Thursday, December 24, 2009

Where Is The Outrage?

Take a look at this article:

  1. Goldman Sachs creates CDOs (collateralized debt obligations), bundling bad debt with good (and linked to mortgage debt by credit-default swaps) during the most manic phase of the housing bubble.
  2. Pension funds, insurance companies, and others bought them believing Goldman's hype that the housing market couldn't fail. Goldman didn't even let buyers short them.
  3. All the while realtors, real estate agents, lenders, local papers where all fueling the buzz about how real estate can't fail, "buy now or be priced out forever".
  4. Goldman Sachs then short their own CDOs well beyond what was justifiable for hedging risk.
  5. The housing markets then predictably implode. Pension funds, insurance companies, mom and pop all bank huge losses.
  6. Goldman Sachs pockets huge rewards.
  7. You and I then bail out the losers.

    "The simultaneous selling of securities to customers and shorting them because they believed they were going to default is the most cynical use of credit information that I have ever seen,” said Sylvain R. Raynes, an expert in structured finance at R & R Consulting in New York. “When you buy protection against an event that you have a hand in causing, you are buying fire insurance on someone else’s house and then committing arson.”

Or a school bus mechanic taking out life insurance on all the kids who ride that bus. Or your doctor taking out life insurance on you before doing your heart surgery. Or airline mechanics taking out insurance on the passengers. Or ferris wheel mechanics...

Where is the outrage?

Sunday, December 20, 2009

Unemployment By County

It's been quiet. Too quiet.

I found this somewhere, I can't remember where. It's an animated display of the growing unemployment rate by county. It comes from the U.S. Department of Labor (so you know the real unemployment rates are much higher than what's shown below). [The graphic to the left shows the final slide.]



Look at little 'ol Marin in the map. It almost seems to try and hold off the waves of unemployment crashing against its borders, but in the end it succumbs. It ends up in the 7.0 - 9.9% unemployment range along with Sonoma County and all the other "we're immune, we're special" places.

I wonder what it could mean?

Then there are the reports (like this one, for example) of how the pricing in"luxury" markets is now getting pummeled whereas the "plebeian" markets, after having been oppressed, are benefiting somewhat from desperate attempts to prop them up with bailout and stimulus money provided by you and me, Mr. and Mrs. Tax-payer (so you just go ahead, pat yourself on the back).

And then there is the Marin IJ (so it must be worse than reported) pointing out that while the cheaper areas in the Bay Area are rising a little in price thanks to the bailouts and stimuli, Marin prices are still going down, over -12%, and are likely to get a whole lot worse.

And oh my but how many formerly for-sale houses are now for-lease or for-rent, at least here in Mill Valley! I guess all the Marin "FBs" are asking potential buyers for a personal bail-out while they wait for a return to a "normal" housing bubble.

Dec. 24 Update: Oh, and I forgot to mention that this POS in Mill Valley, the one accross the screet from the 7-11, is back on the market. I guess the "let's rent it" thing didn't work out so well for them. 'Such a shame, really; who could have known?' Anyway, I first noticed this POS back in December of 2005. So this place has been trying to sell for over four years or more than 1460 days at more or less the same asking price. More on the history of the posting on this POS can be found here.

Have a merry Christmas Marin!
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