From the Star Ledger:
Here’s what happened to those 100 lots Newark gave away last Valentine’s Day
This time last year, John Errico and Shannon Guy took what they believed would be the first step toward their shared dream.
Newly engaged, the two attorneys spotted news clippings detailing vacant lots in Newark being offered for just $1,000 each as part of a couples-only Valentine’s Day sale. They were among the first to arrive at City Hall that morning, and jumped at the chance to build on a small plot on Garside Street in the city’s North Ward.
“It was an emotional decision,” Errico said. “We wanted our forever home.”
A year later, the purchase that seemed too good to be true has been just that.
…
While construction for the three-family home they envisioned would have required a loan of at least $250,000, properties just up the road from their tract were selling in the high five figures.
…
“We didn’t really drill down into what are the actual financials of it (at first),” Errico said. “It was kind of hard to swallow spending $300,000 or even $350,000 to build a new home, when you can get an older home for $90,000.”Errico and Guy’s story is not unique.
They are among 21 couples (or former couples) who have walked away from the Valentine’s Day properties. Dozens of others have found their own hopes delayed by difficulties securing construction loans.
As of Sunday, only five couples who forked over an initial $500 last Feb. 14 have officially closed, though city officials say another seven are in the pipeline. Eleven others have received approvals to begin construction, but are still pursuing loans.
Allowing for two other properties that had to be pulled back after city officials realized they were zoned for commercial use, that leaves 54 lots.
The owners of those 54 total lots have struggled, officials say, to navigate the financial and governmental channels needed to start building.
The city did not require proof of financing until home designs and site plans were approved, and despite the immediate equity gained through the cheap purchase, most buyers found themselves unable to secure financing to put shovels in the ground.
“We’re still in an economy that’s post-recession, and it’s really hard for the average Joe to get a construction loan,” said Baye Adofo-Wilson, Newark’s deputy mayor for housing and economic development.
…
On Sunday, officials announced a second phase of the sale, which will enlist the Newark Community Economic Development Corporation to guide many buyers as they look to obtain architectural renderings, construction documents and approvals from city boards.In many cases, the lots will be sold to a handful of developers, who will build one and two-family homes for sale back to owners at $179,000-$249,000. The 21 lots already returned to the city will also be sold to a local developer for sale back to the public.
Initial agreements signed with buyers require construction to begin within 18 months of closing on the vacant lots, and owners must live in the property for a minimum of five years once the home is built. Adofo-Wilson said that while a handful of lots are on track to meet the requirements, the city has shifted its focus to encourage construction regardless of pace.
“Our goal is to sell all the city-owned lots that we can sell. We believe that’s true economic development. It doesn’t really make sense for the city to hold these lots,” he said. “We learned from the experience.”
From the time machine:
homeboken says:
February 15, 2015 at 9:15 am
Grim 12 – 80 lots sold, can we bookmark that article and review in 18 months? I am very interested to see how many of the 80 have completed structures on them by the deadline.
Also – I didn’t see in the article and didn’t bother reviewing the detailed documents, but if a home isn’t completed in 18 months, then does the lot revert back to the city?
grim says:
February 15, 2015 at 9:17 am
13 – I wager that half the buyers didn’t even consider the price of construction, and have no way of securing construction financing.
We were clearly too optimistic.
From Patch:
Hoboken Condo Is ‘Most Expensive’ Ever Sold In NJ: Report
Hoboken may be a new record holder… the location of the reported most expensive condo ever sold in New Jersey.
According to the Otteau Valuation Group, a real estate appraisal and valuation company, Liberty Realty’s recent sale of 216 Bloomfield Street Unit A for $3.3 million was the highest ever for a condominium sold in the Garden State.
The condo – dubbed “The Gemini” – closed after 37 days on the market and with multiple offers, a company news release stated on Feb. 6.
The previous record of $3 million was set in 2009 in Cape May County, according to the Otteau Valuation Group.
Recently, that record was tied by another Hoboken sale, which closed in the fourth quarter of 2015 for $3 million.
Paterson next in line for state receivership?
Because using borrowed funds, which were sitting around for 7 years unused, to try to reduce the property tax increase from 7% to 6.1% is totally sustainable and fiscally prudent financial management for a municipality. How is this level of mismanagement even possible? From the Paterson Press:
Paterson to use unused funds to reduce tax impact
City officials plan to use $2.5 million that had been borrowed more than seven years ago but has yet to be spent in an effort to reduce an expected tax hike.
By tapping into the leftover capital fund money, the city expects to set the levy in the 2016 budget at $157.3 million, which would represent a 6.1 percent tax increase compared with the previous year.
A week ago, state officials had said they would cut Paterson’s transition aid if the city sought to set a levy less than $159.8 million – a limit set by New Jersey’s budget cap law. At that level, the city would face a tax increase of more than 7 percent.
Mayor Joey Torres’ staff provided the City Council with the proposed changes in the budget last Thursday night. The council plans to discuss the revisions at its workshop meeting Tuesday night.
Torres said the state’s previous position on the city’s tax levy had been “unfair.” The was able to convince the state to allow it to use the $2.5 million from the capital fund to cut the tax levy during a meeting in Trenton last week, officials said.
…
In one instance, a July 2004 bond ordinance to develop a bikeway and pedestrian walkway raised $250,000, but the money was never spent. It’s unclear why the city did not use the unspent money in previous budgets.
Please tell me the thought process in purchasing a single dwelling in Hoboken for over 3 million dollars. What a ridiculous decision.
This is an understatement. Scalia wrote District of Columbia vs. Heller which overturned the city’s outright ban on civilian handgun ownership.
Obama hates guns and private gun ownership…he is hell bent on enacting gun control. If not through congress or executive order…then through the courts.
I maintain that Scalia was whacked.
“hand gun” to the presidential elections actually…
leftwing says:
February 14, 2016 at 10:31 am
First.
RIP Scalia.
Hand grenade into the Presidential elections…….
Paying 3 million in Hoboken still entitles you to have the suburbs pay to have your kid educated ….redistribution at it’s best .
leftwing….hughesrep et al. I would say clot, but only for his potential nihilistic entertainment value……..
http://www.nytimes.com/2016/02/16/nyregion/at-cornells-hotel-school-an-icy-reception-for-a-planned-merger.html?smprod=nytcore-ipad&smid=nytcore-ipad-share
Screw the lots. Why are you looking for more tax money? Clean the fuc!ing cesspool up! Fuc!ing raise the taxes and push them out to places like the carolinas. Enough with this bs, that location is too valuable to be wasted like this.
“Our goal is to sell all the city-owned lots that we can sell. We believe that’s true economic development. It doesn’t really make sense for the city to hold these lots,” he said. “We learned from the experience.”
Sorry about the language, but enough is enough with these urban money pits.
Taking borrowed money to lower taxes? Got damn the suburbs take it in the rear. My town is being divided over a school budget and these guys are lowering taxes with borrowed money? WTF?
Paterson is a prime location too, raise the taxes to push everyone out and suffer for 10 years, but in 20 years have a thriving city by knocking it all down, lowering the taxes and bringing back people that care about the city they live in. God knows how many lives will be saved by the elimination of the heroine trade(drug trade in general).
Now it’s time I get ripped by the participants of this blog for being brutally honest with a real solution.
“Because using borrowed funds, which were sitting around for 7 years unused, to try to reduce the property tax increase from 7% to 6.1% is totally sustainable and fiscally prudent financial management for a municipality. How is this level of mismanagement even possible? From the Paterson Press:”
At the time those lots were sold to those Valentines they had a negative value. End value of the home that could be built on those lots was less than construction cost.
I bet you this was a diversion. A few prime lots transferred to connected parties. Nobody realizes it in the shuffle.
How can you have a negative property value when you have access to almost every major highway, all types of mass transit, a port, international airport, and within miles of nyc? The inhabitants of that city should be ashamed of themselves. Change your ways and you are sitting on a gold mine. A freaking winning lottery ticket in real estate.
30 year realtor says:
February 16, 2016 at 8:35 am
At the time those lots were sold to those Valentines they had a negative value. End value of the home that could be built on those lots was less than construction cost.
They would have had to add a period of no property taxes for this to make sense. 10 years.
Newark, I worked there 1979-1987…I remember the older managers talking about how Newark recovery could not miss…location, pricing, transportation, etc…they were going to invest in Renaissance Towers development or something..can’t miss…..
9. Chi. Sad. Knew many hotelies. Their idiosyncracies and passion will be diluted and missed going forward.
14. Grim. LOL, never thought of that but odds on favorite.
14.
As the sinister Rahm Emanuel famously said: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things you think you could not do before.”
http://www.zerohedge.com/news/2014-08-15/order-out-chaos-doctrine-runs-world
Go Wall St Journal, little Hillary email search engine.
http://graphics.wsj.com/hillary-clinton-email-documents/#
Parent of a Cornell hotelie. The school served her well.
2nd and Bloomfiled and not even the entire building? I lived over there for a few years between the charming homeless shelter and the McDonalds crowd they will be busy calling the cops because someone is always blocking their driveway. MILYUM KIM was the buyer? Daddy’s money?
Think they are up to 30 now.
Iceland convicts bad bankers and says other nations can act
Iceland’s Supreme Court has upheld convictions of market manipulation for four former executives of the failed Kaupthing bank in a landmark case that the country’s special prosecutor said showed it was possible to crack down on fraudulent bankers.
Hreidar Mar Sigurdsson, Kaupthing’s former chief executive, former chairman Sigurdur Einarsson, former CEO of Kaupthing Luxembourg Magnus Gudmundsson, and Olafur Olafsson, the bank’s second largest shareholder at the time, were all sentenced on Thursday to between four and five and a half years.
http://www.cnbc.com/2015/02/12/iceland-convicts-bad-bankers-and-says-other-nations-can-act.html
I might have to check out their platform
http://www.nydailynews.com/news/politics/hookers-hillary-clinton-prepping-nevada-caucus-article-1.2532226
Obama’s golden boy Eric Holder didn’t actually want to prosecute any bankers.
Hundreds of bad bankers were sent to prison during the S&L crisis – who was responsible for that, republicans or democrats?
Was thinking a mobile home may be an option on those lots but even that has it’s issues. I guess the best option is to buy 3 or 4 adjacent lots and make it a parking lot and wait it out…maybe check back every 10 years.
An Affordable (Yet High Cost) Housing Option
Affordability and convenience make manufactured homes a popular housing option. The average sales price of a new manufactured home in 2013 was $64,000 (excluding land costs) compared to an average of $269,000 for a newly constructed single family home.[iii] [iv] While the purchase price of manufactured homes can be relatively affordable, financing them is not. The majority of manufactured homes are still financed with personal property, or “chattel,” loans.[v] With shorter terms and higher interest rates, personal property loans are generally less beneficial for the consumer than conventional mortgage financing. Roughly 60 percent of manufactured home loans in 2013 were classified as “high cost” (having a substantially high interest rate) which is more than eight times the level of high cost lending for newly constructed single family structures.[vi] Manufactured homes are typically sold at retail sales centers where salespersons or “dealers” receive commissions, often exacerbating these finance issues. In some cases, dealers resort to high-pressure sales tactics, trapping consumers into unaffordable loans.[vii]
A shining example for the rest of the world. Based on this, Iceland might be the least corrupt place on earth. Who says utopias don’t exist? Beautiful women too.
Love the line by the prosecutor….”showed it was possible to crack down on fraudulent bankers”. As if it was something not possible?
FKA 2010 Buyer says:
February 16, 2016 at 10:08 am
Think they are up to 30 now.
Iceland convicts bad bankers and says other nations can act
Iceland’s Supreme Court has upheld convictions of market manipulation for four former executives of the failed Kaupthing bank in a landmark case that the country’s special prosecutor said showed it was possible to crack down on fraudulent bankers.
Hreidar Mar Sigurdsson, Kaupthing’s former chief executive, former chairman Sigurdur Einarsson, former CEO of Kaupthing Luxembourg Magnus Gudmundsson, and Olafur Olafsson, the bank’s second largest shareholder at the time, were all sentenced on Thursday to between four and five and a half years.
http://www.cnbc.com/2015/02/12/iceland-convicts-bad-bankers-and-says-other-nations-can-act.html
23.
So many words in that article and so little said. Would really like to know the particulars of the prosecution and convictions. Other than a broad fraud and market manipulation mention (and I’m not even sure those charges relate to the bankers highlighted in the article) it really says nothing.
I thought Iceland’s issue was one of getting stuffed with really bad paper that was misrepresented to them. If so, would seem charges would be a bit different, unless they are arguing the Icelandic bankers knew the paper was bad?
Great graphic that represents my beliefs. No problem with the rich, just the extortionists of our system from top to bottom.
https://pbs.twimg.com/media/Ca9dgbFUEAA_yKl.png
I’m not a lawyer nor did I stay at a Holiday Inn last night, but I think its called prosecutorial discretion.
Are there any prosecutors with a hard on against bankers? Or do bankers have more friends that can make this issue disappear. And when you have both sides already on the same page, then nothing really happens.
Iceland bankers were a bunch of idiots. Rememeber the day trading nonsense that went on during the dot com boom? Imagine if all those people actually became bankers.
19- This is pretty spot on. Rothchilds built their banking empire like this.
“The world appears divided and chaotic exactly because it has been MADE that way by a select few in the globalist establishment. In fact, if you were to name any war in the past 100 years, any competent alternative analyst would easily produce undeniable evidence of the involvement of international banks and think tanks pulling strings on both sides.”
Im thinking the only way these vacant lots become affordable is to do some sort of used Conex box designed home. At 200 sf a box you would need 10 to 15 boxes costing $2,500 each. Ahh crap someone get me a calculator I just got a fraction as an answer while doing the math in my head..
.
I would believe that shipping container houses cost more money to build than stick frame construction, given local building codes.
Grim…props are deserved on your Newark lot sale forecast.
Had a fun morning at the multi. A few sparks shot out of a ceiling fan last night (tenants didn’t tell me about it). This morning, when the same tenants went to put the fan on they claimed a fireball and a shower of sparks shot down from the ceiling and still smelled burning. I told them to call the fire department. Fire department arrived at the same time I did. No smoke, almost no sign of any damage nor was there even a burning smell. We did pull down the fan and noticed the insulation had completely burned off the white wire both coming from the ceiling and to the wire attached to the fan. So a run-of-the-mill short occurred. This is not than uncommon with 90 year-old wires. The rubber wire insulation becomes brittle and dry and I am guessing that the wobble of the fan didn’t help. Looks like the bare wire hit the metal hanging bracket. Would have loved to see the video on the supposed fireball.
Now is the time to bring Chesimard back to New Jersey White lives matter
http://finance.yahoo.com/news/us-cuba-sign-deal-commercial-flights-154943370–finance.html
re # 24 – “shipping container house”
Would it be bullet proof?
Answer, here skip to time 3:41
https://www.youtube.com/watch?v=NP0_A65eJWg
32. Pumps, know your history. Part of going to war historically has been the ability to finance it, and sovereign states have absolutely used private institutions (Warburgs, Rothschild, etc) to borrow to fund their wars.
Sorry dude, you’re “gotcha” is simple world history.
34 grim – Really? Shipping container house cant be more $150,000? That’s pretty generous. The article stated owners were looking at twice that. As for the codes this would need to be a have some buy in from the city to make this work.
Quick Google should this article last year of container housing proposed in Newark. but the cost was $225k for a 3 story home.
http://www.nj.com/essex/index.ssf/2015/06/shipping_container_newark.html
my bad the cost was $225k per condo unit.
Bad Tax Policy Distorts Efficient Capital Allocation
Apple announces a multi-billion dollar domestic bond issue to fund share buybacks since it can’t access it capital overseas.
The US company with the largest cash balance of any corporate ($200 BILLION) is borrowing money because the US government is a pig at the trough and won’t let the money back into the US without additional tax. Meanwhile, the US taxpayer will subsidize this unneeded debt through interest deductions.
Pumpkonomics! Just brilliant.
In case Grim did not see yet:
Cocktails Sip Away at Beer’s Market Share
Liquor industry makes remarkable comeback, helped by TV ads, fickle young drinkers
http://www.wsj.com/articles/cocktails-sip-away-at-beers-market-share-1455585240
The quote was from zero hedge, I was just pointing out that they are pretty spot on. If someone had the ability to profit majorly from war, you are telling me human nature won’t take advantage?
The bigger question based on your assumption is who has the power? The govt going to war, or the institution financing it? Follow the money trail and you will find the hand of power, the puppet master.
leftwing says:
February 16, 2016 at 12:38 pm
32. Pumps, know your history. Part of going to war historically has been the ability to finance it, and sovereign states have absolutely used private institutions (Warburgs, Rothschild, etc) to borrow to fund their wars.
Sorry dude, you’re “gotcha” is simple world history.
I call bs on apple. They aren’t into real growth anymore if they are buying back stock instead of dumping it into r&d. But yes, blame the tax policy. They don’t have balls to risk the capital, right? So they aren’t even practicing capitalism, they are now holding back advances in technology by buying at competitive technology and bullying it’s smaller competition with its sheer size and capital.
leftwing says:
February 16, 2016 at 12:44 pm
Bad Tax Policy Distorts Efficient Capital Allocation
Apple announces a multi-billion dollar domestic bond issue to fund share buybacks since it can’t access it capital overseas.
The US company with the largest cash balance of any corporate ($200 BILLION) is borrowing money because the US government is a pig at the trough and won’t let the money back into the US without additional tax. Meanwhile, the US taxpayer will subsidize this unneeded debt through interest deductions.
Pumpkonomics! Just brilliant.
*buying out
43- Google, facebook, etc…doing the same crap. Thank god you have tesla trying to push these guys.
Grim, my WSJ link is in mod..
Man, if I ever get enough money, I’m going to go on an advertising spree in the urban abyss’s of nj. Going to con them into moving to other areas like the carolinas and florida. Tell them it’s so much warmer and that everything is cheaper. Ahh, to dream.
Would say park an RV on the lot but who knew RVs costs so much.
This one is pretty sweet.
http://www.rvtrader.com/listing/2016-Renegade-Explorer-115571320
47, poor….not stupid. Benefits are much better in liberal high tax places like NJ.
I know. Create a super pac to donate to the politicians in the south. Message will be that it’s all about helping the poor, need to increase the benefits.
jcer says:
February 16, 2016 at 1:19 pm
47, poor….not stupid. Benefits are much better in liberal high tax places like NJ.
During the housing bubble, lots of urban folk were conned into moving to the Poconos. Those new developments only sprung up due to the ease of lending. The builders/developers knew they would default. I’m not sure where I read it, but it was in their business plan. Many of those homes sold three times before the bubble burst.
Rock ‘N Roll (nom Edition):
Eagles of Death Metal frontman blames gun control for Paris massacre
By Yaron Steinbuch
Eagles of Death metal frontman Jesse Hughes claims the massacre at the Bataclan theater– where 90 people were slaughtered during his band’s performance — may have been averted had audience members been armed.
Hughes, 43, called for everyone to have guns as his California rock band returned to the City of Light to perform its first full concert since the terrorist attacks, the mirror.co.uk reported.
The group planned to perform to a full house at the Olympia hall in a concert for survivors of the Nov. 13 massacre by ISIS fanatics, who killed 130 people across the city.
The musician made the controversial comments to French TV channel iTele on Monday.
“Did your French gun control stop a single f—ing person from dying at the Bataclan?” he said tearfully. “And if anyone can answer yes, I’d like to hear it, because I don’t think so.”
He said he believes everyone should be armed “until nobody has guns.”
“Because I don’t ever want to see anything like this ever happen again and I want everyone to have the best chance to live and I saw people die that maybe could have lived,” he said.
Hughes said he felt a “sacred” responsibility to finish the show after receiving an “outpouring of support” after the massacre, which also left 350 wounded.
The Bataclan will reopen soon after being shuttered because of the rampage.
“I haven’t had any nightmares and I’ve slept fine but when I’m awake is when I see things that are nightmares,” Hughes added.
Imagine if these urban area became valuable. The amount of tax money produced would make nj one of the lowest taxed states in the country. How do we get through to these individuals the message that they too can have the American dream if they just started believing in themselves and their neighborhoods. Teach them that the only people holding them back are themselves and their bad choices. It doesn’t have to be this way. There has to be a way to get through to these individuals about the value of hard work and the rewards it brings.
here is an unrelated and shocking Cornell story……
http://www.ithacajournal.com/story/news/local/2016/02/08/cornell-president-diagnosed-colon-cancer/80009940/
chicagofinance says:
February 16, 2016 at 8:27 am
leftwing….hughesrep et al. I would say clot, but only for his potential nihilistic entertainment value……..
http://www.nytimes.com/2016/02/16/nyregion/at-cornells-hotel-school-an-icy-reception-for-a-planned-merger.html?smprod=nytcore-ipad&smid=nytcore-ipad-share
Re: Apple borrowing money because of no access to foreign Money
Even if they have access to the money in the US they will still borrow money
1.They can make more money from the $200b investing it than spending it
2.Borrowed money is tax deductible,low interest rates and bond payments is extended in long term
3.Companies have less risk using borrowed money than using their own cash
I agree,foreign earnings should not be taxed as earned in the US
I had a friend that went to East Stroudsburg University starting in 1999. Man, the change in that area from the time he started to the time he graduated was insane. Talking drive-by shootings his senior year. That area was a small town feel his freshman year, but by the end, it felt like the ghetto in the woods. Amazing how these people destroy whatever area they touch.
Libturd supporting the Canklephate says:
February 16, 2016 at 1:29 pm
During the housing bubble, lots of urban folk were conned into moving to the Poconos. Those new developments only sprung up due to the ease of lending. The builders/developers knew they would default. I’m not sure where I read it, but it was in their business plan. Many of those homes sold three times before the bubble burst.
“So, what has the margin of divide become between the top 1 percent and the other 99 percent?
In New Jersey, if you pull in more $539,000 per year you are part of the top 1 percent. The average income however for the group was a lot higher, $1,546,481, in 2012, according to the report that analyzed some of the most recent data from the Internal Revenue Service.
In that same year, the bottom 99 percent made $57,299 on average in the Garden State, which was one of the largest gaps of inequality in 2012. Across the country, the top 1 percent earned on average 28.7 times more that what someone in the bottom 99 percent made.”
http://www.nj.com/news/index.ssf/2016/02/if_you_make_this_much_money_in_nj_you_are_part_of.html#incart_river_home
“As Gov. Chris Christie returns to New Jersey he faces a tall task. He has to convince the people he left behind in order to pursue his presidential dream that he really has their best interests at heart.
His first test will be at today’s budget address, where he is sure to face a skeptical audience. And we are right to be skeptical, because if we’ve learned one thing about the governor over the last seven years, it’s that, campaign slogans aside, he’s prone to telling it like it isn’t.
No doubt, he’ll focus quite a bit on the pension crisis that he’s helped turn into one of the worst in the nation. We expect that he’ll point fingers, lay blame and even try to portray himself as a pension savior in hopes of keeping people from remembering his actual record on pensions. But New Jersey deserves the truth. ”
http://www.nj.com/opinion/index.ssf/2016/02/njea_we_are_done_with_gov_christies_blame_game_on.html#incart_river_home_pop
Def trying to destroy the pension system by acting like he is trying to save it. Pathetic.
“Those failures are significant. Just last month, Moody’s Investors Service reported that Christie’s 2014 pension contribution was, as a percentage of the full amount required, the lowest in the United States. The same is likely to be true of his 2015 payment. Somehow, 49 other governors managed to do better than Gov. Christie. His dismal 50th place finish is a big part of the reason that Moody’s and other credit rating agencies have punished New Jersey with record nine credit downgrades under his failed leadership. They don’t listen to what he says. They grade him on what he does. And New Jersey voters should do the same.”
[25] grim
“Hundreds of bad bankers were sent to prison during the S&L crisis – who was responsible for that, republicans or democrats?”
DoJ under both the Bush and Clinton administrations prosecuted cases. These took an incredibly long time. In fact, FIRREA, which was passed early in Bush’s term, intentionally had a lengthy statute of limitations in order to let DoJ bring more prosecutions after normal SOLs had run out, and often prosecutors brought new charges under FIRREA for acts that predated it. Naturally, this resulted in much litigation over the reach of the statute.
Prosecutions started to decline during Clinton’s second term as FIRREA’s SOL ran out, and by the time W took office, the statutes of limitations had long since run out and most prosecutions attributable to the S&L crisis were resolved.
[52] chifi
“he believes everyone should be armed “until nobody has guns.”
That makes no sense. It’s either an utterly nonsensical statement, a malapropism on his part, or he was misquoted.
Penn Hills.
https://youtu.be/XgTSGzZ_nNI
I drove by the once legendary Penn Hills a few weeks ago…it is now completely taged with graffiti.
“There has to be a way to get through to these individuals about the value of hard work and the rewards it brings.”
There is a way. Stop rewarding the opposite of hard work.
Still don’t think money isn’t leaving the state our 1% is now at 539K that was down from 1,500,000 in 2012 …http://www.nj.com/news/index.ssf/2016/02/if_you_make_this_much_money_in_nj_you_are_part_of.html#incart_river_home
Dentss,
I think you are mixing the breakpoint with the average of all those above the breakpoint.
Chi (9)-
I hear Cornell hotel skool is gonna start training weed sommeliers.
“leftwing….hughesrep et al. I would say clot, but only for his potential nihilistic entertainment value……..”
http://www.nytimes.com/2016/02/16/nyregion/at-cornells-hotel-school-an-icy-reception-for-a-planned-merger.html?smprod=nytcore-ipad&smid=nytcore-ipad-share
Leftwing (18)-
‘Idiosyncratic’ are the skateboard tweakers that hang out on the Commons. Spent most of the day today watching them burrow into storefronts like rodents.
“9. Chi. Sad. Knew many hotelies. Their idiosyncracies and passion will be diluted and missed going forward.”
Unbelievable how things change over time. Thanks for the share.
D-FENS says:
February 16, 2016 at 2:53 pm
I drove by the once legendary Penn Hills a few weeks ago…it is now completely taged with graffiti.
[60] redux
Further, it wasn’t just bankers who were prosecuted. Often it was borrowers, sometimes in collusion with bankers, sometimes not. US v Taliaferro is illustrative of the sort of borrower prosecuted and the argument over statutes of limitation.
Yes, 1.5 million is what the avg 1%er made in nj in 2012. A lot of money being made out there in jersey.
Ragnar says:
February 16, 2016 at 4:25 pm
Dentss,
I think you are mixing the breakpoint with the average of all those above the breakpoint.
That’s the way it should be. You def know your stuff on this subject.
Captain Nom Deplume of the Adventure Men. says:
February 16, 2016 at 5:58 pm
[60] redux
Further, it wasn’t just bankers who were prosecuted. Often it was borrowers, sometimes in collusion with bankers, sometimes not. US v Taliaferro is illustrative of the sort of borrower prosecuted and the argument over statutes of limitation.
Sorry, dude, not one statement below makes any sense re: Apple.
“Even if they have access to the money in the US they will still borrow money
1.They can make more money from the $200b investing it than spending it
2.Borrowed money is tax deductible,low interest rates and bond payments is extended in long term
3.Companies have less risk using borrowed money than using their own cash”
Re: Prosecutions
Guys, bankers haven’t been prosecuted for 2008 because there is little that can be prosecuted.
As I’ve stated before there are two major areas of blame for the housing crises, both stupidity, not criminal. They are the borrowers who signed on to obligations they could not pay on the assumption of ever rising home values, and the rating agencies whose fiduciary duty was to see the aggregation of these loans were, in fact, not credit worthy to the levels they stated.
Bankers were intermediaries. Prosecuting them would be equivalent to prosecuting the real estate brokers used by buyers and sellers in the 2000s.
The difference with the S&L crisis is that those prosecuted, like Keating, actually broke laws.
Massive speculation and stupidity are, so far, not criminal especially if one is not a principal.
This guy posted this to Facebook. He is a retired superintendent. Joseph Chmura. No idea what town, but he has Christie read like a book. He is dead on.
“It is wise to work around the governor. His goal is to dismantle public employee unions, their benefits and pensions. He will do his best to cripple public schools, which he does not believe in. He will not help public education, he only seeks to end it. That is reality.”
“Emily Del Vecchio his pals in the business world will profit greatly from privatized schools. Think of it, the biggest single item in the budget of most towns is the school system. It is a gold mine and they want it all.”
Some of them should have been put in jail too. Morals were thrown out the door in exchange for dollar bills. You had to know this person couldn’t afford the house. IT DOESN’T TAKE ROCKET SCIENCE to know if someone can pay back a 6 figure loan or not. Why you dance around this, is beyond me. They are guilty. They knew these people were taking on loans that they could not pay back. They almost took down the world economy by looking the other way to make money. Their job is to filter out qualifying candidates. Not too difficult.
My generation has missed out on a decade of economic growth because these bastards. People had to live with their parents after college because of these jerkoffs. i have no empathy for these clowns, no idea how you do either, since you are a proponent of the free market economics. They had a job to do and they didn’t do it. It’s as simple as that. The worst part, they walk away completely devoid of any type of punishment. And you wonder why people hate these people.
“Bankers were intermediaries. Prosecuting them would be equivalent to prosecuting the real estate brokers used by buyers and sellers in the 2000s.”
“Their job is to filter out qualifying candidates. Not too difficult.”
Not correct as you imply a fiduciary duty by bankers to third parties. Their duty to find “qualifying candidates” is for the corporation and its shareholders. Not you.
Every bank product has bad loans and losses attached to it. Fact. The “qualifying of candidates” is for this risk/profit curve of the bank. The more risky the loan type (ie the higher the implicit default rate) the higher the pricing. Lower risk loan types get lower pricing.
A high quality corporate loan portfolio has an ROA slightly in excess of 1%. Stated differently, the bank needs to be right on 99 of 100 loans or it becomes insolvent. That is why your typical small business can’t get a commercial bank loan. The default rates associated with these loans is so high (relatively) that the bank cannot price the loan high enough to compensate for the losses.
It would be very easy to smooth out the housing lending boom/bust cycles and speculation. Go back to the 1930s model of only making loans to people who don’t need them. I suspect you would have an issue with that as half of this board would not qualify for a mortgage (how’s that rental feel?) and national homeownership rates would be in 40 percent range.
It’s a tradeoff, risk and reward. That is the fiduciary requirement of the bankers, to get that tradeoff correct for their institutions. They are not the keepers of each and every citizen. That judgment is the responsibility of the citizen.
When banks failed and the FDIC took them over and found out the stated assets on the BS were overstated by 20-40%… how did that happen?
leftwing says:
February 16, 2016 at 6:33 pm
Re: Prosecutions
Guys, bankers haven’t been prosecuted for 2008 because there is little that can be prosecuted.
Would it all have been possible without all the real estate transfers in the secondary mortgage market? … transfers which evaded all of the local, county, state registration processes and fees.
70 year old grandma selling her Bergen county house with nearly zero basis is a one percenter I guess.
lol…yes, and that’s how money is made off real estate.
Grim says:
February 16, 2016 at 9:30 pm
70 year old grandma selling her Bergen county house with nearly zero basis is a one percenter I guess.
53- Just wanted to touch on this a bit further. How about if Ac was to actually clean up and become productive, how much money would that city bring in to the state of nj. Too bad the occupants of the town are holding the area hostage.
Camden too, it’s right across the river from Philly. If it cleaned up, philly money would start to come over and that city would be pumping out money.
Imagine if all the people…..nope, it’s just a john lennon dream. These people enjoy that lifestyle, otherwise they would CHANGE. That’s the damn truth.
Joyce
2008 was undoubtedly a major market dislocation; I’m not arguing it wasn’t.
But, to understand what happened and what the banks’ actual role was, know that banks literally make a lending decision from the bottom up. Their cost of funds (LIBOR), plus risk premium (very simplistically, the default rate for that class of loan), plus overhead equals the interest rate. If the interest rate clears the expected default rate then the loans are made. If not, declined.
No banker has ever made a class of loans expecting 100% repayment from every borrower – it doesn’t happen, there are always defaults. The question is, how much in losses from expected defaults can we absorb in a given class before saying no?
The decision making process is highly regulated, by the government. Treasuries used to have a risk premium of zero (ie, no default cost for a bank to hold them). Banks could invest in them at nearly no cost and no risk. On the other end of the spectrum, overly simplified, if 50% of small businesses fail in five years then a bank would need to charge an 18%+ annual interest rate (annual default rate of 10% + LIBOR + overhead) to make the loan. That’s why there isn’t a real small business loan market; the clearing rate is too high. Understand the US regulatory agencies literally dictate and monitor reserve rates (default premium costs) for banks’ loan portfolios. Minutely.
So…..what was the problem in 2008?
These higher risk real estate loans were granted a much better credit rating when aggregated than they traditionally received. This was a major failing of the credit agencies. The banks took these (erroneous) ratings and lent and sold against them, as they do with all their loans. The Feds looked at these ratings and established bank reserves (the default clearing rate) that were accurate for the rating but much too low for the real risk.
The defaults among the underlying loans were expected; everyone knew they were risky. What wasn’t expected was that the packaged loans with high investment grade ratings were failing at the rate of garbage small business loans.
Why were there no prosecutions? The underlying fault, for lack of a better word, resided with the erroneous ratings. There were at least two issues with prosecuting the credit agencies – was there intent (versus just bad business decisions) by the agencies and market structure (if you blew up the credit agencies there was nothing to replace them). The other issue? In any prosecution it would come out that the government itself implicitly signed off on the banks’ ownership and issuing of these securities. That is, the Feds looked at these (garbage) securities and said, ‘hey, they are the equivalent of IBM bonds, we’re good’.
That’s it. No global conspiracy. No Wm Jennings Bryan cross of silver. Just a really, really bad miss by the agencies that got incorporated into the highly regulated banking system at all levels, including the US government’s regulatory apparatus, that said garbage was gold.
Credit risk is like energy. It can be neither created nor destroyed, only transferred. Everyone involved in the 2008 mess thought they found an alchemy through deal structure to eliminate a substantial amount of credit risk. They didn’t, it was just transferred to different, temporarily invisible parts of the system – from Iceland, to Dusseldorf, to the MBS portfolio of Bear.
Boom.
Again, stupidity and ignorance are not crimes. And even the Obama Justice Dept won’t try to prosecute bankers for their role in non-criminal systemic stupidity when the government’s own agencies implicitly signed off at most of the critical junctures.
That is why no bankers have ended up in jail. No crime. Just a wildly systemic miss on the actual credit risk of an exponentially growing loan class.
g0d, sorry for that long diatribe. i really respect your views and insights, though i would share same. didn’t realize it was that long.
You hit the nail on the head, they were all in bed together. You think the credit agency did that by mistake? They were payed off dude. Money talks, bs walks. Always has, always will. Everyone knew they were selling a house of cards, but played stupid after the collapse.
Apply the same mindset to the madoff scam. Everyone knew that wasn’t possible, but greed took over. Can’t miss out on the enormous gains now, can we?
That’s a real good write up. You know the industry well. I just don’t understand how you think these individuals were just making “stupid mistakes”. Clearly, these are smart individuals that knew this couldn’t last based on the percentages. It’s impossible to have that high of a percentage of good loans available in the market at that price.
“Why were there no prosecutions? The underlying fault, for lack of a better word, resided with the erroneous ratings. There were at least two issues with prosecuting the credit agencies – was there intent (versus just bad business decisions) by the agencies and market structure (if you blew up the credit agencies there was nothing to replace them). The other issue? In any prosecution it would come out that the government itself implicitly signed off on the banks’ ownership and issuing of these securities. That is, the Feds looked at these (garbage) securities and said, ‘hey, they are the equivalent of IBM bonds, we’re good’.”
How many people were killing it during the boom in those industries. Most of the people got to keep every single penny, while the younger generation had to pay the cost of it through the QE program in the form of diluted currency and destroyed demand (aka almost no growth) in the economy.
Only now, are we finally starting to come out of it. That’s why 2020’s will boom.
Leftwing,
Ratings agencies weren’t the whole story. They were stooges providing the ratings cover the bankers and originators wanted. No serious institutional investor in debt just takes a rating without asking questions. They didn’t want to ask questions. They wanted assets with the maximum ability to leverage, and helped guide the agencies in how to create those.
If anyone deserved jail it should have been Barney Frank and legislators and bureaucrats who mandated inherently weak loans be made at Freddie, Fannie, and the big banks.
Wow, this is crazy. I never knew this. I was reading an nj.com article and then checking the comments and came across this. I checked to make sure, and it’s correct.
“You do know that there are ten pension funds in NJ. Three are closed. Three are considered fully funded. Two are almost fully funded by standards and two are not.
Your statement is not based on fact.”
“According to the United States Census Bureau, there were 10 public pension systems in New Jersey as of 2013. Of these, seven were state-level programs, while the remaining three were administered at the local level. As of 2013, membership in New Jersey’s various pension systems totaled 557,704. Of these, 418,062 were active members.[1]”
87- This tells a lot. How are these other funds fine and these two other funds in trouble? It’s telling me someone had their hand in the cookie jar. They were robbed. It’s impossible that 8 out of 10 funds are fine, and then 2 are all of a sudden in trouble? If 8 out of 10 were in trouble, I would agree, nothing to see here. But 8 out of 10 are solvent. Now who stole from it?
[72] pumpkin
I should. I was in banking before law school, I interned for the DoJ Bank Fraud Task Force while in law school, and I worked in the banking reg practice for a BIGLAW firm.
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