[livinincali]

A good investment would have been to buy weed here in CA and drive it to CO. Prices in CO are crazy high while there’s a temporary shortage.

[livinincali]

[quote=livinincali] Of course tomorrow you might be up 20% or down 20%.[/quote]

Looks like 20% movement for today was right. Unfortunately is was down another 20% to .19/sh

[livinincali]

Ball park each percent point (100 basis points) is worth about 13% of the home value. I.e. a $430K loan @ 3.75 is just about equal with a $380K @ 4.75, both are just under $2K per month.

The problem of course is any kind of markup for your home is going to have to come out of the buyers pocket in cash. The buyer pool that has the cash to pay you for the lower interest rate is pretty thin. Say home price go down or stay the same to reflect the high rates. The buyer can’t cash out equity on the lower monthly payment because the house isn’t worth the monthly payment at 3.75. It’s worth the monthly payment at 5 or whatever the interest rate is.

[livinincali]

Nice volatile bubble stock you got there. This morning you could have got out with a 30% gain. Now you’re looking at a 20% loss. Of course tomorrow you might be up 20% or down 20%.

[livinincali]

[quote=SK in CV]
As to the bolded part, no it isn’t. Average annual payment isn’t anywhere near that much. I’m 58 and have earned max SS wages for most of the last 35 years and my estimated SSDI would be under $30K a year. Doesn’t diminish the crime any. But when reporters make these kinds of simple to refute errors, you have to wonder about the rest of the story.[/quote]

Social Security Disability by itself is about $1300/month on average. Of course most fire and police have a separate disability fund that is run by the city they work for. For example NYPD has this program. http://www.nyc.gov/html/nycppf/html/tier_3/tier_3_disability_retirement.shtml

So for example a NYPD with 25 years of service making $100K per year would get $100 *(25*0.2) = $50K – (15K*.5) = $42500/yr.

[livinincali]

[quote=CA renter]
As for teacher raises, raises aren’t particularly necessary given the current economic problems, but I do favor cost-of-living increases. Raises would be nice from time to time in order to reward good teachers (I have no problem with merit pay above a baseline salary). The truth is that teaching has a very high attrition rate, and it would be nice to be able to retain some of the better teachers.

“Ingersoll extrapolated and then later confirmed that anywhere between 40 and 50 percent of teachers will leave the classroom within their first five years (that includes the nine and a half percent that leave before the end of their first year.) Certainly, all professions have turnover, and some shuffling out the door is good for bringing in young blood and fresh faces. But, turnover in teaching is about four percent higher than other professions.”

http://www.theatlantic.com/education/archive/2013/10/why-do-teachers-quit/280699/
[/quote]

I’m sure the attrition rates are high in the first five years. Many teachers didn’t know what they were getting themselves into and at that point they don’t have any significant vested benefits they’re losing by quitting. It’s when you make it to 7-10 years that there’s a significant carrot in the terms of retirement benefits that means you’ll probably stay even if you don’t like what your doing anymore. It’s probably why we end up with so much mid management staff like assistant vice principles and other administrative staff working as “special” coordinators.

All that staff is likely veteran teachers that didn’t really want to be the in classroom anymore but didn’t want to give up the promise of a good retirement. I don’t blame the employees for acting in that manner. It makes perfect sense, but it isn’t a situation that provides an optimum use of our tax dollars to educate children.

[livinincali]

[quote=CA renter]
Those are just the “official” special ed students. There are many other students who require extensive resources: low SES students, ESL students, students with major behavioral issues (many of whom should be classified as special ed), etc.

In many public schools, these types of students make up 80-90%+ of the student population. Then, you also have the high student turnover rate in many schools, where over half of your class turns over by the end of the year, and they are replaced by students from other schools or from other countries (oftentimes, they haven’t even attended much school because they come from small villages where children are expected to help their families with farm or other types of work).
[/quote]

WTF? We are talking about SDUSD. Where are the small villages that feed kids into SDUSD? It just sad that people in the system of providing public education seem to have only 1 way to fix the problem. Throw more money at it. Give the current teachers raises and that will improve education. Like somehow the current existing teachers will suddenly improve if their paycheck goes up 10%. That somehow promoting some teachers into Assistance Vice Principal roles and hiring more new fresh colleges graduates into the teaching roles will fix everything that’s wrong with our schools. That spending money on iPads when you haven’t even addressed how they are going to be used to improve education is somehow going to improve education. Any charter or private school that out performs the public sector is somehow cheating because they only deal with the good students. Of course the bottom line is if you want your child to be educated your going to have to do it being a parent.

If the situation is really how you describe where it’s just too hard to educate kids because of the reasons you listed then maybe we shouldn’t be providing public education. It a waste of money because we don’t get anything out of it. Let the kids parent pay for their day care and we can provide education to kids that want to be there.

[livinincali]

This article from 2007 says SDUSD spends 18% of it’s budget to support special needs. Of the total student population 12% have special needs. So if you work out the math a special needs kid gets about twice as much spending as the non special needs kid. It does have an impact but not a huge impact. If you had 10% of your school special needs and it took twice as much spending to educate them versus a regular kid, then you’d have to boost prices by 10% across the board. So any private school that costs less than a 10% discount to public education is doing a better job financially.

http://www.sandi.net/cms/lib/CA01001235/Centricity/Domain/155/relatedfiles/HehirReport/hehir_issues.pdf

[livinincali]

[quote=CA renter]Taxpayers (and this includes public employees, BTW, who pay some of the highest tax rates since all of their income is W-2) will not be the primary beneficiaries of any possible “savings” from public employee pensions or compensation.[/quote]

Maybe that’s a good solution to the pension program. Make public employee income tax free. Lower the pay to compensate for that zero income tax and then the pension payment can be based on that lowered tax free salary.

[livinincali]

[quote=spdrun]Buy dryer on Craigslist for $50 — WIN![/quote]

+1

[livinincali]

[quote=CA renter]Public schools also have more qualified teachers, on average, than private schools.
[/quote]

I know one thing that public schools have a lot more of than private schools. Administrative staff. In SDUSD there’s about 15,000 employees and only about 7,000-7,500 are actually class room teachers. I’m pretty sure you average private school doesn’t have a one to one ratio of non teaching staff to teaching staff.

[livinincali]

[quote=CA renter]
BTW, I’m fine if you want to get rid of taxpayer backstops, but ONLY if we get rid of backstops for **everyone.** Why should bondholders or other stakeholders be backstopped if public employees are not?
[/quote]

I do think we should get rid of tax payer backstops for everybody. I wasn’t in favor of the bailouts for GM, AIG, TARP or any of that nonsense. Let people that make malinvestments bear the consequences of their actions.

I haven’t really seen a case in a municipal bankruptcy where bond holders didn’t also take losses. Of course CalPRES and other big pensions probably hold a lot of those bonds so attempting to put differed compensation at the front of the bond holders probably doesn’t help you too much.

[quote=CA renter]
And since public employee pension benefits are deferred compensation (it is money the employees have already earned for services performed), we should also be able to claw back monies paid to private contractors if they don’t perform or if the public entities decides they can’t afford it, as well. Fair is fair, right? Or, do you think we should just penalize one specific group of taxpayer-backed stakeholders (who have had NOTHING AT ALL to do with the financial crisis); and if so, why?[/quote]

Usually a contract is only paid upon delivery of work that has been deemed satisfactory. I don’t think your going to find a court that will let you claw back money from a contract unless there was some sort of deception in the delivered work. Contractors aren’t going to take a contract that calls them to work for years with no payments and then get paid all at the end. They aren’t that stupid.

As for CalPRES I have no problem if they want to try to sue Wall Street for deceptive investments. They were the lead plaintiff in the Enron civil case and I believe the big investment banks settled for 6-7 billion on that case. CalPRES probably lost more than they’ll get back but they can and should try to get money back from Wall Street if it can be proven as a scam investment.

Of course with all that said we know that the only pot of money that’s big enough to pay all public sector employees in full is the tax payers.

[livinincali]

[quote=CA renter]
Yes, they *are* cashing out, but the homes will not belong to the bond investors. These are more like revenue bonds — it is only the rental payments that back these bonds. And I also have no doubt that CalPERS (and others) are going to be investing in these, if they haven’t already…and the union workers will be blamed, once again, for Wall Street’s scams.
[/quote]

Who selects the company to manage the CalPRES fund? That’s where the blame should lie. Certainly public sector employees and their unions should be advocating for a well funded fund that doesn’t invest in junk but they don’t care because they still think they have a tax payer backstop. Get rid of that backstop and then figure it out.

I really don’t care how public sector employees chose to set up their retirement plan. It just needs to be defined contribution from the tax payers perspective. If your managed plan actuaries screw up then share the burden among the current employees and retirees.

[livinincali]

Here’s the full article at Bloomberg.

Bloomberg article

Some answers to the thoughts above without speculation.

About whether the homes in the portfolio can be sold to pay back the financing. The answer appears to be yes with some stipulations.

[quote]
The deal’s covenants can allow individual properties to be sold, for between 105 percent and 120 percent of their allocated share of the total loan, according to information in the Kroll report, a release of liens that may leave the worst properties backing the remaining securities.

The largest danger may be that Blackstone will be allowed to sell the Invitation Homes business or take it public before the securities mature, said TCW’s Whalen, who described the deal as “well-structured and really well thought in terms of the way they put it together” in general.

“Even if can you get comfortable with a business that’s fairly new, you’ll be subject to the performance and disposition strategy of a company other than Blackstone,” he said. While many of the notes carry substantial loss cushions, “the further down you go” in buying bonds with less protection, “the more subject you are going be to that big risk.”
[/quote]

Here’s where the properties in the portfolio are located.

[quote]
The breakdown includes 34 percent from the Phoenix area, 17 percent from the Riverside-San Bernardino-Ontario region in southern California and the rest from other parts of the state, as well as Florida, Georgia and Illinois.
[/quote]

About how they are going to repay at the end of the bond offering. These are 5 year bonds, if credit conditions are tight and they can’t refinance to pay back the principle it’s possible they could flood the market with the homes in 5 years.

[quote]
Along with the Fed’s $85 billion of monthly bond buying that’s reduced mortgage rates, investors including Blackstone have helped drive property-value gains in the regions. Prices in Phoenix have soared 41 percent from a bottom in 2011, according to an S&P/Case-Shiller index.

When it’s time to repay the debt, rental-home owners may be unable to refinance or sell the bond collateral in bulk and flood the markets, Fitch analysts Suzanne Mistretta,Dan Chambers and Rui Pereira in New York wrote in a statement last month.

The transactions can also be “highly vulnerable to unknown variables” including property taxes, restrictions from homeowner associations and actions by local governments, they said.
[/quote]

[livinincali]

[quote=flu]
Well they aren’t selling everything. Just the stuff that isnt good 🙂
[/quote]

Honestly that’s just a guess on my part, but considering how the bonds were rated it’s not a bad guess.

Bottom line this probably won’t have any impact on the price of your San Diego home. It’s also probably very wise to stay as far away as you can from these bonds.

[Author]

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