Perhaps society's current relationship with debt has not changed, but for those with the courage to read today's gripping post, your feelings and attitudes toward debt certainly will transform.
Irvine Home Address … 28 Well Spring Irvine, CA 92603
Resale Home Price …… $4,295,000
{book1}
Abra-abra-cadabra
I want to reach out and grab ya
Abra-abra-cadabra
Abracadabra
The Steve Miller Band — Abracadabra
Hang on, Alice, as we bolt through the rabbit hole on an adventure to financial Wonderland. Come with me on a fantastic journey to the Great Lakes to save fish falling prey to evil bloodsuckers, and along the way we will save borrowers from the evil of debt peddler, Louie the Lender Lamprey.
The Sea Lamprey and the Great Lakes
Prior to canals of the nineteenth century, the Great Lakes were a thriving fishery. With over fishing and the introduction of the sea lamprey through the canals, the fisheries of the Great Lakes were devastated. According to Wikipedia:
The Sea lamprey (Petromyzon marinus) is a parasitic lamprey (a kind of jawless fish) found on the Atlantic coasts of Europe and North America, in the western Mediterranean Sea, and in the Great Lakes. It is brown or gray on its back and white or gray on the underside and can grow to be up to 90 cm (35.5 in) long. Sea lampreys prey on a wide variety of fish. [Pictured right: Louie the Lender Lamprey] The lamprey uses its suction-cup like mouth to attach itself to the skin of a fish and rasps away tissue with its sharp probing tongue and teeth. Secretions in the lamprey's mouth prevent the victim's blood from clotting. Victims typically die from excessive blood loss or infection. [emphasis is mine]
The sea lamprey and the fish the lamprey scrapes and chugs is an allegory for the modern lender and the borrower the lender infests.
Lenders and the Sea Lamprey
The similarities between sea lampreys and lenders are as follows:
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The sea lamprey's sole purpose is to attach itself to a productive organism and syphon a steady stream nutrients from the host's bloodstream. A lender's sole purpose is to attach itself to a borrower and obtain a steady stream of cashflow from the borrower's productive financial life. [Pictured right: Louie's courtship dance]
- The sea lamprey provides no value to the fish, and once attached it remains attached. The value of lending to borrowers is debatable (mortgage debt is tolerable, but consumer debt is not); however, with the "sophisticated" borrowers of today who believe debt is something serviced and not retired, once a lender becomes attached to a borrower, they stay attached for life.
- Sea lampreys were not a problem in the past, and fish populations had to adapt or die when the sea lamprey was introduced. Modern credit cards were introduced in 1958, and with the explosion of debt availability over the last 50 years, our population has come to accept borrowing — and its associated lending sea lampreys.
- If the sea lamprey were eliminated, nutrients diverted to its existence would instead remain with the fish resulting in stronger fish populations. If lenders were eliminated, particularly those focused on providing consumer debt, billions of dollars flowing in to lending would be spent by a stronger, debt-free population on more productive economic uses. Consumer credit only benefits lenders.
- Sea lampreys tend to seek out juvenile fish because the young have fewer defenses, the young are stronger and more resilient and thereby less likely to die, and the young fish can nourish the lamprey indefinitely. Lenders indiscriminately target 18 to 21 year-olds through credit card offers and mountains of student loan debt in order to acclimate teens to debt and assist them in sustaining debt through their funeral pyre.
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If a sea lamprey causes the death of its host, it detaches itself and moves on to another. If a lender bankrupts a borrower — causes a financial death — the lender detaches itself and moves on to another borrower. No emotion when pulling out.
Mortgage Debt
Most home buyers allow lenders to suckle financial excretions through a home mortgage. If the cost of the mortgage is offset by saving on housing expenses, the debt is actually beneficial, and the relationship is symbiotic, like a clownfish (Nemo) and its protective sea anemone, or perhaps the Trill from Star Trek. However, if mortgage interest exceeds comparable rents, the excess lender slurp is parasitic and the borrower loses life force to the lender lamprey.
A typical borrower during the Great Housing Bubble looked like a fish with the two implanted sea lampreys [Pictured right: Big and Little Louie after borrower attachment]. The first mortgage is like the lamprey attached at the throat, and the second mortgage is like the one attached at the nether regions.
Do you know that sensitive spot on the soft tissues of your throat about an inch above your collarbone? Taking on mortgage debt is akin to allowing Louie the Lender Lamprey to drive his dagger teeth deeply into your epiglottis with a cartilage-cracking crunch; let him rasp a gaping gash, ply you with salivary siphon grease, and deflect your financial food toward his gullet.
The pain is necessary evil perhaps, but one to be minimized to the degree possible and removed at the earliest convenience. Unfortunately, most borrowers want to secure the largest toothy leech available and nourish the sponger's growth until the borrower's death. ~Gulp~
The second mortgage — the lamprey biting the borrower's butt — is usually a non-lethal pain in the a$$. In fact, this biting flesh wound is similar to any consumer borrowing like home equity lines of credit, car loans, credit cards, and other payment liabilities like forgotten subscriptions to magazines, websites, or software. Taking on debt may have delivered a fleeting pleasure, but like gonorrhea, debt plagues borrowers until the debt-disease is treated and ultimately banished forever for optimum financial health.
As our foreclosure crisis illustrates, many borrowers who take on excessive debt and hope to manage their parasites underestimate the tissue damage and succumb to the vampiric excess. Like Louie's former customers [pictured to right], many people bought McMansions, they took out multiple mortgages, and they used financing terms requiring accelerating home price appreciation in order to function. The collapse of hundreds of thousands of personal Ponzi Schemes litters America with of rotting financial carcasses — a pungent and painful reminder. Renting-former-owners spend their hours in fear or denial of the collection call yet to come from a long-forgotten mortgage debt holder.
Like most others, I will select a lender lamprey and hope my self discipline prevents him from growing out of control. Images like the ones from this post should ensure I remain focused on his removal.
[seven seconds you will enjoy]
The lamprey earings are a nice adornment, aren't they?
Irvine Home Address … 28 Well Spring Irvine, CA 92603 
Resale Home Price … $4,295,000
Income Requirement ……. $902,530
Down Payment Needed … $859,000
20% Down Conventional
Home Purchase Price … $3,000,000
Home Purchase Date …. 8/4/2005
Net Gain (Loss) ………. $1,037,300
Percent Change ………. 43.2%
Annual Appreciation … 7.6%
Mortgage Interest Rate ………. 5.13%
Monthly Mortgage Payment … $18,719
Monthly Cash Outlays …..….… $24,120
Monthly Cost of Ownership … $20,150
Property Details for 28 Well Spring Irvine, CA 92603
Beds 4
Baths 5 full 3 part baths
Home Size 6,000 sq ft
($716 / sq ft)
Lot Size 29,479 sq ft
Year Built 2007
Days on Market 4
Listing Updated 2/22/2010
MLS Number U10000832
Property Type Single Family, Residential
Community Turtle Rock
Tract Cust
Private Shady Canyon estate evokes the relaxed elegance of the Italian countryside. Nestled on a large lot with only one neighbor and bordered by a nature preserve, the home creates an ambiance evocative of the Italian countryside – with romantic Tuscan architecture and a floorplan designed for effortless indoor/outdoor living and entertaining in all seasons. Lovely Tuscan architecture, interiors with 4 bedrooms, 5 and 3 half baths, in-law suite. Secluded courtyards, loggias, stone cabana, outdoor fireplaces and kitchen, putting green. Adorned in the finest custom finishes of exotic artisan stonework, rich millwork and trompe l'oeil paint finishes, as well as Albertini doors and windows from Italy, the main level offers generously scaled rooms suited for casual everyday living or more formal entertaining, including living and dining rooms, a massive family room, and a large chef's kitchen with catering/prep area and butler's pantry.
The photography is breathtaking.
Everything about these photos is perfect. Top-notch photographic work.
The title of this post is Feelings and Attitudes Toward Debt Transform in Housing Bubble Aftermath, but in fact, this post is the transformation. It is an active agent making this transformation happen.
Some people will undoubtedly react negatively to my overtly manipulative use of powerful images and evocative language; the edge is always a perilous dance. I purposefully went guttural to create a very strong negative association to debt. If you like debt, if you find value in it and want to keep it, I told you how I influenced you. If you want to override the effect, go out and spend some money on your credit card — procure something vacuous that provides immediate gratification, perhaps a massage — make sure you provide direct, positive reinforcement for credit spending, and you will counteract any impact of reading this post. Will that be a happy ending?
The purposes of this post are (1) to entertain, (2) to get you to think about your relationship to debt, (3) to persuade you that debt dependency is a bad thing, and (4) to provide ongoing debt-free reinforcement to those who bookmark this post and return to it when needed. Giving up a debt-dependant lifestyle is overcoming vice, never an easy task. Writing like this helps break down the positive associations of instant gratification and replaces it with negative associations that will make you revile debt. I think that is a great thing, and anyone looking for help putting away the credit cards will agree with me.
This post is not to be taken literally or interpreted as my nuanced opinion on the subject. It was fun to write, it serves a purpose, and I even if you disagree with my attitude about debt, and perhaps you feel my images and references a bit too harsh, I hope you enjoyed the craft of the post. Blogging is a unique art form, and I am enjoying its exploration.
[Artist's Rendering above: Louie the Lender Lamprey — next CEO of Goldman Sachs]
I want to extend special thanks to Sean O'Daniels for his last-minute drawing of Louie. Sean and I are discussing a collaboration on the Monsters of Debt. I look forward to seeing what his creative mind conjures up.
Looks like initial purchase was only land. $1.2M building the house?
I don’t know what the owners invested in the land. There is a $3,000,000 loan on the property, and I would guess the owners paid about $1,200,000 for the land, but I don’t know. Whatever the owners recover over $3,000,000 is how much of their equity they get back.
I can’t imagine what kind of a pretentious douche would want to live in something like this. This place is the Columbian drug lord’s house in every James Bond movie. Can’t you picture some drug boss with a white suit and a fedora smoking cigars on the couch ordering people be snuffed out? Either that or picture the king from Braveheart strutting through the living room screaming that he shall have William Wallace’s head!
It always amazes me how over the top Americans go with these projects. Whether it be building a Yin Yang palace to eat your Pei Wei in with your chopsticks or an Italian Chateau to drink wine and evoke the relaxed countryside of some other country while wanking yourself.
Whenever you see a realtor use the word ‘exotic’ – think ‘superficial’. That’s all this place is.
This is a $4M house. Maybe the pretentious and superficial comment is best saved for the real posers.
I never said that it could not be sold for 4M – I was just commenting on how superficial the style is.
It would be a great place to throw a Toga party, but as far as a place to live in for an extended period of time? It has no appeal to me whatsoever.
Would much rather spend 4M on something else.
When some of these coastal mansions get auctioned, prices will go haywire. For $4M you can get a property in Laguna Beach that is truly superb.
…and deal with all the traffic?
Actually, this property seems to be on the very god side of Shady Canyon. Looking over the valley all you need is a sheep herder, a dog and a bunch of sheep and you’d think you were in the foothills of the Pyrenees. In many ways the only places I can think in SoCal like this are up near the Reagan Library up in Simi Valley. But Shady Canyon is next to civilization.
LB, OTOH, is a traffic nightmare and it much more crowded.
Now, I don’t care much for the place myself. It does look too much like a place out of Colombia were some Dons smoke RyJ LE Robustos while they plan the next shipment to Miami.
Too much
http://www.crackthecode.us/images/realtorbation.jpg
Oh, Oh, I have a sale! You know what I’m talking about
The listing agent was totally showing the oh face on that one. Good lord, the thing almost reads like one of those porn novels. I felt like I was being molested with each creepy sentence.
“Private Shady Canyon estate evokes the relaxed elegance of the Italian countryside.”
For $4.3M I could get the real Italian countryside, complete with a new Ferrari 458 Italia to cruise in.
I like the analogy, but I kept thinking politician and taxpayer were an even better fit than lender and borrower.
I’d like to submit union pension recipient and tax payer, although S&P100; and taxpayer may be more inclusive.
“I kept thinking politician and taxpayer were an even better fit”
And the special interest group and politician is another.
Can you see a group of lobbyist lamprey descending on the capital to attach to the politicians there?
Some of the consumer debt can be productive – just not very often. For example one might say a loan for a good reliable used car for a new college grad is more useful than a mortgage if the car helps produce income (ie. Provide transport for the new grad to get back and forth to work, or to drive as part of their job).
I agree the car is a good example. Sometimes you need to buy something before you’ve been able to save up enough money to pay for it. As reliable of a car as you buy the first time around, even with good maintainence, you’re not entirely in charge of when it starts dying to the extent that the repair costs on a every six month basis are equal to the loan costs on a replacement. Buying the next car on credit allows you to productively get on with your work, provides a sale to the car dealer (i.e. adds to GDP directly) and the lender collects his cut for facilitating the transaction.
Ideally you want to get to the point where your car-fund is ready to go by the time you need another one, but that could take until your mid-40s to achieve.
Yes, the student loan debt and credit card addiction parts are part of what is keeping people from achieving this at a younger age, but even without those, at entry level salaries, if your first car isn’t free, it could take 6-7 years to save up for the next one, and that’s only if it’s a real priority.
I disagree. If you can’t pay cash for a USED car, you should be taking public transportation.
Public transportation is not plentiful here and it’s simply not an option for many people. There’s nothing wrong with a modest car loan.
Or a motorcycle…
The new college grad might do even better to eschew the car loan in favor of the bus or train, and if there aren’t any of those, live VERY close to work…especially when gasoline hops back into the $3-4/gallon range (or worse).
One of the best ways to keep your living costs in line and thus reduce debt dependence is to keep energy consumption to a minimum, because energy is going to take a bigger chunk of our paychecks, directly or indirectly (higher costs for everything) than it has until now.
“The value of lending to borrowers is debatable …”
I know one country with broken banking system. No lenders. None at all. How do people buy houses in that country? All cash transaction, and it takes approximately 150-230 years of median income to accumulate money. Their typical landlord behaves like medieval baron in family’s castle. So rent is out of control too.
The Italian Cypresses lining a drive, like the one at Maximus’s home from Gladiator is a nice picture. That was a modest farmhouse…on a farm.
http://www.norcaltrees.com/Images/BigImages/Italian_Cypress_l.gif
Please tell me the putting green isn’t Maximus’s? I can’t see him golfing…
IR – have you heard about Dave Ramsey’s Financial Peace University? I think you would like it. My wife and I went through this late last year and we are working on getting ourselves out of debt. Once you commit and begin the process it actually becomes sort of painful to use the card because you’ve worked so hard to get to the point where you are and paying debt off becomes self-reinforcing.
Check it out – you may want to recommend it to your readers.
Cheers!
(Disclaimer – I have no stock in Dave Ramsey and reap no financial reward from this posting. Only the satisfaction that I might help another soul avoid the lamprey.)
Yes, I originally had a section recommending him, but I cut it out for brevity. I strongly agree with what I have read and heard from Dave Ramsey.
Ain’t Irvine grand? Like 4,200 grand?
Just think, Sand Canyon was supposed to go directly to the Pacific Coast Highway so EVERYONE could have another access road to the coast. The only other routes are Jamboree, MacArthur, or Laguna Canyon.
Yes, this snobbery serves the community much MUCH better than a road that would have relieved congestion and saved fuel for anyone that has to go to the coast.
On the positive note, there are many, many famous and extremely wealthy people that live in that community. I’m surprised there isn’t a line of women waiting to hike into the “shady canyon”, who knows, it could be the gold digging rush of 2010. Instead of panning for gold, you could MAN for gold.
Consumer debt is a stupid tax just as the Lottery is. I’ve never bought a Lottery ticket, not that stupid, but I did have credit card debt in my 20s – yes, that stupid.
Yuck! And I thought the only problems the Great Lakes had were the Asian Carp and Zebra Muscles. I wonder how these ocean critters manage to survive in the cold, fresh water? Anyway, I totally agree with IR about debt. I’m still stuck with my 15 year mortgage, but I have no other debt. My wife’s (used) vehicle was purchased with cash. Once the mortgage is paid off, I plan to borrow nothing for the rest of my life. The leaches will have to find someone else’s blood to suck. My #1 motivation these days is to sock away cash. The more I can save each month, the happier I am. When I am forced to spend money on something, it brings me down. The dilemma is, where do I keep the cash? I’ve been using an ING money market, which currently pays 1.2%. I kinda feel dirty contributing to a big bank’s bottom line. But I’m not really inclined to stuff $100s in my mattress. And the local banks pay more like 0.0%. I still need a checking account, too. It is painful to me that I am still reliant on banks for these services. I wish I could be done with them for good.
I have considered renting a bank deposit box and stuffing it with cash. Safer than a matress and it would deny them the ability to perform their fractional reserve voodoo on my cash. Would have to pay some rental fees and get no interest, but with interest rates so pathetic right now it might be worth the statement. At least if they start denying withdrawals to people I would assume the folks could still get their vaulted cash.
I would question the example of a car. If I buy a nice, safe and new $40,000 car, pay $3,500 in tax, $800 in registration (even if I get to write off the tax per the Obama stimulus package…so deduct $1,200), the vehicle still totals $43,100. By tying up that amount in a depreciating asset, you lose the interest (say 2.2% after tax) of about $1,000 per year. Your car is worth about 60% of its original value after four years…so $24,000. So, even when you pay “cash”, you lose about $630 per month total. I leased my last vehicle for less than that several years ago. The oil line blew up one month before my lease was up and the dealer couldn’t completely fix it. I’m glad that I didn’t own that one!
Houses generally appreciate over time.
Houses generally appreciate over time.
Usually the house depreciates and the land appreciates.
IR, Like gonorrhea?
More like syliphis — harmful, contagious, can show no symptom for long periods, harder to treat if left untreated or improperly treated, can be passed on to your spouse and unborn children, but syliphis get into the brain and causes a variety of mental illness’. The latter points are more like unrestrained borrowing.
Thank you, with better research, I could have picked a more appropriate venereal disease.
LOL! I really like the sexually transmitted disease analogy.
The host (debt-slave) often times contracts the disease (indebtedness) after getting excited by, what appears to be, an attractive mate (bank) to consummate what the host believes to be a mutually beneficial act (take out a loan). Inhibitions of the host are reduced by plying the host with mind-altering substances (Realtor Kool-Aid). Initially, the transaction can be exhilarating (I now “own” a house! / [you can figure out the sexual analogy on your own]), but thereafter realizes the transaction was not worth it (“Top Ramen for dinner again, kids.” / “What is this growth coming out of my [beep]!”)
Furthermore, societal acceptance of unprotected casual sex leads to wide-spread sexually transmitted diseases, much like societal acceptance of unregulated casual borrowing leads to a nation of debt-slaves.
Educating the participants about the risks and using safety precautions is the most effective way to reduce the disease from spreading. So I guess this makes the IHB my condom.
Great analogy. A+
Preach moral restraint against uninhibited borrowing? How prudish, what made you the morals police? Poor people (or fill in the race) just can’t help themselves…. You just need to have protected borrowing/lending with the proper use of a nothing down loan and govt bailout for the banksters.
:]
A free society can not exist without moral restraint.
Without moral restraint, govt’s need to rule by fear and guns (i.e., large army and police force) plus lots of entertainment and amusement.
Owning beats leasing if you plan to own the car for more than 5 years. In addition you can buy a used model that tends to appreciate slowly (Nissan, Honda, etc?) to further reduce monthly cost of ownership. In the end it all comes down to how important it is to you to get a new Mercedes every 3 years.
These days its best to own your car outright.
No one can ever report you for theft because its yours.
You can drive wherever you want – no 12k mileage restrictions.
You can live out of it if you have to – just remember to tint the windows.
You do mean “depreciate slowly”, I hope. Unless you have a Bugatti Royale, you ain’t getting any appreciation on your vehicle.
That’s why I buy them pre-depreciated. I got my wife an ’06 Town & Country with 28K miles for $12K cash. I figure we’ll put 100K miles on it over 7 years. If we spend $8K on maintenance and repairs, that comes to about $0.20/mile. About $0.35/mile including gas. Not too bad for a newish 7 passenger vehicle. We’ve always kept our cars to 100K+, so leasing doesn’t make sense. Also, she tends to back into things, so a brand new vehicle would be wasted on her.
I agree with you about owning a car long-term. I’ve owned all of my cars for an average of 8 years, except for that one lease. The main problem that I have with owning is that the repairs can be incredibly random and expensive as the car gets older, as well as frustrating and time consuming. Not that I speak from experience. I bought my current car and plan to keep it for 8 or 9 years. I’m under no illusion that it’s a monthly expense, however, no matter how I slice it.
I should clarify…houses that sit on land appreciate over the long term, lol. I knew that would ruffle a feather after having read this blog for a few weeks. I agree with most of the analysis here. It’s a great service.
But honey, I. R. told me to get a massage on the plastic, and he even suggested there might be a “happy ending”!
Obama May Prohibit Home-Loan Foreclosures Without HAMP Review
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahuuwBS8KYq8&pos=1
Another pretend and extend:
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahuuwBS8KYq8&pos=1
Why not just have a damn title “Obama May Extend 0% Financing on All Homes in the Country” and get this charade over with. Geesh…
It’s better than your regular 0% loan. It is a 0% interest only loan.
Renters that need help paying their rent get help too, right? No, renters are low life scum? Rats.
I have an issue with your characterization of massage. Sometimes, yes, it is a luxury, but sometimes it’s not. I’ve been getting it semi-regularly for the past few years and it seriously is one of the few things that helps me keep my stress to a manageable level. It also has other health benefits.
I use my own cash for it though, I never use credit.