Tuesday, October 2, 2012

SELLER: Paul Haggis
LOCATION: Santa Monica, CA
PRICE: $5,250,000
SIZE: 5,690 square feet, 5 bedrooms, 7 bathrooms

YOUR MAMAS NOTES: Two weeks ago, the award-winning television and movie  screenwriter/producer/director Paul Haggis and his estranged, former-actress second wife Deborah Rennard quietly hoisted their long-time family home in Santa Monica, CA on the market with a $5,250,000 price tag.

We don't know a pouf from a poof, of course, but If Your Mama were the betting type—and we're not—we'd wager Big Daddy's citrus ranch up in Middle-of-Nowhere, CA that this mini-mansion in Santa Monica has lately been occupied primarily (if not exclusively) by soon-to-be second-ex-Missus Haggis, once a small-bit actress most known for her role as Texas oilman J.R. Ewing's loyal secretary on the 1980s nighttime soap story Dallas.

The couple have been amicably uncoupled for a few years now and Mister Haggis, who sired one child with Miz Rennard and three with his first wife, has reportedly been spending more time in New York City. In June 2010 the newly-single-again Showbiz scribe shelled out $3,950,000 on a 2,948 square foot loft-condo bachelor pad in SoHo with, according to listing information from the time of the purchase, 2 bedrooms, 2.5 bathrooms and monthly taxes and common charges of $5,397

A notably prolific screenwriter, Mister Haggis has toiled in the trenches of Tinseltown since the late 1970s and early 1980s when he wrote for a heavy-duty handful of campy if iconic sitcoms that include Love Boat, Diff'rent Strokes, One Day at a Time and The Facts of Life. In the late '80s Mister Haggis was awarded an Emmy for his writing work on the prime time soap story thirtysomething and in the 1990s he primarily penned tee-vee crime and law dramas (L.A. Law, EZ Streets, Walker, Texas Ranger and Family Law).

His upwardly mobile foray into the world of cinema didn't begin in earnest until the early 2000s and almost immediately resulted in the much-gushed over and award-winning movies Crash, Million Dollar Baby and Letters from Iwo Jima, all three of which earned Mister Haggis Academy Award nominations. In 2004 Mister Haggis was awarded two of the plummiest of the Oscars—both for Crash, one for Best Original Screenplay and the other for the Best Motion Picture of the Year.

His output seems to have slowed in the last few years but, let's be honest, who could blame him if he wanted to slow down and shift focus a little bit after a pretty damn spectacular, non-stop thirty year (and counting) career? Mister Haggis's more recent efforts on the small screen (The Black Donnellys) and the big screen (Quantum of Solace, The Next Three Days) have not resulted in such bell-ringing accolades and, indeed, Mister Haggis may very well be less well known the last few years for his inventive screenplays as for his daring, full-throttled, articulate and very public renunciation of Scientology.

Mister Haggis voluntarily belonged to the religious organization for nearly 35 years but bitterly parted ways with the group in 2009 and, in a eye-popping early 2011 profile in The New Yorker entitled The Apostate, unequivocally called the polemical organization "a cult." But, children, fascinating as Mister Haggis' personal story may be—and a real damn ring tailed doozy of a tale it is—it's his real estate story we're here to discuss.

Property records show Mister and soon-to-be-second-ex-Missus Haggis paid $2,618,520 for the property that current listing information indicates spans a prairie-flat, 13,000-plus square foot corner lot located less than a mile from the beach and hosts a chunky, tree-enshrouded, East Coast-y sort of grey-shingled mini-mansion with 5 bedrooms and 7 bathrooms in 5,690 square feet.

A shrub- and boxwood-lined slate walk way (which we like), passes under an small arbor (which we don't) and cuts across a verdant, shaded lawn to the front door that opens dramatically into a mostly beige, unexpectedly spacious double-height entry with gleaming wood floors and a glimmering, rich-old-lady crystal chandelier.

There are—natch—predominantly beige and decoratively traditional formal living and dining rooms, the former with a fireplace and large enough to accommodate a baby grand piano and the latter with a steeply vaulted and sky-light dotted ceiling and a wide bank of French doors to the exterior entertainment areas.

Less stiff—if equally beige—family quarters include a giant, quite bright and faintly rustic, country-style eat in kitchen. This area is neatly outfitted with more gleaming hardwood floors, crisp white raised-panel cabinetry, gray (or maybe greenish-gray) stone counter tops, commercial-style appliances, a center island snack counter, and a built-in desk where Esmerelda the housekeeper can clip coupons and keep track of the floor waxing schedule.

An adjoining breakfast room opens into the backyard, as does the cavernous family room with high-drama exposed beam ceiling and flat-screen tee-vee built in to an entertainment center with enclosed storage cabinets—for games, scented candles, various paraphernalia, etc.—and two expanses of book shelves filled with actual books. We adore the deep window seat in the corner of the room where Your Mama can imagine spending hours upon hours reading and napping but—have mercy!—did soon-to-be-ex-Missus Haggis and/or Mister Haggis ever meet a shade of beige over which they did not break out in a sweat of decorative desire? Seriously!

Listing information indicates there are three bedrooms on the lower level, one a second master suite and another probably small enough—and probably also ill-located enough—to be identified as "Guest/Maids Quarters."

The second floor can accessed by a grand staircase in the (mostly beige) front foyer that somehow manages to be both amazingly ho-hum and Scarlett O'Hara worthy, or a far more prosaic staircase in the kitchen. A loft landing with book-filled bookcases connects to a private office/study with built-in wood cabinetry and a guest bedroom with private bathroom. Finally there is the tastefully if blandly decorated primary master suite with fireplace, over-sized walk-in closet and—not at all surprisingly—a pale beige bathroom with double sinks, soaking tub and separate, glassed-in and steam-equipped shower.

Several rooms along the back of the house open though French doors to a huge, slate terrace partially shaded by a slatted pergola. The terraces steps down to a built-in outdoor kitchen/barbecue center with snack counter and ambles down again to a shaded patch of grass where one might understandably expect to find—but does not find—a swimming pool and/or spa. Five and some million bucks in Santa Monica just don't buy a millionaire what it used to, does it? There is, perhaps as some consolation, also a detached three-car garage off the alley that runs behind the property.

Although they've owned their (former) family spread in Santa Monica for a dozen years, a slow peek and poke around public property record databases reveals Mister and soon-to-be second-ex-Missus Haggis together and separately bought and sold a significant amount of property during their 12-or-so years of marriage.

In May 2012 the now-kaput couple took a loss when they sold a small condo in Chicago, IL for $191,500 that they picked up in (presumably) happier times, in June 2006, for $242,000 and in August 2008 Mister Haggis coughed up $2,365,000 for a 2,262 square foot, single-story ranch-style residence a few blocks away from the family homestead in Santa Monica that he sold in July 2010 at a considerable loss for $2,000,000.

Sometime in 2002 or 2003—depending on where online one looks, and along with another non-celebrity couple, Mister Haggis acquired a pair of petite and charming if somewhat nondescript, side-by-side residences in Clearwater, FL that at some point he came to own on his own. Clearwater is, of course, the official headquarters of the Church of Scientology Corporation where acolytes of the secretive and frequently controversial religious organization travel to get audited—or whatever—at a non-contiguous campus that Scientologists reverently refer to as Flag Land Base. Mister Haggis may have left the church but is yet, according to property records we peeped, to unload his Clearwater cribs.

In June 2000 they took in $2,129,000 when they sold a 3,568 square foot house in Santa Monica they'd purchased just a couple years earlier for an unknown amount and about the same time in 2000 that they bought the Santa Monica mini-manse now on the market for $5,250,000, Mister and Missus Haggis also scooped up a vacant, ocean-view residential parcel in Pacific Palisades that they did not develop and sold in 2008 for undisclosed amounts.

listing photos: Prudential California Realtors
European banks are supposed to be deleveraging. By now, most realize they are headed the opposite direction. In Spain, the increased leverage is pro-cyclical, 100% certain to cause a bigger problem down the road.

Here is a Mish-modified translation of an El Economista article on Spanish Bond Purchases.

Financial institutions have become the main investor in Spanish government bonds after foreigners withdrawn €89.6 billion in the first eight months of the year, according to Treasury data.

In these eight months, Spanish exposure has risen €108.8 Billion, a record 106.84% increase.

Meanwhile, foreign investment in Spanish debt has dropped 31.8% during the same period, standing at €191.836 billion euros, compared to €281.439 at the end of 2011.

This is the second consecutive time since 2008 that the debt in foreign hands is below the €200 billion.

Banks are now the main investor, ahead of foreigners, accumulating now 34.07% of the public debt, compared to 33.49% by foreign investors. This situation has not occurred since 2003.


Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com/
Plunge in CEO Expectations

The quarterly survey of CEO expectations looking six months out shows that while CEOs are still positive in regards to capital spending and sales, the recent plunge was the third largest plunge in expectations in history.

John Engler, president of the Business Roundtable discusses CEO sentiment in the following video.

Link If Video Below Does Not Play: CEO Rountable Video



Read the transcript of the call for comments from BRT President John Engler and BRT Chairman and Boeing CEO Jim McNerney.

Hiring Contraction

More CEOs than not expect reduced employment in the next six months.



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CEOs Sharply Reduce Expectations for Economic Outlook, Hiring

Business Roundtable notes CEOs Sharply Reduce Expectations for U.S. Economy.
The results of Business Roundtable’s (BRT) third quarter CEO Economic Outlook Survey for 2012 show a further downturn in CEOs’ expectations for sales, capital spending and hiring for the next six months. The Business Roundtable CEO Economic Outlook Survey Index decreased to 66.0 in the third quarter of 2012 from 89.1 in the second quarter of 2012, the lowest reading since the third quarter of 2009 and the third largest single quarter drop in the survey’s history.

“CEOs foresee slower overall economic growth for 2012 and have lower expectations for sales, capital expenditures and hiring compared to last quarter,” said Jim McNerney, Chairman of Business Roundtable and Chairman, President and CEO of The Boeing Company. “The downshift in quarterly sentiment reflects continuing concern about the strength of the recovery, including uncertainty over the approaching fiscal cliff and accompanying debates about the tax code, sequestration and the debt ceiling.”

Third Quarter 2012 CEO Economic Outlook Survey Index

The Business Roundtable CEO Economic Outlook Survey Index – a composite index of CEO expectations for the next six months of sales, capital spending and employment – trended downward to 66.0 in the third quarter of 2012 from 89.1 in the second quarter of 2012. This marks the lowest point for the index since the third quarter of 2009.
Plunge In Economic Outlook



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Reflections On "Uncertainty"

CEOs blame "uncertainty" which is nothing more than a euphemism for poor business conditions.

It's as if there is some unwritten rule that CEOs can only be "certain" of good things, never bad. Yes, there is this "fiscal cliff" thing, but business is slowing already, globally, and not just because of a "fiscal cliff".

Simply put, CEOs can easily see things are already getting worse or at least not improving.

Finally, no one can ever truly be "certain" about anything economically speaking six months down the road. CEOs and politicians just do not want to say "conditions suck" so instead they complain about "uncertainty".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com/

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The August financials for the Houston apartment complex are in. Occupancy remained at the same level as last month - 90%. Rent concessions increased and management expects occupancy to increase during the last quarter of the year. The unemployment rate in Houston remained at 7.5%, which is where it has been since June. This is slightly lower than the 7.6% it started the year at, but higher than the low of 6.5%, which was hit in April.

The increased rent concession cost was offset slightly by reduced marketing expenses, reduced apartment turnover costs, and lower maintenance costs. Overall, although the property's overall income was about the same as last month, it lost $100 this month, compared to making $900 last month.

Management will be giving the yearly conference call in two weeks to update us on the state of the investment and the projections for the future. Overall, they say they are progressing as they had planned back in February when they made the cash call.

Case-Shiller Index annual change July 2012

There have been no shortage of "housing market" stories lately. After sinking through much of late-last decade, home values slowly stabilized into mid-2011. By October 2011, values appeared to have bottomed.

Today, nearly five-and-one-half years after the April 2007 housing market peak, home prices are finally showing their ability to rebound. Over the past 12 months, a bevy of housing market data highlights broad-based market growth.

For example, as compared to August 2011, Existing Home Sales are up 9.3 percent nationally; New Home Sales are up 27.7 percent nationally; and home inventories have slipped to multi-year lows in Kent and throughout the country.

Furthermore, multiple home value trackers show home prices rising both regionally and nationwide.

Last week, the government's Federal Housing Finance Agency released its Home Price Index (HPI) -- a metric which tracks how home values change between sequential property sales. HPI showed home values up 3.7% nationally.

Another home valuation tracker -- the S&P Case-Shiller Index -- has shown home values to be rising, too.

As compared to one year ago, the private-sector metric puts home prices higher by 1.2 percent via its 20-city composite. 20 cities remains a small subset of the broader U.S. population, but, in looking for a trend, it's clear that the trend is a positive one.

Some of the Case-Shiller Index highlights from its most recent report :

  • All 20 tracked cities showed home price gains between June 2012 and July 2012
  • The previously hard-hit city of Phoenix now leads the nation with a 16.6% annual gain
  • Versus their respective lows, San Francisco and Detroit are up 20.4% and 19.7%

In addition, on a 12-month basis, only four cities are showing negative home value growth -- Atlanta, Chicago, Las Vegas, and New York City.

The Case-Shiller Index is a national index, though, and specifically does not report on valuation changes in specific U.S. cities and their neighborhoods. For local real estate data, make sure to speak with a local real estate agent instead.

Georgia Ave church fights historic designation (Washington Post)  Once home to the New York Theater, the church at Georgia Avenue and Quebec place is the subject of a fight between parishioners and preservationists.

New Capitol Hill office building opens (Legal Times) Boston Properties bought 500 N. Capitol 2 years ago and stripped the building to its core.  The new office building, between the Capitol and Union Station, opened its doors this morning featuring main tenant McDermott, Will & Emery.

Long & Foster buys Randall Hagner (Fairfax News) Long & Foster's W.C. & A.N. Miller purchased the residential arm of commercial real estate company J Street.  Will the new company be called W.C. & A.N. Miller's Randall Hagner, a Long & Foster Company?

Mortgage rates set more record lows (HousingWire) With ever fewer borrowers having old, high-interest loans, mortgage giants are lowering rates to squeeze out the last few holdouts.  What happens when they're gone too?

18% of residential buyers are investors (National Association of Realtors)  The August numbers are higher than average, reflecting that fact that investors can often have positive cash flows immediately.


Monday, October 1, 2012

Earlier today, in Bernanke Begs Congress to Address "Fiscal Cliff", Pledges to Hold Interest Rates Near Zero Through Mid-2015 Even If Economy Picks Up I commented on the Bernanke's self-serving responses to his own questions.

In this post I want to focus on another disingenuous part of his speech that I did not comment on previously. Specifically ...

With monetary policy being so accommodative now, though, it is not unreasonable to ask whether we are sowing the seeds of future inflation. A related question I sometimes hear--which bears also on the relationship between monetary and fiscal policy, is this: By buying securities, are you "monetizing the debt"--printing money for the government to use--and will that inevitably lead to higher inflation? No, that's not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates. At the appropriate time, the Federal Reserve will gradually sell these securities or let them mature, as needed, to return its balance sheet to a more normal size. Moreover, the way the Fed finances its securities purchases is by creating reserves in the banking system. Increased bank reserves held at the Fed don't necessarily translate into more money or cash in circulation, and, indeed, broad measures of the supply of money have not grown especially quickly, on balance, over the past few years.

Gradual Bullsheet

Bernanke knows damn well that the Fed will never "gradually sell these securities". Rather, the only way the Fed would be willing to sell securities is at break-even or a profit.

Yet, if Bernanke honors his pledge to hold those securities until after a recovery is well underway, interest rates will be higher and the Fed will have losses.

Thus, it is the clear intent of the Fed to hold assets it buys from now until maturity (perhaps a decade from now, which for all practical purposes is "permanent"). At that point in the distant future, the Fed may even roll the securities over.

Who Benefits From This?

As I did note previously    ...

Bernanke's policies have destroyed those on fixed income (a claim he tries but fails to address in his five questions). More importantly, those with first access to money (primarily banks and the wealthy) are the biggest beneficiaries of monetary printing exercises.

Those wondering how the 1% got so wealthy need only look at the Fed for the answer.

That was a question Bernanke did not address, but I addressed in detail a few days ago in Can the Fed Fight Droids and Win? Apple's SIRI, Driverless Trucks, What's Next? Riveting Video: Are Droids Taking Our Jobs?

Finally, when it comes to "printing" let's flashback to December 8, 2010: Caught in a Massive Lie: Daily Show Comments on Bernanke's Lies Regarding "Printing Money"



Mike "Mish" Shedlock

"Wine Country" Economic Conference Hosted By Mish
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