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Can I have an easier question? Seriously, you know that in corporate law in the States it is incumbent upon the officers to exercise “fiduciary responsibility”. In practical applications in what Barry Ritholtz (The Big Picture) would call “Bailout Nation” it is rare indeed especially where a lobbying force does not negatively counterbalance ethical business behavior. Sarah Palin proved that in a vacuum any state budget can be balanced (thanks Exxon). If you are in Michigan there are fewer options.
Interestingly enough, a lot of healthy banks are acting like the states in that they are refusing stimulus. Not from an idealogical perspective but strictly business in that the T’s and C’s attached to it are onerous to the extent that it is counterproductive. This is where the rubber meets the road. Obama (and I admit I voted for him) does NOT represent change IMO. Influencing the relaxation of “mark to market” standards is a clear indication of that and the attention once again is drawn from the realities of worldwide “fiscal irresponsibiility” (Goldman, BoA, AIG, GM, RBS, any Austrian Bank) toward those who were simply smart enough to avoid the temptation of the avarice and greed that brought about this worldwide dilemma (Soros, other smart private money). That was the misguided focus of the G20 – that and deciding that Costa Rica was…well, too cool.
If you drive about 5 miles north off the Costanera somewhere between Parrita and Quepos you will find a little watering hole with all the fiscal responsibility you need. However, if you need a ride back to town because you are, let’s say “ill liquid”, the owner will personally take you in his car will a killer sound system and no windshield wipers. As I will attest, if its raining sheets, its a challenge and a gamble. Ah well, nobody’s perfect.
Cheers! Joseph
Sorry Scott. You won’t get much support on that. I used to live in NY where they have a significant income tax as you know especially in NYC and the lawmakers there cannot even deliver a budget on time much less balanced. In FL where I live now although they have their misgivings in this all out bad economy they have proven to survive well without a state income tax. How about some fiscal responsibility?
Of course there are far fewer prisons in FL than in NY.
Emerging markets are generally lagging. Scott makes a pretty good argument for expecting a minimal impact on the basis of the positives in CR. However, it would seem that lack of demand and especially demand fulfillment is the case. Case Shiller is down 19% Y/O/Y with Dallas Denver and Cleveland leading the way. Just as these cities lag behind the Bubble cities like Miami, CR will lag behind the US and EU. CR is a great place but shop hard and shop often if you are in the market to buy.
Hard enough to do in the US. The SBA is marginalized. Most private equity is on the sidelines except for the most attractive of scenarios. The angel clubs are not doing a lot either and when they do it is in growth companies or producing mineral assets. Taking that mindset offshore is not easier.
With all due respect, it’s hard to sound like an alarmist when you are yelling fire from a burning building. There is plenty of blame to go around and US has to install a new measure of accountability as part of a rapid recovery. I think what would be revealing would be the net resultant impact internationally in the event that foreign interests in the asset bases of US banks were to founder like they did at Lehman.
The idea of paying off or even reducing someone’s mortgage without caveats is absurd. Just like no regulator stopped a bank from over leveraging its assets, no bank stopped a borrower from accepting a loan that was based on untruths, especially so where the false statements were at the complicity of the borrower. Sure many were preyed upon, but a lot of homeowners chose to roll the dice. The amount of outstanding mortgages far outweighs the aggregate of the bailouts. Not even close. So the person who paid their mortgage should get the same treatment as the one next door in the same type house who lied about his income his assets and when he hit a wall stopped paying altogether? It is a very difficult problem.
We are only half way through this. There are plenty of people that want to buy RE in the US, just not at the price the banks want. That is the shadow stat of all shadow stats. The amount of REO is massive and growing, extending into asset classes that used to be fairly impervious. The banks need to have a yard sale. As long as we prop them up the economy goes nowhere. They need to sell the “family jewels” Think about when working people are going broke they sell off their best stuff to stay afloat. That’s what needs to happen with the banks.
You are already seeing it albeit at a relatively benign level – vandalism and protests. As they say you aint seen nothin yet. We are ready for the “big one”. At the time that the debt level of the US exceeds the ability of the GDP to service it, then its the big swirl. Hank and Ben are trying to “kick the can” but until those entities, companies, people who are supposed to bankrupt actually do we are only narcotizing ourselves into a bigger, badder crash.
We need our currency to be tied to standard and out of the Fed’s hands. The last guy who tried that was JFK and well…we know what happened to him.
Well put.
Value in a large sense is in the eye of the beholder whether its the value of a particular piece of real estate or the compensation of an individual. In the US very few people balk at paying athletes huge sums of money for their skills and very many of them are nonperforming for various reasons. Granted the fallout isnt nearly as severe but it happens.
I dont begrudge an executive making the salary he is entitled to based on performance. Whats funny is that the disfunctional political structure of the US still pays out its legislators and executives regardless of the outcome of their actions. I would more likely move to make them work for free based on performance. Most of them are financially secure already anyway. Let them work their first term for free and get paid based on reelection. No more lobbyists period…let em get a real job. Bribery is easy.
Lastly I dont believe that it is grossly off topic to discuss the real estate market in CR or anywhere in relation to the thread. It is the deleveraging of the derivative assets secured by real estate that has created the crisis. I am already on record in this forum regarding my thoughts on the future of CR real estate values and I empathize with Scott and others who count on a robust market in CR. It is what it is however. The revitalized strength of the USD will have its downward effect as will the recession economy and especially the obscene oversupply of real estate in the US. Emerging markets are the last to be affected. I believe that if Scott looks inwardly on that basis he will see the root cause of his frustration and its relation to the impact at a personal level.
I am sorry that I missed the flurry of activity here but I cant resist weighing in anyway.
Jeff the banks are the market makers. They have as one would say “made their own bed”. By suspending mark to market you merely delay the inevitable. There has been and continues to be such a stream of propaganda coming form the financial industry that very few can pull apart the heroes and villains. Read up on Basel II if you really want to get an idea why the US financial system is so f**ked. Now we devalue the currency again and postpone the reporting of TRILLIONS of dollars in bank assets under FAS 140. The banks answer is to socialize the losses and bury the bodies in accounting tricks.
Now lets get something straight. The “government” is not the buyer. The TAXPAYER is. Why should we pay a premium for something that is going to remain static at best in order to prop up shareholder value. There are plenty of Private Equity companies, Community banks and credit unions ready to lend. They have guidelines. This bill is unbelievably flawed. You’re right Wall Street did not create the problem but they have been enablers through the pump and pump insider shenanigans promoted by the TV “stock experts”. This is a Financial System Rescue Bill and anything else is bs.
Oh thanks to Clinton too for the 1996 Telecommunications Act that gave us Roger Ailes at Fox Noise and CNBC’s brilliant manipulator Jim Cramer. The cable news networks sold this bill hard after parading out self serving a******* like Warren Buffett while only months ago Helicopter Hank and Bernanke panky were saying “its all good”. Paulson was gushing after Bush signed the bill. Maybe its because he doesnt have a Kalashnikof pointed at head for a while.
True that…except in started in the early 1900’s when the Fed (read: the Enemy) was established.
Also our pal Clinton signed off on the Telecommunications act of 1996 that created those time honored stalwarts of journalistic integrity like Fox news and CNBC.
We are looking at revolution in the US. We have to let the markets collapse in order to survive. You cant cure an addict by giving them more drugs. Let the assets mark to market and let the dollar recover. Let private equity participate. Right now a foreign bank can get bailed out through creative transactioning under the bailout.
Jeff I do agree with your remarks on inflation and although I hope that you are correct on the end of 2009, there are too many mitigating circumstances yet to arise that will postpone that in my opinion.
There is real data out there that shows that CA alone is responsible for 40% of the nation’s foreclosures and almost 50% of the volume. The Alt-A, Pay Option Arms and Prime markets are just starting to become part of the dilemma. There have and will continue to be numerous feats of legerdemain (sp?) on the part of the banks, the Fed and Congress to show the public a more rosy picture.
One of the most egregious of these is the delay in implementing FAS 140 which would require banks QSPEs (Qualified Special Purpose Entities) to move the 3 Trillion in off balance sheet assets on the their books. This is Enron on Steroids.
Without getting into the fine points FNMA is not a market maker for rates, the Fed is on the basis of supply and demand. One real thing that could happen to help is that they could lift the restrictions on investors for the number of properties held in mortgage. If the guidelines for borrowing are real there is plenty of money on the sidelines. Also Private equity should be allowed to participate easier.
Loan Mods are big business now although the banks still have an unrealistic valuation and some who buy in for a quick fix are going to find themselves in the same pickle in five years.
I really believe what Meredith Whitney has to say on these matters. She’s been right on this from the beginning and ever since. Considering that we are getting off topic I would wrap it up here and defer to her.
Best to all,
Joseph
Yeah its tough…although you must be pretty connected to be able to short those stocks these days. Costa Rica is a very beautiful place and I would hope that it retains its pristine nature. Perhaps an expunging of the opportunists will contribute to that. For the record, I think extremists of any type are dangerous (Hugo Chavez, Sarah Palin)
Anyway getting to the thread…expect construction costs and real estate values in CR to correspondingly decrease until after (maybe well after)the housing market in the US stabilizes (read: Median income buys median house). Obviously some property will be more impervious than others but that will be driven by real ECONOMIC growth, not past performance. Construction industry growth is a time delayed byproduct of Planning and development. It does not reflect current and especially future trends.
Of course if Helicopter Ben Bernanke Panky decides to gut FFR then expect hyperinflation eventually equaling high prices, low value.
“I tip my hat to the new revolution…”
Good move – grb. I too have my primary accounts in a deposit heavy CU. Fact is it is going to get worse now that Lehman has to sell their assets in a force majeure environment. This is going to drive down ALL asset classes as the market influences the economy rather than the economy influencing the market. The latter wont happen until housing prices in the US stabilize. Worldwide we have 3 Trillion less liquidity than a year ago. Right now Citi and Wachovia are under 25% peak to trough devaluations which is WAY off reality. Not a good time to be owning them in any form. Wamu is toast.
Funny thing is, I received an email today from a “developer” who is mentioned in this forum using the meltdown to tout 32% appreciation in Costa Rica and their property. Does stupidity trump fraudulence or vice versa? Watch out for the falling pianos.
Joseph
Since when does construction rates growth equal growth in value? The same could be said in Miami. There were still cranes everywhere in the first half of 2008 while prices were plummeting.
I am a long time follower and submit occasional comment to this forum. Although there may be still growth based on some dated reports that I would consent to the validity of as you are regarded as a provider of quality information, the fact is that the emerging markets are the last to feel the ripple of the financial meltdown. Giving you the benefit of the doubt, the deflationary effect on RE in the US may have yet to translate to Costa Rica but it will. As you said this will be a dream come true for those wanting the dismissal of the spurious “development”activity that has occurred and the unfortunate byproduct is there will be a lot of people getting stuck. And the same will be true of construction costs. You can buy a cy of concrete for $60 in FL now.
Merrill is going to BOA, Lehman is done (160 year company survived the great depression and two WWs but not the current admnistration.) and the year ends we will finally see the truth from the banks. In a monetary system that is debt based, deleveraging equals deflation. Also in a capitalist economy the profits are privatized and the losses socialized so for all the Yanks out there(like me) grab your ankles and spread your money.
There is lots to love about Costa Rica and if that is one’s reason to buy then great. If you are speculating you better get one heckuva deal and more now than ever know who are doing business with.
Joseph
Sorry to say but reporting to the BBB especially in FL serves only to allow you the gratification of putting your complaint to paper, nothing more. They are a for profit entity whose goal ultimately is to acquire and retain member companies. This flies in the face of genuine consumer advocacy in my opinion.
I am a former resident of SE Florida and I know of numerous “companies” with a BBB rap sheet that continue to engage in their questionable business practices (having been taken personally) You need counsel if you want results and should file your complaints with a state agency.
