“You Can Never Lose Money in Real Estate”

I used to hear that all the time, even though it was never true. (The first housing bubble in the US was in 1837.) You don’t hear that much since the implosion of 2007. However, we should be coming up on the limit of the collective memory anytime now, so I thought a refresher would be in order. And by some measures we’re already in another real estate bubble.

In a housing crisis that somehow hasn’t been blamed on President Trump, there are about 55,000 homes in Connecticut that have concrete foundations that are disintegrating. Replacement costs start at about $100,000 and go up, depending on the size of the house. Plumbing and electrical must be disconnected, The house jacked up on piers, the old foundation removed, and new basement walls poured. It is actually a fairly straight-forward process, but you expect to have to do things like this to 100-year-old structures, not homes built since 1980.

Pre-2007, people would talk to me about “the way real estate traditionally works,” and then give me a rundown on market conditions since Jimmy Carter was in office, which to my way of thinking isn’t indicative of the traditional real estate market. And real estate discussions from that era had all too much in common with the discussions I had during the dot com insanity of the mid-to-late 1990s, about how of course companies like Pets.com, which had the revenue stream of your average dry cleaner, could have a market capitalization approaching Ford. Or whatever the situation was. Because, this time, things were different. See the classic text, Extraordinary Delusions and the Madness of Crowds, by Charles Mackay. It was written in 1841. (I will dust off some of the quotes from that book in the future.)

But back to the topic at hand.

Homes on stilts in Vernon as crumbling foundation replacement gets underway.

Less than 10 minutes away, four homes are on stilts on Eliot Drive.

“Every piece of concrete that’s here is gone,” said General Contractor Don Childree.

Childree is replacing full foundations. Each home averages about eight weeks and more than $200,000. Childree has done about 80 foundations across the state.

And this is filed under “Your Tax Dollars at Work” because funds for low-interest loans have been made available, and the state is still trying to get federal dollars out of FEMA (or some part of disaster relief). And that is because insurance isn’t paying to cover shoddy construction.

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UK to Mandate That Phones/Dishwashers/etc. Be Too Expensive for the Average Person

At least some folks in the government would like to take those decisions away from you. Phones and washing machines must be made to last, MPs say as Government launches inquiry into ‘Tsunami’ of e-waste.

People don’t throw their phones away every year because they don’t work. They want the newest iPhone or whatever.

The Labour MP told The Telegraph: “30 years ago, things were built to last, I had a dishwasher I gave to my sister that was 30 years old. Why is it that dishwashers that are built today break after 10 years?

If dealing with waste it too expensive, then increase the fees for the waste. Tell people, and they will plan accordingly. Of course that doesn’t give the .gov complete control over everything you buy.

That 30-year-old dishwasher, didn’t have 17 settings, or a 4-hour-delay (like mine does), probably didn’t do a very good job of cleaning dishes, oh, and it wouldn’t have met the “we have to use less energy” mandates. In other words, no one would want it today, even if the government would let you sell it.

So you want things that contain electronics (like a modern dishwasher) to last 30 years? Better spec military-grade components, and even then, they will need a lot of repair.

Would I like things to last longer? Sure. But consider the case of the circular saw.

You can run down to your favorite Big-box store and buy a circular saw for less than 50 bucks. Or, you can elect to purchase a German-engineered marvel from Festool for just shy of $600. (If I get all the options I want, it would be closer to $1000.) Both saws are available, and a lot of choices in between those extremes. Do you think the .gov should mandate the features in the $600 saw? Would you buy a circular saw for $600? (I do woodworking, and I haven’t purchased one, because money is definitely an object, and that just isn’t in my budget.)

Politicians have proved, time and again, that they aren’t very good engineers. They should stop pretending that they are.

SJW’s Screeching That Insurance is Unfair in 3, 2,…

After the Camp Fire, it seems some insurance companies are revisiting their actuarial tables. ‘Sticker shock’ for California wildfire areas: Insurance rates doubled, policies dropped.

Here’s a hint: If Lloyd’s of London won’t insure you, you are screwed, because they traditionally are the insurer of last resort. They will make you pay, but they will take your bet. Only not in this case.

Jennifer Burt knows she lives in a fire-prone community. That’s why she’s done everything she can to fire-proof her home in Meadow Vista, in the bushy, densely wooded Placer County foothills, even installing a sprinkler system on the roof.

Yet a few weeks ago, her insurance carrier — Lloyd’s of London, known for insuring high-risk properties — told her it was declining to renew her homeowners’ policy. Lloyd’s also dropped coverage on two rental properties Burt owns in Graeagle, a heavily forested community northwest of Truckee.

As I mentioned earlier, people are re-building homes in Paradise, California with no thought to improving the fire resistance of the structures. OK then, no one will want to insure them. Or any of the existing homes in other areas prone to wildfire.

“It’s really sticker shock for people to see their homeowners’ (premium) go from $1,200 to $3,600,” said Richard Harris of Harris Insurance Services, an independent agency in Grass Valley. “They can’t afford these increases, and they leave crying. We can’t help them. You can only have so many people leaving your office crying.”

If you read the fine print of your mortgage (I know, it’s crazy to assume people actually READ the contracts they sign) you will find that one of the requirements is that you have to maintain minimum insurance coverage. If you pay escrow every month, it’s because your lender doesn’t trust you. They collect the fees (taxes and insurance) every month and pay them on your behalf. Because something you did (credit score or small down payment) made it so that they don’t trust you.

Cal Fire – and probably a few other organizations – is trying to get enhanced forest management through the California legislature. Any bets on whether they will succeed? Or will the environmentalists claim, as they have for the past decade and more, that cutting down the dead and dying trees would be wrong. Or something.

The screeching. It’s there in the article linked at the top of this post. As for the reality…

Insurers have complaints of their own. Homeowners’ coverage, an $8 billion-a-year business in California, has become an unmitigated disaster for carriers: For every $1 they collected in premiums from Californians last year, they paid $1.70 in claims, according to data collected by the Department of Insurance.

California lawmakers are probably going to ignore the reality of economics. But however you slice it, the amount of money paid for insurance premiums needs to pretty much double. And then you have to ask, is it fair for people in non-fire-prone areas to subsidize those who live in the forest?

Meanwhile in the Socialist Paradise of Venezuela…

Did the UN manage to get something right? Amazing. Glavin: Damning UN report on Venezuela’s brutality must not be ignored. Even a broken clock is right once in a while.

There is a lot of spin out there. Certain Presidential candidates in the US, and politicians in Canada as well, want to say the Socialism is a good thing. To do that, they need to ignore Venezuela. And of course the Democrats (and their compatriots in Canada and Europe) would like all of the problems to be the result of US (and Canadian and European) sanctions.

Despite fashionable explanations, neither U.S. sanctions, nor European or Canadian sanctions, are anywhere near the cause of Venezuelan suffering. “The economy of Venezuela, particularly its oil industry and food production systems, were already in crisis before any sectoral sanctions were imposed,” Bachelet’s report concludes. The economy was in a tailspin long before the Trump administration’s August 2017 economic sanctions, which don’t fully kick in until later this month anyway.

Those sanctions may be “exacerbating” the effects of Venezuela’s economic collapse, but it began several years ago, owing to the gross incompetence and hubris of Hugo Chavez, Maduro’s predecessor and mentor. The collapse has continued in hyper-inflationary overdrive under Maduro,

It would be fun if the media would corner all the celebrities and politicians who congratulated the leaders of Venezuela on the wonderful job they were doing, to have those celebs say where things went wrong. But celebrities and politicians don’t get withing shouting distance of a real question if they can avoid it.

UK’s NHS, “Tax the Rich!” and Unexpected Consequences

I love it when politicians “fix” a problem and create 2 more. NHS waiting lists surge due to pensions row.

While I’m not clear on the details, the issue revolves around tax increases, and NHS pension payments. The result is that doctors who work for The National Health Service are refusing overtime. Some are considering getting out of NHS/taking early retirement. (The problem hits “senior doctors.”)

Consultants who earn more than £110,000 a year faced new limits on how much they could contribute to their pension from 2016. Complex rules mean the charges can be unpredictable if they go over the allowance.

But those near the threshold have few options to avoid the impact, other than reducing their hours, quitting the NHS pension scheme or taking early retirement.

One anesthetist essentially worked every other Saturday in 2018 to help with the backlog of surgery. This year, he can’t afford to, so the backlog of surgery at that hospital is increasing.

Why is all this happening? Because it isn’t fair if doctors work and save to have a retirement that is “above what we consider to be OK.”

Why does this interest me? Because I didn’t beg and plead with Mr. Government Man to allow me to retire. I retired when I could. (Early enough to do the things my health won’t let me do today.) But the government hates that. I didn’t ask permission. I didn’t turn my life over to them to control. But if you’re a doctor working in that place where Great Britain used to be, you don’t have any choice. They will grind you down. But you do have a choice about paying too much in tax.

My guess is that the next step the .gov in the UK takes is to mandate overtime. You don’t have a choice. You will work when we tell you to work. And pay any tax that creates. At that point, I expect a raft of “senior doctors” to retire (basically with a “Fuck You, I’m outta here,” goodbye.)

The So-called Affordable Care Act and 911 Calls

There are those unintended consequences. Medically unnecessary ambulance rides soar after ACA expansion.

By 2016, two years into the expansion of the Affordable Care Act (ACA), 17.6 million previously uninsured people around the U.S. had gained health insurance coverage. But with the expansion, researchers at the University of Colorado Denver and the University of Kentucky found that ambulance dispatches for minor injuries like abrasions, minor burns and muscle sprains rose by a staggering 37% in New York City.

And why is that? “Ambulances are now cheaper than Uber/”

“Medicaid patients in particular have incredibly low out-of-pocket responsibility for ambulances,” says Friedson. “The most an ambulance ride covered under Medicaid costs the patient three dollars. If there’s a low-cost alternative to Uber to get the hospital, you’re going to take it.”

Meanwhile in The People’s Republic of Illinois…

What happens when you try to solve decades of bad management by squeezing the taxpayers left in the state? They leave. Why Is Illinois Hemorrhaging Residents?.

Taxes are up and going higher, because for decades politicians in Illinois promised stuff to the unions (teachers, cops, fire, whatever) but never bothered to fund those promises. And the bill is finally coming due.

Vincent Flaska wanted to expand his forklift manufacturing business in 2015. He could have either kept Hoist Liftruck in Illinois, where the company was based since 1994, or moved it just over the Indiana border to East Chicago.

He chose Indiana.

“The environment that has been created in Illinois is not supportive of those blue-collar jobs,” he said.

With the move, Flaska saved $1.75 million annually on workers compensation insurance and an additional $1.5 million on state taxes

Without jobs, there will be no one to pay the taxes. So then the politicians in Illinois will raise the rates higher in hopes of generating revenue. Rinse repeat. (Hat tip to Second City Cop.)