Tuesday, July 24, 2007

Letter to Tara; Housing Boondoggle

Dear Tara,

In the rough and tumble politics especially on a small Island sometimes we forget to challenge the ideas and not the person. I must confess, I have done my fair share of bashing on the 3-2 Board of Aldermen votes in which you participated. You know, being a mom, dentists, wonderful person, and Alderman must be a bunch of work and it is easy for us seagulls to sit in our beach chairs and call the potshots. But you are special and I've talked with many people over the last two days and it is time to cut some slack. So I went through my stuff and deleted bad things and then cruised the new SPI Forum and tried to do the same there, including bashing some really unrealistic requests and "facts" over there. Like you, I'm tired of all this hooey and it is time for me to confess and say I'm sorry Tara. I am being totally honest there. What some people are saying is so despicable they should or could be sued, or at least have to go to the time-out box (how about Houston, that'll fix them!). You said not to do this Tara but I'm my own man and I AM man enough to admit my mistakes.

* * *

In a New York Times article today Countrywide Financial (login required for NY Times) said that the housing economy was the worst since the Great Depression, driving the markets down by at least two percent and more to follow after the opening bell tomorrow. The story wouldn't be significant if Countrywide hadn't said that (1) housing prices have gone down, a fact not seen seen since the Depression, and (2) people with good credit were defaulting. Several hedge funds have already tanked because of "sub-prime" lending but when folks with good credit go down, it will drag the economy.

Yours truly predicted this and said that while the South Padre economy seems bullet-proof, signs are that the economy is very sick on our Island, since land flipping it the main trade in stock aside from bars, shops, and restaurants. Several huge deals such as ZOL and AZUL have been mothballed, and new projects on paper or under construction are on tenterhooks no matter what the management companies claim. If it wasn't for the Monterrey money coming in with large doses of cash, this Island would be in the toilet already. That's the buffer that can cushion a softer landing for us.

I can't think of a batter way to control land use on this Island except for the economy to tank for about three years. Oh yeah baby, I was there in the mid-1980 Texas Depression. That one was caused by a bunch of illegal bankers such as Tony Sanchez - the same rube who wants to drill for oil in the Laguna Madre. Just about everyone will agree that Tony was and is a complete and utter asshole and he same reasons for defaults are valid today as then.


mustlovespi said...

Sammie oh Sammie - you are a quandary. Your “pot shot” at the spiforum.org is unfair and misleading; as is your apology.

Asking BOA members to participate on the forum is not unrealistic, nor is it a violation of the Open Meetings Act. The OMA was designed to prevent a group of decision makers from meeting privately, not to prevent those decision makers from publicly expressing their opinion. If your interpretation were correct then politicians could never give a speech, nor correspond with constituents.

“Despicable” is a harsh description of the rhetoric found on the forum. Of course there will always be the ill-conceived comment, but overall the forum is a refreshing and honest exchange of ideas and opinions by a diverse group of participants.

Thank you for always keeping us on our toes - certainly a great place to put your "flip flops".

Sam said...

Glad we could communicate off-line. As I neglected to say, my motivation is mainly one of being sick of the local politics.

I've talked to people who have lived here over 30 years and they say they have never seen it this bad.

It's not just me ...

MLeahy said...

I am sure she has already given the town at least her $1's worth.

Nuff said.........

Speaking of hedge funds in trouble...Look at Fortress Investment group.

This is the one John Edwards worked a few hours for to learn about the poor (that's "rich"). They are in financial trouble.

That is what happens when the "well intentioned" try to help the poor by screwing them with high rates and ARM loans, huh?

I am sure that as concerned about the poor as John Edwards is, he will give the millions he received from them to help salvage all of those loans in default.

It would be the right thing to do.......

Sam said...

Hey Mike, I know you were in real estate but I think there's something up with these folks that flipped mortgages like hamburgers at a 4th of July party. It wasn't the developer, builder, seller, realtor, mortgage agent, or anybody like that. Large companies would buy risk! Hedge markets defined as being high risk, so they snapped up the high risk notes and combined them, bet for and against them, and made a ton of cash.

As you know, the broker house makes "two and twenty" off a hedge fund, which means two percent of the capital and 20 percent of the profits. Some of the fund managers aren't mere millionaires, they are billionaires.

I'm not sure about our Edwards boy here but you don't run a hedge fund on being nice to people. I mean, you pretty much screw everybody and because the capital is not raised on the open market - all are wealthy private investors with chunks of millions of bucks - there is no accountability. I mean come on, the hedge fund manager is taking 20 percent of the winnings off the top before the investor makes a dime, and could actually fall into the red (while the fund manager is STILL getting paid). Hey Mike, ever lose 5 billion in one day? How about in one hour?

I'm not sure where to go with this, other than if you were going to fund low-cost housing for poor people you might use some leveraged cash but not a freaking hedge fund.

That would be insane.