27 August 2007


Flips and scams blamed in California housing decline
Mon Aug 27, 2007 9:32AM EDT

By Christelyn Karazin

CORONA, Calif (Reuters) - Bhaviesh and Varsha Shah bought their dream home in a new development east of Los Angeles two years ago, planted flowers around an emerald lawn and picked out wicker furniture for sitting outside on cool afternoons.
Today the view from their porch is a street pocked with boarded windows and dead lawns -- homes now repossessed after buyers failed to make mounting mortgage payments.
The Shahs live on a street with 10 large homes of 3,000 square feet or more, four of them now in foreclosure.
Although they are surviving the mortgage meltdown, their dream development -- like many in this arid corner of Southern California known as the Inland Empire -- is an early casualty.
"We're not surprised. We had a feeling it was coming," said Varsha Shah.
They found out which way the wind was blowing about a year ago when several families moved into some of the homes and never bothered to water the grass or pick up beer cans. Unlike the Shahs, they didn't seem to be in Towne Square and its 49 Spanish-style and 1920s-inspired Craftsman homes for the long haul.
The Inland Empire, 50 miles east of Los Angeles, was a latecomer to the housing boom in California as buyers squeezed out of high-price coastal Los Angeles and Orange counties found large homes going up on the region's vast supply of vacant land.
And it has been one of the most hard hit by foreclosures.
The Inland Empire's combined Riverside and San Bernardino counties reported the fourth highest number of foreclosure filings of any of the nation's 229 largest metro areas in July, behind Atlanta, Los Angeles and Detroit, according to market tracker RealtyTrac.
Survivors of Towne Square find themselves not only with unsightly, empty properties next door, but also with home values plummeting amid the fire sales on foreclosed homes.
So selling and moving to a better neighborhood is not much of an option because many owe more on their mortgage than they would get for the sale -- what the industry calls "upside down."
And real estate agents note that California's market is likely to rebound as it has in the past, underpinned by high population growth.
"Everything goes in cycles. I think we'll be OK if people don't panic," said Patricia Patton, who has been a real estate agent in the area for over 14 years.
Joe and Mary Gordon don't feel much like sticking around, but have little choice.
They bought an approximately 4,000 square-foot (371 sq meter) home on the street behind the Shahs for $741,000, thinking it would be their last home after moving from Orange County, just west of the Inland Empire.
Two homes on the Gordon's street are going through foreclosure and one of them, comparable in size to theirs, is being offered by the bank for $550,000.
The Gordons fear they will lose hundreds of thousands of dollars in equity. "We have no recourse. We'll have to live here eight to ten years before we get our equity back," said Joe.
Bob Taylor, president of the development's homeowners association, said his family thought about moving, but with the installation of a pool and landscaping, they didn't think they would break even after the market turned south.
The frustrated families stuck in Towne Square are critical of the developer Centex Corp. for failing to exclude investors and scammers who bought 14 to 17 of the 49 homes in what was billed as a "family centered executive development."
"Centex has discouraged speculative investments in our primary-home neighborhoods," Eric Bruner, Centex's director of public relations, told Reuters in response to homeowners' complaints.
The families believe the investors were not just people flipping houses for a quick profit, but also a group of scammers taking advantage of lax lending rules that permitted 100 percent financing with no money down and minimal documentation.
For the Gordons and Taylors, these are the people who ruined the neighborhood by using their homes like revolving night clubs, cramming cars into the cul de sacs and threatening neighbors who complained.
The Corona Police Department said it was called about neighborhood disturbances on Towne Square's Summerset St., where the Shahs live, 35 times in 2006. The street that runs parallel, Springfield Circle received 28 complaints.
"How did we feel? Sick!" Joe Gordon yelled, throwing up his hands. "We'd go to work, then just come in the house and hide. You never knew what was going to happen."
Now, many of the investors have disappeared and their homes have gone into foreclosure.
Despite the bad days spent in Towne Square, Bob Taylor said his family of six is here to stay and even optimistic that nice, responsible neighbors will eventually move into the foreclosed homes.
"After what we've been through for the past two years -- short of Charlie Manson moving in -- it can't be any worse," he said, referring to the famous American murderer.

25 August 2007

On Beauty...

From the rattled brain of the Associate Editor of the Fairbank Report: We’ve been advised to be less cantankerous and more
hip (?) and thus to increase our coverage of the lighter fare of life. Here goes…

Plastic Beauty


Natural Beauty

I will gladly take either ... or better yet, BOTH!

Madam President?!

Photo source: The Drudge Report (www.drudgereport.com)

20 August 2007

Peasant Slut Defies Paper Tiger for One Year: Finally Deported

This insignificant peasant slut has defied the Great Paper Tiger for one year before the pusillanimous American regime even dared to deport her for entering the country illegally. The government was so weak that this illiterate peasant actually strutted around the country and gave the birdie to the Fed for a full year before the government could summon enough courage to act on Sunday (August 19) to deport this illegal alien-criminal.

Now illegal aliens are threatening to burn down Los Angeles unless she is “returned to her people.” We say, better to let LA burn than to succumb to foreign subversives.

15 August 2007

Stock Market Meltdown!

By J. Fairbank

Chris Thornberg of UCLA and others have presaged the collapse of the housing market as far back as the boom boom days of 2002. Perhaps, they were wrong in when the collapse would take place. (Staff at the Fairbank Group correctly predicted in 2004 that 2006 would be the year, and it was!) But their logic, housing price increases at rates not supportable by prevailing salary and wage increases, was indisputable.

Yet, people who had no business buying condos and houses, recklessly bought by playing with OPM (Other People's Money), and now the proverbial chickens have just begun to come home to roost. Although Fairbank Report analysts have projected up to 20% housing price downturn, I project a larger decline because people, as late as 2005, were buying properties at 10 to 15 times their annual household income! And the Greenspan Federal Reserve Bank sat idly by, refusing to crack down on dangerous subprime (read junk) loans!

07 August 2007

Red China Threatens to Sink Fat and Lazy America

Fat and lazy, Americans have come to rely on cheap Chinese imports and cheap Mexican labour. American sloth and debauchery have descended to the point where in merely twenty years of open trade with the United States, Red China has such a commanding current account surplus with the USA that this once scrawny country of toothpick-skinny men is now threatening to torpedo the American economy by dumping US bonds.

Sloth and debauchery led to the demise of the Roman Empire. And the same sins have apparently led to the decline of the short-lived American Empire. Rome’s might lasted 1,000 years; America’s might lasted two generations. How pathetic.

China threatens 'nuclear option' of dollar sales

By Ambrose Evans-Pritchard, The Telegraph (UK)

Last Updated: 1:48am BST 08/08/2007

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.

"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.

He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.

"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.

"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily.

The threats play into the presidential electoral campaign of Hillary Clinton, who has called for restrictive legislation to prevent America being "held hostage to economic decicions being made in Beijing, Shanghai, or Tokyo".

She said foreign control over 44pc of the US national debt had left America acutely vulnerable.

Simon Derrick, a currency strategist at the Bank of New York Mellon, said the comments were a message to the US Senate as Capitol Hill prepares legislation for the Autumn session.

"The words are alarming and unambiguous. This carries a clear political threat and could have very serious consequences at a time when the credit markets are already afraid of contagion from the subprime troubles," he said.

A bill drafted by a group of US senators, and backed by the Senate Finance Committee, calls for trade tariffs against Chinese goods as retaliation for alleged currency manipulation.

The yuan has appreciated 9pc against the dollar over the last two years under a crawling peg but it has failed to halt the rise of China's trade surplus, which reached $26.9bn in June.

Henry Paulson, the US Tresury Secretary, said any such sanctions would undermine American authority and "could trigger a global cycle of protectionist legislation".

Mr Paulson is a China expert from his days as head of Goldman Sachs. He has opted for a softer form of diplomacy, but appeared to win few concession from Beijing on a unscheduled trip to China last week aimed at calming the waters.

02 August 2007

Associate Editor's Pick

Editor's notes: The FR has featured several original and controversial essays on the topic of Asian men in contemporary Western society. Search the archives for them.

They're hot, they're sexy... they're Asian men

By David Nakamura
First Appeared in Seattle Times. ©2000 Seattle Times

For 29 years, I've lived, day in, day out, with something that was so unfashionable I'm surprised someone didn't try to manufacture it and sell it at Kmart or TJ Maxx. It was something that left me hopelessly lame, uncool, out of it. No matter how hard I tried, I couldn't make it into the "hip" crowd.

My unthinkable and unchangeable flaw? I'm Asian. More specifically, an Asian man.

Thankfully, I'm not alone. About 2 percent of the American population is similarly afflicted. For years we struggled with our predicament, hopeful - but by no means certain - that someday our glaring inadequacy would cease to be a flaw. Someday, we prayed, it would be cool to be like us.

Well, people, I'm here to tell you that General Tsao's Chicken has at long last come home to roost. Check out the evidence. Look at the faces on the billboards. The Wall Street Journal reports in a front-page story that Asian males are "becoming increasingly popular with advertisers." The Dallas Morning News says there's been "a surge in Asian male awareness" in the ultra-macho worlds of sports, cars, fraternities.

And, the coup de grace: a two-page spread in the Feb. 21 issue of Newsweek titled, "Why Asian Guys Are on a Roll."

Such articles lay bare the disturbing facts, how we had been seen as inscrutable by nature, bookish in appearance, small in stature, and how that added up to the painful truth: We weren't the masculine ideal. At the same time, our Asian sisters enjoyed a free pass on the benefits of a decidedly different reputation: exotically beautiful and culturally mysterious.

But now, Asian men are all the rage, the articles said. We have Asian actors and action heroes such as Chow Yun Fat, Rick Yune and Jet Li. We're on the fashion runways in chic cities. We make more money than other racial groups. And, the Newsweek story reported, Asian men are intermarrying other races like never before. (And to think I believed my Asian girlfriend was good enough!)

Newsweek quotes this dialogue between an Asian man and his white babe:

He: Asian men are the next "trophy boyfriends."

She: "It's almost like Asian boyfriends are the fashion accessory of the moment."

After reading that, I was so ebullient that I could have kissed my pocket protector. After all those years of nerdiness, I am finally riding the crest of America's cultural tsunami!

In the interest of full disclosure, I should say I'm only half-Asian: My father's family is Japanese and my mother is descended from Eastern European Jews. But most "ethnics" are only partly so - it's that single-drop-of-blood thing. So let the record show that I'm as down with my roots as any Human homeboy.

And I'm ready to rock. My days of rising at dawn, working 10 hours, hitting the sack early and being an otherwise decent, law-abiding geek are over. I'm gonna be hitting the fly clubs, chowing at the phat restaurants and dating the hotties, kickin' it with my good friends and fellow hipsters, Puff Daddy and Ricky Martin.

Of course, that's assuming those guys can hang with me. Sure, just last year the national media were going gaga over over the Latin invasion of the likes of Martin, Enrique Iglesias and Jennifer Lopez. How they could sing, shake their booties, pout before the cameras. But, hey, a year is a long time. Get with it. The Latino thing is so 15 minutes ago that I suspect it'll soon be roped off, declared a national treasure and placed in the Smithsonian.

Now it's all about Asians, baby, and I, to crib from a certain overexposed Latin lothario, intend to be livin' la vida Tokyo.

My Asian buddy Phil isn't as convinced that this is a good thing. I mean, he's spent a good 28 years dutifully keeping his place in the Asian nerd corner. He attended Harvard, for heaven's sake.

At lunch the other day, he confided, "Doesn't it feel uncomfortable being objectified in this way?"

I was appalled, naturally. From behind my wraparound shades and pulled-down ball cap - I don't want to be mobbed on the street, after all - I patiently explained the New World Order to P-Daddy, which is what I call Phil now.

"P-Daddy, my samurai partner in crime," I said. "You gotta learn to live a little. Stop being so... so... Asian! Or, rather, be more Asian! Feel the power in your weaknesses."

For the sake of P-Daddy and my non-Asian friends, I've put together this tip sheet on how to be cool, Asian-style:

Hair: Preferably black and limp; cut in the shape of your favorite kitchen bowl.

Shirt: Snug; short sleeves preferred.

Pants: Polyester; hemmed 2 inches above the ankle; worn at all times, even when you're playing basketball.

Car: Any make of Toyota or Honda; for those on a budget, Hyundai; for the extra-wild party boys, Mitsubishi Mirage.

Food: Dim sum (except for those icky chicken feet)

Babes: Pamela Anderson-Lee (explain to friends that she added "Lee" to her name because she really is married to a Chinese).

Clubs: Anything karaoke (sing only Canto-Pop songs by your favorite Hong Kong teen idols; fake the lyrics if you haven't mastered your Cantonese).

Catch phrases: "He's my Buddha!" and "Confucius says you ain't nuthin' but a grasshopper." (Translation: You're so inconsequential that even a fifth-century B.C. East Asian philosopher wouldn't bother pondering you.)

I urge everyone to study up. You never know when we Asian men will be reduced to fleeting has-beens. I can see it now: a Newsweek cover story in March 2001: "Why Native American Men Are Livin' Large." Guys with ponytails. Feathered headdresses for the ladies.

Sure, you may think what I'm saying is based on tired, played-out cultural stereotypes that lump individuals into broad groups in ways that can be hurtful and dangerous. But who cares, as long as the stereotype works for you?

Whatever seems lame about your group right now might seem trendy in the blink of a (slanted) eye. After all, I'm Asian, and you know what that means: We're on a roll, the big Buddhas on the block after all these years.

Washington Post Metro reporter David Nakamura is considering changing his byline to his middle name: Akira.

Housing Price Collapse

Fairbank Report editors agree: 10 - 15% price correction by July 2008...