $670,000 house, then spent $100,000 to add a pool and miniature golf course in the back.

    With a $250k income, he should’ve totally just bought in Palo Alto. Using the normal 6x measure, he could’ve easily afford a $1.5 million dollar house there.

  30. DreamT Says:

    Guess he would have been too far from his construction job. And also the lure of the mansion and the smell of new walls and foundations…
    I wonder if the Murky News picked the folks with the most misguided priorities and meant it as a tongue-in-cheek article without the sarcastic tone.

  31. burbed Says:

    I bet most people read it and felt bad for the people, glossing over the numbers – unlike the readers of this site.

  32. nomadic Says:

    Just think, if he DID buy in PA, he could’ve sold for a hefty profit after getting multiple offers…

    Still a sad/painful story – to put $250k into a place and lose it all. Now the other folks who drained their 401ks… well, no sympathy for that kind of dumb.

  33. WillowGlenner Says:

    Construction jobs like that $250K job that guy had were sort of flash in the pan casualties of the property bubble and only lasted a year or two though. Just like in 1998 some internet consultants in the bay area were bringing in that level as “consultants”. Today there are still consultants but they pay the same as everybody else. That guy didn’t really have a consistent job that paid that level, I believe anyway.

    And the amazing thing about that article is that he could have bought at that same time in many parts of the bay area- not just Palo Alto- and been just fine. The entire problem they had is they went out to an exurb and got caught up with that shiny object over there, so to speak.

  34. R Says:

    Yep, there were a lot of flash in the pan jobs in construction and real estate where people, many without even college degrees, were making about 4x what they should. Now that the funny money has dried up, so too have those jobs. Imagine, people actually having to accept making what they are worth.

  35. cardinal2007 Says:

    Based on what I saw on TV yesterday the most funding for TV ads seems to be:
    1. Against Prop 7
    2. For Prop 10
    3. For Prop 2
    4. For Prop 8

    The Anti-prop 8 ads have disappeared. They keep asking for money, saying that the pro-prop 8 people are outspending them. I have donated $200 to defeat prop 8, but I don’t think I will donate any more money at this point. The ads need to address these fact issues that the pro-prop 8 ads brought up.

    Yeah, I agree with Burbed that demand for purchasing housing will increase if prop 8 fails. I’m also expecting higher sales tax revenues.

    I disagree with Burbed on prop 10 though, you can only take advantage of solar panels and plug-in hybrids if you own a house of a townhouse. Clear boost to RE there.

  36. madhaus Says:

    Want to remind everyone to vote no on Prop 4, so all those rebellious teenaged girls can have abortions and go to college instead of being stuck with brats and no education, and collecting welfare for years. Vote no, it will save on taxes and raise real estate prices.

    As to that story in Manteca, anyone who buys a house in a place named Lard deserves what they get. I felt bad for the couple who got to keep their house because they insisted on getting a fixed loan, but they still overpaid. I don’t see how it’s their fault if they wanted to buy and the ninja loans raised prices for everyone. Clearly everyone had Dutch Tulip Disease.

  37. anon Says:

    “Imagine, people actually having to accept making what they are worth.”

    Tough times, this recession. Maybe before its over people will have to earn before they spend. God that would be horrible.

  38. anon Says:

    “As to that story in Manteca, anyone who buys a house in a place named Lard deserves what they get.”

    They just wanted to live off the fat of the land, MH! Have a little sympathy!

    Mmmmmm…Kool aid mixed with lard.

  39. crossroads Says:

    “The ads need to address these fact issues that the pro-prop 8 ads brought up.”

    that is what they call “teach the controversy”. it’s like swift boating. even though none of their claims are true, they just keep repeating them forcing the other side to prove that they are untrue. it’s like the realtors who keep saying that bay area homes will double every 10 years.

    clearly it works.

    http://www.sacbee.com/1195/story/1311238.html

    http://opinion.latimes.com/opinionla/2008/08/what-same-sex-m.html

    i don’t understand why we even have these conversations. just look at canada. they haven’t fallen apart.

    i love the think of the children argument. it always wins. unless it involves spending money.

  40. WillowGlenner Says:

    Cardinal, I’m pretty sure every cent that is against Prop 8 is going to the central valley and Socal, because the bay area is very sympathetic to gay marriage. This is a high cost media market and its just not worth the money to advertise here, against 8 anyway.

    On 7 thats the alternative energy bill. The sheer dollar volume and amount of time the utilities have been advertising against that would typically cause me to vote FOR it, especially since the NO people call themselves “Californians against another costly energy scheme”. What a load of crap. Except that the Sierra club is against 7 too according to ballotpedia. It turns out my state congressman Joe Coto is FOR 7, and I like the guy but there is just too much noise against it to pass. Whatever 10 is seems like it will pass. Really crossing my fingers against 8 right now but my gut tells me it passes.

  41. WillowGlenner Says:

    DreamT, the reason the Murkynews picked these people to chronicle in that article is because this Manteca development was the first one to go down last year. The Murkynews covered the auctions last year and interviewed people, and then went back this year where of course it is much worse. Last year when they did their first piece, the RE market was still on fire on the peninsula. The neighborhood where I live had a sale across the street (on the bad side) sell for 100K more than I paid just a year prior. So we were still going up, then. Only manteca and tracy and a few others were starting to decline. Of course now those places are completely devastated.

    In September 2007, the Mercury News chronicled the conflict between Paseo West homeowners and Anderson Homes, one of the first builders in Northern California to try to sell its new, empty houses at auction.

  42. nomadic Says:

    anon, you commie! Tough times, this recession. Maybe before its over people will have to earn before they spend. God that would be horrible.

    ;-) That’s downright un-American!

    crossroads, I got a “yes on 8″ flyer in the mail today and they attribute the statement that churches can lose their tax exemption to a professor at Pepperdine school of law. Sounds like just a sensationalist opinion but they sure are milking it. One poor decision that someone made – on channel 7 news this weekend they did a story on a first grade class that went to a gay wedding for a field trip. WTF? That’s a waste of taxpayer money – regardless of what kind of wedding it was.

    I wonder if I put a “NO on 8″ sign on my lawn my neighbor with the McCain/Palin sign would get mad??? Maybe I’ll find out… someone brought extra signs to the office.

  43. madhaus Says:

    McCain Palin signs can be easily adjusted, get yourself a navy blue sharpie and color in the “L” in PALIN.

  44. cardinal2007 Says:

    Don’t vandalize signs, that is taking away someone’s right to free speech.

    Plus it decreases the boost to RE that comes from having free advertising space from a lawn.

  45. madhaus Says:

    What I described is not vandalism. It’s editing for content and clarity.

    Speaking of lawns, should renters be allowed to put up yard signs? After all, they cannot water their own lawns?

  46. Pralay Says:

    I got a “yes on 8″ flyer in the mail today and they attribute the statement that churches can lose their tax exemption to a professor at Pepperdine school of law.
    ———–

    Looks like the whole October will be “yes on 8″ month. Mailbox, TV, radio – their ads are everywhere.

  47. nomadic Says:

    ah, my neighbor isn’t a renter. He’s an old Prop 13 welfare recipient. He’s a really nice guy but with the Palin endorsement I really have to wonder about his judgment. Funny, but I usually don’t feel very strongly about a candidate and actually liked McCain until his pandering to the bible contingent got out of hand.

    Ol’ Sarah is giving women a bad name with her lack of qualifications and shrew-like attacks on her opponents. What happened to respect?

  48. RealEstater Says:

    If this economy is going to have any chance of recovery, the government must stimulate two fundamental areas:
    1. Real estate
    2. Car industry

    Thus I propose the following:
    1. Reduce property taxes by 50% across the board
    2. Stop wasteful public transportation projects. Everyone should buy cars instead.
    3. Required bailed out banks to offer 30 year fixed mortgage at 5% or lower.

    With these 3 simple steps, I guarantee that home and auto sales will pick up rapidly, and foreclosures will decrease. It’s a win-win-win situation. Of course, Prop 13 all the way!

  49. anon Says:

    ROFL @ 48.

  50. Herve Says:

    RealEstater, you’re onto something… I think San Jose should offer property tax credit to whoever buys a Tesla and a house.

  51. Pralay Says:

    If this economy is going to have any chance of recovery, the government must stimulate two fundamental areas:
    1. Real estate
    2. Car industry

    ————-

    And this is coming from an “average hitech guy”. :) Not real estate agent or used car salesman.

  52. bob Says:

    The whole ” we must save homeowners!” is total bullshit. I am so sick and tired of hearing how we have to “help” those poor homeowners. It reeks entirely of mis-placed priorities. It also clearly demonstrates that the government is willing to look the other way when consumers screw themselves by making stupid decisions, but will come running to the rescue when they start to whine.

    This punishes people who act responsibly- both homeowners and renters alike. But I can tell some of you who think the bailout means a return to happy times and crazy appreciation will be in for some disappointment. Despite the bailouts, sales will continue to slide, prices will fall, and demand will fall with it.

  53. R Says:

    The “poor homeowner” is really a misnomer. It’s really the poor lender (not that I feel sorry for them or believe they should be bailed out). Most foreclosed or struggling homeowners are or will be out very little; only windfall equity. They paid little, if any, downpayment, have been making absurdly low monthly payments, and get to walkaway with no liability for their massive debt and return to renting, which they would have been doing anyway.

    I just fail to see how most foreclosed homeowners are much worse off. They just didn’t end up with the undeserved “free money” windfall they apparently believed they deserved. It is not as if they are going to be living on the streets. They’ll be renting again like they should have been all along.

  54. bob Says:

    The problem is that the whole country massively overbuilt houses to accommodate “fake” homeowners who are now out on their rears. RE was partially correct: The US economy is sadly tied to home sales since we don’t produce anything to start with- hence selling and buying homes was what our economy was fueled by, with the bulk of that money being funneled onto wall street.

    But the problem is what do you do when nobody can actually afford these homes? Home prices will fall until they can afford, which is what would’ve happened if the government didn’t do anything to start with anyway.

  55. WillowGlenner Says:

    I don’t understand why they didn’t offer EVERY homeowner a chance to refi their existing mortgage at a point or two above the fed funds rate. Whats the harm in that? The fed still makes a profit and the people in the mortgages stay in their homes. Forget the appraisals just offer it to everybody. The cost in any foreclosures of these homes will be miniscule compared to the cost of all these other bailouts.
    I think the reason the govt doesn’t propose this is because banks are making too much money on people like me who pay their mortgages. They only want to give these deals to people who are actually defaulting. It sucks.

  56. DreamT Says:

    Bob said: “But the problem is what do you do when nobody can actually afford these homes?”
    Print money. Deflation diminishes the value of the dollar, forcing wages up, keeping house values somewhat afloat, and preventing more mortgages from defaulting. I’m not clear if the government is doing anything else than that anyway – unless the capital extended to buy bank shares and loans is coming from some mysterious gold reserve.

  57. bob Says:

    I guess what pisses me off the most is that even though its very obvious to anyone with a brain that this recession was caused by overpriced housing, I have yet to hear officials, presidential candidates, congress, or the Fed specifically say this. Mr. Bush sort of mentioned it, but did so lightly.

    The American people need to be told that they are every bit at fault for the mess as Wall Street. Everyone who went crazy over real estate has a share of the blame. It needs to be communicated to people that there is a limit to how credit can be used. In other words, they need to be told specifically that in buying a home well above their means, or even one that sucks away a lot of their income that this is a problem and one that creates cratering economies.

    To tell you the truth, with all the bailouts, government stock buying into banks, rescue plans, and printing of money, in retrospect it would’ve been more effective for the government to simply BUY everyone’e houses, out everyone on a government mortgage program, and additionally start to build government housing with government backed leases and mortgages.

    That in effect would remove the whole investment aspect of housing and divert money back to where it should be, which is in providing capital for real economies, not in economies of debt.

  58. DreamT Says:

    bob – A Singapore-type housing model? That’d fly in the face of the ownership society touted by Bush’s government. You’re asking for sitting politicians to renege on the fundamentals of their social policy. Don’t forget many people merely immersed themselves in debt to do their patriotic duty after 9/11, as enjoined by their government.

  59. RealEstater Says:

    >>its very obvious to anyone with a brain that this recession was caused by overpriced housing, I have yet to hear officials, presidential candidates, congress, or the Fed specifically say this.

    Isn’t the recession caused by falling home prices? How are they going to save the economy by making it fall further?

    >>The American people need to be told that they are every bit at fault for the mess as Wall Street.

    If you tell the truth, you won’t get elected. Just like when I tell the truth about the RBA market, people get upset.

    >>in retrospect it would’ve been more effective for the government to simply BUY everyone’e houses, out everyone on a government mortgage program, and additionally start to build government housing with government backed leases and mortgages.

    You are in support of socialism?

  60. DreamT Says:

    Well bob’s approach to solving the crisis is to first blame everybody (except himself) because blame is very important. It clarifies that a lambda person is too stupid to own a home. Since the government has our best interests in mind, relinquishing ownership rights is the right thing to do. I hope I got it right, bob.

  61. WillowGlenner Says:

    You know, I have had to point out multiple times that this recession is NOT caused by falling home prices. Falling home prices do not cause banks to fail. The problem is leverage that allowed banks to create derivative debt contracts on said mortgages. Then when the mortagage defaults rose, which happens from time to time, the derivatives broke the banks. We have seen this before with derivatives. For this reason I dislike the spin politicians are putting on this that HOME PRICES are somehow at fault in this breakdown of financial institutions. It is not home prices it is a derivative and leverage issue.

  62. WillowGlenner Says:

    Bob says, Everyone who went crazy over real estate has a share of the blame. It needs to be communicated to people that there is a limit to how credit can be used. In other words, they need to be told specifically that in buying a home well above their means, or even one that sucks away a lot of their income that this is a problem and one that creates cratering economies.

    Wrong bob. We had a real estate crash in California in the early 90s that was much worse than this one, at least so far. The entire financial system managed to survive largely intact. The culprit is derivatives and leverage.

  63. Pralay Says:

    That’d fly in the face of the ownership society touted by Bush’s government.
    ———-

    You mean the same guy who touted “record home ownership” in every stop of 2004 campaign trail and own the re-election with a fake appearance of robust economy and then now blaming “easy credit — combined with the faulty assumption that home values would continue to rise”?

  64. Pralay Says:

    Just like when I tell the truth about the RBA market, people get upset.
    ——-

    You mean those cherry-picked quotes (sometimes omitting part of the sentences) from real estate industry?
    Truth and Chuckie! That’s such an oxymoron!

  65. Pralay Says:

    Isn’t the recession caused by falling home prices?
    ——-

    No that’s not correct. If I buy your sub-zero refrigerator for 1 million dollar and bank loans me money for that reason, the problem is not falling price of sub-zero refrigerator, but bank lending me money for something which simply does not worth that much.

  66. R Says:

    Why doesn’t the government just become the sole mortgage lender? They could then set rates at whatever they want for whoever they want to further their goal of homeownership and generate billions in revenue through their monopoly. Not saying I favor this but I am surprised that the idea hasn’t been thrown out this political season.

  67. DreamT Says:

    RealEstater, WillowGlenner and Pralay – Let’s collectively show a little restraint. We’re getting too abstract for bob and throwing in too many variables. The problem and solution must be presented at a third-grader level, or some folks might get even more “pissed off” than they were a few posts back.

  68. DreamT Says:

    R – I shiver at the thought of the massive political corruption that would eventually ensue.

  69. WillowGlenner Says:

    The govt already owns many of the mortgages in the USA through its conservatorship of Freddie Mac and Fannie Mae. And it is not such a bad deal either. The % of bad mortgage loans the FNM bought is tiny against the overall pie. FNM doesn’t even do subprime. The banks took what FNM wouldn’t take and made derivatives out of them. That is the issue. Part of me would like to see these banks that played this game fail, but I realize that would be bad for the economy as a whole. I looked at a few of the debt instruments involved and there is no way to determine risk. They don’t even list WHERE in the state of CA said mortgages are. Nobody knew what they were buying and they deserve to fail because of it.

  70. bob Says:

    For some of you who took my comments at face value- perhaps you didn’t catch my sarcasm. But to continue in that vein, what’s the difference between outright social housing and what the government is doing now? They’re printing money, buying bank stocks, promising to buy bad mortgages, planning to help homeowners, and everything inbetween.

    Government bailouts seldom work, and there has been more than one country try this. The same was done in Denmark in the 90’s when there was a commercial real estate bubble. The government bought all the bad loans. They still had a recession.

    That brings me to the next point, which is to comment on the thoughts that people like WG seem to still have, which is that thank goodness, the worst is finally over, the bubble burst is over, the bottom has been reached, the bailout will relieve home prices, and access to appreciation riches are around the corner.

    Saying that “this” housing burst isn’t as bad as the “last” one is stupid because yes- the last housing bust was caused by a recession, but last time pales in comparison to this one. We haven’t even started the recession yet. Remember that as recent as this summer, the job market was still robust, salaries were rising, and even though the housing market was tanking, the economy still meant that those with good pay could still manage quite well. The fact is that regardless of how much the government cranks up the presses, we are going to have a recession- likely a severe one at that, one that will likely be worse than the 90’s recession, which in turn will crash housing prices further.The bubble crash is far from over. We’re simply moving into part 2.

    This will happen. That much I know.

  71. RealEstater Says:

    Bob says,
    >>Government bailouts seldom work

    Which pipe are you smoking now? The S&L bailout did work, and the government made money on it. The government also successfully bailed out Chrysler, which is still in business today.

  72. DreamT Says:

    WillowGlenner #69 – Niche market for mortgage loans (non-jumbo, prime) versus monopoly are two vastly different concepts. The latter is just scary.

  73. bob Says:

    RE,
    Yes, the S&L bailout did what this bailout hopefully did- prevent us from going into a depression. But it didn’t save the economy, as you can recall from the recession of the late 80’s-mid 90’s.

    You and other house-happy people here act as if the bailout was meant to return us to bubble status. That’s not what they’re for. They are merely last chance desperate measures. We are far from being out of the woods. As you can see, stocks got murderlated today. Why? Because consumer spending is down. Add this to record job losses, giant companies like GM and Chrysler talking mergers, and from what I read on here yesterday- Google laying off people- and wallah… you have a recession.

    As mentioned before and should be obvious to anyone, recessions means lower house prices.

  74. cardinal2007 Says:

    I think one reason the idea of the government being a direct lender might get some popularity is that otherwise the government can’t control the interest rates on the 30yr fixed. As and example interest rates increased this week up to 6.28% from 5.82%, as is usual with these swings people will put off shopping for a mortgage for a while until either rates drop again, or enough time passes that they are convinced they won’t for a while. This difference in rates can also mean a slight difference on people’s buying budgets (though I honestly think the downpayment is the bigger hurdle here). Some people I guess would like more stability on this regard.

  75. RealEstater Says:

    Bob,

    The purpose of the bail-out was never to prevent a recession! Recessions are a normal part of the business cycle. You will see many in your life time. BTW, when a recession hits, a job hopping guy will be the first to end up on the unemployment line.

  76. nomadic Says:

    WG is pretty much right on. Check this out if you haven’t seen it:

    http://www.nytimes.com/2008/10/03/business/03sec.html?_r=2&scp=1&sq=sec%20deregulation%20lone&st=cse&oref=slogin&oref=slogin

    This looks like the root of the worst part of the problem to me.

  77. bob Says:

    You’re right RE, the bailout was never to prevent a recession. If you had read my post, I specifically mentioned that it was put in place to prevent a Depression. Big difference there. Depressions tend to cause vast social and economic unrest. We can live with recessions. I in fact welcome them because they trim the excess and lower prices on things like housing and so forth.The bailout was meant to relieve panic. Not sure if that will hold since as I look up now, the stocks are already down almost 200pts already today from a previous 777 yesterday. In other words, we’ve already eaten up all of Monday’s historic gains and then some. I’d say we will hit below 8,000 at some point, which will perhaps be the second testing of the bottom. Regardless, we are in a recession which will affect all areas of the country. I just heard on the radio that Tesla is now going to downscale their workforce and delay the launch of the model S sedan. Yes- a new Bay Area company in the heart of the RBA for that matter. This plays into my theory which is that ultimately, housing prices in the RBA and the surrounding areas will see some hefty falls as a result of the impact in the local economy.

    As far as job hopping goes, well if you were to ask any of the people I work with how many jobs they’ve been at, staying a year or two at a company is actually pretty typical in my line of work. I’m not a programmer monkey or engineer. What I do is very fluid and tends to change rapidly. Perhaps in your industry people stay for years and years. All I’ll say is that once you’ve been through the job changing cycle as much as I have, you get pretty good at it. I have zero problems finding work very rapidly. That’s actually a good skill to have.

  78. Herve Says:

    > staying a year or two at a company is actually pretty typical in my line of work

    Are you a Starbucks barista? ;-)

  79. Is Barack Obama right for the Bay Area? How Much Would You Pay in Taxes? [Burbed.com] Says:

    […] Now, Burbed doesn’t usually venture much into politics. At most, it’s a guide to Propositions like last week. […]

  80. RealEstater Says:

    OK, I just sent in my mail-in ballot. I am here to officially ensorse the Obama/Biden ticket.

    In addition, I voted “No” to any initiative that will have a million+ dollar budget impact, such as BART to San Jose, rehab for prisoners, and libraries expansions in Palo Alto. Plain and simple — WE CANNOT AFFORD IT. It’s time to stop spending on things we cannot pay for. It seems like the new wave of creative financing is in government issued bonds. Voters need to stop this practice before it turns into another fiscal crisis.

  81. DreamT Says:

    Can we short government bonds?


Leave a Reply

Please be nice. No name calling, no personal attacks, no racist stuff, no baiting, etc. Let's be nice to each other in the true Bay Area spirit! (Comments may be edited/removed without notice.)