Builders may get more time to pay Bend SDCs
(subscription req'd)
"The Bend City Council will get a look at a new plan Wednesday that would give builders a nine-month window to pay system development charges, a move designed to help residential and commercial builders get through the current economic downturn. While many of the efforts have been in place for a while, there are two new options the city is extending to builders for at least the next year, Community Development Director Mel Oberst said. The council will get a briefing on the issue at a work session Wednesday evening. Builders currently have to pay their SDCs, which can top $13,000 for a single-family home, when they pick up construction permits. A new plan the council would first have to approve would give builders up to nine months after picking up permits to pay their SDCs, Oberst said. For homes that can be built in that amount of time, builders hope they would be able to pay the SDCs with revenues from selling the completed homes, rather than financing the SDCs upfront with high-interest construction loans."
I just sit & shake my head at this sort of thing. From the comments:
Anonymous said...
"And, while the change will delay the collection of fees temporarily, there will be no reduction."
More bullshit math from The Bullshittin. The city will be giving a nine-month, interest-free loan of $13,500 per house to the builder. The only collateral will be the house. At best the city loses nine months interest on the $13,500. Worst-case scenario, the city loses the $13,500 PLUS the interest and ends up owning a crapshack that nobody will buy.
Yeah, looks like a real "win-win" here ...
Anonymous said...excerpt from the WSJ: Bear Stearns Assets Accepted By Fed Lose $1 Billion in Value "What it looks like ... is that we've socialized risk and we've privatized reward," Sen. Christopher Dodd (D., Conn.), chairman of the Senate Banking Committee, said at an April hearing while acknowledging that the Fed had little time to carry out the deal. "We're on the hook. Hopefully it doesn't happen, but we're on the hook."
What the hell is going on in this country? We are doing exactly what Dodd said. For the love of Christ, this guy is Democrat!
We are trying to turn fundamental economics on it's head. Commenter "wsj" posted a really great piece about Ted Forstmann. Here's one of several great lines:
"You've got [Treasury Secretary Henry] Paulson saying 'Oh, you see the good news is it's over.'" The problem, according to Mr. Forstmann, is that it's far from over. "I think we're in about the second inning of this." And of course, the credit crisis wasn't even supposed to last this long. "This all started in August [of 2007], and it was going to get cleared up by October. It hasn't gotten cleared up at all."
Actually, this really started in March 2007, when the short-lived subprime implosion came to light.
DJIA - 2 yearYou can see this thing has not been all that bad. I think it became clear early on, that Wall Street billionaires would be taken care of. My thinking at the time was that No One could possibly bail out a situation like the one we were facing. No One.
And they did put a band aid on things, and that seemed to assuage fears of Total Collapse, for a bit. And we had a quick run from the Bear Stearns low of 11K to 13,000 on the DJIA. If you remember, I said fade that thing at 12,500, which we seemed to hit just 2 DAYS after the BS panic lows.
Anyway, this ties back to COBA, Bend City Council, and the imposing of RISK on Bend taxpayers, and cordoning off of PROFIT to builders. What we are doing is actually FAR WORSE than the BS bailout: The purpose of the BS bailout was to calm markets & restore some semblance of normal functioning AFTER the essential collapse of one of Wall Streets cornerstone players.
We, as in TAX PAYING BENDITES, are expected to financially SUPPORT an industry that has simply built itself into a glutted supply situation. And as I have said before, BUILDING is NOT really an industry at all. It's DUDES. Yes, it's just DUDES in pickups who know other DUDES, who know Mexicans, who do NOT KNOW SHIT, except they will work for fucking peanuts so they can expend 112% of their annual earning blowing off illegal fireworks.
Because think about it: Most companies will demand that The Corporation somehow benefit from such a boondoggle. But COBA & Bend builders KNOW FULL WELL that their little incorporation bullshit is a thin veil that allows them to appear to be building PRODUCT for the ILLUSION of somehow making a profit ON SALE.
There is NO SUCH THING. Builders are FUCKING DUDES. Just Dudes. The LAST THING they care about is selling the house they are building. They just want to siphon off money by PAYING THEMSELVES some sort of hourly rate. NO ONE HERE cares one wit about selling the homes they are building.
So what happens? Ultimately, it appears Bend is looking to become a landlord, just like The Fed. When The Fed bought Bear Stearns toxic waste, they were buying mortgages. You'll recall I quoted a pretty decent piece by Bill Fleckenstein who was pretty outraged that the US Government was going into the loan servicing business. This is where the City of Bend is headed.
Again, what happens? This country, and this town, are headed down the same path: towards Democratic Socialism.
Democratic Socialism - A leftist political ideology that emphasizes the principle of equality and usually prescribes a large role for government to intervene in society and the economy via taxation, regulation, redistribution, and public ownership.
As usual, I just sort of wonder how can I benefit from this. How? Seems the answer is similar to How do I benefit if I am living in commie Russia in 1975?
Leave. Get the hell out.
I'm not sure there is anything to do when government bodies CAN & WILL bail out private investor losses of any and all types. The City of Bend will INEVITABLY begin to have a stake in the private ownership of homes, government housing. Believe me, government housing DOES NOT WORK. It is synonymous with DRUGS & HOMOCIDE. That's ALL that goes on in gov't owned housing.
We are entering a dark, slippery slope. The loaning of money is really only meaningful if there is some onerous, burden of repayment. Paying it back is THE ONLY sufficient impetus for the RE-LOANING of money. When borrowers default en masse, and there appears to be no further real enforceable incentives for repayment, the jig is up.
The whole depositer & borrower scheme just implodes. And banks are just middlemen in this process, who don't REALLY have anything of their own. They have OUR money, that's it. And they all hopped on the "abstraction of ownership" bus over the past 3-4 years, taking PROMISES TO PAY, cutting, slicing, dicing, and reselling them between each other, and making a hell of a lot of money doing it. THIS PROCESS was pivotal in creating the credit bubble.
No one knows who owns what, or who owes what to who.
The Great Deleveraging is going to sweep away this entangled mess. There is more collapse waiting in the wings.
THERE IS ANOTHER BEAR STEARNS COMING. Mark my words. Bernanke, Bush, BendBB and other PERENNIAL OPTIMISTS will tell you over & over & over that this thing is NEAR OVER.
Ain't NEAR OVER. This thing is the Greatest Financial Calamity of All Time. Hell, Forstmann says we're in the Second Inning. He's even more pessimistic than I am.
For the love of Christ, we are in the throes of some sort of Biblical Seven Horsemen of the Apocolypse. We can't eat CORPORATE PROCESSED FOOD, for Gods sake! They can't even figure out what's the root cause of the biggest poisoning of Americans EVER.
I mean marge & them were talking about GARDENING AS A FOOD SOURCE, something about which I sort of chuckled about 2 months ago.
Now? Fuck, now I am asking my wife about how to plant OUR FOOD in the back yard.
THIS is another trend that I think is very interesting, and it has less to do with a poisoned food supply than it does gas & transport costs.
The One Thing PRE-SOCIALIZED America could do pretty well, was look at their own income statements, look at the high-cost items, and DISINTERMEDIATE THEM. Get rid of them.
Now, The High Water Item Everyone Wants To Get Rid Of, is fuel costs. Transport. We pay billions to ship all sorts of stuff All Over The Place. We pay a hell of a lot to ship food to this country. Timber? Again, millions to ship here, mainly from Canada. Look around your desk; there was probably $.10-20 of every dollar spent to ship that stuff around, INCLUDING your gas money to go get it at the store.
Think about what Exorbitant Transportation Costs mean. Can you think of a time when transport costs were truly mond-boggling? Try 1,000 years ago. Overland treks could cost you your life. They took major chunks of your life.
What about space travel? Going to Mars or something.
OK, when transport costs become outrageous, we do it FAR LESS, and we try to be Internally Self Sufficient; ie we bring all our shit with us. We have to be able to make stuff, fix stuff, and soldier on By Ourselves.
This seems to be where we're heading. Communes. The Texas Polygamists. Internally self suffiecient units that make & build they're own supply of just about everything, including food.
Small lots, small runs of production of a wide variety of items. No HUGE corporate industrial food suppliers trucking & shipping stuff Worldwide, because the ALTERNATIVES are cheaper: buy seeds & plant it. Little socialized farms. Rural China is what we're turning into.
I don't know. I just try to look at what is happening & deduce from Standard Human Nature & what I know about it, to figure out The Big Picture. We might be real shitty at a lot of stuff, but Americans as a group are a damn crafty bunch, and our economy, with its heinous inherent flaws, is pretty good at allowing people to do what the hell they can to make a living.
And we will beat this fuel problem not really by any sort of Reduction Planning, but by Elimination. We simply will NOT ship things. We'll produce it locally.
An example that just popped into my head is produce in Alaska. You wanna see truly ridiculous costs & poor value, head up to the outer reaches of Alaska & (try to) buy produce. It's awful, barely edible stuff. And it costs a fortune.
What to do? Small greenhouses? Social gardens protected by the elements somehow? There's money in them thar hills.
A LOT of people have gotten on here & said that I am trying to somehow INFLUENCE PEOPLE'S DECISIONS, OR SOCIAL POLICY, or some weird ass shit like that. Of course I am not. I am trying to read The Big Picture, INTERPRET social policy, and combine it with my ideas about human nature (self-centered searching for utility optimization) & figure out WHAT WILL BE BOUGHT in response, if anything.
We are socializing the building of homes in Central Oregon, taxpayers will own, in part, several homes as a result of tragically flawed City Council enactments. What to do? Property management? I've said before I think this is a good way to go in Cent OR. Move out cleanups? Again, the methers LOVE to turn on the water & plug the sink 2 days before their lease is up. Motherfuckers LOVE to leave landlords a swimming pool.
There seems all sorts of Management & Remediation Businesses that will result of bend City Councils actions.
This rationale also seems to apply at the Federal Gov't level: We are BUYING MORTGAGES at an untold rate. What to do? The Fererales LOVE to hire contractors to manage their messes for them. Fuck, that's really ALL Soviet Russia was.
Speaking of which, they also produced & consumed ENORMOUS amounts of alcohol. Buffett, you sly devil!
We're in the throes of transforming the US Economy folks. I know it doesn't seem like it, but have you actually considered GARDENING a proper use of your time in ANY past years? I NEVER have. It's STILL sort of on the border.
But fuck, that means we're entering into a WEIRD ASS AGRARIAN phase. I mean, WHAT THE FUCK? AGRARIAN? That shit was put down 200 years ago, right?
Again, the after effects of this fucking housing bust are going to be weirder & more severe than we ever thought possible.
OK, you might think that all this talk about the deleterious effects of High Costs as sort of abstract & maybe irrelevant, but there is an industry in the country that has stoically maintained ridiculous wage levels for it's rank & file, far above the competition. Here's an excerpt:
With barely four months to go to the day of the US presidential election, the BBC's James Naughtie finds Americans worse-off than they were seven years ago - and worried about the future.
East Grand Boulevard in Detroit is still handsome, in its way. There are wooden and brick houses on spacious plots, with trees front and back. They have that early 20th Century confidence that American architects were able to exploit, with high chimneys, wide porches and plenty of room inside.
You can find plenty of prosperity around the edges of Detroit. But take a trip down East Grand Boulevard and into the enclave of Hamtramck, which was the heart of the American car industry, and you can sense the economic angst that's gripping the country.
It's not simply that there is poverty in Detroit - which you can find at the busy soup kitchens that were established in the Great Depression - but that a city which once boasted some of the best-paid industrial workers in the US is in steady decline.
Politics in Detroit is a mess - the mayor has just been deposed by his own Democratic supporters over his use of public money to try to cover up an extra-marital affair - and economic prospects are bleak.
People who thought they would remain reasonably comfortable are discovering that rising medical bills, falling wages and petrol at $4 a gallon are making life difficult. Add to that the pressures from the banks and mortgage lenders, and you find trouble.
Watershed
More than 73,000 homes were repossessed in the city in the second half of 2007 because the owners couldn't keep up with loans: Detroit is a prime example of a contagion that's sweeping the whole country.
This is one of the painful facts that lie behind the rhetoric of the presidential campaign. The reason why both John McCain and Barack Obama talk about "change", is that most Americans feel that this election year marks some kind of watershed.
They're not agreed, of course, about which way the country should turn. But there is a general sense that after the eight Bush years, in which the country has been tormented by post-9/11 national security worries and war, and in the course of which government spending has soared and personal debt has become an obsession, this electoral choice will be important.
Searching for the worries that give rise to that belief, you first of all confront the lack of economic optimism.
Although you can find those who talk of a cycle that will turn once again, about the long-term inevitably of recovered prosperity, it's much easier to find people who are starting to question their birthright. Is it true, as they've always been taught, that the next generation will always be better off than the one before it, that hard work will produce rewards and the freedom to choose a lifestyle?
In short, is the American Dream still in business?
'Katrina-like crisis'
I found in Detroit that there are doubts. Among car workers, who were once the elite of the labour force, there is deep gloom.
Talking to some of those who are losing their homes through foreclosure, having stumbled into loan agreements that allowed interest rates to be ratcheted up, I became quickly aware that the problem is not one that is confined to what might be called, over-simplistically, an "underclass".
As one woman put it, it's a "Katrina-like crisis" - the waters are lapping around the feet of those who never thought that their homes would be inundated.
In America, it's always important to balance bad news or public anger with the country's innate capacity for ingenuity and recovery. But, as Joe Stiglitz, Nobel-prize winning economist, put it to me: "The reality of each generation being better off than the last is becoming destroyed."
Most Americans, he says, are worse off than they were seven years ago. So, when they come to make their political judgements this autumn, this is what will affect them most.
They know that China holds much of America's public debt, and that jobs are going overseas. And they're aware that the weakness of the dollar overseas can be seen a measure of the troubles of the superpower.
They wonder, therefore, whether they can assume that in the 21st Century their country will remain an economic superpower, even if its military strength is still unmatched.
It's a deep question, lying far beneath the surface of a presidential campaign in which the personalities of the candidates and a speech here or there often determine the headlines and the tone of the exchanges.
The truth is, this is a troubled nation. And one of the problems is this: change may be necessary but where should it lead? In the next four weeks that's what I'll be trying to find out.
You might say, "Hey, the car business is a TERRIBLE EXAMPLE! It's old & industrial, it was bound to fall apart"!Umm, no. Look at Honda & Toyota.
The market cap of GM is $5.8BB. Ford is $9.9 billion. Yes, Ford is worth about twice what GM is. Weird.
But Toyota is worth $144.9 BILLION. Toyota is worth 25X what GM is. Honda is worth $61 billion.
There is HUGE amounts of value being created in auto assembly. But US automakers have had to deal with a century-old suckerfish: UNIONS. Unions have jacked up the cost of every single car made in this country to the point that the industry has been destroyed, AND THE ENTIRE SURROUNDING AREA where they are built has been 100% destroyed.
If you're a freaked out self-delusing liberal, keep telling yourself that THE UNIONS ARE NOT THE PROBLEM, IT'S THE GREEDY CORPORATIONS! OK, settle down Tim Robbins.
All corporations are greedy. You're greedy. I'm greedy. And corporations are JUST US.
Anyway, if you want a PRESENT DAY example of what non-competitive cost dynamics can do to a city, state or country, just look at Detroit. It becomes less & less relevant, less & less able to sustain itself, and decays more & more until it is simply abandoned.
WE, Bendites, are living in the Next Detroit. Oh yes, the Auto Unions succeeded brilliantly, but they have killed the hosts. Bend City Council will succeed in perpetuating the Suckerfish, BUT THE HOST WILL DIE. Iran and Russia are succeeding brilliantly in feasting off the host, but it will INEVITABLY DIE. The Saudis understood this.
Massive hyper-inflation, and stagnating growth; Worst of all Worlds. We're headed for disaster. What to do?
Remember the fundamental: People in a "free" society maximize their own utility. We get the most for our money. We purchase the low cost to disintermediate the high cost. And salmonella is a COST, just like oil.
So what are The Costs? What is Their Origin?
It is BIG BUSINESS. Corporations. We've endowed these things with sustaining our lives. Big Oil. Big Food. Big House. Big Computer. We're going to start disintermediating these enterprises. Small lots. Short runs. All is Local. Can't afford even to pay South American peasants 2 cents to pick bananas, cuz it costs $20 to ship them here. All is LOCAL.
We will work in Bend. We will be taxed to pay builders for unsaleable homes. This is a fact. What to do? Leave. Leaving is all we can do to disintermediate the cost. WE will be Detroit. We'll still be here; Detroit is still here. But things will look different.
Bend circa 2015On a different tack: I will ask again, does anyone want to write a Guest Post? C'mon! It's got all your standard chunks of Reaping The Goodness Of Fame! Getting whaled on by Buster! Being Told Your A Lunatic! Absolutely NO Monetary Payoff!
It's fantastic. I wanna hear from YOU! I'm going to setup an anon email, & YOU TOO can be the next contestant on BendBubble2. I truly suck, and I know it. I think my strengths lay in CONVINCING people that The End is Nigh, but that phase is clearly over. The Chronicling of The Calamity is where we are, and I question my ability here.
AS you can tell from my recent comments, I play the other side of stuff: I load up at the bottom... and typically unload somewhere just off the bottom, about 1% above my breakeven. So I tend to become progressively more optimistic as things collapse. THAT is why I believe in Detroit: ALL THE BAD NEWS IS OUT THERE. TWICE. Can't really get worse. Even an open field is worth more than what is there now.
I am actually starting to fade the oil hysteria. I bought a bit of Monaco Coach this week.
MNC, 1 yearTo repeat, this ain't for everyone. I have sort of a Taleb-esque approach to things: Spread 10-20% of your portfolio across a thin veneer of lottery-ticket style holding, and hold the rest in cash. And going from $16 to $2.86/sh in one year qualifies as a lottery ticket in my mind.
I am becoming more optimistic AS THINGS IMPLODE, as is my nature. I am compelled by LOW COSTS to buy things I wouldn't touch a year ago. And things are beginning to get cheap, fast.
So I wonder if I am The Prophet Of Doom this blog seems to require. I am STILL HORRENDOUSLY BEARISH ON BEND. I can't possibly understate that. Bend is the Detroit of the 1960's: Doing OK now, but literally facing it's own long term doom. Barring a complete cleaning of house, Bend will self-destruct.
We need to adopt the Economics of Small Lots & Short Production Runs Of a Wide Variety of Goods. We need to become Self Sufficient. We are an island. We're a spaceship headed for Mars. Well, we need to act like we are, because we are incurring all the same costs.
I don't know. Costs need to fall precipitously here for me to switch from Rent & Invest The Difference, to Buy Bend. So maybe I can gab on about the Fall of Bend, which will stay the course for at least 5-10 years.
But I would like to post different ideas here. What will work? What will kill this place? Some people seem to have a good handle on things that I don't. I'd like to post pieces that present a variety of positions. Even RE-friendly stuff. If I got enough, I could post more than once a week.
And this blog is getting tough for me to keep up. I've eaten my own pudding, and positioned myself "delta negative" on this housing collapse, and I am also Renting & Investing The Diff. And I am busy because of it. I am working more than ever. I used to have a spare couple of hours to even think about housing issues. Now, I am just working all the time. It's becoming difficult to take 5 seconds to write anything.
Anyone want to help? Write a guest piece? Doesn't have to be totally agreeable to me or the bent of this blog. I just want a diversity of thought & opinion.
