<p>I’m not going to explain why a rich person may want a credit line.</p>
<p>There are always sectors of markets that do better than others. That’s not what I was talking about, was it? Kind of irrelevant to what I was saying, wasn’t it? The fact that there were stocks that were good short sales was irrelevant to what I was saying too.</p>
<p>The fact that bankers acted in their own self interest… most people act in ways that favor their own self interest. I didn’t think that need to be stated. But thanks.</p>
<p>The dollar went up because European economies are having problems of their own. </p>
<p>Well located areas in SF aren’t down very much. </p>
<p>The commercial property business is just starting to have problems.</p>
<p>It’s getting harder to get loans, true? In general, you need to have more equity in the deals, true? Terms aren’t as favorable, true? Rates are actually higher, not lower than they were several months ago. True?</p>
<p>“I work in the financial markets. Just in case you run into one of my posts.”</p>
<p>I’m an engineer but there’s a lot that I don’t know about high-tech. That’s because there is too much going on to follow everything that’s happening everywhere."</p>
<p>Well BCEagle91, to pick up from a post in another thread, there is a lot I don’t know about financial markets. I have made plenty of mistakes too. I’ve made more mistakes in the markets than you will ever make. And I am sure you pick up on a few things I miss. :)</p>
<p>But I traded about several hundred thousand times, maybe more, so…maybe… try not to talk down to me… like I don’t know what is going on. ;)</p>
<p>“I’m not going to explain why a rich person may want a credit line.”</p>
<p>I know lots of people that aren’t rich that do a great job of living within their means that don’t have credit lines. I also have a friend worth nine figures that likes to talk about his 1980s era pickup truck. He has a BMW and a Harley too but he always talks about how to be well-off financially to those that will listen. And it’s all old-time stuff (he’s a real old-timer).</p>
<p>“There are always sectors of markets that do better than others. That’s not what I was talking about, was it? Kind of irrelevant to what I was saying, wasn’t it? The fact that there were stocks that were good short sales was irrelevant to what I was saying too.”</p>
<p>Stock market returns in the 1990s were way out of line with historical returns and these returns became the normal expectations from the market. We are simply seeing a reversion to the mean. No big deal. Unless you bet the farm on 1990s returns as far as the eye can see. People have to go back to working for a living. Instead of paper-trading to an early retirement. What’s bad about that?</p>
<p>My point on the short sales is that markets and economies can recover in surprisingly quick ways.</p>
<p>“The fact that bankers acted in their own self interest… most people act in ways that favor their own self interest. I didn’t think that need to be stated. But thanks.”</p>
<p>I do think that this needs to be stated. Because many people do ask me why bankers and mortgage brokers behaved in the way that they did. And I just give them the simple explanation.</p>
<p>In the past, Corporate America did a better job at taking care of their employees and spreading the wealth around to lower-level employees and shareholders. These days, it seems that top management is out for itself and that employees are commodities. And it’s obvious as to how employees would change their perspectives on their companies given their new status. Perhaps this is a lack of character on the part of executives that has led to the loss of company loyalty by employees. I think that there were many in real estate and the mortgage business that made enough to be set for life. That most blew it on consumerist behavior is somewhat ironic. I do enjoy making a product that gets sold around the world as the basis of my salary - the value equation make a lot more sense to me that a lot of things in the financial services industry.</p>
<p>“But I traded about several hundred thousand times, maybe more, so…maybe… try not to talk down to me… like I don’t know what is going on.”</p>
<p>You’ve made a bunch of pretty inane comments since yesterday. If you acted more like you know what’s going on, then I suspect people wouldn’t think that you don’t.</p>
<p>“You’ve made a bunch of pretty inane comments since yesterday. If you acted more like you know what’s going on, then I suspect people wouldn’t think that you don’t.”</p>
<p>The rates are slightly higher but still very reasonable based on historic rates. Anything under 7% is very good. My first rate was nearly 9% back in the 80’s with 10% down and some points. Sure they are very tight now on underwriting but give them a year. We are coming off an incredible screw-up nearly beyond my comprehension with no underwriting standards at all. I don’t expect such things to turn around in a month. Two years is more likely and we are still in Year 1. </p>
<p>With Iraq apparently on the move towards winding down our huge spending we will have more flex in the system to handle some of the problems at home. Meantime if you have some $$$ there are great buys to be had from real estate to cars to consumer stuff to stocks. Now is the time to get a deal of the decade.</p>
<p>For development, I’m hearing things like Libor +5. Instead of 10% down, it’s 30-50% down. Pretty ugly numbers. Maybe you are seeing better numbers.</p>
<p>I actually wish real estate in the “nicer” areas would drop more. I would love to see prices in SF get crushed so my kids have a shot. Of course, many others would also like to see prices go down more in those areas so it may not happen. Next year the option arms start coming due in a big way. Those are the loans the wealthier used so we’ll see.</p>
<p>There are people getting into trouble in places like southern Marin, but there is also large demand to live in those areas. I’d like to see prices drop there too. Right now inventory is building but prices haven’t really dropped too much.</p>
<p>It is amazing how financial standards just flew away.
Fannie Mae used 50 to 1 leverage. Looks to me if prices drop across the board by more than 2%, Fannie Mae is underwater. </p>
<p>I guess that is why the treasury and the Fed are working so hard to keep Fannie and the banks afloat. And Raines gets $1 million a year for life.</p>
<p>I could kick myself for buying AIG. What a mess!</p>
<p>The last terms I saw last week were for a 10 year fixed rate, 30 yr amort at about 6.5% for a good quality $20 million industrial property here. That really does not sound too bad to me. It was at 80% LTV. Also we have seen one of the Ibanks getting more active again but really asking lots of questions–like in the pre boom days. For now they got religion.</p>
<p>Now there is a special loan program for you… I sold one of those as a broker. The circumstances were perfect and they guy was happy as could be. So many of those were pushed because of the yield that the broker could rip. Ugly, ugly stuff.</p>
<p>“The last terms I saw last week were for a 10 year fixed rate, 30 yr amort at about 6.5% for a good quality $20 million industrial property here.”</p>
<p>“It is amazing how financial standards just flew away.
Fannie Mae used 50 to 1 leverage. Looks to me if prices drop across the board by more than 2%, Fannie Mae is underwater.”</p>
<p>Since I wrote this I should clarify. The above would only be the case if all of Fannie Mae’s loans were 100% loan to value. and all values dropped 2%. </p>
<p>dstark, why doesn’t your rich friend apply for an equity line loan secured by his house? Then he would be able to deduct a part of the interest expense in the event he borrows money?</p>
<p>“dstark, why doesn’t your rich friend apply for an equity line loan secured by his house? Then he would be able to deduct a part of the interest expense in the event he borrows money?”</p>
<p>Maybe rich is tongue in cheek.</p>
<p>I saw a friend at work and asked him how things are going with three kids in college. He’s paying $100K a year (one is on the five-year plan). He just sold some stock to pay for the fall semester. No big deal. If you’re rich, I’d expect you to have liquid assets at least that of the value of your house. This guy could always just sell the $10 million house, buy a $1 million house and have the “problem” of figuring out what to do with the other $9 million. Unless he’s leveraged and HELOC’d to the hilt.</p>
<p>“dstark, why doesn’t your rich friend apply for an equity line loan secured by his house? Then he would be able to deduct a part of the interest expense in the event he borrows money?”</p>
<p>Sorry. </p>
<p>My friend had the $3 million credit line at a bank. He wasn’t using it. In order to continue the credit line, he was told he had to deposit $1 million in the bank.</p>
<p>I am crying over the tragedies of the wealthy having to cut back. So glad that I don’t have to deal with these dilemmas. I will just continue to debate the value of generic over brand name.</p>
<p>^^ In all fairness to the wealthy, Momof3stars, if they cut back on their luxuries, it reduces job opportunities . Someone has to builld those yachts and pay those realtors and the manufacturers of the high end electronics, the wait staff at the fancy restaurants, the workers at the auto detail shops, etc. :)</p>
<p>Back to the original question, has the recession hurt college advising businesses? Are parents choosing to forego test prep and private college counselling because they can no longer afford it, or because they see the writing on the wall - s or d will attend state u. anyway (due to affordability and intense competition), so why pay for services they won’t need?</p>
<p>The parents that I know with kids heading to college haven’t changed plans. Those that took a budget approach are still using that approach. Those that said that they’d pay for whatever their kid chose are sticking with that plan. Note that our company is doing quite well and that the stock price has done quite well this year - my guess is that the stock price is paying for a lot of college bills.</p>
<p>jym626: I believe you have put me in my place. Actually, my DH owns a body shop and specializes in restoration of antique cars. It is nothing for a car owner to have $30-$40K in one of these cars when they are done (and my DH’s labor rate is about half the national average). Just the other day someone told my DH that he has a 67 Mustang to restore and that he would like to do a 68 as well but that with 2 kids on the way to college he must cut back somehow. Very sad…</p>
Actually, my DH owns a body shop and specializes in restoration of antique cars. It is nothing for a car owner to have $30-$40K in one of these cars when they are done (and my DH’s labor rate is about half the national average). Just the other day someone told my DH that he has a 67 Mustang to restore and that he would like to do a 68 as well but that with 2 kids on the way to college he must cut back somehow. Very sad…</p>