There’s a popular historical legend that goes like this: Once upon a time (for this is how stories of this kind should begin), back in the 19th century, the United States economy was almost completely unregulated and laissez-faire. But then there arose a movement to subject business to regulatory restraint in the interests of workers and consumers, a movement that culminated in the presidencies of Wilson and the two Roosevelts.
This story comes in both left-wing and right-wing versions, depending on whether the government is seen as heroically rescuing the poor and weak from the rapacious clutches of unrestrained corporate power, or as unfairly imposing burdensome socialistic fetters on peaceful and productive enterprise. But both versions agree on the central narrative: a century of laissez-faire, followed by a flurry of anti-business legislation.
Every part of this story is false. To begin with, there never was anything remotely like a period of laissez-faire in American history (at least not if “laissez-faire” means “let the market operate freely” as opposed to “let the rich and powerful help themselves to other people’s property”). The regulatory state was deeply involved from the start, particularly in the banking and currency industries and in the assignment of property titles to land. (Even such land as was not stolen from the natives was seldom appropriated in accordance with any sort of Lockean homesteading principle; instead, vast tracts of unimproved land were simply declared property by barbed wire or legislative fiat.)
The early republic’s two major political factions – to oversimplify a bit, call them the Jeffersonians (as represented by the Democrats) and the Hamiltonians (as represented successively by the Federalists, Whigs, and Republicans) – disagreed primarily about which forms of governmental interference to emphasise. To be sure, both sides paid lip service (and sometimes more than lip service) to the “Principles of ’76,” i.e., the libertarian ideals enshrined in the Declaration of Independence; but each side quickly deviated from those principles when doing so served its economic interest. The Hamiltonians, whose chief base of support was in the urban financial centers of the northeast, called for Read more
Category: Marketing (page 60 of 191)
A few quotes and Gingrichian observations:
1) He called it a “stupid plan” that looks like it had been designed by autocrat Vladimir Putin. He also said it will be a “nightmare” to implement and full of corruption.
2) He said the Paulson Plan would be a “dead loser” on Election Day that will “break against anyone who votes for it.” It will hurt even worse with the 2010 election once Americans see what a drag it is on the economy when implemented.
3) He recently chatted with economic historian Alan Meltzer who advocated doing nothing rather than implanting the Paulson Plan. Meltzer apparently joked to Gingrich that this was about the third time he had seen Wall Street scream “the apocalypse was nigh” only to have the economy keep right on chugging along.
4) Gingrich thinks that if the Paulson Plan isn’t passed by this weekend, it is dead and the White House better have a Plan B, economic-growth package ready. Right now, he still thinks it has an 80 percent chance of passage, partly because of Paulson’s apocalyptic tone that if a bill isn’t passed, “the whole world will end on Tuesday.”
5) He advises McCain to play the maverick and come out against the Paulson Plan. Then it will be the Obama-Bush plan.
Much more here.
Technorati Tags: investment, real estate, real estate marketing
Totally absurd? Think twice:
In the dark of night over the weekend when most people were snoozing, the Treasury dramatically expanded its bailout plan to include buying student loans, car loans, credit card debt and any other “troubled” assets held by banks.
The changes, which were included in draft language that also opened the bailout program to foreign banks with extensive loan operations in the United States, potentially added tens of billions of dollars to the cost of the program.
Although it was a major addition to what was already the nation’s largest-ever bailout, it did not become part of the debate between Democrats and the Treasury over details of the program. A Monday counterproposal by Senate Banking Committee Chairman Christopher J. Dodd included such consumer loans as well as mortgages, just as the Treasury’s draft did Saturday night.
“The costs of the bailout will be significantly higher than originally considered or acknowledged,” said Joshua Rosner, managing director of Graham Fisher & Co., who charged that the Treasury and Federal Reserve have not been “forthright” about the ultimate cost to the public. The plan gives Treasury the discretion to buy the non-mortgage loans and securities in consultation with the Fed.
Conservatives cited the move as a sign that the massive plan to take over bad mortgage debt already is opening the door to further government bailouts.
“Such a large takeover by the government will surely be accompanied by adverse, unintended consequences,” said Pat Toomey, president of the Club for Growth, a conservative advocacy group. “Already, other companies and industries are lining up at government’s door asking for their own bailout.”
In my column for this week’s Republic, I argue that buyers should not even consider bidding on short sales: Too much hassle to catch a falling knife. In the same respect, in this climate, I can’t see any reason for sellers to participate in the short sale process — except, arguably, to extend the amount of time they remain in the home without making any payments.
Capitalism rewards thrift, zeal, planning, self-reliance. Socialism in all its many flavors rewards theft — so long as there is anything left to Read more
Things fall apart: Kevin Hassett at Bloomberg.com is getting death threats over this news analysis:
The financial crisis of the past year has provided a number of surprising twists and turns, and from Bear Stearns Cos. to American International Group Inc., ambiguity has been a big part of the story.
Why did Bear Stearns fail, and how does that relate to AIG? It all seems so complex.
But really, it isn’t. Enough cards on this table have been turned over that the story is now clear. The economic history books will describe this episode in simple and understandable terms: Fannie Mae and Freddie Mac exploded, and many bystanders were injured in the blast, some fatally.
Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street’s efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.
In the times that Fannie and Freddie couldn’t make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.
The problem was that the trillions of dollars in play were only low-risk investments if real estate prices continued to rise. Once they began to fall, the entire house of cards came down with them.
Take away Fannie and Freddie, or regulate them more wisely, and it’s hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.
Technorati Tags: investment, real estate, real estate marketing
Two questions for my colleagues in real estate!
#1: How much information about yourself do you share with prospective clients? I have to ask only because Redfin has lately been working with clients who want us to publish detailed statistics on each agent, and have wondered how far we should go. Today, we publish each transaction and, if the client has responded to our survey, the agent’s rating on that transaction.
But especially in our bulletin boards — why doesn’t Bloodhound have online discussions (it could be a great consumer resource)? — folks ask detailed questions about our business model. They want to make sure our agents aren’t too busy, our houses sell for a good price, our files are locked, our clients are happy, our lawyers are idle, our — dozens of questions! The questions have been pretty good so we have tried to answer them all, but I wonder sometimes if we’re setting a precedent that will be hard to keep up.
As the general counsel at my last job used to say in answer to almost any question (Am I going to get fired? or where’s the bathroom?): “Answering that question now would obligate me to answer it in the future…” So, when someone unknown to you starts asking plenty of good questions, where do you draw the line?
#2: how do you protect the safety of an agent visiting a prospective client in a home the client wants to sell? We had our annual company meeting Friday, and this was one question we had to defer until we could consult others. Safety has always been a concern in real estate, but since prospective clients only communicate with us online before asking for an in-home consultation, it seems like the usual precautions may not be enough.
Any help would be much appreciated!
This is my column for this week from the Arizona Republic (permanent link).
This endless election season may give the real estate market time to self-correct before new legislation can make things worse
Looking for a silver lining amidst the black clouds of financial news? Here’s one: The fact that we’re in the middle of an election campaign gives us at least a fighting chance of solving our own problems without more government interference in the real estate market.
Everything that’s happened so far has been a triumph for the government approach to what should be free markets. Since the 1930s, the Federal government has been guaranteeing home loans. That made it easier for Americans to buy homes, but it dulled that flinty due diligence we expect in bankers.
Our tax laws favor homeownership with deductions, credits, capital gains exclusions and favorable loan terms. It’s nice to save on taxes, but these incentives induce us to own homes where we might otherwise do something else with our money.
In the recent past, the Federal government decided everyone should own a home, no matter what. After 9/11, the Federal Reserve Bank reduced the cost of money to almost nothing. Hundreds of different arms of government at all levels gave away financial incentives to homeownership. And the U.S. Treasury seemed to hint that American mortgage-backed securities were as safe as houses.
This has turned out to have unhappy consequences. That old-style flinty banker could never conceive of houses losing even 20% of their value, where the Phoenix market has given back twice that much since the market peaked.
Even so, the sky has not fallen. Wealth is not dollars, wealth is the productive power of the American economy. The majority of Americans still have significant equity in their homes, with many of them being owned outright.
What’s happened is that lenders and their financiers and, unfortunately, the American taxpayer, have taken a hit to the wallet. If the Federal government can restrain itself from overreacting, we’ll dig ourselves out in due course. And that’s why we’re blessed by this election: It will be at a least a year before the Feds Read more
One:
If we go back to 20 percent down payments, the market will be more stable. I’m sure that in a free market we would see 20 percent down payments. Barney Frank is the only person I can think of who still wants to lend with little or no money down. He’s welcome to do it, but I dare him to use his own money instead of ours. –Arnold Kling, EconLog, via Cafe Hayek
Two, Donald Luskin at Poor and Stupid:
I’m quoted extensively in Debra Saunders’ column in today’s San Francisco Examiner.
On the campaign trail Wednesday, Obama bemoaned “the most serious financial crisis in generations.” He said the exact same words the day before…
“The most serious financial crisis in generations?”
Donald Luskin, a chief investment officer with the Menlo Park investment research firm TrendMacrolytics and an economic adviser to McCain – who tells me he has never talked to McCain – remarked that if Obama “had a little bit more experience,” he would “put these things in more context.” Luskin has lived through five or six recessions, and “this ain’t one.”
It isn’t a recession because the U.S. economy has grown in both of the last two quarters. Read: It is not receding. And while Luskin sees the unemployment rate as “a little high,” it is “not as high as it typically is in a recession.” Yes, Luskin is concerned about inflation, now at 5.4 percent. The drop in oil prices may help…
Luskin questioned what has happened to politics, when a candidate “must pretend this is a recession or you’re seen as hard-hearted.” And: “What does it say when we can’t be nuanced? And we can’t say, ‘Look, we’re in a little bit of a slowdown, but the fundamentals are strong’?”
The answer, of course, is that Democrats can’t win without trashing the economy. As Luskin pointed out in a piece in Sunday’s Washington Post, in Obama’s famed anti-Iraq war speech back in 2002, the then-Illinois state senator suggested the war was waged “to distract us from corporate scandals and a stock market that has just gone through the worst month since the Great Read more
This is my column for this week from the Arizona Republic (permanent link).
Fannie and Freddie fall to foreclosure, but, still, lenders lend
I write this column at the beginning of the week, and it appears at the end of the week. My topics are usually timeless, but, if I turn my attention to current events, there’s always the chance that I’ll end up with my foot in my mouth.
Even so, the news that matters most in residential real estate this week is the takeover by the federal government of the Federal National Mortgage Association (FannieMae) and the Federal Home Loan Mortgage Corporation (FreddieMac). These two quasi-private corporations define the lion’s share of the secondary mortgage market in the United States.
What does that mean? If you got a conforming loan for your home, it will have been sold into the secondary mortgage market in short order. FannieMae or FreddieMac would have guaranteed the loan to investors, this so your lender could have had a renewed supply of capital from which to make new loans. Federal Housing Authority and Veterans’ Administration loans would have been guaranteed by those entities, and sub-prime (non-conforming) loans would have been marketed directly to private investors. The secondary mortgage market exists to keep loan originators liquid in a market where very few people keep their savings in banks.
Given the federal takeover, has the sky fallen on the secondary mortgage market? No, although things may be a little sluggish as the newly-installed management teams learn the ropes. But as San Diego real estate broker Jeff Brown says, “Lenders lend.” There are still plenty of dollars chasing mortgages, so there will be mortgages chasing dollars. It’s plausible that interest rates could even go down, now that the secondary mortgage market has a rich Uncle Sam to back its loans.
What is not so plausible is the notion that investors will suddenly abandon housing altogether. Things will shake out. The ideal situation would be for a new free-market clearinghouse for the secondary mortgage market to arise. A business like that could cherry-pick the strongest loans, those least likely to go into foreclosure, leaving Read more
Cross your fingers, Cathy may have brought home a $600,000 listing today. As my contribution to our household finances, I lassoed a $50,000 prize of my own. Mine will be fun for the whole family though: We’re going to discuss it here as a unique marketing problem. Why unique? It’s a vacant lot with a structure on it. It’s a tear-down that can’t be torn down. It’s a certified antiquity with no discernible historic value. In short: It’s a challenge.
Why did I take the listing? Because I’m committed to the idea that marketing real estate is not fundamentally different from marketing anything else. I believe I can target-market this outrageously anomalous property and get it sold. I think this will be a fun exercise, a chance to explore radically different ideas about selling real property.
I linked today to a post I wrote more than a year ago. Like this post, it has that strangely disorganized cohesion of a weblog entry — part essay, part letter to a beloved friend — but I think it’s one of the best things I’ve ever written here. I reread it today, and Teri tells us in a comment that she did, too.
Here’s the best of it:
A Bloodhound’s virtues are genetic accidents, but that doesn’t make them less than perfectly admirable, whether evidenced in the dog or anthropomorphized and expressed in thoroughly conscious human behavior. Brought up right, a Bloodhound is a natural alpha, regal and indomitable. The dog will move with a lanky, un-self-conscious arrogance that is simply heart-breakingly beautiful to look upon: This what a thriving organism looks like.
I am steadfastly, philosophically opposed to the idea of humility. I think it is one of many evil ideas foisted off on us by malefactors who love us best at our absolute worst. To say to me, “You’re arrogant,” or, “you have a big ego,” is no reproach. On the one hand, it is a statement of obvious fact. But on the other, it puts me on my guard against you. A healthy, normal human being moves and acts and thinks and speaks with the lanky Read more
My other question: Good ideas and bad ideas. This bites me in the butt over and over. My brain is great at generating ideas, not so great at knowing what makes an idea great. Something new or different is not always better (I need to have that tattooed on the inside of my eyelids). The million dollar question: How do you know?
The way we work is to think backward from the marketing objective: What event or outcome do we want to have happened? “Sell the house!” is a lot to tear off in one mouthful, but how about, “What can we do to get visitors to sit down and ‘try the house on’ in their minds?” That’s where the coffee table book came from.
I wrote the original version of our sign philosophy before I created our first yard sign. That sign was very different from the signs we make now, but that paragraph of small text was there from the very beginning. I knew that if a yard sign was actually going to work to sell the house, I had to get people to stop their cars, and that paragraph of text has been doing that one little job ever since.
This is all Richard Riccelli again, thinking in terms of direct response marketing. The big yes to the house is an accumulation of smaller yeses to particular marketing tactics, so the most effective marketing efforts will consist of taking away the negatives — eliminating the deal-killers. Who can you turn to for that kind of marketing advice? Your buyers. When you show, again and again your buyers will teach you what’s not working in other listers’ houses. Learn from your buyers and eliminate the turn-offs from your own listings.
That’s important. People will read the things I write and decide that I’m talking about tricks or gimmicks or tactics. I’m not. I’m talking about a complete home-marketing strategy, and each individual element of that strategy is expected to fulfill a particular strategic objective. But our strategy starts with four obvious tactics that are omitted in at least 90% of the homes Read more
I have been enjoying the fray caused by Greg’s post Wednesday inviting one and all to Bloodhound Unchained in November, as I am sure many of you have. In the post Greg responds to some personal attacks by referencing the success he has had with his ideas. Interestingly, the “Bloodhound Way” gets criticized, not on merit or content, but rather volume. Interesting logic that. Confusing volume with validity is common among common people. I used to work with a mortgage broker whose office spent $150,000 per month on lead purchases and generated many hundreds of thousands more in gross income. It was a poorly run, poorly executed operation that succeeded on sheer size and volume. Was this a valid way to do business? Numbers don’t lie. Does his success invalidate the one-man office who uses localism, innovation and advanced marketing skills? Hardly. (Side note: can you guess which office is still conducting business?) High volume is a measure of success… but not the tool I would use to discern quality or even future success.
I have been following the Bloodhound Way for only a few months now. As I got back into Real Estate it struck me as eminently doable (after all, Greg and the other hounds here share their ideas freely) and obviously innovative. In today’s real estate industry I believe the motto is “Differentiate of Die” so innovative works for me. I posted my first effort at these ideas in Custom Signs and Brake Lights. That listing was taken June 09, 2008. Since then I have taken two more listings. (I am chagrined to say I took no listings in August, but I do have 2 listings coming online in September). Suffice to say I am not a big volume hitter. As I said previously, I am getting back into active Real Estate after a prolonged absence running a mortgage division. Here are the stats:
- 2219 Eucalyptus SOLD 23 days on market
- 2324 Donnington SOLD 17 days on market
- 642 Glover SOLD 2 days on market
That is roughly $1.3 million dollars and an average of 14 days on market. The absorption rate for Read more
Alas, not every visitor to BloodhoundBlog has the sublime gifts to preen at length about the salutary benefits of a carefully-cultivated humility. Some people, oddly enough, come here to learn about real estate. From my email:
I’ve been looking at your listing/marketing process, and am curious about your open house strategy. You comment something to the effect that you hold opens every week because a) you have the time with only really salable listings and b) there are lots of unrepresented buyers out there.
We’re probably a little more old school that you, but we try to not be “lazy, stupid and cheap.” We try to price realistically, and we try to promote our opens energetically. Sometimes we get a lot of traffic, but sometimes we don’t (FWIW, we’ve got just over 12 months of inventory right now, and falling, but still very high prices). Is your market way different from ours? Do you get lots of traffic all the time, or is it hit and miss? Just curious.
Here’s the thing, and I guess I can’t say this enough: We don’t do anything the way other Realtors do it. Many of our ideas are original to us, things we worked out on our own. But many others are tactics that we have heard about from other agents. These ideas we Bloodhoundize, a process I’ve talked about before. We strip the idea down to its essence, then rebuild it from the ground up our way, so that the fundamental marketing objectives don’t get lost in the shuffle.
What could be more ordinary than a Realtor holding an open house? Here is our policy on open houses from ABetterListing.com:
We hold Open Houses every week until the home is sold. Why? Because there are an awful lot of un- or under-represented buyers out there, and we want for them to be able to see our home. We avoid dual agency, but we have no problem showing the home to buyers who accidentally left their buyer’s agents at home. If a listing is near the commuter traffic flow — and most of ours are — we like to Read more
The good news is that Vlad Zablotskyy is nearing the end of his legal battles with ePerks.com. As you will recall, ePerks sued Vlad to try to compel him to squelch criticism of the lead vendor.
That bad news is that Vlad has had to take a night job to help defray his mounting legal expenses. The Vlad Zablotskyy Legal Defense Fund has raised a significant amount of money, but as anyone who has ever gotten trapped in the court system knows, there is never enough money to cover legal fees.
What can you do to help? Push the “Donate” button you see below or in our sidebar. If you want to add a button to your own weblog or web site, you can find the HTML code here. But the most significant difference you can make in Vlad’s life, right now, is to make as big a donation as you can afford.
Vlad is stuck in this quagmire a little longer, but it’s worth noting that no one else has been threatened, neither by ePerks nor by any other vendors. By participating in this Legal Defense Fund, we have made it plain that we will defend our right to speak freely — to speak truth to power. I count that a victory for the good guys. How about you?
Click on the “Donate” button and let’s put “paid” to this kind of intimidation against real estate webloggers.
Support Vlad Zablotskyy’s Defense Fund
Defend your own right to free speech!
Technorati Tags: blogging, real estate, real estate marketing
Hither. The weblog will be an adjunct to Zillow Mortgage Marketplace, with a crew of loan bloggers and frequent ZMM mortgageurs providing the content. Our own Brian Brady and Tom Vanderwell are early contributors, and Zillow’s man on the job, David Gibbons, will be looking to add more writers as time goes on.
Visit the site for more info.
Technorati Tags: blogging, real estate, real estate marketing, technology
I like to think that, as a secondary consequence of the things I do, I goad good people into becoming better people. This is a part of everything I do, but it’s why there is a category called “Egoism in Action” in BloodhoundBlog, and it’s why so much of what I write about is focused on the idea I call “Splendor.” As much as I can, I want to help the people I come into contact with — here and in the corporeal world — to navigate the path from rational self-interest to undiluted self-adoration — an attainable moral perfection.
I like to think I help good people become better people. I know beyond all doubting that coming into contact with me induces bad people to become worse people. I absolve myself of all guilt in the matter: I would never, ever encourage anyone to pursue any sort of disvalue. But Joseph Ferrara, as an example, seems to have wasted two years of his irreplaceable life sticking metaphorical pins into a metaphorical doll of me. How sad for him, but I am undaunted, undamaged, undiminished — quite the contrary.
Poor Joseph is an extreme specimen, but he is hardly alone. Closer to home is Jonathan Dalton, who seems to devote some huge fraction of his every waking moment to trying to vanquish me in his imagination. He does this in secret, without naming me or linking to me. I wouldn’t even know it was happening, except that people keep sending me his snarky little posts. I cannot imagine what crime the poor slob has committed, that he would punish himself endlessly with thoughts of me, but never doubt that nature is just: Whatever his crime, certainly he believes that obsessing over me — striving with all his might to shout me down inside his own mind — is the fate he has earned and deserved. How sad for him.
Here’s a recent specimen of poor Jonathan’s obsession:
So when you read that a listing agent will be checking your house every other day and will hold your house open every single weekend until it [sells] Read more