Thursday, April 23, 2009

Toll Brothers President is out of touch

Bob Toll told Mad Money's Jim Cramer yesterday that he sees 80% of the country's real estate market's improving over the course of the next 8 months.


Maybe someone should take Mr. Toll on a cab ride through such cities as Compton, CA, Las Vegas, NV, Phoenix, AZ or Miami, FL after he spends a few minutes driving through Detroit. For anyone, especially the head of a publicly owned luxury construction company to say that real estate markets will be improving anytime soon is disingenuous at best and an attempt to shore up his company's home sales and stock values at worst.

With over 8 million mortgages about to see their interest rates reset over the next 18 months there is NO WAY IN HELL the market is about to recover anytime soon. I suspect it will take at least 3 years to clear up the inventory of foreclosures and about the same amount of time to bring down the inventory of existing homes back down to sustainable levels.

It will take 5-7 years or more for prices to begin increasing again and by then, we should be right in the middle of a hyper inflationary cycle which means mortgage rates will be mostly unaffordable to the average buyer.

The situation is completely without any positive indicators at this time and for Mr. Toll to go on CNBC to try to give his company';s sales a bump is, well, like all the other big businesses lying to us about how rosy things will be again by early next year. It's bullshit at best and criminally misleading at worst.

I have many friends that had been working at Toll as middle managers for years. All but one lost their jobs and Toll is still cutting. In the meantime, the company is offering huge discounts. You don't discount unless you feel the need to do so. His words and expressed opinions as the head of a publicly held corporation must be considered carefully by the SEC as do so many other CEOs who have made ludicrous comments about the state of their businesses over the past 12 months.

If you're in the market for a house - WAIT. Prices will continue to drop and so will interest rates. Wait until the late fall or winter of 2009 when the markets usually slow down naturally. The deals will be even better 8 months from now given the continued steep decline in the economies of the world.

What do you think?

Wednesday, April 22, 2009

Bank lobbyists still control Washington

Even on my birth day, I feel the need to express my outrage.

I am getting soooooooooo tired of hearing how the lobbyist still control our Congressional representatives in Washington. After you read this article at posted on CNBC' website today you'll immediately understand my outrage of the day.

Here's the first few lines of that article. It reads:

"They may be held in low esteem around the nation, but the country’s largest banks still wield considerable influence in Washington. The banks have made it difficult for Congressional Democrats and the White House to give stretched homeowners a stronger hand in negotiating lower monthly payments on mortgages and to prevent credit card companies from imposing higher fees and interest rates.

Having won some early skirmishes by teaming with Republican allies, the banks now appear to have the upper hand and may wind up killing — or at least substantially diluting — both pro-consumer measures."

Once again big bank lobbyists are linning up their Republican pals and some conservative Democrats in Congress and in the Senate to radically dilute several key provisions contained in an upcoming bill (the legislation is called the Credit Cardholders' Bill of Rights). This legislation would give credit card issuers more than a year to make changes designed to limit the massive fees and charges all the banks currently levy on consumers. And they're winning the battle.

Never mind that the industry collected over 15 BILLION dollars in such fees last year. Taxpayers bailed out the banks in October and now the same taxpayers will be providing the very income the banks will then use to pay down the TARP money they all received. How completely absurd is that?

I once took a negotiating course that taught me several things about the process but what I remember most from that seminar is this: NEVER give up anything without receiving something in return. What are we as taxpayers going to get back? Nothing. We provided the initial bailout funding and we're now also the main source of bank profits(record profits in some cases. I.E.: Bof A).

What's more offensive is that banks are borrowing money at near 0 percent then charging customers usuriously high rates to borrow that same money back. It's the American Taxpayer bailing out the banks and the bank lobbyist making sure they have Congress including the Senate water down the very bills intended to give borrowers a needed break in these impossibly difficult times.

Democrat and Republican Representatives and Senators are being targeted but it is the Republicans in the Senate that are most willing and prepared to help the lobbyists get what they want. Republicans ARE NOT YOUR FRIENDS. Throw the bastards out!!!!

The original bill was introduced months ago. It was to limit many of the ugly practices used by lenders to jack up interest rates by 50% or more, increase fees with only a mere 30 day notice and generally make all our lives even more miserable in the process. Unfortunately, the bill doesn't take effect until mid 2010 so the banks have plenty of time to adjust to the new rules. In the meantime, the banks are raising rates and fees on just about every customer and only giving them 30 day notices. How absurd is that? Lobbyists are making headway in getting the bill watered down to nothing and may even succeed in delaying its implementation until mid 2010 despite the efforts of some lawmakers to accelerate the process.

Enough said. Want to have your voice heard by the banks, call them and demand they lower your interest rate or threaten to stop paying them. Yes that will hurt your credit but if you're unemployed, underemployed or just plain upside down on your debt to income ratio, bail out now, stop paying and wait for the bank to call with an offer to settle for pennies on the dollar. Choose to help yourself first, not the banks.

What do you think?