[Beach Rat]

The comment about porn tells us more about her then it does you. She is having insecurity issues about herself, her appearance, whether or not you still find her attractive, and possibly the decision for selling her nest which she will blame you for forever. Now these fears may or may not be valid, but that doesn’t matter. I would recommend that you let her know that she is still beautiful and that you love her (that you aren’t thinking about cheating on her which is how a lot of women interpret porn. ie you are interested in other women).

Also find one of those women that she just can’t stand that bought an expensive home in the last year or two. I’m sure you know the ones I’m talking about. Track the comparable sales in the neighborhood with your wife so she can see how much this person is losing. You can start out by saying look so and so bought their home for $X and their neighbor just went into foreclosure and had to sell for $Y. With any luck Y will be less than X. This will get her in the mind set that there is a declining market/economy and it will also help REAFFIRM her position for having sold a year ago.

As far as money goes you could start saving for a “romantic” trip. A little charm should get her talked into it easy enough and improve her happiness. If the S@#% hits the fan you could always use the cash to get by on (the re-appropriation of funds has to be her decision, you can have no part for obvious reasons.) If nothing hits the fan then you have some cash to travel to an exotic place with your wife. Embezzlement is also an option. Stash a $20 here $100 if she asks just tell her you spent it on porn or something (that may not be a good idea). Finally if nothing works you could always slip Prozac into her coffee. All is fair in love and war! This last paragraph I was just brain storming, but I think your wife feels uneasy right now with a lot of things. She needs to know that everything is going to be all right and that she made the right decisions. Women have lots of insecurities and need to constantly reaffirm their position. (Sorry girls, not trying to pick on you)

[Beach Rat]

Yep I hear you. A good friend of mine had a Super-Bee that was in pieces. I offered to help him restore it free of charge because getting that beast up and running would be a beautiful thing. He just couldn’t afford the parts for it at the time. Probably for the best, we may have killed ourselves in it even with just the 440 Six pack….

A drop in price should “Ideally” lead to increased demand. What this assumes is that the price drop is instantaneous and not dependant on time. If prices drop over time what is important is the rate of decline. What incentive is there to purchase something today that will be less expensive tomorrow be it milk, a car, or a house? The “New Price” for the asset will not be set until it reaches a new equilibrium where the 2nd derivative is zero, or the rate of decrease has effectively become zero. Then there may indeed be increased demand once the price has stabilized.

[Beach Rat]

Jobs going up 50%: Well a friend of mine started working for Idec as a tech making about 38K in 2003. He is now making upwards of 60K in another large pharmaceutical even without stock options or 401k match figured in. Also he is now married and has a combined income of over 120k.

Also many people prefer to have roommates and still more will get roommates if they need a few hundred extra dollars each month. If you have a 3 bedroom you can rent out the other two rooms for a minimum of 1000/month in San Diego. Even if your mortgage takes up your entire pay check you can still live. Or heaven forbid you pick up a part time bartending gig. I have seen lots of my friends take out crazy loans. You can tell the ones that will make it. They have drive, initiative, and the desire to succeed. It may not be pretty, but many people will make it work. There are others that I have seen fail. This guy has no problem. He can sit through a 50% drop in equity and still about break even if he is forced to sell. The problem comes when you have negative equity and can’t make the payments even by renting out rooms.

[Beach Rat]

We have all missed the point. I too have been critical of PS in the past. I now realize that half the people are below average intelligence. Ok technically half the people are below the median. If you look further into the problem, average intelligence is normalized to 100 so in effect half the people are below are below average intelligence. Ok the point is if you followed that you are probably not the half that is below average intelligence. What we need for this bust is for the Irrational Exuberance to change to Irrational Pessimism. Why is propaganda used? Because there are so many idiot’s that don’t think for themselves. We need board sweeping comments about Armageddon to get the sub-par members of this society to freak out and cause a panic. Therein lies the difference between a 20% correction and a 50+% correction. If everyone has a level head at -20% and doesn’t start panicking the market may indeed level out. If at that point Irrational Pessimism takes over then who knows 50,60,70%… . Maybe the world will end! Go preach it on the mountain sister! 🙂

On a more serious note did that sign twirling idea about the housing bubble ever get off the ground? We really need to get the Propaganda machine organized!

[Beach Rat]

I don’t know how to interpret the comment about chemical and biological weapons being more effective than nukes.

It was meant as a response to PS idea that we should get rid of Nukes. She should probably focus her peace mongering on the other weapons first. The point I was tying to make is that overall nukes aren’t that effective unless it is for deterrent purposes. There are far more destructive weapons out there that she should probably focus on like bio/chem. weapons. I just love educated, strong willed women that believe we should disarm and not keep our military up to date with current weapons and technology. Yeah I’m sure they had a huge laugh the last time Germany invaded Poland with tanks against Polish Calvary. How long did it take Poland to be over run? Days? Weeks? Is there a reason you might want a strong military? Naw Peace and Love will save us!

[Beach Rat]

Pakistan arming has interesting implications for China. On one side they are faced with Japan and S. Korea arming in response to N. Korea. On the other they are faced with an ongoing nuclear arms race between India and Pakistan.

Note: Biological/Chemical weapons are far superior to nukes because they are more effective over a wider range and don’t damage infrastructure. Ideally you could “re-colonize” without having to rebuild as opposed to nukes which destroy everything.

[Beach Rat]

90% of the income was exaggerated

Are we really that shocked? You take a hit on your rate when you use a “stated income” because of the added risk. One would think that you would only use this program if you absolutely had to because you didn’t make enough to qualify for the loan. Note also that the increase in rate here is not realized by the loan officer in the form of YSP and only profits the lender. Even better is the NINA loan: No income/No Asset verification. Ideally it would be used for a small business owner that would have difficulty documenting such things. Ideally being the key word….

[Beach Rat]

Question on weighing: If an asset is no longer appreciating 10-20% yearly is it worth as much?

I had no idea that a La Jolla address carries such a price premium.

La Jolla Shores/Cove
Birch Aquarium
Torrey Pines State Beach/Reserve/Golf Club
UCSD/Medical center
Pharecuticals in Torrey Pines: Pfizer, Takeda (San Diego), Genomics Institute of Novartis Research Foundation (GNF),
Numerous other Bio-Techs in UTC/Mira Mesa
http://www.biospace.com/company_region.aspx?RegionID=12
(this is a list of So Cal, but there are huge concentrations in Torrey Pines, UTC, and Mira Mesa)

Lots of MD’s/PHD’s with money that like the beach.

[Beach Rat]

Even this morning I read in the NY Times that all the mortgage brokers are excited by the prospect of refinancing all these scary home loans and earning more money…

This will be a good source of income for a short period of time. There are two problems going forward… Rising interest rates may make it difficult to qualify people on a fixed rate loan, but the 40 and 50 year mortgages may help with that. The bigger problem is that if prices start dropping to the point were people owe more on the house than it is currently worth. Refinancing gets extremely difficult.

Just curious PS, I’m not trying to attack you, what were you doing up at 3am posting on the forum? Are you that eagerly awaiting the crash? Maybe the time stamp is off?

[Beach Rat]

What it comes down to is that we are going to try to punish people in order to make America look less attractive? Short of cutting off peoples feet for running across the border this isn’t going to work. The punishments only work if the illegals get caught. Then what? They face deportation and make another go at it. Build all the walls you want it isn’t going to fix the problem, it may slow the leak. Even without construction there are plenty of jobs. Farming, gardening, cleaning, family run restaurants, drugs… . has anyone asked for their maids/gardeners SS card? The fix for the problem is to “Fix” Mexico. As long as a huge difference exists between the two, any barrier legal or physical will be over come. Maybe after we are done in Iraq we can start making Mexico a better place. Then once TJ is as nice as SD or SD is as bad as TJ we won’t have an immigration problem.

If there is a recession caused by the housing industry I doubt that anyone with enough money to afford a house with a lawn in San Diego will be so strapped for cash as to fire their gardener and do their own yard work. Will there be some job losses yes, but people legal or not will find something else to do.

[Beach Rat]

It was not my intension to say that Bio-Tech is failing. The industry is has a lot opportunities. Bio-Tech/Pharm is, however quite volatile meaning that there can be a high turnover of jobs. Personally I have averaged over one round of layoffs or merger per year I’ve been in the industry, maybe it is just bad luck. The upper level people should not represent a problem. They may be forced to relocate for a new position, but should be financially sound. What worries me are the people that have worked in the industry for about 2-4 years starting entry level that have purchased condos. If they were to leverage themselves out they could get into a home albeit a small one. Couple that with a volatile job market and you have a situation that could add fuel to a fire of a housing down turn. The thing I love about Bio-Tech/Parm is the excitement. You never know when what you are working on is going to explode, good or bad. Elan for example.

[Beach Rat]

My major problem with some of these threads that are started is that they are meant to be provocative. That’s fine on occasion. I started reading this blog because there is a lot of good data and some knowledgeable people. When you start going to the far extremes in expressing you views it doesn’t matter if you are the person saying RE will go up 10% annually for the next 10 years, or that RE will see a 70% drop from current prices, all this accomplishes is to get people to think you are a fool and you lose credibility. The way to change someone’s mind is to listen to them explain to them where you believe their lapses in reasoning are and let them re-evaluate the situation. Running around screaming the sky is falling isn’t going to do anything to further you point and it can only detract from rational discussions and ideas. One can be “confident” and still be completely wrong.

Confirmation Bias is interesting. Is that like when you took your high maintenance/priced German engineered vehicle to your mechanic and he told you with out a doubt that it was a good buy because all he saw was $$$?

[Beach Rat]

Do you even have to file bankruptcy if you have a foreclosure? Maybe I’m wrong what’s to keep you from handing the house back to the bank? If it sells for less then you owe then 1 you would end up with a house payment on a home you don’t own any more. Sad but again this happed to a good friend of mine out in Temecula. Or 2 if it is a large enough debt the bank will realize it will force you into bankruptcy and they will probably never see a cent of the money so they will write the debt off and move on. Sure you will get taxed on that as income. Will that change with the new bankruptcy laws? If it doesn’t then as long as you go into foreclosure early there is no reason to not walk away at the first sign of trouble. Foreclosures stay on your record for about 7 years so if you walk out in the first years of the down turn you should be ready to get back in as the market is turning around. I don’t see the problem.

[Beach Rat]

YBC: check out online sites like auto trader and cars direct. Cars Direct will give you the price of a new one and auto trader will allow you to look up the prices on used ones. It should only take you a few minutes to do the research. Also make sure you are comparing cars with the same packages. It is always a good idea to go into the dealership already having obtained financing at say a credit union and having printed out a quote from a place like Cars Direct. It gives you a position from which to bargain.

PD, no worries… I can see what you mean that any time you use a large portion of money, it no longer invested. At the time I was looking to get into a new car I had the option of putting a lot down, or financing the car and investing the money. It worked for me because I was able to get substantially more of a return from my investment. I got a little lucky.
Other people have brought up the fact that you can look up a cars history. Yes this is true. The car history doesn’t take into account people like my good buddy who bought a pick up and launched it multiple times in baja within days of purchasing it and on numerous off-roading adventures since. He recently sold it and you would never know how hard this truck was rallied by looking at it or running a history check on it. Who ever wound up with that thing will wonder why the shocks just blow up one day.
Also there is a reason a few year old 911 Porsche Carerra sold for 30K. Unless the previous owner was a geriatric someone probably drove the piss out of that car. Yes the joints, trans, and engine look alright for the quick visual inspection that the mechanic does. Most of the damage done to such a car would be interior engine and trans which would only show up if you opened it up and noticed things like your rings were melted off the pistons for some unknown reason. Just curious does the 911 burn/leak oil?

[Beach Rat]

Just a few things to note.

1) Buying a new car is not always bad. In my case I purchased a new 4X4 Toyota a few years back. I decided to go new because of the warranty, and mostly because I don’t think buying a used 4X4 in San Diego is a good idea. Not to mention with Toyotas you don’t save that much money going used. I really didn’t want to deal with the possibility of ending up with a 4X4 someone had rallied the hell out of in Mexico and dumped before the warranty was up.
2) With rates as low as they are/were it didn’t make sense to put a lot down. My rate is in the 4’s and after inflation is figured in am I really loosing all that much money having financed the car? Can I find a better investment with my money that will return more than the approximate 2% gap between my rate and inflation? In fact I picked up a biotech stock, the same month, after the price plummeted on the negative results of a phase 3 trial and sold a few months later when it rebounded and more than doubled in price. Awesome gains of $2.80->$6 in only a few months, I would have made more if I was more patient, but I’m not above scraping the bottom of the barrel.
3) If you are upside down in your car loan there are a few things you can do. First “Gap” coverage will be offered to you to cover the difference you are upside down. Like buying insurance in black jack. Also there are creative ways of “backing” out of these loans if you get tired of them. http://www.edmunds.com/advice/specialreports/articles/115584/article.html Not to mention that you live in San Diego! Do you have any idea how easy it is to get your car stolen next to the border!
4) Are we seriously stressing out that people leveraged out car loans so much when money was that cheap? It is similar to the problem with home ownership, but cars are much easier to dispose of, plus even if you do wind up in a loss your only looking a few grand max. Unless you are mob’n in an Austin Martin.

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