Optimistic on California – Even With All Its Warts

On February 25, 2010, In Investing, By Chuck Ponzi

I often get questions from others as to why I seem negative on California.  I’m not.  I have lived here for nearly a dozen years, and have loved living in many areas throughout the southland.  I believe strongly in the positives of the state.  I have had opportunities to leave and not taken them.

However, focusing our entire energy on the positives means that we cane easily forget what we need to improve.  A great leader has the ability to both celebrate the successes while not forgetting the risks and failures.  One of the great potentials of this state is its ability to adapt; and many long-time readers know that I follow alternative energy very closely.  In particular, I love the ideas of small-scale energy production.  Not only because of personal independence, which I greatly favor, but mostly because so much waste and risk is created in large-scale generation and transmission.  Distributed energy grids mean that local generation can be more adaptive and reduce the possibility of large-scale outages (like during the California “brown-outs”) and grid cyber-attacks.

I see hope in California through emerging technologies.  Technologies that answer the problems of today.  If you haven’t yet heard of the “bloom box”, I recommend the below video.

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Long-term California is a great place to be.  We only need to fix what is wrong with our present problems, and everyone can share in the prosperity together.

By staying current on emerging trends, you might also be able to increase your investments.  I know that my personal accounts more than doubled last year (2009) due to some timely purchases of energy-related investments.  Let’s all hope more come from our state.

 
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Prop 13 and California’s Budget

On February 24, 2010, In Housing Crash, Prop 13, By Chuck Ponzi

Proposition 13 was the “biggest tax revolt” in California’s history.

KPBS San Diego did an interesting piece on raising taxes in California and Prop 13′s effect on this.

Thirty-two years ago, Californians en masse went to the polls and approved the largest tax-limiting legislation in recent history.  Basically, it limited the property taxes that could be assigned to a property.

In response, many municipalities responded by building more hotels, retail, and more while limiting the amount of houses (municipalities earn more money from sales and occupancy taxes than on property tax).  This leaves the state perpetually building too few houses, and worse, restricting adaptive reuse of residential real estate into higher density because of the reassesment rules.

Personally, there are 3 major qualms I have with Prop 13.

1.  This is not a homestead exemption, so it does nothing to favor homeowners over landlords (who already have strong incentives through.  This is landlord welfare.

2.  Commercial properties are not exempted (they have a fixed base as well).  This is fundamentally flawed, since it favors property-owning companies who lease as their primary business.  This is corporate welfare.

3.  There is no means test.  Millionaires have the same exemptions as indigent elderly.  This is welfare for the rich.

Unfortunately, taxpayers were sold that little old ladies were getting kicked out of their homes.  While this is true, we could avoid the landlord, corporate, and rich welfare by instituting some changes to the original proposition.

Instead, we have serious imbalances because cities favor not building homes unless they have significant Mello-Roos attached to them, allow corporate transfer of assets to perpetually avoid reassesment, and allows non-citizens and non-tax payers of California to receive the benefits of everyone else’s pain.  How do you feel about prop 13?

The money shot for me?

RAND (Caller, La Jolla): Thank you for taking my call and thanks for this discussion. I would just like to put two issues on the table. The main one is something that really shocks me, never comes up in these types of discussions, which is the distinction between commercial properties and homes. Of course, nobody wants homeowners to be taxed out of their homes but Prop 13 also holds down the property taxes paid by shopping malls, office buildings, all kinds of commercial properties. And they have a loophole that homeowners don’t have, which is that they can sell the holding company that owns the property and then someone else can take ownership of that property but, theoretically, it hasn’t changed hands, just the company has changed hands. And so there’s many commercial properties in the state that have not been reassessed for many years and they’re not paying the cost of the essential services that they need to stay in business. And I think that that aspect of Proposition 13 is very unfair and needs to be changed.

 
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America: Freedom to Fascism

On February 23, 2010, In Uncategorized, By Chuck Ponzi

 
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OT: Climategate Gets a little warmer!

On February 16, 2010, In Uncategorized, By Chuck Ponzi

As if there weren’t enough disinformation about what’s really happening with the climate, we get the following, direct from the scientists who brought you global warming:

The dog ate my homework:

The academic at the centre of the ‘Climategate’ affair, whose raw data is crucial to the theory of climate change, has admitted that he has trouble ‘keeping track’ of the information.

Yeah, but…

Professor Jones also conceded the possibility that the world was warmer in medieval times than now – suggesting global warming may not be a man-made phenomenon.

And he said that for the past 15 years there has been no ‘statistically significant’ warming.

At least we’re staying scientific:

‘Of course, if the MWP was shown to be global in extent and as warm or warmer than today, then obviously the late 20th Century warmth would not be unprecedented. On the other hand, if the MWP was global, but was less warm than today, then the current warmth would be unprecedented.’

 
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1.1M off and still falling

On February 8, 2010, In Bubble, Ladera Ranch, By Chuck Ponzi

Those of you who know Ladera Ranch, know that at the peak of the housing market, it was a cesspool of speculating flippers gone wild.  Some of the most egregious lending happened here with Negative Amortizing loans that are quickly imploding faster than any subprime loan could.  And the size of these loans is even bigger than subprime by multiples.

Ladera was carved out of some leftover parts of Mission Viejo abutted to San Juan Capistrano, and for the most part is searing hot in the summer with no views to speak of, has insane choked off traffic to get to the 5, or you endure ever-increasing tolls from “The Toll Road Company” whose stated objective is to siphon off as much of the local wealth as possible while crying foul and getting “Community Reinvestment” money from the Federal Government.  Good to see that even if the rich won’t support the toll roads, everyone else gets to with their taxes (without the benefit of actually using the roads.

Our subject today is 40 Lewiston Court, Ladera Ranch, now for sale for $1.1M.  At the peak it sold for 2.2M, and is having a hard time finding a bottom.

Here’s the beauty.  And, by the way, this is what 3% of 1.1M will get you in OC today:

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I guess Realtors here haven’t yet gotten the memo: the internet sells properties.

But, between you and me, the most interesting part is not the cesspool that your neighborhood is, but rather the cesspool that is in the back yard, lovely.  Mosquito abatement anyone?

Please, for the love of god, will some knifecatcher step up to the plate?

Edit: South OC tracker already featured this one.  She gets around.

 
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The bidding of the leaders…

On January 22, 2010, In Bailout, By Chuck Ponzi

If you remember rightly, the financial crisis of 2008 created a lot of people drawing parallels between that and a war, indeed, even Warren Buffett called it the “economic Pearl Harbor“.

I said it then, that this was fear-mongering and disingenous.  The crises of 2009 and 2010 and 2011 will be products of those decisions.  The decisions made then by the Banking Cabal (whose long fingers include Paulson, Geithner, Bernanke, Summers, Blankfein and others) will eventually lead to financial indenture.  For those who saw this coming, let me share with an excellent quote:

“Naturally the common people don’t want war; neither in Russia, nor in England, nor in America, nor in Germany. That is understood. But after all, it is the leaders of the country who determine policy, and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is to tell them they are being attacked, and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same in any country.”

Ten points for anyone who can tell me who wrote that.  Or at least which decade it was written in.

We were lied to.  Plain and simple.

 
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American Dream is a Scam

On January 22, 2010, In Uncategorized, By Chuck Ponzi

James Altucher basically lays out the most logical argument countering the stupidity perpetrated throughout the housing bubble.  For what it’s worth, I don’t believe we’ll be at the bottom until this is a widely held belief.  Houses are risky investments that only pay off in a declining-rate and/or improving demographic environment.  It is very unlikely that we will have either in the next 20 years with the Boomer cohort leaving peak earning/spending years, and rates at historical lows.  We could see housing declining against inflation for a generation to come.  It all depends on how fast we clear out the dead wood of overvaluation based on historical appreciation rates.

From Yahoo:

The past few years have certainly challenged the idea that real estate prices only go in one direction. But the downside of the “American Dream” is even more pronounced, says James Altucher of Formula Capital.

Owning a home has “never been a great investment,” Altucher says, noting housing went up a dismal 0.4% annually vs. 8% for the stock market from 1890 to 2004, according to the Social Security Advisory Board.

Moreover, Altucher says the notion buying a home is a ticket to financial security is a “scam” perpetrated on the American people by corporations seeking to keep us in debt, less mobile and with the storage to purchase all sorts of needless consumer goods.

That’s a provocative statement, hard to prove, and certainly subject to debate. Such a view also leaves out the intangibles of home ownership, such as the stability and other benefits raising a family in a community can bring.

Still, it’s hard to argue with Altucher’s main point, as detailed in a recent Daily News article: from a purely economic basis, there’s a lot of downsides and hidden costs to home ownership that get lost in the “American Dream” discussion:

* Insurance premium.
* Property taxes (which usually offset any tax deduction you get from your mortgage interest).
* Maintenance (pipes break, electricity problems, etc.).
* Remodeling costs.
* Utilities (utilities and maintenance for renters is often reflected in the rental price, but it’s not reflected in a mortgage when you own).
* Yard work, pest control, etc. (again, rents usually have this built into the price, but mortgages don’t).
* A down payment of at least 15%, which is $90,000 on a $600,000 home.
Closing costs, usually 5% of loan amount, or another $25,000.

Rather than concentrating so much of your wealth in a potentially illiquid asset, Altucher says most of us would be better of renting. If you want to bet on a housing recovery – and he does believe housing is a good short-term bet here – Altucher recommends buying a REIT like the iShares FTSE NAREIT Residential Plus Capped Index Fund (REZ).

So if buying a house is a bad investment, should the more than 20% of American mortgage holders currently under water just walk away, as some advocate? Check the accompanying video to hear Altucher’s take on this highly controversial topic.

 
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A bad dream, a nightmare.

On January 20, 2010, In Delusion, Free Speech, Rants, By Chuck Ponzi

Unfortunately, this bad dream, this nightmare is what we are living through.  I believe we have reached the tipping point.  If the morally decrepit cannot be removed through nonviolent means (voting), they will most assuredly provoke a sleeping giant.  I don’t think Americans can take much more evil, graft, stupidity, and lawlessness.

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“Could it all be a bad dream, or a nightmare? Is it my imagination, or have we lost our minds? It’s surreal; it’s just not believable. A grand absurdity; a great deception, a delusion of momentous proportions; based on preposterous notions; and on ideas whose time should never have come; simplicity grossly distorted and complicated; insanity passed off as logic; grandiose schemes built on falsehoods with the morality of Ponzi and Madoff; evil described as virtue; ignorance pawned off as wisdom; destruction and impoverishment in the name of humanitarianism; violence, the tool of change; preventive wars used as the road to peace; tolerance delivered by government guns; reactionary views in the guise of progress; an empire replacing the Republic; slavery sold as liberty; excellence and virtue traded for mediocracy; socialism to save capitalism; a government out of control, unrestrained by the Constitution, the rule of law, or morality; bickering over petty politics as we collapse into chaos; the philosophy that destroys us is not even defined.

We have broken from reality–a psychotic Nation. Ignorance with a pretense of knowledge replacing wisdom. Money does not grow on trees, nor does prosperity come from a government printing press or escalating deficits.

We’re now in the midst of unlimited spending of the people’s money, exorbitant taxation, deficits of trillions of dollars–spent on a failed welfare/warfare state; an epidemic of cronyism; unlimited supplies of paper money equated with wealth.

A central bank that deliberately destroys the value of the currency in secrecy, without restraint, without nary a whimper. Yet, cheered on by the pseudo-capitalists of Wall Street, the military industrial complex, and Detroit.

We police our world empire with troops on 700 bases and in 130 countries around the world. A dangerous war now spreads throughout the Middle East and Central Asia. Thousands of innocent people being killed, as we become known as the torturers of the 21st century.

We assume that by keeping the already-known torture pictures from the public’s eye, we will be remembered only as a generous and good people. If our enemies want to attack us only because we are free and rich, proof of torture would be irrelevant.

The sad part of all this is that we have forgotten what made America great, good, and prosperous. We need to quickly refresh our memories and once again reinvigorate our love, understanding, and confidence in liberty. The status quo cannot be maintained, considering the current conditions. Violence and lost liberty will result without some revolutionary thinking.

We must escape from the madness of crowds now gathering. The good news is the reversal is achievable through peaceful and intellectual means and, fortunately, the number of those who care are growing exponentially.

Of course, it could all be a bad dream, a nightmare, and that I’m seriously mistaken, overreacting, and that my worries are unfounded. I hope so. But just in case, we ought to prepare ourselves for revolutionary changes in the not-too-distant future.”

 
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Is the Foreclosure Crisis Over? 2010 Version

On January 20, 2010, In Uncategorized, By Chuck Ponzi

 
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Tragedy in Haiti

On January 18, 2010, In Uncategorized, By Chuck Ponzi


Watch CBS News Videos Online

SCREBC has donated all earnings for the past year to relief efforts in Haiti. I recommend you take a serious look at your lives and how you might help others with a little less in yours.

 
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