Property Grunt

Monday, May 11, 2009

This game is to blame

All the same.

As someone who is a self-professed comic book fan, I confess that Eisner was never one of my favorites. I knew of his work in the Spirit and I knew that he was part of the family of icons that included Jack Kirby and Stan Lee.

But I never really got into the Sprit. As kid I may have flipped through the Spirit and I watched the first Spirit Movie on ABC starring Sam Jones. I wasn’t really impressed by it. I mean yeah, he survived a near death experience but he had no super powers or nifty gadgets. And he got beat up, a lot.

Every now and then I would hear about his other non-adventure works and how it was critically hailed, however at that point I was more interested in the works of Garth Ennis and Warren Ellis.

With Frank Miller’s aborted fetus of a film version of The Spirit, I became curious about Eisner once again. But I began to read his non-Spirit related works which were tales based on growing up in New York City and being an immigrant.

The result is that I have an insatiable hunger for Eisner now and I realize why I had no interest in his work back then. It was because I was not ready to read them.

One particular work that has resonated within me is “The Name of The Game.” which chronicles the lives of a very prominent Jewish Family known as the Arnheims. It is a tale of greed, betrayal, spousal abuse, assimilation and copious amounts of family dysfunction.

One of the main characters in this tale is Conrad Arnheim who is a douchebag of the highest order and it is no surprise why. As a child, his father deems him the heir to the family's corset manufacturing empire however this position only creates a monstrous sense of entitlement within Conrad which destroys all he touches and eventually leads to his own demise.

Here are some examples of Conrad’s actions

When the company is about to go under, Conrad sets up a loan in putting up shares of the company as collateral. But he sets it up so his shares are protected while leaving his cousins on the hook for the loan when the company goes go under.

His cousins threaten to put Conrad’s brother in jail for embezzlement unless Conrad helps them out. Conrad responds by having his brother committed.

On his wedding night, his wife is hesitant about consummating the marriage, Conrad’s response is to beat and rape her.

In Conrad’s defense, he is not the only one with an agenda. Every character, even ones with the noblest intentions has an angle when they get involved with the Arnheims.

When Conrad leaves the garment industry he buys a seat on the stock exchange and sets up his own firm. All the other prominent Jewish families throw tons of money at him without engaging in any acts of due diligence because they trust the Arnheim name. Sound familiar?

The two women who marry Conrad are not motivated by love but the opportunities that come by being an Arnheim. Despite the indignities of Conrad’s affairs and beatings, they still stay.

Conrad’s mother espouses the following mantra which is Always Keep up Appearances which is the main theme of the book. By making every effort to maintain this charade of success and good fortune, they are perceived as being prosperous to the general public.

If you want to truly understand why the economy is in the tank and why the real estate market has imploded read this book because it all comes down to keeping up appearances.

We are constantly being bombarded with real estate reports from real estate brokers that claim everything is honky dory when the evidence shows the contrary. The list of real estate developers who are in deep trouble is rapidly growing as they realize that owe more than they actually own. But we still hear reports of "green shoots" and the market turning for the best.

Why did all of these people buy bigger homes? Why did they take out mortgages they could not afford? They wanted to create the façade they were moving up in the world. A new home is a simple and easy symbol that says to the world, I am somebody. Respect me. It is a status symbol and status symbols are a huge part of the social construct in our society.

Even the very act of refinancing says to the world. “Hey, my home has risen in value and I am going to tap into it.”

The credit card industry is also part of the game and is going to get destroyed for being such a bad player.

Banks Brace for Credit Card Write-Offs

It used to be easy to guess how many Americans would have problems paying their credit card bills. Banks just looked at unemployment: Fewer jobs meant more trouble ahead.

The unemployment rate has long mirrored banks’ loss rates on card balances. But Eddie Ward, 32 and jobless, may be one reason that rule of thumb no longer holds. For many lenders, losses are now starting to outpace layoffs.

Mr. Ward, of Arkansas, lost his job at a retail warehouse in April and so far has managed to make minimum payments on his credit card debt, which he estimates at $15,000 to $20,000. Asked whether he thinks he will be able to pay off his balance, he said, “Not unless I win the lottery.”

In the meantime, he said, “I’m just doing what I can.”

Experts predict that millions of Americans will not be able to pay off their debts, leaving a gaping hole at ailing banks still trying to recover from the housing bust.

The bank stress test results, released Thursday, suggested that the nation’s 19 biggest banks could expect nearly $82.4 billion in credit card losses by the end of 2010 under what federal regulators called a “worst case” economic situation.

But if unemployment breaches 10 percent, as many economists predict, the rate of uncollectible balances at some banks could far exceed that level. At American Express and Capital One Financial, around 20 percent of the credit card balances are expected to go bad over this year and next, according to stress test results. At Bank of America, Citigroup and JPMorgan Chase, about 23 percent of card loans are expected to sour.

Even the government’s grim projections may vastly understate the size of the banks’ credit card troubles. According to estimates by Oliver Wyman, a management consulting firm, card losses at the nation’s biggest banks could reach $141.5 billion by 2010 if the regulators’ loss rate was applied to their entire credit card business. It could top $186 billion for the entire credit card industry.

Unlike in prior recessions, cardholders who recently lost their jobs are unlikely to be able to extract equity from their homes or draw down retirement accounts to help pay off their debts. That means borrowers who fall behind on their bills are more likely to default, leading to higher losses.

After writing off about $45 billion in bad debts during 2008, credit card lenders are bracing for the worst year in the industry’s history. Not only are losses spiraling, but also lawmakers are on the verge of passing a set of tough new consumer protections that could have a devastating effect on profits. This week, the Senate is expected to take up the Credit Cardholders Bill of Rights after the measure passed in the House with a strong bipartisan vote of 357 to 70.

Over the weekend, President Obama pressed lawmakers to approve the new rules, which would curb the ability of card issuers to raise interest rates retroactively on consumers and would require them to reduce hidden fees and penalties. He hopes to sign the legislation by Memorial Day.

For the banks, the economics of the credit card business are increasingly troubling. As the recession has dragged on, cardholders have sharply reduced spending. New customers with strong credit histories are increasingly hard to find.

Many who have played the game of keeping up appearances are screwed because they have nowhere to turn to for funds. Lenders are freaking out because of the rising defaults and the plummeting levels of qualified customers.

This is is just the tip of the iceberg. If these people are having credit card problems, do you think they will be able to cover health care costs, let alone food?
How can this economy recover when everyone is reining in their spending? When we treat consumer as our only annuity, this is what we get.

It is not all gloom and doom. In fact if you did not play this game you have the advantage. If you paid your credit card balances in full, if you kept a pristine credit report and if you saved your money and lived frugally, then you are in a better position than most.

For you buyers out there, if you are willing to wait at least another 6 months to a year and treat real estate like a night at Scores (Look but don't touch.) Then there will be some very sweet deals for you out there.

Sellers, pray. Because that is all you can do now.