Higgenbotham's Dark Age Hovel

[Higgenbotham]

Sundar Pichai, CEO of Alphabet Google, took a slightly different approach:

"Expanding access to opportunity through technology is deeply personal to me. I didn’t have much access to a computer growing up in India. So you can imagine my amazement when I arrived in the U.S. for graduate school and saw an entire lab of computers I could use whenever I wanted. Accessing the internet for the first time in that computer lab set me on a path to bring technology to as many people as possible. It’s what inspired me to join Google 16 years ago."

Once again, very touching.

So what's going on here? These ridiculous statements are carefully planned and carefully rehearsed well in advance, in both content and demeanor, to show that these huge online service monopolies are really just innocent little businesses, bringing the American dream to millions of others.

It's as if to say, "We're not like other wicked monopolists -- John D. Rockefeller in oil, Andrew Carnegie in steel, Cornelius Venderbilt in railroads. Those are nasty, mean, old, ancient, out-of-date monopolies. Not like us. We're sweet, happy, modern, hip, cool monopolies, and we're different."

The CEOs were playing on the politicians' ignorance and stupidity, which is trivially easy. The objective of the CEOs was to avoid answering any real questions from the posturing politicians, who are too dumb to know what was going on anyway, since they barely know how to turn on a computer. And it worked.

So what are the questions that the CEOs were afraid to answer?

One of them was the one we've been discussing. This hearing occurred shortly after the Twitter hack, and the CEOs were undoubtedly all dreading the question: "Could the same thing happen to you?" They were dreading that question because the answer would have to have been "Yes," although they would have buried that answer in multiple paragraphs of self-excusing verbiage.


The 'Hate Speech', 'Fake Speech' censorship monopoly

The second question the CEOs are afraid to answer is about their censorship monopoly.

This article has been about illegal abuse of monopoly power and exposure to data breaches, by the large online services, especially Microsoft.

However, with the November 3 presidential election approaching, we're seeing abuse of a different kind of monopoly power. We're seeing Google, Facebook and Twitter abuse their monopoly power over censorship to influence the election toward the Democrats by censoring anything from Trump's 63 million supporters as "hate speech" or "fake speech." There are many examples of this that are extremely ridiculous, such as approving support for left-wing protests and violent riots by antifa, while condemning street protests against Democratic governors as racist or dangerous.

Ironically, this didn't start with Trump's presidency and actually has nothing to do with Trump. It was already going on early in the Obama administration with the vitriolic attacks by Democrats on members of the conservative Tea Party, referring to Teapartiers with the hate term "teabaggers," which is as bad as the N-word. In my almost 20 years of developing Generational Dynamics, I've seen many similar examples of one group hating another group for no reason at all. I don't know what chromosome or hormone causes this, but I do know that that chromosome or hormone causing Democrats to hate 63 million Teapartiers and Trump supporters is exactly the same as the one that caused the Nazis to hate the Jews, the Hutus to hate the Tutsis, or the Chinese Communists to hate the Uighurs and Tibetans. This is a constant of human nature, and we're seeing it played out in America today in the Democrats' vitriolic hatred of 63 million Teapartiers and Trump supporters.

So today we have the major online services -- Google, Facebook and Twitter -- supporting this hatred by classifying anything by Teapartiers or Trump supporters as "hate speech" or "fake speech."

When confronted with evidence of this, a standard answer is to appeal to the magic of artificial intelligence. "The decision whether something is hate speech is made by impersonal AI algorithms in computers that are non-partisan and not political. Haha."

Politicians who barely know how to turn on a computer just accept this argument, as if there were some magic involved. Actually, there's no magic involved. AI algorithms like that are rules-driven, and programmers would write the rules.

The rules used by Google and others are confidential, of course, but we can speculate on how some of them work. Let's suppose a tweet contains the text, "Make America great." That alone wouldn't be enough to classify it as hate speech, but it would add points in some sort of point system. If a tweet contains another "racist" phrase like that, then there might be enough points for the "non-partisan" algorithms to decide that the tweet is hate speech.

Who decides what these rules are? The deciders are Google employees. Among the Google employees making the rules there will be women as well as men, to prevent anti-female bias in the rule-making. And there will be blacks as well as whites, in order to prevent anti-black bias in the rule-making. But what do they do about anti-conservative bias? The answer is NOTHING. We know from various statements and blogs and leaked meeting videos that all the employees at Google are far left, and if there are any politically moderate employees at Google (such as James Damore), they will be fired or marginalized by the others, and their suggestions for rules will ignored in group code reviews.

So we have a situation where Google is fully on-board to target 63 million tea partiers and Trump supporters in order to affect the November 3 election. As I said, for one demographic group to hate another demographic group is common throughout history and the world, as in the Nazi hatred of Jews and the Hutu hatred of Tutsis or any of a million other examples that anyone who studies history can name. The one good thing we can say about the current situation is that the hate campaign has not yet degenerated into genocide, although genocide is the stated objective of the fascist organization antifa.

http://www.generationaldynamics.com/pg/ ... tm#e200817

The rest of John's article linked is no less relevant to recent posts because it details how these clever tricksters stuff their coffers with cash.

Example #1: Apple's iPhone forced slowdown using 'throttling'

It's estimated that some 3 billion iPhones have been sold, and Apple has the kind of monopolistic control over them that Microsoft has over Windows. Apple has already used criminal monopolistic behavior to force users of older iPhones to upgrade.

You may recall from March that Apple was forced to pay up to $500 million to settle a US lawsuit. Apple had used its monopolistic control over iPhones to slow down old iPhones, in order to coerce users into upgrading. This is criminal behavior under the antitrust laws, and that's why Apple was forced to settle, and was anxious to settle. They were lucky that it cost them only $500 million.

Here are some excerpts from a Reuters news story from March:

"Apple to pay up to $500 million to settle U.S. lawsuit over slow iPhones

(Reuters) - Apple Inc has agreed to pay up to $500 million to settle litigation accusing it of quietly slowing down older iPhones as it launched new models, to induce owners to buy replacement phones or batteries.

Consumers contended that their phones’ performance suffered after they installed Apple software updates. They said this misled them into believing their phones were near the end of their lifecycles, requiring replacements or new batteries.

Apple attributed the problems mainly to temperature changes, high usage and other issues, and said its engineers worked quickly and successfully to address them. Analysts sometimes refer to the slowing of iPhones as “throttling.”

Following an initial outcry over slow iPhones, Apple apologized and lowered the price for replacement batteries to $29 from $79."

Apple was committing a crime by using its monopoly control of iPhones to force iPhones to run more slowly, in order to coerce the user to upgrade to a new iPhone. That's why Apple was desperate to settle as quickly as possible.

An important part of Apple's behavior is that it must be as obscure as possible to the user. If the user knew that Apple was purposely throttling his iPhone, he might trade it in for an Android. Instead, slowing the iPhone down is made as obscure and invisible as possible so that the user doesn't know what's going on, and just buys a new iPhone.

I realize that many people idolize Tim Cook and Apple, but this is incredibly sleazy behavior. Apple managers are screwing their own customers to essentially extort their customers to buy new iPhones. It's absolutely incredible, but it shows the state of corporate management these days. Apple managers like Tim Cook and Craig Federighi are criminals who are totally lacking in morality and ethics. And this criminal behavior actually happened.

But with 3 billion iPhones under their control, morality and ethics go out the window, as Cook and Federighi look for ways to extort more cash from users. The chance to extort billions of dollars from users is just too tempting.

If anyone reading this wants to argue that Microsoft managers are less unethical and immoral than Apple managers, then I'd like to hear that argument.

[aeden]

Avarice the spur of industry. David Hume. Essays 1741 Of Civil Liberty
https://zerohedge.com/markets/raytheon- ... tary-balls

Thu Apr 23, 2009 1:48 am
Cicero's speech to the Roman Senate, as recorded by Sallust.
A nation can survive its fools, and even the ambitious.
Bt it cannot survive treason from within. An enemy at the gates is less formidable, for he is known and carries his banner openly.
But the traitor moves amongst those within the gate freely, his sly whispers rustling through all the alleys, heard in the very halls of government itself.
For the traitor appears not a traitor; he speaks in accents familiar to his victims, and he wears their face and their arguments, he appeals to the baseness that lies deep in the hearts of all men. He rots the soul of a nation, he works secretly and unknown in the night to undermine the pillars of the city, he infects the body politic so that it can no longer resist. A murderer is less to be feared.

The body farm is a uniparty swamp disease. They are depraved and evil reprobates just a the Lord told you.

A Pillar of Iron: A Novel About Cicero and the Rome He Tried to Save (New York: Doubleday & Company, Inc., 1965), p.556

Go ahead find 10 men in that City for its own sake.

[Higgenbotham]

“We rely upon the stupidity of the American voter” ~ Johnathan Gruber 2011, 2012.
https://conservative-caucus.com/how-big ... lly-works/

No politician is afraid the US voter anymore and with good reason.

From the article:

Outside groups, often called “special interest groups”, are entities that represent their interests in legislative constructs. These groups are often representing foreign governments, Wall Street multinational corporations, banks, financial groups or businesses; or smaller groups of people with a similar connection who come together and form a larger group under an umbrella of interest specific to their affiliation.

Sometimes the groups are social interest groups; activists, climate groups, environmental interests etc. The social interest groups are usually non-profit constructs who depend on the expenditures of government to sustain their cause or need.

The for-profit groups (mostly business) have a purpose in Washington DC to shape policy, legislation and laws favorable to their interests.

They have fully staffed offices just like any business would – only their ‘business‘ is getting legislation for their unique interests.

These groups are filled with highly-paid lawyers who represent the interests of the entity and actually write laws and legislation briefs.

In the modern era this is actually the origination of the laws that we eventually see passed by congress. Within the walls of these buildings within Washington DC is where the ‘sausage’ is actually made.

In most cases, the industry, which is where the technical expertise lies, actually writes the regulations. I can't vouch for the fact that the nuclear industry operates that way, but I can vouch for many others. This comes as a shock to most people (I don't know about the people here; maybe you know) and creates a host of problems, such as stifling competition, as the regulations are often written so as to be too specific or cumbersome for less able (ie smaller) competitors to implement. An easy to understand example would be the landfill industry. Notice how there are no longer any city dumps or small trash collectors nowadays, but rather Waste Management, Browning-Ferris and maybe one other. Any landfill constructed today has many highly technical and costly operations on site such gas collection systems, energy plants and particulate monitors.

CPSIA regulations crafted by Wal-Mart to put small competitors out of business

http://en.wikipedia.org/wiki/Consumer_P ... vement_Act

All of this Wikipedia article is relevant to how government and large corps conspire in the name of "do-gooder" subterfuges like "children's safety" to torture and dismember small US based manufacturers and resellers.

Note: The problem with CPSIA for small business was that their per unit compliance costs were much higher due to the fact that they couldn't operate the required testing equipment at full capacity.

Mike Wallace: When you advocate for completely unregulated economic life in which every man works for his own profit. You're asking in a sense for a devil take the hindmost, dog eat dog society, and one of the main reasons for the growth of government controls, was to fight the robber barrons, to fight laissez-faire, in which the very people whom you admire the most, Ayn, the hard headed industrialist, the successful men, perverted the use of their power. Is that not true?

Ayn Rand: No it isn't. This country was made not by robber barons. But by independent men, by industrialists, who succeeded on sheer ability. By ability, I mean without political force, help, or compulsion. But at the same time there were men, industrialists who did use government power, as a club, to help them against competitors. They were the original collectivists. Today, the liberals believe that the same compulsion should be used against the industrialists for the sake of workers, but the basic principle there is, "Should there be any compulsion?" And the regulations are creating robber barons, they are creating capitalists with government help, which is the worst of all economic phenomenon.

Ayn Rand: No it isn't. This country was made not by robber barons. But by independent men, by industrialists, who succeeded on sheer ability. By ability, I mean without political force, help, or compulsion. But at the same time there were men, industrialists who did use government power, as a club, to help them against competitors. They were the original collectivists. Today, the liberals believe that the same compulsion should be used against the industrialists for the sake of workers, but the basic principle there is, "Should there be any compulsion?" And the regulations are creating robber barons, they are creating capitalists with government help, which is the worst of all economic phenomenon.

I'd like to break Rand's statement down into its component parts and comment on them using the concepts and semantics I've used in other contexts.

"This country was made not by robber barons. But by independent men, by industrialists, who succeeded on sheer ability. By ability, I mean without political force, help, or compulsion."

I've discussed the ability of certain categories of people in terms of percentiles. So here, Rand is discussing the lone "independent" industrialist who has created something of value to sell to the world based on sheer ability alone "without political force, help, or compulsion." This type of person is rare. These types of people may exist at a frequency of 1 in several tens of thousands, depending on the industry and the level of success. Luck is involved to a great extent, but there's nothing we can do to mitigate that factor. So it may be that some with rare ability succeed and some don't. But, at the same time, those with rare ability who do succeed don't need to form gangs to maintain their success, and their success normally leads them to become a positive force in society.

"But at the same time there were men, industrialists who did use government power, as a club, to help them against competitors. They were the original collectivists."

This is The 97th Percentile. These people are common. There is one in every room of 30. Despite being common, they normally don't see themselves that way, but rather see themselves as the smartest person in the room. For example, if Dick Cheney happened to be the smartest kid in his first grade class, he will think he is the smartest person in the Roosevelt Room when he tells the rest of the room that Ronald Reagan proved that debt doesn't matter. These people generally aren't smart enough to know how stupid and dangerous they are. They are like monkeys flying 747s. The 97th Percentile fears those independent individuals of rare ability that Rand describes in her books. Since those in The 97th Percentile are common, they can find each other and form gangs to cast individuals of rare ability off to the side. That is what has happened in America today and it is the principal reason why the American economy is failing.

"The basic principle there is, "Should there be any compulsion?" And the regulations are creating robber barons, they are creating capitalists with government help, which is the worst of all economic phenomenon."

It is indeed the worst of all economic phenomenon. Absolutely without any doubt in my mind. I've watched it happen, I've lived it, and it is awful. I've come to the same conclusion before reading Rand's comment and she was spot on.

Back to the present economic situation and how it fits in with the above.

In 2009 or so, there were lots of foreclosures and the Federal Reserve pumped hundreds of billions into the economy, putting it in the hands of select politically favored entities without allowing the market to clear. As a result, tens of thousands of rental properties got into the hands of entities like Blackrock.

Had the Federal Reserve not gotten involved in that way, and the market had been allowed to clear, those rental properties would have gone into the hands of many small business people. Literally thousands of those small business people would have greater ability to manage those properties than Blackrock, and those who had the greatest ability could have expanded their businesses, and by doing so benefited their tenants with lower rents than Blackrock now charges, healthier and more well maintained properties than Blackrock is capable of providing, better appearing neighborhoods, etc.

Addendum: The article linked below demonstrates that The 97th Percentile has no ability to manage rental properties.
https://www.theatlantic.com/technology/ ... et/582394/

Looking at the above from a different standpoint from where this series of posts veered off to in 2021, we basically have two possible methods for managing a deluge of foreclosed properties. The first is to put them into the hands of a large entity like Blackrock who would then cull through thousands of applications to find employees to manage these properties. The second would be to let the free market operate.

In the first instance, everyone knows pretty much what is involved. Blackrock is going to undertake a massive hiring program of some kind to assemble a team of how ever many people it takes it takes to manage these properties. The people who are hired are going to be those that the hiring authority deems most likely to be able to do this task based on all the criteria they can make a determination on - education, experience, and a long evaluation process including many interviews.

Letting the free market operate is something that is less well understood nowadays because that's not what was done in "2009 or so" and is still not being done. Letting the free market operate is done on the basis of putting capital at risk and performing lots and lots of small tests. An example of a test might have been on a foreclosed property in, let's say, Cleveland in a run down neighborhood with drug and gang problems a couple blocks away but not right in that particular block. Due to the deteriorating conditions around that property the previous owner gave up on it and let it go back to the lender.

There's a young man in his early 20s named Bob who is aware of the property. He has done some maintenance work unrelated to housing for three years and has saved enough to put a down payment on this house. He has no education in property management and this is his only experience. The bank that owns the house has it listed for $30,000 and Bob offers them $20,000 with $10,000 down and for the bank that owns it to finance the remaining $10,000. The nearest branch of the bank reaches out Bob and invites him to come in and discuss it. The branch manager meets with him and is favorably impressed. He finds out that Bob has saved another $10,000 for repairs and sees the estimates he has done for the cost of the materials and the timelines to complete the various parts of the project. The branch manager knows he will likely receive higher offers for this property. However, he is aware of the particulars described above and knows that he has other loans in the area. He tells Bob that he is going to take a chance on his proposal, that he believes in him and, if he is successful with this project, that they may be working together on other projects in the future. They close on the house and Bob quits his job and goes into business. He believes this is do or die. There is no fallback to any education because he has none. He moves into the house and works day and night. Due to his lack of experience, expenses are higher than forecast and timelines slip. But people see what he is doing and are impressed. He gets offers for side jobs that pay more per hour than his previous job.

As winter comes, Bob looks at the 17 year old Weil McLain steam boiler in the basement and fears what might happen. He starts it up and within a few minutes hears a "poof" as a puff of soot explodes out the front of the boiler. He has the house mostly complete and is down to his last $500. He feels fearful, but at the same time confident in what he has accomplished and hopeful for the future. He opens up the boiler and starts disassembling it. He's sort of aware that the soot means the air to gas ratio might be too low. As he's disassembling the boiler, the head of a bolt breaks off. There is a brief "oh shit" moment, but then he realizes that in his previous job bolts would break off all the time on equipment that he maintained for his company and he knows just what to do. He runs down to the hardware store and buys a special tool for about $10. While he's in there, he briefly discusses the problem with an old retired guy who worked for a local plumbing contractor. He greets Bob and says, "Whatcha got?" Bob tells him and he says, oh, those are good boilers, that one will last 30 years easy. Within 2 hours the bolt is extracted and the boiler disassembled. He then cleans the soot out, adjusts the air to gas ratio on the burners and fires it up. It now works perfectly and he soon hears the familiar ping ping ping of steam moving through the radiators, which is just what the old guy at the hardware store said would happen if all was well.

Meantime, in a property owned by Bailout Receivables LLC, who is just getting into the business themselves, the same exact situation comes up with a 17 year old Weil McLain boiler. Their maintenance man, Donnie, calls Kayleigh, who is a new MBA assigned to manage properties for BR and says, "Kayleigh, got a busted bolt on an old boiler, head busted off. Plus we got black soot exploding out the front." Kayleigh says, "What do we do now?" Donnie knows 4 hours have been allocated for maintenance and that he has already been docked twice in the past 3 months for exceeding time allotments. Management knows he is a good and thorough worker but two strikes are two strikes. Donnie says, "Dunno, it's pretty old. You know, when bolts break off you got a rust problem in there and you don't know when that sucker might crack. It could go out in the middle of winter. I'd go with a replacement. Probably go with gas forced air." Without asking what type of boiler it is, Kayleigh googles for "How long will a boiler last" and up pops 15 to 30 years. Bingo. Kayleigh looks at her spreadsheet and sees she has used 57% of her allotted money for capital improvements this year and she is now 75% through the year. Using some money now would probably be a good idea or she will lose it. There is not much incentive to come in under budget. But there's a lot of incentive not to have a tenant's heat go out in the middle of the winter. Kayleigh thinks back to her cost accounting courses and realizes the replacement would probably qualify for ACRS and there are a few other accounting gimmicks that could be used to get some tax breaks. She tells Donnie to get 3 bids and admonishes him to make sure he goes with the lowest, even if it will take another few days to get it done. She feels really proud of her expertise and how she is saving money for BR and gets back to watching TikTok videos and polishing up her linkedin resume.

To be continued...

[Higgenbotham]

Kayleigh justifies some of her Internet activity in her own mind because it is really work related. Bailout Receivables LLC had no formal training program but she saw some videos that were work related and wondered whether they could help BR cut costs. One video had to do with getting property assessments reduced to lower property taxes. It seemed like a good idea because BR was buying properties below assessment, but still paying property taxes based on assessments at the time of purchase. She wasn't sure whether the assessments would be lowered or what should be done and she had received no guidance from BR. She had also been educating herself on insurance. She learned that there were many different forms of home insurance that covered various perils for various costs, but it was unclear to her whether BR had a company wide policy to use certain forms, whether that varied by the part of the country they were in, or whether they just purchased whatever the insurance company offered. She knew somebody in headquarters probably did know how to do all this stuff but didn't try to reach out to anyone because it didn't seem to be part of company culture to ask such questions.

Ron Barker knows he is part of a dying breed. He has been a community banker ever since he graduated from college 26 years ago, all with the same bank, Mutual Savings, which is a small savings bank with 11 branches in the city and outlying areas. It's a natural fit for his cautious personality. Most of his family still lives in the area and he wouldn't dream of changing jobs or leaving the area. Despite his experience, nothing prepared him for the deluge of foreclosures that hit the area starting in 2008. Mutual Savings had weathered it better than most because they had stuck with tried and true lending practices. Still, there was fallout that couldn't be avoided and the bank ended up with some real estate owned.

Ron was anxious to recycle these houses back into the community. When he met with Bob, besides Bob's repair estimates and timelines, there were two additional things that got Ron's attention.

The first was, in the offer to purchase, Bob had written, "This offer is subject to receiving written agreement from the city assessor's office before closing to reduce the tax assessment to a reasonable figure." During the meeting, Ron had cautioned Bob as to how the city does such things. He told Bob that the city has detailed procedures that must be followed and that getting any such written agreement would be unrealistic. Bob listened carefully to what Ron was saying, then proposed that he take photos of the house and meet briefly with the assessor to see what would happen. The photos would show, among other things, that all the glazing was worn off the asbestos slate siding except under the eaves, which gave the house a hideous and forlorn appearance from the outside, as well as all the cockroaches still stuck to the walls and piled on the floor when Mutual Savings' contractor had bombed the house to kill the roaches. In addition, Bob took an electrical plate off an outlet to photo a dead mouse that had been fried in the electrical box. Bob called the city assessor's office, but was told that nobody would meet with him because he didn't own the house yet. Bob then found a photo of the city assessor online and went down to the city offices without an appointment. After several attempts at different times on two separate days, he was able to have a brief conversation while standing with the assessor's assistant in a hallway. Bob told the assistant that the house was assessed at 92K and he had an accepted offer to buy it for 20K. Bob said he would have the house renovated within a year and the city should be able to reassess it for full price at that time, but in the meantime he would like to have the assessment lowered to somewhere around his purchase price. The assistant looked at the photos and nodded, then said he would be right back. When he came back, he told Bob they would lower the assessment to 46K when the sale went through their office. He said if you don't see anything in the mail within 8 weeks after closing, give me a call. Bob calculated that this would save him $150 per month and that, as busy as the office seemed, they would probably forget about him and the house might not be reassessed for two or three years. Bob quickly thanked the assistant and left.

The second was, Bob asked Ron during the discussion whether, in the event Mutual Savings made a loan on the property, they would accept home insurance written under Form 1. Ron actually wasn't sure, so he called their attorney in the main office. The attorney wanted to clarify which property this referred to, then said, "Yes, we can accept a policy written under HO-1." Bob wasn't sure exactly how much this would save him or even whether he wanted to use a policy written under HO-1, but he filed that information away, as it had the potential to reduce his costs.

When the day of the closing came, because it was a real estate owned property, the closing took place in Ron's office. Ron went over the paperwork with Bob, as he had done dozens of times. But this time something different happened, something Ron had never seen happen in all his 26 years in the business. The loan was to be for $10,000, but with all the various fees, the total cost to Bob was going to be $11,500. There was a loan origination fee, an appraisal fee, and some other fees. These were accepted costs of doing business; everyone in the business understood this. Bob started by asking Ron why he had to pay an appraisal fee when he didn't need the house appraised. After some back and forth regarding the fees, Ron asked Bob, "Do you not want to do this deal?" Bob replied, "I want to do something that makes sense. If I pay all these fees, that is 15% of the loan amount. If I spread these fees out over 3 years, in addition to the 6% interest you are charging, that is an effective 11% interest rate. I can't do that and have any reasonable expectation of staying in business. So if you can't waive these fees, I still want to do this deal, but will pay cash instead, then figure out where to get the money for the repairs." Ron picked up the phone and called the attorney in the main office. The attorney said, "Is this the guy who asked about the HO-1?" Ron replied that it was. The attorney said, "We need to get rid of this wreck. Waive all the fees." Ron put the phone down and said to Bob, "You are the first person I have ever seen buy a house and not pay any fees."

Bob didn't mention this to Ron, but since it was likely that his taxes would be reduced for this calendar year and the proration at the closing had been based on last year's taxes, Bob had in all probability come out of the closing with a net gain.

After Bob left the closing, he thought a bit about what Ron had said. He remembered his Dad taking him to car dealerships when he bought cars. One time, his Dad had questioned a dealer prep fee and gotten it waived. But there wasn't time to think about that. The meter was running - interest, taxes and insurance - and he needed to get to work.

[Higgenbotham]

Ron Barker's AC compressor had started making noise in July. At first, the noise was intermittent, then it worsened enough for Ron to know that this was destined to be a repair of some kind. Ron called his trusty mechanic, James, who came out to do a diagnostic. The diagnostic alone would cost $125. James leaned over the car and listened. "Bad news, Ron. It's your AC compressor." Ron realized this was bad news and asked about how much it would set him back. James replied $1300 to $1500, but there was something he didn't say. This would be the first time that he was not going to work on Ron's car. James figured that since the car was 15 years old, along with the tough winters, the compressor would be too hard to replace. It was too close to the road and, without looking, James knew the underside would be badly corroded. Ron said, OK, let me talk to my wife and I'll let you know whether we want to do it. He did, and they decided to do it, but James stopped returning his calls or replying to his emails. There was a labor shortage now and James had plenty of easy work like changing brake pads, which his mobile service did in employer parking lots or wherever it was the customer needed it done. With good planning he could knock out several jobs like this each day. His labor rate had nearly doubled in the past 3 years and the calls just kept coming in.

This was bad news for Ron. He had two daughters in college and that car needed to last another 5 years. Six weeks later Ron found Dale, who said he could come out to the bank parking lot and replace his AC compressor. Dale assured him that he could do the job within the next two weeks depending on weather and planning.

Of course, Dale had asked Ron where the job site would be so as to gauge the likelihood he would get paid. Every so often, Dale also looked at his reviews on Yelp and other sites, noting that his rating remained a solid 4.9 out of 5 stars. Some of the reviews even said his rates were reasonable, while none had yet talked about how he was jacking his rates sky high. Dale was planning to retire in the next couple years, but this wouldn't be a standard retirement. Dale could see that civilization was collapsing. It was obvious. Even though he was only 54, Dale was making plans to get out of dodge. As part of these plans, he was going to extract as much cash from his customers as he possibly could whether he liked them or not. That didn't mean he was going to do anything else differently, just charge more. And he was getting it and nobody was complaining yet. He had already saved $400K in the past 3 years and raised his labor rates to $150-200 per hour. Just 2 more years and he could get out. Besides, Ron was a banker, right? What's the big deal?

Dale showed up at the appointed time and Ron never asked him for an estimate. Several Yelp reviewers had indicated his rates were reasonable and, besides, it wasn't like he could get anybody else who had both a good reputation and was able to do the job. After Dale had been on the job for 3 hours, Ron came out to the lot to check on his progress. Dale said it was going fine. He had gotten the old compressor off by heating the bolts with a torch, but a smaller bolt had broken off and he was extracting it. Ron nodded, vaguely aware this could be a problem. Dale said it would be a couple more hours and he'd be done. Ron started thinking about how much this would set him back. He tried to make small talk with Dale and succeeded somewhat. Dale told him that a big part of his business nowadays was with bricks and mortar auto shops. Since the shops couldn't get experienced mechanics, he was often called over for bolt extraction and other problems they couldn't solve. He told Ron that he charges them $200 per hour for his service, plus travel time. Ron asked what will happen when he retires. Dale shrugged his shoulders and said, "They'll find a way to get by, I guess." A couple more hours went by, Dale finished, and totaled up the bill. "I'm gonna have to charge you a little more because of that bolt," he announced. $1000 for labor, $200 for travel, $583 for parts (which were marked up), and $112 for supplies. Ron just said, OK, and pulled out his credit card. What choice did he really have?

And there's another way in which Ron has no choice. Even as of last year, Ron could have bought a car with no air conditioning, but, as of 2023, air conditioning is now standard on every car sold in America.

[Higgenbotham]

There were a couple loose ends to tie up on the heating system and Bob would be done. After 8 months of hard work, the house was unrecognizable. It had taken 4 months longer than he had estimated. One of the neighbors had asked him jokingly whether this was going to be a lifetime project.

Also, several neighbors had asked Bob what he was planning to do with the house. So as to avoid discussions about this or that deadbeat relative who needed a place to live, he had responded that he planned to live in it. Really, he planned to rent it and was keeping his eyes and ears open. In addition to the purchase price of $20K, he had spent $18K to renovate the house, $8K more than planned. Bob figured his equity was worth $34K, which meant he was only able to build equity at the rate of 51K per year at the level he was working at. He would try to improve that, but flipping houses was out of the question for now, and real estate prices were declining.

Rents in the area were no less than $1,050 per month. The interest on his loan was $50 per month, taxes were $150, and insurance was $20. The notice for the reduction in the assessment had been received from the city as promised. At $1,050 rent, conservatively assuming 20% for maintenance and vacancy in that area, his return and cash flow would be reasonable. He figured if he could do this 9 more times, he could make a decent middle class living assuming everything held together. But his immediate problem was where to get more money and the apparent answer to that was more side jobs and a little cash flow from his rent. It might be another 8 months before he would be able to start another one. But each time it would get easier because there would be more cash flow from his rents.

Suddenly the phone rang. It was Ron Barker. He wanted to stop by the house and talk to Bob. Ron rushed in. "Bob, this looks beautiful," he said. "You know, in my position, we never know who will really have a knack for this and who won't, but you certainly do. What you've done here is incredible and the numbers will certainly work, congratulations, but there's something I came here to talk to you about. We have a house out in the suburbs where an investor has gotten in over his head. If you're interested, we can loan you the money for the repairs to finish it. I'm on my way to a meeting and have to go, but here's the address - let me know if you're interested. You might even be able to flip this one and make a good profit."

[Higgenbotham]

Meanwhile, over at Bailout Receivables LLC Donnie was getting bids to replace the boiler, as he had suggested to Kayleigh.

Bailout Receivables had paid 32K for the house. It was nearly identical to the house Bob had purchased for 20K except the house Bob had purchased required more extensive cleanup. Thus far, BR had spent 56K for repairs and upgrades, taking everything into account - materials, labor, and overheads - and the work was almost done except for replacing the boiler.

Rather than asbestos slate siding, BR's house had old clapboard siding which was torn off and replaced with vinyl siding. BR was in the process of getting volume discounts on materials and had made significant progress in that regard. Bob had put a special primer from Sherwin-Williams on the asbestos slate siding. The primer was costly and, while Sherwin-Williams gave him a contractor discount, it was nowhere near the discount BR would have received for the same material. However, Bob was told by Sherwin-Williams and others that with the proper topcoat the paint job would last far longer than if it were applied to wood, perhaps as long as 20 years. Therefore, with regard to the siding, as most other things, BR was set up for less maintenance expense down the line, but whether it would be done more efficiently is debatable. However, it might still be reasonable to assume that BR's maintenance expense is half of Bob's.

The low bid Donnie received was $5,800. Because the existing boiler was relatively new, it wasn't necessary to do much repiping. The contractor was able to get it in right away and the house was ready to rent at approximately the same time as Bob's.

BR didn't need to call Dale in to extract the bolt out of the existing boiler. They got a cheaper and lower quality boiler than the one that was originally installed but will probably get a few extra years of useful life out of it versus keeping the existing boiler.

Upon completion, based on an accurately done market analysis, BR received an estimated value for the property of 78K. Taking everything into account, BR had 94K invested into the house. All of the 94K was debt, but the effective interest rate on their debt was only 2% thanks to their friends at the Federal Reserve. Interest on the 94K of debt was therefore only $150 per month, taxes were $300 per month, and insurance was $30 per month. At a rent of $1,050 per month, and conservatively assuming 15% for maintenance and vacancy, the property had positive cash flow of over $400 per month and the return on total money invested was 5%. Had BR's interest rate been 6%, the same rate Bob was paying, the property would have barely cash flowed.

BR management realized what was needed. They were upside down on thousands of properties and there wasn't going to be a way to renovate properties and come out ahead using their business model except to rent them long term, and even that was a dubious proposition. Even if positive cash flow of $400 per month could be sustainably achieved, it would be over 3 years before they would break even on this property. Others were similar. What BR needed was another real estate bubble.

[spottybrowncow]

Higgie, I hope you have grandkids someday, your stories are great!

[spottybrowncow]

Remind me of "The Big Short," in a way.

[aeden]

Higg is warning us what does not want to be seen as what it takes to preserve capital in a cycle seen before.
I do not think He misses property management either.
https://craignelsen.substack.com/p/nazi ... -bolshevik
We had a quarterly meeting of Elders last night and the term Liberty was offered to what that price tag is
not having qualified souls who can maintain it heading into the period things are taken away by grifter retards.
I was allowed to join so I guess I'm older now.
As offered before reading what Robert Freidman meant about deracinated as Balaam was abusing His transportation then.
We had a good laugh about the cheese wall and who ate my cheese period as LEAN thought maps moved into corporate circles
and what piggyback globalists means in today's World. The point is going along to get along had consequences Just as my Father in Law
Hit Normandy and had the feet of combatant's feet pointing towards the door to show who was behind that point of contact was cleared
in that building. The warning is being liberal does not mean it is correct. We assume a decade if India and the States sort out essential details.
The fact is the ensuing subsidy's will be first use money corruption and will end up like San Fransisco's values of merit just as we seen in China
countless tens of thousands of electric and registered vehicles rotting in the Sun. Subsidy theft and corruption to lure in capital and just like
FTX to vanish in another polo-tic fashion.

The blue tooth from the apple ipad would not link to the bose speaker. I offered get a hammer, a few amused, a few chuckles and after a few minutes just rebooted it to refresh the system. I do not use any Apple products or Starbucks woke, so it appeared cluelessness is just the order of the day. Waiting for the well they used the highways in Rome then built by slaves to surface. Cannot wait for the Hadrian's curse discussion to events.

Suicide runs.
https://en.defence-ua.com/analysis/russ ... -4768.html

script map https://clifhigh.substack.com/p/lin-bia ... e-of-trans

Also cash money seized from the trucker's donation accounts. Fig tree barren roots.
https://ottawacitizen.com/news/national ... formation/
European Endowment for Democracy.
Canada's very own uknazi finance minister Chrystia Freeland roots.
https://smartcdn.gprod.postmedia.digita ... pdnBVqjb9g

The Kazarian cult has no issue killing any Christian biscuit eaters.
The CBDC attacks on our currency will fund all butchers until you guessed it, when the real Boss has to show up.
The Kazarian cults mentats wants a world tax and yea, nirp for superior orders Senator.
Vix Biscuit.
“I can assure you: there is more money that we’re going to be able to identify”

The only thing Noske got was more cow bell from the educated.