Holy crap! this may be a "rebirth" of squatters!

Should we start singing songs from "RENT"?

If everyone is broke, and no one can buy your property, you'd be stupid to leave if the bank won't take eviction action. You still don't own your house, with a mortgage, so this may be interesting...don't pay and still have a roof over your head.

it's amazing how people can be so irresponsible. to me, there's almost nothing worse than not paying debts you owe. now we are seeing how individual irresponsibility can truly effect the entire economy.

Don't worry fellas, regulations are on the way...

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great

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Originally posted by Krypton Don't worry fellas, regulations are on the way...

regulations normally shift the consequences elsewhere. ask anyone about the success of SOX. while it has been a boom for accounting firms and law firms, SOX may have shifted the title of financial capital of the world from NYC to london

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Originally posted by jerZ07002 fluorescent all the way!! the upfront cost isn't even that bad. i hear LED lights are the next big thing in energy saving.

They do have promise, though they currently cost an assload on the front-end and the payoff is 5+ years. The good thing about LEDs is that unlike CFL bulbs, the quality of the light from LEDs is much better, and the intensity of light that they emit is constantly rising. I have CFLs installed at home and those things really fuck with my color vision.

I called a company last summer to price LED-type bulbs for curiousity's sake. They told me that a single can-light fixture was running around $100 or so. So to replace 1 can light fixture in my house that uses a 60-75 watt bulb that costs a couple of bucks a pop and lasts for 1-2 years (and puts out as much heat as it does light), I could spend $100 on a 60-75watt equivalent LED fixture (power consumption around 12 watts) with an expected lifespan of 50,000 hours or so. Give it time and hopefully prices will come down as the technology advances and yields improve, etc.

I think Ann Arbor, MI recently announced a bold LED initiative for the city.

CREE is a major company in the LED/LED lighting space, but it's been a dicey stock. At any given time you can get some of the most divergent opinions on it that you could imagine.

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Originally posted by jerZ07002 regulations normally shift the consequences elsewhere. ask anyone about the success of SOX. while it has been a boom for accounting firms and law firms, SOX may have shifted the title of financial capital of the world from NYC to london

Sarbox has done more harm than good (as is usually the case with regulation that is passed once the horse is already out of the barn).

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Originally posted by Shakka Sarbox has done more harm than good (as is usually the case with regulation that is passed once the horse is already out of the barn).

The Trickle Down of SOX
Since the Sarbanes Oxley Act (�SOX�) was passed, much has been written on the cost of compliance levied upon Wall Street brokerage firms (I include the Spitzer Settlement in this calculation) and corporations (specifically Section 404 which mandates an audit of internal accounting controls). However, little has been said about the cost to investors.

The cost of compliance is now trickling down to the end user, the investor, and can be classified as direct and indirect. This tax on the market and its participants could have an adverse impact on the US economy.

Direct Costs
Direct costs consist of the reduction in earnings, earnings growth, and dividends that result from the high cost of complying with SOX. The increased accounting and auditing fees that are required in order to comply with SOX are new and sizeable expenses that increase with the size of the company. In an efficient market, the reduction in earnings and growth potential will be reflected in the stock price.

According to a study done by the Financial Executives Institute, companies expect to spend an average of $3 million to comply with Section 404 of SOX. Companies with revenues in excess of $5 billion expect to spend an average of $8 million (0.2% of sales) and companies with sales less than $100 million think the average cost will be $550,000 (0.6% of sales). You can add to this price tag the cost of higher Director & Officer Insurance and the need to make more regularity filings with increased speed and frequency. This �investment� will not increase a company�s competitiveness or its profitability.

This data indicates that the cost of SOX compliance will impact profit margins and weighs heavier on smaller companies. The cost is expected to be highest in the near term as companies determine how to comply with Section 404, which systems need improvement and auditors charge to test the new systems.

The short term accounting costs are higher than they might have been for three main reasons. First, competition among the major accounting firms was reduced when Arthur Andersen was taken out (due to its involvement with Enron). Arthur�s former clients had to scramble to find a replacement, allowing the remaining firms to raise prices.

The looming deadline for compliance with Section 404 is the second main factor resulting in higher accounting fees. Some accountants are claiming that the higher fees are due to the need to implement recently issued guidance from PCAOB (Standard No.2) and the 2005 deadline. Although Section 404 was public knowledge for over a year, accountants waited for guidance before creating the systems needed to perform the required audits.

But perhaps the main reason for the high near term cost is that nobody knows what they are doing. The accounting practices in Section 404 have been around for a long time, but the current environment of malpractice risk makes the players cautious. And fees rise with uncertainty. Fees are thus set to not only cover the base costs, but also include risk premiums for the hard costs of malpractice insurance and soft costs that allow partners to sleep at night.

While you might expect fees to decline once everyone gets more comfortable with the new reality of Section 404, don�t count on it. Costs could increase as miscreants test the limits of the law (as they always do), resulting in new regulations and the need to invest in new systems and audits in order to comply with the new regs.

The bottom line is that the spending on compliance will divert funds that could be invested for a profitable return that would boost earnings and dividends. As a result, valuations will experience a quantum shift downward from what they could have been.

There are also �soft dollar� direct costs, the biggest of which is reduced productivity. While some of the hard dollar costs noted above may include an estimate of the hourly cost of management�s time, I think the real soft costs are understated. How can you quantify the opportunity cost of the time management spends on determining how to comply, implementing new systems, and constantly monitoring these systems instead fo growing the business? The thousands of hours spent on compliance divert managements from focusing on becoming more competitive and profitable.

In the financial industry, the compliance costs are already evident. We already have seen the cost structures of brokerage firms change as they have had to erect higher Chinese Walls and fund the Spitzer Settlement. Wall Street firms have had to increase legal and compliance expenses because they need to have a babysitter every time an analyst talks with someone in investment banking.

Indirect Costs
Indirect costs are those that result from the unintended consequences of SOX. These costs consist of the reduction in research coverage, the growing number of companies that chose to de-list, a decline in productivity, and the inability of companies to access the capital markets. It is these costs that could have the greatest detrimental impact on the US economy.

The significant decline in research coverage created an Information Gap which resulted in inefficient pricing by the market. Prior to the implementation of the Spitzer settlement and the creation of SOX, the number of companies that lacked research coverage was large and growing. I did a study in 2002 that indicated that almost 70% of the publicly traded companies lacked adequate research coverage (defined as 2 or more analysts). Since that time, I think the situation has gotten worse. The number of analysts declined as brokerage firms reduced their market making activity. The wave of mergers in the late 1990s significantly reduced the number of regional brokerage firms that use to focus on small cap stocks in their �back yards.� The surviving brokerage firms reduced their coverage lists to the biggest and most liquid issues. As a consequence of the combination of a lack of research and SOX costs, a growing number of firms are delisting themselves from the major exchanges.

The trend toward de-listing (also known as �going dark�) is another indirect cost to investors. Delisting is a relatively simple step whereby companies can move from the larger exchanges (NYSE, AMEX, and NASDAQ) and have their shares trade on the OTC Bulletin Board (aka �Pink Sheets�). While trading on the Pink Sheets does not have the stigma that it use to have, an �aura� remains and it does increase the cost to trade. Whether real or perceived, there are inefficiencies that increase the cost to invest in Bulletin Board stocks that have not been offset by electronic trading mechanisms. But the most significant indirect cost is the cumulative impact of all of the above to the economy as a whole. As the result of SOX, the cost to access capital has increased, the ability to access capital markets has decreased (lack of research coverage and market making), and the efficiency of the market pricing mechanism has decreased.

To illustrate, consider the small entrepreneurial firm. It has always been the source of innovation and economic growth in the US economy. Pre-SOX, the small firm could focus on its core competency and develop a market for its product. While it had to deal with regulatory costs, access to capital was less costly because research coverage was more available because there was a network of regional brokerage firm that could provide investment banking and market making services to these small firms. Today, the few remaining regional firms are hard pressed to provide the needed services due to the increased cost of compliance and reduced margins. Due to these increased costs, brokerage firms are focusing their efforts on the biggest and most liquid stocks in order to maintain operating margins.

The Bottom Line
Change was needed to correct the excesses that were manifest during the dotcom bubble and many of the post-bubble regulations are beneficial because they provide investors with more information. However SOX, despite having some very good points, may turn out to be the modern day equivalent of the Smoot-Hawley Tariff Act, doing more harm than good.

Both SOX and Smoot-Hawley were enacted in an attempt to correct systemic wrongs but both had unintended consequences. Smoot-Hawley was enacted in the wake of the Great Stock Market Crash of 1929 as a way to protect the US economy. However, it had the exact opposite effect and caused the Great Depression. SOX and other post-bubble regulations have changed how the markets function in a way that may actually reduce the future growth potential of the US economy because they have reduced the ability of small entrepreneurial firms to tap the capital markets. This may prove to be the biggest cost to investors.
Source

Good article on SOX

Last edited by jerZ07002 on Apr-07-2008 at 18:18

Back to the fray...

It just gets better and better down there doesn't it?

quote:

Foreclosures jump 57 percent in last 12 months Tue Apr 15, 2008 2:00pm EDT By Lynn Adler NEW YORK (Reuters) - Home foreclosure filings surged 57 percent in the 12 month-period ended in March and bank repossessions soared 129 percent from a year ago, as homeowners struggled to make mortgage payments, real estate data firm RealtyTrac said on Tuesday. For the month of March, foreclosure filings, default notices, auction sale notices and bank repossessions rose 5 percent, led by Nevada, California and Florida, RealtyTrac said. The rise in March to filings on a total of 234,685 properties followed a 4 percent decline in February, RealtyTrac reported. RealtyTrac said the peak has yet to be reached. "What we're really looking at is ongoing fallout from people overextending themselves to buy homes they couldn't afford and using highly toxic loan products to get into the houses in the first place," Rick Sharga, vice president of marketing at RealtyTrac, based in Irvine, California, said in an interview. "We're going to see quite possibly a record amount of foreclosure activity in the third or fourth quarter," reflecting sharp payment increases on adjustable-rate subprime mortgages in May and June, Sharga said. One in every 538 U.S. households living in single-family dwellings received a foreclosure filing in March. The single-family dwellings can include condominiums. There are three phases of the foreclosure process in most states -- an initial default notice, notice of a scheduled auction, and an "REO" filing if the property is not sold at auction but instead repossessed by the bank, Sharga said. REO refers to real estate-owned property. All of the households in the report received at least one of these filings last month. AUCTION NOTICES UP 32 PERCENT While default notices and repossessions soared in March, auction notices rose a relatively small 32 percent, James J. Saccacio, chief executive officer of RealtyTrac, said in a statement. That suggests "more defaulting homeowners are simply walking away and deeding their properties back to the foreclosing lender," he said. "This deed-in-lieu-of-foreclosure process allows the lender to take possession of a property without putting it up for public foreclosure auction." The states with the highest foreclosure filing rates -- Nevada, California and Florida -- also are among those that had the biggest price appreciation in the five-year boom before the housing meltdown that began in 2006. These states tend to also be plagued by defaults on unoccupied homes bought by speculative investors. In many cases, home prices have now fallen below the size of the mortgages and some owners are walking away. In Nevada, one in every 139 households received a foreclosure filing in March, keeping the state at the top of the ranks for the 15th straight month. The 7,659 Nevada properties receiving foreclosure filings last month represented a 24 percent jump from February and a nearly 62 percent spike from March 2007. California had the second highest rate of foreclosure filings, one for every 204 households, followed by Florida with one of every 282 households. Arizona's filings fell about 5 percent, but it retained its standing as with the fourth highest pace of foreclosure activity for the third month straight. Foreclosure activity in Colorado dropped 8 percent in March from February and 1 percent from a year ago, but it ranked No. 5, with one filing for each 339 households. Georgia, Ohio, Michigan, Massachusetts and Maryland were the other states with the highest foreclosure rates in March. The states with highest total number of foreclosure filings were California, Florida and Ohio. Foreclosure filings were reported on 64,711 California properties in March, the most of any state for the 15th consecutive month, up nearly 21 percent from February and up almost 106 percent from March 2007. Florida posted the second highest total, with foreclosure filings reported on 30,254 properties in March. While down about 7 percent from February, filings were about 112 percent higher than last March. Georgia, Texas, Michigan, Arizona, Illinois, Nevada and Colorado were the other states with the highest foreclosure totals in March.

>>Source<<

___________________
"...End? No, the journey doesn't end here. Death is just another path...one that we all must take.
The grey rain-curtain of this world rolls back, and all change to silver glass...and then you see it...
...white shores...and beyond...the far green country under a swift sunrise."

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Originally posted by Fir3start3r Back to the fray... It just gets better and better down there doesn't it? >>Source<<

if you're trying to buy into the market it couldn't be better. i actually don't know anyone who has lost their house, but then again, i don't think that's something people advertise. i only wish my student loan payments didn't amount to $1400 a month. i could definitely get a nice condo on the hudson if that wasn't the case. although the condo market in north jersey / nyc has yet to collapse like the housing market in other parts of the country.

quote:

Originally posted by Fir3start3r Back to the fray... It just gets better and better down there doesn't it? >>Source<<

Great pair of articles

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Originally posted by jerZ07002 i only wish my student loan payments didn't amount to $1400 a month.

I hope your job is worth the education, that amount IS a house payment WITH taxes. Pretty stiff payment I wonder how many other graduates are crippled by a student loan payment (...and defaulting on a student loan is WORSE, to your credit, than a foreclosure)