It’s WAY Broader than New Orleans August 17, 2006March 4, 2017 So far, this year’s hurricane season is wonderfully tame. Even so: Three of the six most powerful hurricanes ever recorded in the Atlantic basin over 150 years of record keeping happened in 52 days last year. Trouble, my friends – oh, yes, we got Trouble. With a capital T and that rhymes with C and that stands for – Click here. I hand the keyboard over to Katharine Mieszkowski and Mike Tidwell. If they made a movie about YOUR HOUSE, would you go see it? Well, they have.
Natural Selection August 16, 2006January 10, 2017 STILL UNCERTAIN ABOUT EVOLUTION? A couple of summers ago, I think it was, we learned that the President was reading a 450-page history of salt, and then Tom Wolfe’s738-page I Am Charlotte Simmons. I don’t know where he finds the time. Here’s one he should read: Natural Selection, a first novel by one of his fellow Harvard Business School alums. Publishers Weekly called the prose ‘pedestrian’ but acknowledged that it ‘might make an awesome beach read.’ An Amazon reviewer gave it five stars: Reviewer: Anne (Chicago, IL) This was such a fun, incredibly fast read! I heard about it in USA Today a month ago; they had named it one of their top-10 beach reads so I thought I’d give it a try. What a rocket!! The opening pages are very creepy, very mysterious. You read it and you want to know: What are these creatures? Where are they from? What are they doing? It just sucked me right in!! [ . . . ] All that aside, the science is what makes this truly special. Natural Selection’s depth and breadth of science is EXTRAORDINARY. Wow, did the author do his research!! I work in a related field – otalaryngology/ENT – and let me tell you, he knows his stuff: the commentary on the evolution of the brain, evolution of the lung, the fluid dynamics discourse and many, many other facets were just so well done. . . ☞ Natural Selection would be a good way for your teenager, or the Republican leadership, to learn about evolution. NEWLY UNCERTAIN ABOUT THE TERRORIST PLOT? One must surely err on the side of caution – I have willingly emptied my carry-on bag of toothpaste – and one desperately wants to believe our government does not manipulate such things for political gain. So who knows what to make of this, from Craig Murray, former British Ambassador to Uzbekistan? . . . In all of this, the one thing of which I am certain is that the timing is deeply political. This is more propaganda than plot. Of the over one thousand British Muslims arrested under anti-terrorist legislation, only twelve per cent are ever charged with anything. That is simply harassment of Muslims on an appalling scale. Of those charged, 80% are acquitted. Most of the very few – just over two per cent of arrests – who are convicted, are not convicted of anything to do terrorism, but of some minor offence the Police happened upon while trawling through the wreck of the lives they had shattered. Be sceptical. Be very, very sceptical. ☞ I don’t want to be skeptical of my government (or Tony Blair’s). But given the track record, it’s hard not to wonder. R.I.P., YUSUF RAHIL – THE SHEPHERD Yaakov Har-Oz: ‘Your readers are right; I should have checked variant spellings. I apologize. I do note that Israel claims the boy was armed and on the wrong side of the border, in the Chebaa (also spelled Shebaa!) Farms area, which Lebanon says is Lebanese, and which Israel and the U.N. say is not. I know the Israeli claim carries no weight with Strindberg (indeed, he doesn’t even bother mentioning it), but since I know Israeli soldiers don’t go around killing kids for the fun of it, it carries a lot of weight with me.’
Israel August 15, 2006March 4, 2017 In trying to understand why Israel feels threatened, and to put its situation in context, please imagine that September 11’s death toll had been repeated on September 12, September 13, September 14, September 15, September 16, September 17, September 18, September 19, September 20, September 21, September 22, September 23, on and on – one ‘September Eleventh’ every day for more than five years, two thousand days in a row. (The Holocaust actually didn’t take that long, but only because the Nazis killed faster.) And, for further context, please consider this from FrontPageMagazine.com: Hezbollah’s Final Solution Alan M. Dershowitz August 11, 2006 The uniqueness of the Holocaust was not the Nazi’s determination to kill the Jews of Germany and even of neighboring Poland. Other genocides, such as those by the Cambodians and the Turks, sought to rid particular areas of so called undesirables by killing them. The utter uniqueness of the Holocaust was the Nazi plan to “ingather” all the Jews of the world to the death camp and end the Jewish “race” forever. It almost succeeded. The Nazis ingathered tens of thousands of Jews (including babies, women, the elderly) from far flung corners of the world – from the Island of Rhodes from Salonika and from other obscure locations – in order to gas them at Auschwitz and at other death camps. The official leader of the Palestinian Muslims, Haj Amin al-Husseini, the grand mufti of Jerusalem, collaborated in the Nazi genocide, declaring that he sought to “solve the problems of the Jewish element in Palestine and other Arab countries” by employing “the same method” being used “in the Axis countries”. Husseini, who spent the war years in Berlin and was later declared a Nazi war criminal at Nuremberg, wrote the following in his memoirs: Our fundamental condition for cooperating with Germany was a free hand to eradicate every last Jew from Palestine and the Arab world. I asked Hitler for an explicit undertaking to allow us to solve the Jewish problem in a manner befitting our national and racial aspirations and according to the scientific methods innovated by Germany in the handling of its Jews. The answer I got was: “The Jews are yours.” Husseini planned a death camp for Jews modeled on Auschwitz, to be located in Nablus. He broadcast on Nazi Radio, calling for genocide against all the world’s Jews: “kill the Jews wherever you find them – this pleases God, history, and religion.” Professor Edward Said has acknowledged that this Nazi collaborator and genocidal anti-Semite “represented the Palestinian Arab consensus” and was “the voice of the Palestinian people.” Yasser Arafat referred to Husseini as “our hero.” Never before or since in world history has a tyrannical regime sought to murder all of the members of a particular racial, religious, ethnic or cultural group, regardless of where they live – not until now. Hezbollah’s aim is not to “end the occupation of Palestine,” or even to “liberate all of Palestine.” Its goal is to kill the world’s Jews. Listen to the words of its leader Sheikh Hassan Nasrallah: “If Jews all gather in Israel, it will save us the trouble of going after them worldwide.” (NY Times, May 23, 2004, p. 15, section 2, column 1.) Nasrallah is one of the most admired men in the Muslim and Arab world today. Hitler made similar threats in Mein Kampf but they were largely ignored. Nasrallah has a reputation for keeping his promises. His genocidal goals – to kill all Jews – were proven by two recent statements. He has warned the Arabs and Muslims to leave Haifa so that his rockets can kill only Jews. And he apologized for causing the deaths of three Israeli-Arabs in Nazareth, when a Katuysha struck that religiously mixed Israeli city. Hezbollah also worked hand-in-hand with Argentine neo-Nazis to blow up a Jewish community center, murdering dozens of Jews. Nasrallah is a modern day Hitler, who currently lacks the capacity to carry out his genocide. But he is an ally of Iran, which will soon have the capacity to kill Israeli’s five million Jews. Listen to what the former President of Iran has said about how Iran would use its nuclear weapons: Hashemi Rafsanjani, the former president of Iran, has threatened Israel with nuclear destruction, boasting that an attack would kill as many as five million Jews. Rafsanjani estimated that even if Israel retaliated by dropping its own nuclear bombs, Iran would probably lose only fifteen million people, which he said would be a small “sacrifice” from among the billion Muslims in the world. Now listen to the current President of Iran, Mahmoud Ahmadinejad, who denies the Nazi Holocaust, but calls for a modern Holocaust that would “wipe Israel off the map.” [ . . . ] The Iran-Hezbollah axis is the greatest threat to world peace, to Jewish survival, to Western values, and to civilization. Those . . . who support Hezbollah, and even those who refuse to fight against this evil, are on the wrong side of history. They are collaborators with Islamofascists – today’s version of Nazism. Tomorrow: Still Uncertain About Evolution?
But I Regress . . . August 14, 2006March 4, 2017 ICE YOUR PHONE: In Case of Emergency Ken Ahonen, MD, FACEP: ‘Paramedics, Police Officers and Firefighters are trained to search the cell phones of people who are unconscious or otherwise incapacitated for ICE. They will call that number to notify someone and get more information. This is easy and extremely helpful. Sometimes patients are brought in to the Emergency Room and it takes hours to find a family member or significant other to help us. This new ICE system can help in a crisis. Do this right now. Get your cell phone and input a new speed dial with the name ICE. Then assign it the phone number of someone to reach In Case of Emergency.’ RE-PUBLICAN? OR RE-GRESSIVE? Joe Vecchio: ‘The radical right have demonized the term liberal, causing progressive to replace it. Well, they are anti-intellectual, anti-labor, anti-science, anti-stem cell research, anti-universal health care, anti-Project Head Start; anti-environment, anti-choice, anti-equal rights . . . they are taking us into the past, not the future . . . so from this day forward we should call conservatives who align themselves with Bush what they really are: regressives. Use ‘regressive’ instead of ‘conservative’ until we get this country back for the people.‘ ☞ Joe goes on to suggest that Jesus advocated social justice, not tax cuts for the rich and attacking countries that had not attacked us. And he directs us to Wikipedia entry for liberal. In key part: Broadly speaking, contemporary liberalism emphasizes individual rights. It seeks a society characterized by freedom of thought for individuals, limitations on power, especially of government and religion, the rule of law, free public education, and progressive taxation, the free exchange of ideas, a market economy that supports relatively free private enterprise, and a transparent system of government in which the rights of all citizens are protected. [2] In modern society, liberals favor a liberal democracy with open and fair elections, where all citizens have equal rights by law and an equal opportunity to succeed[3]. ☞ Listen: There are tons of wonderful people who identify as Republicans but who, like Nancy Reagan, are deeply saddened that we are leaning against stem cell research rather than racing to the cures. Republicans who feel the government has no business in people’s bedrooms and even less business in Iraq – at least not without having a clue when we went in what might happen next. Republicans who, perhaps like you, are horrified that just three Republican presidents – Reagan, Bush, and Bush – will have accounted for $8 trillion of what will be our $10 trillion National Debt by the time the White House changes hands.* (Remember the promised ‘humble foreign policy’ from a ‘uniter not a divider’ who would dip into ‘budget surpluses as far as they eye could see’ in order to enact tax cuts – ‘by far the vast majority’ of which would go ‘to people at the bottom end of the economic ladder’?) And to those Republicans, we Democrats – like Howard Dean, who balanced Vermont’s budget in each of his six terms while cutting the state income tax twice and who was rated ‘A’ by the National Rifle Association every year he was in office – say: welcome to the moderate wing of the Democratic Party. At least temporarily, until you get your party back. We need you. *The annual interest on that debt, even at today’s relatively low interest rates, already eats up 40% of all the personal income tax we pay. Tomorrow: Still Uncertain About Evolution?
Back On Line (I Think, Therefore I Am) August 11, 2006March 4, 2017 If a column is posted to the Internet but no one can read it – was it funny? Well, not the ones I posted the last couple of days that you couldn’t read – there is nothing funny about the precarious residential real estate market, let alone Lebanon or Iraq. So, apart from the obvious (great work, Scotland Yard! no, Joe Lieberman should not run as an independent), I hope you will find a few minutes to catch up with anything you missed – especially Eric Hoffer’s short, poignant column from (yes) 1968. The reason for the web site problems is known only to our estimable web hosting company. They claim we did something. But we haven’t changed our code in five years (which is why I look 12, top left). But just before you do go back to Eric Hoffer or residential real estate: FMD Earnings reported yesterday beat expectations by $.28 a share (largely from a change in local taxes) – up 65% from last year, and up even more per share because the company has been buying back its own stock (fewer shares to divide the profit over). Loan growth and revenues are accelerating, while margins are expanding. “Not bad,” writes my FMD guru, “for a stock with a PE of roughly 10 times next year’s earnings.” R.I.P., YUSUF RAHIL Patrick Gallot: “Yaakov Har-Oz’s first point is incorrect and defamatory. ‘Yusuf Rahil’ is a transliteration of a Lebanese name that probably was never written in the Latin alphabet before the kid was killed. Another common transliteration of ‘Yusuf’ is ‘Yousef’. If you Google that, you will find his death reported on February 4th, 2006 in Italy and Uruguay. Lebanon too, presumably. So it is incorrect to say that this ‘wasn’t reported on anywhere’ and to imply that Strindberg made up this incident is libelous.” David Williams: “Was Yaakov Har-Oz lazy? Or did he just not want to find the story of the shepherd boy killed by the IDF? It took me approximately three minutes to find this and this. Strindberg, apparently by mistake, wrote the boy’s father’s name. The account from Lebanon gives the boy’s name as Ibrahim Rhayyel; the father, Youssef Rhayyel. There is an issue of phonetic spelling.” ARABS SIDE BY SIDE WITH JEWS This is how it should be – at least until the rockets started flying. Especially now, it is hard to understand this reality in Israel – that many Jews and Arabs share communities and citizenship, the day-to-day activities of their lives. “Ten years ago, when I went to the Arab villages, they would say, ‘You stole our land,’” Vice Prime Minister Shimon Peres said Monday at the Council of Foreign Relations in New York. “Now they say, ‘Let’s talk about education.’” ☞ Okay: now go back and see if a tree fell in the forest – though it was not funny.
The Skinny from Two Real Estate Insiders August 10, 2006January 15, 2017 But first . . . CONSUMER SATISFACTION ISN’T EVERYTHING . . . . . . but it’s still nice for those of us long CBH: Commerce Bank Tops Magazine Survey NEW YORK (AP) — Consumers appear to be happiest with banks that have attractive branch offices and limited fees, according to a personal banking survey released Monday by Consumer Reports. A survey completed by nearly 11,200 of the magazine’s subscribers indicated that their favorite financial institution was Commerce Bank . . . And this . . . RIGHT CONCLUSION, WRONG REASON Religion News Service reports Pat Robertson said this about the recent heat wave: “It is the most convincing evidence of global warming I’ve run into in a long time,” Robertson said Thursday (Aug. 3) during his “The 700 Club” television show. He previously had been critical of claims about the dangers of climate change. ☞ The scientific consensus failed to convince him (and yes, it is a consensus). But a really hot week – well, now maybe he agrees with the scientists . . . though surely not based on their thousands of man- and woman-years’ research and analysis. Just seems real damn hot. And now . . . REAL ESTATE Following up on Tuesday’s ‘ouch‘ . . . here are the views of two real estate professionals. The first is scary (and long!). It concerns residential real estate only (not that a collapse in residential real estate wouldn’t affect everything else). The second is more upbeat. Here’s the first . . . Michael Monahan: ‘This is an anonymous loan officer’s take, from the forum at piggington.com (right column, second heading – active forum topics . . . the thread title is: ‘Mortgage Lender to Answer Questions that You May Have’). I’ve pasted the loan officer’s comments below, and deleted the questions and interruptions.’ Submitted by X1Y2Z3 on August 5, 2006 – 12:32pm: Hi all, I noticed someone asking for a mortgage lender to participate in these forums. I have been in the mortgage business for 10 years. I have worked at a mortgage banker that funded their own loans with their own warehouse line of credit and then sold the loans to various investors, and for one of the top three direct mortgage lenders in the country. If you have any questions, please feel free to ask. I may not answer everyday but I will try to get back to you. I will give you the real scoop on mortgage lending and real estate. BTW I have a real estate license as well. 2:04pm: Ok here goes. Yes, most major real estate markets are in housing bubbles IMHO. It was like the dotcom frenzy of the late 90’s. People thinking they were geniuses because the values of their homes were going up. Once the bidding wars started up, I knew the bubble was getting way out of hand. The worst situation that I heard of was a house that had 36 offers on it. Who in their right mind would bid against 35 other people for a house? It wasn’t even in a nice location, in fact it was in a bad location. Here’s what would happen. A couple would get approved for a mortgage. Then the agent would help them make an offer, they would lose the house because they didn’t bid high enough. Then the agent had them. They would say, if you only add an escalation contract you will win the next bidding war. So the buyer probably would lose another house, then they would ask, how high can I go over the list price? It was ridiculous. One agent I worked with called it a “vertical market,” prices were going straight up. So you have everyone trying to outbid each other and virtually no one taking the time to assess whether the price increases were sustainable. BTW I was an in-house Loan officer meaning I worked in a real estate office so I saw everything. So initially, the low housing supply/low rates got the bubble started. Then the lenders made it much worse than it had to be by loosening guidelines. When the Interest-Only loans started getting popular a vicious cycle began. They allowed people to buy more home, which drove the prices higher. Then, as the prices rose, people had to use the Interest-Only’s or they couldn’t afford the house. Now, remember that regular guidelines were very easy to begin with. At my bank, we allowed debt ratios – mortgage-payment-plus-monthly-debt divided by income – of 45% and didn’t even bother with a front ratio (mtg payment/income). When I started in 94, FNMA guidelines were 28/36 for ratios. And I can tell you that the majority of people who got a regular loan were at 44% or so. I had to be very careful with my estimates for monthly tax and insurance or someone could end up at 45.1%. Then as people couldn’t afford a house with either an interest-only and a 45% debt ratio, they opted for a negative amortization ARM or a Stated Income loan. My bank doesn’t even offer the negative amortization ARMS. There are basically 3 types of low documentation loans: Stated Income, No Ratio and No Doc. Stated Income means we ask for income and employment info but don’t verify it. No Ratio means we don’t ask for income but verify the employment. No doc means, no job, no income no assets are verified. Stated Income loans are very much ‘liar’ loans. I never liked them because it was so obvious and I was uncomfortable with them. A bank can do quality control and pull tax returns to verify the Stated Income after the loan closes. I preferred No Ratios or No Docs because no one was lying, they just didn’t put their income down. Bottom line is that originally these loans were for newly self-employed people or people who just didn’t want to document their income for various reasons (tax returns were too large and complicated). But today they are used to buy homes that the borrower can’t afford in the first place. Our company tried to separate functions, so I was a “prime” loan officer and I would refer marginal buyers to our subprime loan officers. Every time someone wouldn’t qualify for a prime loan, I would just refer them to the subprime guy and ask him to do a stated, No Doc, etc. Bottom line is that first low supply low rates drove prices up, then interest only and neg am arms helped push them up and finally, when all else failed, just put someone in a Stated Income, No Ratio or No Doc to get them qualified. Oh – I forgot about 100% financing. Of course, no one buying a house these days has any money saved. Since we can now do 100% to $1M who needs savings? Basically, anyone who could fog a mirror could buy a house. This created a massive pool of buyers with a limited supply of homes. Any one who took Econ 101 can tell you what happens with large demand and low supply. Let me give you some examples of crazy loans: 100% to $800k, 1 day out of bankruptcy, credit score 580, 95% NO DOC to $700k and some lenders were doing 100% No Docs: again, no job, no assets needed. Anybody, anybody could get a loan. Here are some reasons why most major markets are in a bubble: 1) price/rents are way above historical averages 2 price/income way above historical averages 3) look at mortgage volume: Interest Onlys went from being almost non-existent to 40% of the market and higher in certain areas. 4) Neg am arms again almost nonexistent to a huge percentage of loans, 100% financing a huge percentage. I believe 40% of first time buyers used 100% financing last year. 5) Subprime loans made up 5% of the market in 2000 or so and about 25% now. The majority of subprime loans are 2/28s, meaning the rates will adjust in 2 years – these borrowers are finished. The easiest sale in the world for a loan officer is to say, ‘Oh just take this 8% loan and in two years your credit will improve and I will refi you to a standard, loan.’ It never happens, these people never fix their credit. 6) 2 Trillion dollars of ARMS are adjusting over the next 2 years. Many of these are interest-only so they will be hit by a rate increase and have to start paying principal. 7) Prices are already coming down much more than the stats show, NAR stats do not include seller concessions, the large majority of sellers/builders are paying closing costs, etc. 8) The NAR stats also operate with a lag. They use year over year numbers so if there was a lot of appreciation in the beginning of the year, but prices are falling now, albeit slowly, it still looks like houses are appreciating. Prices just turned negative year over year in San Diego, DC, Long Island, NY and many other places. 9) Inventory is going through the roof. real estate moves like a glacier. First inventory will rise, then sellers will have to adjust their prices down. Especially ones who can’t afford their ARMS. 10) Psychology will change. Behavioral economics studies how psychology can affect economic decisions. People get caught up in the mass psychology and get burnt, dotcom bust, the coming housing bust. Robert Schiller is a Yale economist who studies this and studies the housing market. His data shows that housing barely exceeds inflation, his data goes back something like 200 years. Now the scary part is that as home prices fall, psychology will turn negative. People will hate housing which will drive prices down further. Why would I buy now, if prices are falling, why don’t I wait? 11) people who put 0 or 5% down are already underwater. They will walk away from their homes. Foreclosures are going up across the country. Of course foreclosures were very low recently because all you had to do was throw a sign in your yard to sell your home. Now that homes aren’t selling or are selling for lower prices, foreclosures will continue to rise adding more inventory to the market. Note that foreclosures are a lagging indicator. I think the last time they spiked was in 1996 or so well after the last real estate bust of the early 90s. Oh I forgot, this isn’t just a US bubble. Most major markets around the world have housing bubbles, UK, South Africa, Ireland, Australia, Spain, etc. etc. The Fed caused a lot of this by dropping the funds rate to 1%. Other central banks lowered their rates spurring bubbles of their own. Australia has already seen a downturn in their markets, nothing huge yet, but I have seen declines of 5-10%. The UK is on the knife’s edge. Their personal bankruptcies are soaring. The most undervalued market is probably Japan. I’m sure most of you know but their housing market fell 50% or more from the early 90s. Their stock market fell 70% or more. Their housing market just showed some appreciation for the first time in many, many years. If the US goes into recession, which I believe we will in early to mid 2007, we could bring the whole global economy down. Things could get very ugly. Housing made up a huge percentage of GDP over the past 5 years (after the dotcom bubble), something like 40%. When housing goes, which it is doing, the US economy will go. My prediction is that 30% of agents, lenders, contractors, builders, painters, etc. will be out of the business in the coming year. It’s already happening. Here’s what makes this so scary, unlike the dotcom bubble, people now have enormous mortgage and consumer debts to service, many of which are ARMS, they are in serious trouble as the economy slows. The FED created one bubble after another and this one (housing) is much more dangerous than the first (dotcom). Ok that’s enough for now. I apologize for the spelling and grammar. I was trying to type as fast as possible. This is all my humble opinion and worth no more than 2 cents. 3:44pm: You are right, most people who visit this site know what’s really going on. But I can tell you, that 90% of the real estate community and the general public doesn’t get it. They now know that things are getting ugly because of the surge in inventory and the recent price reductions, but before August 2005, they had no idea that we were in a bubble. Honestly, it was very frustrating because I couldn’t talk to my coworkers, friends or in some cases, family about it. They either didn’t get it or would think I was nuts. My in laws thought I was crazy. I told my sister-in-law, to be careful about buying a house. They bought in April of this year. I told them to negotiate and get the seller to pay closing costs. I also told them to prepare themselves mentally that prices could fall after they buy. Of course, they didn’t really believe me. I put them on a 30-year fixed rate first mortgage that is interest only for the first 15 years and a 30-year fixed rate second. They put 5% down. There’s no doubt that prices in their neighborhood will fall and they will owe more than the house is worth. However, they have the protection of 30 year fixed rate loans. They will just have to ride out the downturn. I noticed the bubble in early 2003. It was just starting to get some publicity. When the multiple offers, escalation clauses started picking up, I knew people were being irrational and a bubble was forming. Also, when I started in 1994, I will never forget sellers bringing money to the table to sell their homes/condos, that they bought in the previous peak around 1989-1990. I knew that real estate goes in cycles. Unfortunately, a huge amount of new realtors, lenders, buyers, didn’t understand the cyclicality of the business. Angelo Mozilo, CEO of Countrywide, is quoted as recently saying, “I’ve never seen a soft landing in 53 years in the business.” He’s just pointing out that real estate goes in cycles. The problem is this cycle got so out of control that the downside could be much, much uglier than ever before. I just left the business, not because I couldn’t survive, but because I never liked it. The money could be incredible, but it was mindless work. I also did not like being tied to one area of the country. Once you build your book of business, its hard to relocate without having to start all over. Basically, as a mortgage lender, one does the same thing over, and over and over. How many loans can I do this week, this month, this year. It’s the same process every time, although it’s been streamlined dramatically since 1994. Now, don’t get me wrong, this year has been very ugly for many lenders, including myself. I saw the latest numbers for my company, everyone’s numbers are off 20-40%. And, we are a very strong mortgage company, because all of our loan officers work in real estate offices and do a large amount of purchase business. Lenders who focused on Refis are finished. If lenders do not have a strong base of builders or real estate agents referring them business they are in big trouble. Basically, lenders can get their business from realtors, builders, accountants, financial planners or past clients. The best source of course is builders or realtors. However, most builders will have their in-house lenders which they can steer loans to because they can pay closing costs or offer reduced points. Once a lender has been in the business for a long time, if they are smart, they will build a database of past clients who they will email, mail, etc. to bring new business in. They will also have a loyal following of real estate agents. So the longer one has been in the business, the more sustainable their business becomes assuming they are any good. Now, that doesn’t mean that they won’t have huge ups and downs during the cycles. I know many people who were making $300-500k just because they had been in the business a long time. I always considered a loan officer to be very close to a used car salesman. There are almost no barriers to entry, most states don’t require licensing or a test of any kind and no education is required. I also hated being on call 24 hours a day. It just wasn’t worth it to me. I always tried to steer my clients to the safest loans possible. For example if someone wanted an ARM, I tried to push them into a 10/1, 7/1 or 5/1 at the shortest. Even the 5/1 ARMS are at risk. Our 5/1 has an initial interest rate cap of 5%! So if someone starts at 4%, they can adjust to 9% at the first adjustment. I also, never offered Neg Am arms, I lost a bunch of deals because of that. 3:48pm [in response to a first-time buyer ‘in-waiting,’ asking when to buy]: You are in a great position. Time is on your side. Real estate takes a long time to move, the downcycle has only just begun. Luckily you didn’t listen to your agent. Many people bought the line, “if you don’t buy now you never will be able to.” That’s total BS. It’s tough being a contrarian but can be very profitable. The old adage, it’s best to buy when everyone is selling and best to sell when everyone is buying, is perfect for this real estate bubble. Now we are on the sell side of the equation as inventory continues to build. The buyers market has only just begun. 4:34 pm: I understand Negative Amortization option ARMS. They are terrible loans. Obviously they are a easy sell when the teaser rate is 1.5%. I had a lady and her real estate agent come into my office to do a refi. She had no idea what kind of loan she had so I told her to bring in her loan note and mortgage statement. She had a neg am option arm. Her loan had grown something like $8k on a $300k balance. She had no idea this could happen. She also had a prepayment penalty of 2%. I ran the numbers and it was a tough call whether to refi. If she planned to keep the house, then she should have sucked it up, switched to a 30 year fixed and rolled all closing costs into the loan. However, she couldn’t make the new payment. She had a renter in the home and now I’m sure she is in trouble. This was a few months ago. Yes, I have heard of caps of 110% up to 125% on these option ARMS. These ARMS helped extend the bubble by allowing marginal buyers to purchase homes. They are going to have massive default rates. I will tell you about an even worse loan. Our company offered two equity lines back to back. So you could do an 80/20 no money down with two equity lines. Well, equity lines are tied to prime, have only a life cap and are monthly adjustable. They started a 3.5% for the 1st loan and probably 7% for the 2nd in 2003 or so. Now they have gone up by 4.25% on each loan. Anyone still in those loans is finished. They are the riskiest loans I have ever seen. They were interest only and the buyer could ask the seller to pay all closing costs. So one could buy a home with nothing down, no money in the bank, no assets, with a monthly adjustable loan with no monthly or yearly rate caps up to $500k. And this loan was from a conservative lender. I would estimate that the majority of people with prepayment penalties have no idea that they have them. Very few people would realize they should get a rate break to accept a prepay penalty. Yes, I have seen a bunch of people consider refi-ing with a prepay penalty because they can’t afford not to. Honestly, I would say the great majority of home buyers do not understand their ARMs, the caps, whether there are prepay penalties and when their ARMS adjust. The buyer is usually more concerned with the payment than the type of loan they get. Of course, there are exceptions to this but I really believe that most of the buying public knows very little about how their mortgage works. Some understand that they have a 5/1 ARM and that the rate will adjust in 5 years. But they won’t know that the cap is 5% at the first adjustment. They also won’t know that they will have to pay principal at that time if they took an interest-only. Most lenders will say, oh you will either move to another house or refi before your 5/1 ARM comes do. Everyone buys that line and then forgets they have a time bomb waiting in 5 years. ☞ Now that you are about to jump out the window of your overpriced condominium, here’s the second, somewhat more sanguine view. It comes from a friend whose private jet is probably larger than yours (no offense) – or mine, for that matter (no exist) – which suggests he knows a thing or two about his business: I think it important that you differentiate the residential market vs commercial. Housing – big difference between high rise condos and single-family homes. While the first is set to blow up with speculators and mezzanine lenders holding the bag – and developers and senior lenders coming out ok – single-family home builders will just suffer a severe slow down – and will be okay if they are not over levered. Condo apt values should fall as speculators unload. The residential lenders, lawyers doing closings, title companies, residential brokers and mortgage brokers will suffer most – and then the general construction trades as the slowdown continues. In markets dependent on residential real estate like Miami, this will impact office and retail real estate – as they give up office space and consumers in these impacted industries have less to spend. But the labor market is tight enough so they will find new jobs easily but at less pay. Commercial markets remain strong – office rents and occupancies are rising since new construction costs are not yet supported by current rents – a number of factors have driven new construction costs through the roof: oil, China, and scarcity of materials and labor – most labor is made up from labor suppliers and illegal aliens – immigration reform would send labor costs to the moon. (Commercial spaces are rented to serve a business need – and as such, the occupancy while subject to variations in the economy, is a little less prone, initially at least, to suffer in economic downturns. If the downturn is prolonged, tenants do fail and vacate, and businesses to not expand at the same rate, but in 18 to 24 month slowdowns – as opposed to meltdowns – we usually have long-term leases so the tenants stay and pay – albeit they may profit a little less.) Retail sales and rents continue to climb – market is incredibly healthy in the open air shopping centers and moderately strong in enclosed malls – super discounters and high end retailers will perform well, guys in the middle will suffer. Retail rents are all about sales and sales are good – especially restaurant sales as the eating out trend keeps growing with more and better options for the consumers. Dual working households makes this trend likely to continue. Warehouse occupancies are ok – not great – and rents, likewise – but rising land prices and construction costs are positively impacting both of these and will continue to do so. Hotel room rates are rising – as again costs of new construction are too high to support new hotels – so, as with offices, growing demand with constant supply is leading to rising rates and values Finally there are rental apartment buildings – with the rush to condo conversions over (and higher interest rates shutting down home buyers in all but the super affordable categories) rental apartments are finally filling up – the demographic bubble coupled with the inability to replace supply bode well for a recovery in rental housing. There u have it. Just important for you to note, when you bash the real estate market, that it is only fair to do so to the residential component – and, more narrowly, the high rise condo world – especially in Miami, Las Vegas, and California. PS: We have always thought the leading economic indicator was the payment of rent by local tenants – they tend to be the least capitalized and the most subject to a slowdown in sales. Our rent collections on a sizeable portfolio have been very strong – unusually so for the summer months. Both inquiries and signings of new tenants in all asset classes – retail, office and industrial also continue strong – in fact, stronger than last year at this time period for office and industrial – and retail continues to be the power performer for the last six years. ☞ But what if $3.50 gas begins to cut into retail sales? And what if folks start saving for retirement instead of spending at the mall? Then again, if things do get rotten – and they might not – loan demand likely fall, and interest rates could fall, too . . . which would ease the pain somewhat for the folks with adjustable rate mortgages. And so it goes . . .
A Peculiar People August 9, 2006January 15, 2017 ERIC HOFFER, 38 YEARS LATER Alan S.: ‘Look when this was written – 1968! Do you remember Eric Hoffer? He was a longshoreman turned social philosopher. Not Jewish. He died in 1983, aged 81, after writing nine books and winning the Presidential Medal of Freedom. Here is one of his columns from 1968.’ ISRAEL’S PECULIAR POSITION by Eric Hoffer (LA Times 5/26/68) The Jews are a peculiar people: things permitted to other nations are forbidden to the Jews. Other nations drive out thousands, even millions of people and there is no refugee problem. Russia did it, Poland and Czechoslovakia did it, Turkey threw out a million Greeks, and Algeria a million Frenchman. Indonesia threw out heaven knows how many Chinese-and no one says a word about refugees. But in the case of Israel the displaced Arabs have become eternal refugees. Everyone insists that Israel must take back every single Arab. Arnold Toynbee calls the displacement of the Arabs an atrocity greater than any committed by the Nazis. Other nations when victorious on the battlefield dictate peace terms. But when Israel is victorious it must sue for peace. Everyone expects the Jews to be the only real Christians in this world. Other nations when they are defeated survive and recover but should Israel be defeated it would be destroyed. Had Nasser triumphed last June [1967] he would have wiped Israel off the map, and no one would have lifted a finger to save the Jews. No commitment to the Jews by any government, including our own, is worth the paper it is written on. There is a cry of outrage all over the world when people die in Vietnam or when two Blacks are executed in Rhodesia. But when Hitler slaughtered Jews no one remonstrated with him. The Swedes, who are ready to break off diplomatic relations with America because of what we do in Vietnam, did not let out a peep when Hitler was slaughtering Jews. They sent Hitler choice iron ore, and ball bearings, and serviced his troop trains to Norway. The Jews are alone in the world. If Israel survives, it will be solely because of Jewish efforts. And Jewish resources. Yet at this moment Israel is our only reliable and unconditional ally. We can rely more on Israel than Israel can rely on us. And one has only to imagine what would have happened last summer [1967] had the Arabs and their Russian backers won the war to realize how vital the survival of Israel is to America and the West in general. I have a premonition that will not leave me; as it goes with Israel so will it go with all of us. Should Israel perish the holocaust will be upon us. MORE ON STRINDBERG Yaakov Har-Oz: ‘I’m going to keep it down to two points: (1.) Anders Strindberg claims that, ‘Since its withdrawal of occupation forces from southern Lebanon in May 2000, Israel has violated the United Nations-monitored ‘blue line’ on an almost daily basis.’ I don’t know what reports he is relying on – he quotes ‘UN reports’ without giving any detail – but he does give one and only one concrete example, claiming that earlier this year ’15-year-old shepherd Yusuf Rahil was killed by unprovoked Israeli cross-border fire as he tended his flock in southern Lebanon.’ Did you happen to Google Yusuf Rahil? I did. It got 67 hits. All but one were cites to various versions of Strindberg’s article on the Web! (The 67th, tellingly enough, was a cite to a character in a movie.) It’s a bit hard to believe that this event actually happened, but wasn’t reported on anywhere. (2.) You suggest that the land should have been purchased. Ummm . . . much of it was. According to the Survey of Palestine of 1946, more than 70% of the land (pre-1967) was owned by the British Mandate, which was the successor to the Turkish Ottoman occupiers. (Most of this devolved to Israel after 1948 and the remainder became Gaza and the West Bank.) Land in the area now known as Israel owned by Jews amounted to some 8.6%. Land owned by Arabs who left the country amounted to 16.5%, and owned by Arabs who remained 3.3%.’ EXECUTING 11 YEAR OLDS ‘Gays flee Iraq as Shia death squads find a new target,’ reads the headline.
The Real Estate Recession – Ouch! August 8, 2006March 4, 2017 ‘I can’t tell you if the use of force in Iraq would last five days, or five weeks, or five months, but it certainly isn’t going to last any longer than that.’ – Donald Rumsfeld, November 14, 2002 CINNAMON Eric Batson, MD: ‘I did a two-minute search on cinnamon and LDL in the peer-reviewed medical literature. TWO studies exist. The first is the one referred to by Monty Goolsby. It ends with . . . ‘They point out the study is preliminary and is based on findings from a relatively small group of volunteers.’ The second study was published in May, 2006. Its abstract can be found here. This [slightly larger] study had 79 people and found NO effect on LDL. Will cinnamon hurt your gentle readers? Probably not, but we should all concentrate on treatments that are known to work before we spend time and money on unproven remedies. The indirect harm caused by ignoring effective treatments in favor of the unproven and perhaps ineffective can be significant.’ Steve Farthing: ‘According to Dr. Julian Whitaker’s Health and Healing newsletter, June 2006 p.5 – ‘In the past, I suggested sprinkling a little cinnamon on your oatmeal or applesauce. However, recent research has revealed that when cinnamon mixes with saliva, its beneficial components are rendered ineffective. Therefore, I now recommend taking cinnamon in capsule form.’ ‘ THE REAL ESTATE BUST / RECESSION Ouch. Ouch, ouch, ouch, ouch, ouch. AND THIS JUST IN . . . . . . from the Borowitz Report: Bush Urges Bin Laden to Take August Off Warns Terror Leader of Burnout Having begun his month-long summer vacation at his ranch in Crawford, Texas, President George W. Bush used his weekly radio address on Saturday to urge Osama bin Laden to take the month of August off as well. President Bush said he was taking the “extreme step” of “slipping out of vacation mode for a few seconds” to address the al-Qaeda leader directly. “I strongly recommend that you take August off, because if you don’t, you are greatly increasing your chances of burnout,” Mr. Bush told the al-Qaeda madman. “Even an evildoer like yourself cannot evildo twelve months out of the year.” The president added that if Mr. bin Laden takes his advice, “In September, you will emerge from your vacation feeling rested, refreshed, and eviler than ever.” The president’s extraordinary message to the world’s most wanted man may have come in part as a reaction to a Presidential Daily Brief (PDB) received last week entitled “Bin Laden Determined Not to Take a Summer Vacation.” “The president was concerned that Osama bin Laden apparently is planning to work straight through the summer,” White House spokesman Tony Snow said today. “Also, he was very annoyed that he had to take time out of his vacation to read that two-page PDB.” For his part, President Bush said he intends to spend this August much as he did last year, clearing his ranch of brush and antiwar activists. Elsewhere, after ten years of exploring Mars most scientists believe that there is no life there, but NASA proposed spending $400 billion more “just to be sure.” If they made a movie about YOUR HOUSE, would you go see it? Well, they have.
Cinnamon Tea and the 72 Vestal Virgins Who Await August 7, 2006March 4, 2017 YOUR CHOLESTEROL Monty Goolsby: ‘I don’t know why this information isn’t being screamed from the roof tops. My LDL bad cholesterol (which was not terrible) was reduced by 55% when I started taking 1/4 of a teaspoon of cinnamon twice a day. You can search on ‘cinnamon + LDL‘ and get lots of other articles. Even my doctor didn’t know this.’ ☞ One more reason to drink Gold Rush Cinnamon Honest Tea (of which I own a tiny sliver). THE LEBANON Michael Axelrod on the Christian Science Monitor piece I posted Friday: ‘I know you want to be balanced, but giving more exposure to that ridiculous bigoted article by Strindberg is perhaps going too far. Has this guy ever read any history? Does he know that after WWII, about the time the modern state of Israel began, the Allies (US, UK and USSR) went on an ethnic cleansing rampage in Europe. Over 16 million ethnic Germans were expelled from their homelands around Europe. The directive is right there in the Potsdam Agreement. About 2 million died. Does he know that over 600,000 Jews were driven out of their respective countries in the Middle East in 1948? Does he realize that if anyone ‘stole’ Palestinian land it was the Ottomans? Once again the revisionist historian Benny Morris is evoked. There are many responses to his revisionism. Moreover you should read what Morris says today!’ UNDERSTANDING SUICIDE BOMBERS One view from a guy who’s been there, coming soon to a theater near you. (Or, at least, one near me.) OHIO, HATE STATE Scary fundamentalism is not only the province of the Middle East. From Salon a couple of years ago: Patrick Johnston, a physician and vice chairman of the Ohio branch of the far-right Constitution Party . . . isn’t officially affiliated with Burress’ group, Citizens for Community Values, but the two men worked together collecting signatures to put Issue 1 on the ballot, and Johnston says they talk often. . . . . . . [According to Johnston], the decision to put gays to death is a matter best left up to the states. “If we ever had a nation sufficiently Christian” to make homosexuality illegal, he says, imposing capital punishment for homosexuality would be a subject for “an in-house debate. There were capital crimes in the Bible, and that would be something debated.” ☞ The initiative Burrress and Johnston sought to put on the ballot would not just have amended the Ohio Constitution to define marriage as between a man and a woman . . . it would have forbidden the state from ‘creating or recognizing’ a legal status that would ‘approximate the design, qualities, significance or effect of marriage.’ Like civil unions. Burress and Johnston did manage to get it on the ’04 ballot, and, as some will recall, the people of Ohio passed it 62% to 38% (but have not yet had the ‘in-house debate’ on whether or not to kill gays).
Mr. Sabatin’s Dunums August 4, 2006January 15, 2017 AL-BA YOU DINNER IF THIS WORKS Rob: ‘Is it game over on the ALBAW warrants? Time to dump them and buy more Borealis?’ ☞ No. I would hold both – but only as speculations, because both are just that. The ALBA warrants give you the right to purchase a share of ALBA at $5 until February 16, 2009. As I type this, the stock is $5.35 and the warrants are 36 cents (I just bought more). All I know about this – and I mean all I know about this – is that the guys running ALBA are smart guys, and at 36 cents, I just paid a one penny premium for an option that has two and a half years to run. (It’s a penny premium because the right to pay $5 for $5.35 shares right now is worth 35 cents; the extra penny gives you the right to do it any time in the next two and a half years.) I may definitely lose 100% of my bet – the world financial markets may descend into a chasm or the smart guys may not be as smart as I think. But I like the odds. Tails, I lose 36 cents; heads, if they manage to get the stock to $8, say, sometime in the next two and a half years – let alone higher – I win $3 (which would be a lightly-taxed long-term capital gain of $2.64 on my 36-cent cost). I don’t even feel too bad about the warrants I initially bought at 70 cents. Yes, they’ve declined by half if I were to sell them today. But other things being equal, if you figured stocks might go up 5% a year (just to pull a not-crazy number out of a hat, though I think the next two and a half years could be tough), then a $5.35 stock like ALBA, if it did nothing smarter or dumber than average, would be worth $6.04 when these warrants expire – at which time their intrinsic value would be $1.04. The thing to focus on here (because I see you beginning to squint as you contemplate the opportunity) is not whether you wind up paying a penny or a dime or even a twenty-cent premium over this warrant’s intrinsic value – but whether you can afford this toss of the dice at all. If the stock is not above $5 by 2009, you will have lost everything, regardless of what you paid. And if it does rise some from here, then having paid a nickel or a dime premium instead of a penny should not leave you too badly bruised. (But if you do decide to do this, don’t purposely throw money away. Buying 50,000 warrants at Ameritrade nicked me for an $8 commission. There will be another $8 when I sell. The same two trades at my full service broker, instead of $16 in commissions, would have cost $2,000.) LEBANON – TWO MORE VIEWS From Tuesday’s Christian Science Monitor: Hizbullah’s attacks stem from Israeli incursions into Lebanon August 1, 2006 By Anders Strindberg NEW YORK – As pundits and policymakers scramble to explain events in Lebanon, their conclusions are virtually unanimous: Hizbullah created this crisis. Israel is defending itself. The underlying problem is Arab extremism. Sadly, this is pure analytical nonsense. Hizbullah’s capture of two Israeli soldiers on July 12 was a direct result of Israel’s silent but unrelenting aggression against Lebanon, which in turn is part of a six-decades long Arab-Israeli conflict. Since its withdrawal of occupation forces from southern Lebanon in May 2000, Israel has violated the United Nations-monitored “blue line” on an almost daily basis, according to UN reports. Hizbullah’s military doctrine, articulated in the early 1990s, states that it will fire Katyusha rockets into Israel only in response to Israeli attacks on Lebanese civilians or Hizbullah’s leadership; this indeed has been the pattern. In the process of its violations, Israel has terrorized the general population, destroyed private property, and killed numerous civilians. This past February, for instance, 15-year-old shepherd Yusuf Rahil was killed by unprovoked Israeli cross-border fire as he tended his flock in southern Lebanon. Israel has assassinated its enemies in the streets of Lebanese cities and continues to occupy Lebanon’s Shebaa Farms area, while refusing to hand over the maps of mine fields that continue to kill and cripple civilians in southern Lebanon more than six years after the war supposedly ended. What peace did Hizbullah shatter? Hizbullah’s capture of the soldiers took place in the context of this ongoing conflict . . . . . . [I]t is the manner in which Israel was created, and the ideological premises that have sustained it for almost 60 years, that are the core of the entire Arab-Israeli conflict. Once the Arabs had rejected the UN’s right to give away their land and to force them to pay the price for European pogroms and the Holocaust, the creation of Israel in 1948 was made possible only by ethnic cleansing and annexation. This is historical fact and has been documented by Israeli historians, such as Benny Morris. Yet Israel continues to contend that it had nothing to do with the Palestinian exodus, and consequently has no moral duty to offer redress. . . . The Palestinians are the Indians who refuse to live on the reservation; the Negroes who refuse to sit in the back of the bus. By what moral right does anyone tell them to be realistic and get over themselves? . . . The fundamental obstacle to understanding the Arab-Israeli conflict is that we have given up on asking what is right and wrong, instead asking what is “practical” and “realistic.” Yet reality is that Israel is a profoundly racist state, the existence of which is buttressed by a seemingly endless succession of punitive measures, assassinations, and wars against its victims and their allies. A realistic understanding of the conflict, therefore, is one that recognizes that the crux is not in this or that incident or policy, but in Israel’s foundational and persistent refusal to recognize the humanity of its Palestinian victims. Neither Hizbullah nor Hamas are driven by a desire to “wipe out Jews,” as is so often claimed, but by a fundamental sense of injustice that they will not allow to be forgotten. . . . If Israel, like its former political ally South Africa, has the capacity to come to terms with principles of democracy and human rights and accept egalitarian multiracial coexistence within a single state for Jews and Arabs, then the foundation for resentment and resistance will have been removed. If Israel cannot bring itself to do so, then it will continue to be the vortex of regional violence. • Anders Strindberg, formerly a visiting professor at Damascus University, Syria, is a consultant on Middle East politics working with European government and law-enforcement agencies. ☞ But what a gamble that would be: turning over majority rule of Israel to non-Jews. After thousands of years of enslavement, persecution, and genocide, you will forgive me if I think it may be asking too much. From yesterday’s San Diego Union Tribune: Losing freedom bit by bit By Gary Fields August 3, 2006 HUSAN, West Bank – Although the war in Lebanon and Gaza now dominates the attention of people here in the West Bank, recently while in the Palestinian village of Husan near Bethlehem, I was witness to another type of territorial conflict that in many ways lies at the foundation of the war gripping the region. I spent the day with Mohammed Abdel Aziz Sabatin, a farmer from one of the largest and oldest families in this small village. The Sabatins have lived in Husan for at least 400 years farming this land, he tells me. Recent history, however, has altered the conditions of farming for the Sabatin family – and for innumerable Palestinian farmers who share a similar fate. In order to access his land, Sabatin not only has to get a permit from the Israeli military authorities who administer the occupied territory of Palestine. He also has to go though the security gate of an Israeli settlement, Betar Illit, to get to his land, which his family has owned and cultivated for 200 years. He is not allowed to drive his car to his land. He must park it in the village, walk across a road for Israeli vehicles only, and then walk into the settlement where he then confronts a security checkpoint that decides whether he can pass. Like virtually all Israeli settlements in the occupied territory of Palestine, Betar Illit is built on land belonging to Palestinian farmers, in this case, farmers from Husan. To build the settlement in 1989, the authorities of Betar Illit confiscated 5,000 dunums of land belonging to Husan village. A dunum equals a quarter of an acre. The process for such confiscations is very simple. The settlement authority petitions the Israeli government to create a settlement in a certain location. Upon favorable review, the government declares the area in question to be Israeli “state land” to be used for the public purpose of housing Israeli citizens, and then cedes the land for development to the settlement. The land is then rezoned by the occupation authorities as residential and thus the former agricultural use by Palestinian farmers is declared “nonconforming.” The political architect of this settlement program was none other than Ariel Sharon. In a celebrated quotation, Sharon described the objective of Israeli settlement policy to be the taking of land in occupied Palestine “dunum by dunum.” What enables Israel to take land for settlements in this fashion? The answer is transparent: force. It is Israel’s military occupation of Palestine – and the backing it receives from the U.S. government – that provides it with the power to engage in this activity. Of the 5,000 dunums taken from Husan by the settlement, 30 dunums belonged to Sabatin. On these 30 dunums now stand apartment blocks housing Israelis. In a way, Sabatin might be considered “lucky.” After all, the settlement did not take all of his land. He still has 50 dunums remaining that now lie in the shadow of the settlement, meters away from the buildings that occupy the land confiscated from him. As we walked through his fields, we could see people from the settlement watching us the entire time. Sabatin is a soft-spoken and gentle man. He told me how the settlers burn and vandalize his remaining olive and fruit trees on a daily basis. Just as he was describing this to me, we came upon upon several olive trees apparently burned just that morning. The ashes were still smoldering from this detestable act when we came into his fields. He just stares at the blackened limbs and burnt ground in silence. As we go through his groves, other trees, almond and fig, revealed branches torn off and scattered on the ground, the trees bending and disfigured. “I love these trees,” he tells me. “They are part of my family.” Sabatin then told me a story of his father, apparently a very proud and feisty personality, when they were building the settlement. His father tried to prevent the bulldozers from uprooting the trees on his land confiscated for settlement construction. He stood in the path of the bulldozer, refusing to move, and then the army came to arrest him. They demanded his ID. The father of Sabatin picked up a handful of dirt and screamed at the soldier, “This is my ID!” After wandering for some time through the olive, fig and almond groves, the security man from the main gate at the settlement entrance intercepted us in the field. He had a call from one of the settlers about us. Sabatin told the security person about the fires and vandalism and asked him why nothing was done to prevent settlers from destroying his livelihood. “The settlers are minding the fields,” the security person retorted. “You see, what can I do?” Sabatin asks me in his gentle voice. If these difficulties weren’t enough, now Sabatin has something else to worry about. In another part of Husan, he owns a beautiful piece of land, roughly 20 dunums where he grows vegetables. This land is irrigated with natural aquifers typical of land near the border with Israel but inside Palestinian territory. Israel has always coveted these natural water sources. Recently, the Israeli authorities informed Sabatin, along with others in the village, that this land is in the pathway planned for The Wall. When built, The Wall will confiscate an additional 400 dunums from Husan, including the 20 dunums from Sabatin. It is hardly a coincidence, say Palestinians, that the route of The Wall aims to seize the most valuable Palestinian water sources. Dunum by dunum, more and more Palestinian land is changing hands. Little wonder that so many people here are so angry. We spent close to three hours in Sabatin’s fields during which time he described how desperate he is to keep what he still has. I don’t know how he can go on. I felt such compassion for his resilience. As an American, I was uneasy wondering what he might think of me and the policies of my government. Then, of course, at the end of the tour, he invited me to his home for dinner, a feast in fact, breads just baked from the ovens, the freshest vegetables, olives from his trees. He kept telling me how welcome I was. Fields, author of “Territories of Profit,” is currently in the West Bank interviewing people for his upcoming book on The Wall. He teaches in the Department of Communication at the University of California San Diego. ☞ But then there’s this: Zach: “Hezbollah have clearly stated that their aim is the destruction of Israel. Hezbollah, as its supporters Syria and Iran, characterize the Jewish people as pigs and monkeys. The last time Jews were driven out of a land and characterized as sub-human, millions were slaughtered. We wonder now how Jews and the world at the time waited so long to fight back. Israel is not waiting this time.” ☞ But then there’s this: Tom Roth: “Arabs feel the State of Israel was forced on them. That the Arabs living there were shoved out of the way. I still don’t understand how the post WWII powers could give the land to the Zionists when people already owned it.” ☞ I’m not sure how much ownership there was . . . I think it was mostly nomads, not deeded homes in subdivisions the way we think of it in McLean, Virginia. But, yes: somehow, this land should have been purchased, and some permanent, inviolate, pansectarian international status assured for Jerusalem. It’s clear you don’t have to be a bloodthirsty fanatic – on either side – to feel viscerally aggrieved. So the one thing I’m sure of is that we were unwise to break off our engagement in the Mideast peace process (not to mention our engagement with North Korea) when President Bush’s team took the reins. With enough talking and cajoling and creativity, there has to be a better way to resolve this than, say, lighting a slow fuse to Armageddon. And so one grasps wistfully for the grand solution (think Rodney King, when he asked, with childlike naiveté, “Can’t we all just get along?”). Jonathan Edwards: “It’s interesting that you dare to suggest the Israelis move elsewhere, when Ahmadinejad did so and was roundly criticized. What’s the difference, do you think?” ☞ That he would kill them if they don’t? (And that I was not seriously suggesting we move Israel? But $500 billion to retroactively purchase that land, funded by a global oil tax, could be nice.) Hey – It’s Friday! If they made a movie about YOUR HOUSE, would you go see it? Well, they have.