Monday, November 29, 2010

From the wtf fie:
Fiat and Chrysler to Build Jeeps in Italy - And Export Them to the US

There were rumors of this last week, but I guess now it's offical because it's in the Automotive News. Fiat and Chrysler are going to jointly invest $1.3 billion into a plant in Italy to make vehicles under the Jeep and Alfa Romeo brands. The upgraded facility would have a capacity of up to 280,000 vehicles per year and will employ up to 5,600 workers. In other words, it's a big factory. Some of the production will be assigned to Jeep models to be exported to the US.

It's interesting to me that this press release came out over Thanksgiving weekend. It appears that the UAW hasn't had time yet to react in an organized way to the press release. Personally, I have a hard time with this, since Fiat stands to get a third of Chrysler without investing any money. The whole purpose of the deal is to save jobs and industry in the US. Chrysler's reinvestment in North American built products is not complete, yet capital is somehow available to build cars in Italy.

Sunday, November 28, 2010

Leslie Nielsen Dead at 84

Thanks for the comedy, Leslie.

The Thief that's Stealing your Processor Cycles
Windows 7's wmpnetwk.exe

I spent most of my morning today trying to wrestle Windows 7 back to reasonable performance. My performance meter showed the processor was working hard all the time. Also, over time startup performance has deteriorated, shutting down, going to sleep and waking up became slow and iffy propositions.

When I looked into it, it soon became clear that my year old Windows 7 laptop had two major problems. The first had to do with ill-behaved drivers for my HP-8500 series printer. Setting the drivers to not install at start-up seemed to solve that problem.

The second problem was more invidious and more difficult to solve. In fact, I still don't have it solved. It involves Microsoft Media Player. More particularly, a "service" file in the Windows registry called wmpnetwk.exe. According to my research, this program allows your PC to share media files over a network. You know, like the guy on the Windows commercial who carries his laptop all over the house. Apparently, it has been common knowledge for years that for this marginal bit of utility, this program can take half or more of your processor cycles all of the time. A Google search returned over 48,000 hits for this search

problem wmpnetwk.exe windows-7

Like Hal-2000, this program refuses to just let you turn it off. You can go to the resource monitor and try to turn it off all day long and it refuses to budge. I got it turned off through the Task Manager. Windows 7 has a built-in utility player called services.msc. With that program, you are supposed to be able to set the various service programs to automatic, automatic (delayed start), manual, or disabled. I used services.msc to return wmpnetwk.exe to "manual", restarted, and low and behold, the freaking program ignored my instructions and started automatically again.

I still don't have the problem completely solved. I know now though that if my process meter shows 55% of the cycles used when I'm not doing anything, I need to go to task manager and disable wmpnetwk.exe. I also know that if I do that, I'm unlikely to suffer any ill consequences. That's better than nothing. I hope that Microsoft has a service pack for Windows 7 on the way that will resolve this issue. So far Microsoft's response is bringing truth to the proverb, "once you go mac, you don't go back."

Here's a very relevant video I found on Youtube.

Saturday, November 27, 2010

Take a Pass on the American Express PASS card

American Express has been heavily promoting its PASS reloadable debit card. It's a card aimed at teenagers. American Express sent me a mailer with what looked at first glance to be an attractive offer. Here's the pitch, sign up for an American Express PASS debit card for your teen, load it with at least $25.00, and when you reload the card, you'll get a free $25.00 credit with their promotion code getpass25. What's the catch? The most obvious one is the $3.95/month fee, but the fee is suspended until October 1, 2011, and you can cancel before the fee kicks in. Another catch is the $1.50 ATM withdrawal fee, but that's livable. The dealbreaker for me involved privacy. In the application,they want your teen's name and date of birth. They also want the teen's cell phone number and the express permission for American Express and its affiliates to send text messages whenever they want. They want the parent's date of birth, social security number and cell phone number.

In other words, this is a card where the company is making a $25.00 bet that you're too busy or stupid to cancel the card before next October. In the meantime they are likely to cost you money with text messages; and who knows to whom they'll sell (or barter) your and your child's personal information. There's no such thing as a free lunch. My family's privacy is worth more than $25.00.

Now for the marginally relevant video of the day. The subject is PASS. The video is This Too Shall Pass by Ok Go. I've always loved Rube Goldberg Machines, and this is the best one I've ever seen.

Thursday, November 25, 2010

We might as well make this a "Dramatic Reading" Theme Day

Wednesday, November 24, 2010

And They Say the Art of Writing Letters is Dead . . .

If you've ever seen a Ken Burns documentary, two things stand out: the first is the cinematic style of zooming around the image of a still photograph, and the second is the lost art of letterwriting, as a famous actor reads a well-written and heartfelt missive. (I just wanted to use the word "missive".)

Well, Buckos and Buckets, letter writing isn't dead. Here's a letter from the Civil War, the famous Sullivan Ballou letter.

Okay, that's a pretty high bar when it comes to the art of correspondence. Now let's see what a modern writer can do with all the technology of the modern day.

More Senior Citizens "Dying with Debt" - USATODAY

Per a recent article in USATODAY, more senior citizens are deciding not to pay off their credit cards - ever. The plan is to die owing the money. This is not a new strategy. I have been advising some clients this strategy for years. The strategy only makes sense because the credit policies of giant creditors don't. To give an 80 year old a large credit line based on a simple FICO score completely ignores a substantial possibility that he or she may not have the incentive or ability to pay off a multi-thousand dollar unsecured credit line before his/her natural life expectancy ends. If this seems harsh, or even unethical, consider what has been the alternative. Many of these same seniors have been talked into disastrous home equity loans, equity stripping loans, that they can't afford, just to pay off credit cards. Clearly, the lesser of two evils is to pay what they can on their credit cards, even if it is the minimum payment or less. If the senior citizen leaves an insolvent estate, then the creditor should have thought about that before granting the credit.

Tuesday, November 23, 2010

Obama and Biden Go to Kokomo
Plus - an update on the Tipton transmission plant

It must be Take Your Vice President to Work Day. It's slightly after noon, and as I write this, President Obama and Vice President Biden are likely on their way to a rare joint appearance at a Chrysler Transmission plant in Kokomo, Indiana. Sharing the bill with them will be Chrysler Group CEO, Sergio Marchionne and UAW President, Bob King. They are basically taking a victory tour of Chrysler post-bailout. While Chrysler is not completely out of the woods, I've got to say that I'm amazed at how smoothly Chrysler's revamping of its existing product lines has gone so far. I guess that goes to show just what you can do when you actually pay your suppliers.

Even though Kokomo has no final assembly plants, Kokomo might be the more economically dependent on Chrysler than any other town in the country. Chrysler employs 4,500 workers in this city of 48,000. There is no question that the auto bailout saved the city from economic ruin.

The President is on hand for the expected announcement of roughly $1 billion in upgrades to the existing Kokomo transmission facilities. The Kokomo plants are expected to be reconfigured to produce an advanced automatic transmission for front-wheel-drive vehicles. The current product line focuses on trucks and rear-wheel-drive cars. A few years ago, old-Chrysler partnered with German firm Getrag to build a brand new plant in nearby Tipton, Indiana to produce advanced dual-clutch automatic transmissions. If things had gone as planned, those transmissions would be in Chrysler vehicles today. With the help of government incentives, the plant was completed, at least externally, but no production equipment was installed. There was an ongoing dispute between Chrysler and Getrag regarding who was supposed to pay for the equipment. From the perspective of this outsider anyway, it appears that neither Chrysler nor Getrag wanted a partner, they were both looking for a sugar daddy. By 2008 both companies had backed out of the deal, each throwing stones at the other. Within months, both companies would be bankrupt. At last report, the Tipton factory was sitting vacant, owned by a constellation of unpaid contractors. There was pending deal to sell the facility to Abound Solar, for the purposes of making solar panels. This deal was on hold as of November 19, 2010 due to a slight problem, no money had shown up.

Anyway, what a treat to have both the President and Vice President come to your plant on a work day. There are some who will say it's risky having both the President and the Vice President making a joint appearance. I can't say that I didn't think of the risk. Then I realized, out of the finite universe of individuals who would wish harm on the President and Vice President and try to carry it out, how many of them do you think would actually prefer Nancy Pelosi?

Sing us out, Kermit.

Monday, November 22, 2010

Netflix Raises Prices $1.00/month
More Bucks for More Crap, But Interesting Crap

Netflix Raises Prices $1.00/month. Not much of a headline, I know. The only reason I post it is that I'm watching Netflix as I watch this. Netflix's streaming service has a reputation of having a lot of crap. It does, but some of it is interesting anyway. I'm watching a documentary, Who is Harry Nilsson. What a strange dude. He brought in a busload of pensioners to record a song, I'd rather be dead than wet my bed. To prove you can find anything on youtube, here's the song from an earlier documentary called Did Somebody Drop his Mouse?

The Fraud at Bank of America Keeps on Coming
Countrywide Held on to Notes it Should Have Transferred.

According to an article in American Banker (subscription required, so I'm linking to Max Gardner's blog entry discussing it), a Countrywide Finance employee testified that Countrywide (since taken over by Bank of America) would routinely hold on to mortgage backed notes that were supposed to have been transferred in loan securitizations. In my post of November 16, I talked about how proper transfer of the note is crucial in a foreclosure case. If the borrower pays somebody other than the holder of the note, the borrower may be liable to pay twice. This danger is compounded in mortgage securitizations. Unless the notes (endorsed in blank) are transferred to the trustee of the mortgage security, the same loans could be bundled into multiples of mortgage securities. It doesn't take a genius to figure out that if this practice is widespread, confidence in mortgage securities could plummet.

It's clear to me that the corporate culture of dishonesty that permeated Countrywide has infected Bank of America to the core. It's time for Bank of America to be placed under receivership. Interestingly, the loan in question in this case was subject to a lost note affidavit in a previous proceeding. All of a sudden the note showed up again. That brings us to our marginally relevant video of the day, Baby, Now that I've Found You (I can't let you go) by the Foundations. What I found is interesting about this song is that almost everybody is familiar with the Foundations' other hit, Build Me Up Buttercup, and they forget about this song even though this was a top 10 hit in the US. I guess we'll have to wait for There's Something About Mary II.

Sunday, November 21, 2010

Big News in Hanford Washington - Radioactive Rabbit . . .

The Seattle Times reports that workers at the nuclear facility in Hanford, Washington have come across radioactive rabbit droppings and mouse droppings. They shot one rabbit that was radioactive, but they haven't found any glowing mice yet. Maybe they're not looking in the right place. They're looking down, and maybe the mouse they're looking for is six stories high.

Somewhere in an alternate universe, I imagine teenaged Peter Parker, on a fieldtrip to the Hanford Facility, getting bitten by a radioactive rabbit. Peter would then obtain super powers. He could sire 2000 offspring per year and s--t little pellets. That's about it, actually.

Tuesday, November 16, 2010

The Congressional Oversight Panel and the Mortgage Documentation Mess
Show Me the Note

The Congressional Oversight Panel, convened in 2008 to review the Treasury Department's response to the financial crisis just released a 125 page report on the scope of the mortgage documentation controversy. Of course, I haven't read the 125 page report, after all, there are videos of cats staring down alligators to watch, but CNN Money says the following: (Nested quotes are left in just to show how lazy all layers of reporting are in this day and age.)

While the report acknowledged that the scope and the consequences of controversy remain unknown, the panel warned that the financial system could be at risk if the allegations of "robo-signing" are proven to be true.

"If documentation problems prove to be pervasive and, more importantly, throw into doubt the ownership of not only foreclosed properties but also pooled mortgages, the consequences could be severe," the report said.

The panel suggested that stress tests would be in order for certain institutions with large exposure to high risk loans. Yes, Bank of America, we're looking at you. (See William K. Black and L. Randall Wray's October 22, 2010 essay in the Huffington Post, Foreclose the Fraudsters, Part 1: Put Bank of America in Receivership.)

Let me just say this about the Congressional Oversight Panel. It may seem like they did a deep and thorough analysis of the problem, but when you give it even a cursory glance, you can see they just punted and didn't really issue a usable opinion at all. Imagine that you had a bunch of money that you didn't need, and you decided that you would hire an oversight panel to look at a particular problem and write a report, let's say, a concise 125 page summary. So you give a bunch of experts a bunch of money, and two years later they write a report that says this problem could either be something that will crash the entire US financial system, and maybe the world's, or it could be no big deal. If you paid the money, wouldn't you think you were a bit cheated? Guess what, you did pay the money. You were cheated.

The strange thing is with all this talk about robosigning of documents related to the mortgage, very little is being said about the promissory notes that comprise the actual promises to pay. Without the notes, the mortgages are useless. The geniuses behind the MERS system for putting mortgages in the hands of nominees omitted the duty to track and properly assign the promissory notes.

One of the highlights of the NCLC conference last week was the speech by negotiable instruments expert, Professor Douglas Whaley. His speech focused on what he calls "The Sexy Promissory Note". I don't have to summarize it because he has published a somewhat shorter version of it in his blog, linked here. The bottom line to Professor Whaley's speech is that a lawyer representing a consumer defending a foreclosure, and in some cases, even a consumer acting pro se, should demand presentment of the original promissory note as a precondition of foreclosure. That promissory note should show a clear chain of endorsement from the originating mortgagor to the current claimed assignee. Absent such evidence, the court should not allow foreclosure to occur. When a note is claimed lost, there is no presumption of validity, and the claimed owner must show evidence for each transaction in the chain of title, and in some cases must post a bond to protect the mortgagor from multiple claims of ownership.

Now it's time for the segue into our marginally relevant video of the day. In 1970, 20 year-old Stevie Wonder had a huge #1 hit with the song Signed, Sealed Delivered (I'm Yours), a song he wrote with his wife, his mother and his regular songwriting partner, Lee Garrett. If a blind singer barely out of his teens could figure out the concept of signed, sealed and delivered, why couldn't the professionals that were being paid big money to set up mortgage securitizations? Now I could post one of half a dozen Stevie Wonder versions of this song, or one of several that he does as duets with other artists. I could post Peter Frampton's #18 hit. Perhaps the #11 British chart hit by Blue. Nope, too easy. Here's a version of the song done in 1970 by a then-unknown singer named Elton John. In those days, while he was waiting for his first crack at solo success, Elton paid the bills by recording "sound alike" versions of current hits. Some of them are complied in an album called Legendary Covers including this version of Signed, Sealed, Delivered. You should be glad I didn't post Elton's version of Young, Gifted and Black.

2011 Chrysler 200
Better, Duh!

More complete information and full photo sets of the 2011 Chrysler 200 are now circulating. The Chrysler 200 replaces the less-than-successful Chrysler Sebring. Under Cerberus, Chrysler was starved for product development money, and the Sebring was one of the vehicles most affected. Post-buyout, the Sebring needed to be replaced, like yesterday, but there wasn't the time or money to do a complete do-over. Under the circumstances, new Chrysler has done a good job putting new flesh on old bones. The moderate reskinning of the old Sebring platform renders the 200 basically inoffensive even if it isn't a raging beauty. The old hard plastic interior has been thrown out, and soft touch plastics now predominate. The biggest change is in the powertrain. Chrysler's new Pentastar V6 is the optional engine, with a new 6-speed automatic transmission. The base engine is the carryover 4-cylinder engine, but a six-speed transmission is available even with the 4-cylinder. Virtually all of the auto sites are running stories on the 200. Here's a link to Autoblog's
Mortgage Securitization - A Case Study

Dan Edstrom, of DTC Services, performs mortgage securitization audits. He prepared the chart below showing how his own mortgage was securitized. I tried to explain the diagram, but I ended up just improvising "do a head fake, and go long."

Source zerohedge via

Cat vs. Alligator

Fannie Mae to Stern Law Firm: You're Fired
Foreclosure Mill Faces its Demise

Fannie Mae sent a letter last week to all of its affilliates servicers telling them to immediately take Fannie Mae loans out of the hands of the Stern Law Firm. If you're not familiar with the Stern firm, it's a Florida based "foreclosure mill" firm that has been at the heart of controversies involving robosigned and otherwise questionable documents.

DJSP Enterprises, a publicly-traded company set up to do the back office processing of the Stern cases immediately announced a lay-off of 435 of its 1,600 employees. It was once the 9th largest employer in Broward County (Ft. Lauderdale), Florida. DJSP's major subsidiary, DAL Group LLC defaulted on a $12 million line of credit with Bank of America. Bank of America, of course, is into the foreclosure mess up to its proverbial corporate eyeballs.

Are Potterheads Nerds?

I have often wondered whether it is fair to call serious Harry Potter fans "nerds". There are similarities to typical nerds, but there are differences as well. Potterheads read actual books on paper that don't have the word "Star" in the title. Here on the eve of the opening of Harry Potter and The Deathly Hallows, Part One, Daniel Ratcliffe deposits a solid of helping of evidence in the "pro" category of the nerd debate by reciting Tom Lehrer's Element Song from memory. Pretty impressive.

BUT is it more impressive than Al Franken drawing a map of the United States from memory?

Is Al Franken a nerd? Just because you're smart and you know a good party trick, that doesn't make you a nerd, right?

Monday, November 15, 2010

Tomorrow Never Knows

Will Apple announce tomorrow (Tuesday 11/16/2010) that iTunes will (finally) be getting Beatles music?

Saturday, November 13, 2010

Congratulations, Rand Bragg

Rand Bragg was awarded the Vern Countryman award for Consumer Advocate of the Year by the National Association of Consumer Advocates. Rand currently is of counsel for the Horowitz, Horowitz firm in Chicago with a practice specializing in Fair Debt Collection Practices class action cases. Many years ago, Rand was the litigation director of UAW Legal Services Plan. I met Rand when I was in private practice quite a few years before I came to UAWLSP. Rand was a very important early mentor for me. He gave me some important tips on case selection, helped me learn about class actions. He was always a gentleman, never condescending, and he never asked anything in return for any of the advice he gave me. Congratulations, Rand, this is an award you truly deserve.
How We Doin?
Update on Mortgage Foreclosure and Modification Statistics November 2010

I'm blogging from the National Consumer Rights Litigation Conference in Boston. Professor Alan White will be giving his presentation on the latest statistics regarding foreclosures and mortgage modifications. Last year, the the numbers showed that the HAMP program was barely putting a dent in mortgage foreclosures, and the problem was growing. We'll see how the situation is changing.

Since the remarks at the conference are supposed to be "off the record, I'm not going to post details. By past practice the same data that he's discussing here will be distributed in a published report within a few days. Here's a link to Professor White's website with monthly foreclosure reports.
Auto Fraud and the FTC
NACA is looking for complaints

With a Republican-controlled Congress, consumer advocates expect that there will be very little new consumer-friendly legislation over the next two years. Luckily, the Consumer Financial Protection Act was passed this year, and the Consumer Financial Protection Bureau (CFPB) was established. It will take about a year for the CFPB to be set up, and at least another year before the agencies new rule-making authority can bear fruit, at least on big issues. That being said, the Federal Trade Commission is still in business, and the FTC is collecting information on auto fraud. In July, the FTC gets APA rulemaking authority over car dealers, this authority was the quid pro quo that dealer lobbyists had to accept to get exempted from CFPB regulation. (The dealers' legislative victory may backfire. If they were covered by the CFPB, nothing would really be done for at least two years, and probably longer, because the banks and mortgage industry have to be fixed first.)

Even though the FTC is indicating a new activism, in recent years, when used cars complaints have been made to the FTC, they've tended to vanish, sometimes without even acknowledgement that they were ever received. The FTC blamed the lack of complaint information on defects with their Sentinel system, a system that has stayed rarely used and unfixed for years. With that in mind, the National Association of Consumer Advocates (NACA) is collecting auto fraud complaints from lawyers for forwarding to the FTC. Send your auto fraud complaints to In this particular case, NACA is looking for court filed (or arbitration) complaints alleging auto fraud complaints, primarily in .pdf form. Anything in the last five years is fair game.

Friday, November 12, 2010

2012 Hyundai Elantra to Get 40 MPG

According to, the entire model line of the 2012 Hyundai Elantra will be rated at 40 mpg highway and 29 mpg city. This is quite the achievement because the Honda Civic and Toyota Corolla can't touch 40 mpg, and models of the Chevrolet Cruze, Ford Fiesta, and probably the 2012 Ford Focus will have 40 MPG highway ratings, but only for special high MPG subvarients.

The 2012 Elantra will be assembled in the United States and will use a 1.8 liter, 148 horsepower, 131 torque engine. That's more horsepower but less torque than the Chevrolet Cruze Eco, a direct competitor. Hyundai has been aggressively introducing new models lately, and some of the models have featured engines with fuel-efficient, direct-injected engines. Somewhat surprisingly, the Elantra engine does NOT feature direct injection. The Elantra will make its official debut at the Los Angeles Auto Show next week.

2011 Chevrolet Cruze Eco Rated at 42 MPG Highway
Great, but look out for the Elantra

Chevrolet has announced that the EPA has rated the Eco model of its 2011 Chevrolet Cruz Eco at 42 MPG highway. It will be rated at 28 MPG city. GM is skilled at getting good highway economy ratings for its vehicles. Special aerodynamic enhancements and the 138 horsepower 1.4 liter turbocharged engine (and a manual transmission) are the special sauce that delivers the good MPG. The non-eco version of car with the same engine is rated at 24/36, the Eco with an automatic transmission is 26/37. The price of the Eco with destination is $18,895.

As it so happens, a couple of weeks ago, I had my first opportunity to go out and test drive cars in about two years. I had two primary targets, the Ford Fiesta, and the Chevrolet Cruze. I drove the Fiesta, and it was a nice little car. When I went to the Chevrolet dealer to drive the Cruze, Icouldn't get the attention of a salesperson, or any employee for that matter, for the 20 minutes I was in the showroom and out on the lot. They had two locked Cruzes on the lot. One stickered at $22,000+, and the other stickered at over $24,000. The Cruze may be a nice car, but at those prices, they're going to have to "put some money on the hood" to get buyers in the face of stiff competition. Also, if the idea behind the dealer cull was to enhance the customer experience, it certainly didn't work in my case.

For more information, check out this post at

Picture Chevrolet via

Wednesday, November 10, 2010

Mortgage Servicers and Foreclosures
Conflicts of Interest Hinder Workouts

Diane Thompson of the National Consumer Law Center (NCLC) has been a key player in helping consumer advocates battle the mortgage foreclosure crisis. Not only has she conducted training sessions throughout the country, she has produced analytical and training material that are some of the best in the business. It looks like she's finally starting to get some due credit.

Pro Publica features Diane's analysis in an article highlighting problems with mortgage servicers, especially conflicts of interest. For some time, NCLC has made available Diane Thompson's white paper, Why Servicers Foreclose When They Should Modify and Other Puzzles of Servicer Behavior. This should be required reading for legislators and policy makers. Below is a table from the article that highlights some of the conflicts of interest involving servicers that are keeping our foreclosure rate high and our recovery rate low.

Tuesday, November 09, 2010

Is President Obama the Victim of Robosigning?

Michael Redan of thinks so. He looked up two satisfactions of mortgage from President Obama's property and found suspicious signatures and notarizations.

Monday, November 08, 2010

General Motors IPO Going Forward
"American" Ownership Likely to be Reduced

The GM initial public offering is moving right along. The company would like to sell $13 billion worth of stock at about $26-$30 per share. There appears to be a pretty decent market for the stock. Several sovereign wealth funds, including that of the Kuwait government, are among the most talked about purchasers of stock. Another is the Chinese automaker SAIC which might drop several billion dollars on GM stock.
BoA is FoS
Bank of America: How Cooked Are The Books?

Jonathan Weil of writes that Bank of America may be headed for serious problems, perhaps another bailout, months after returning $45 billion in TARP money to the federal treasury.

The problem comes down to the accounting for BoA's purchase of Countrywide Financial.n BoA is still carrying $4.4 billion of "goodwill" on its books going back to the Countrywide purchase even though it is clear that Countrywide never had a positive value, and BoA has discontinued the Countrywide name. The investing community values the company at less than the book value of its assets, and the biggest reason is doubts over the real value of $141 billion worth of Countrywide loans in BoA's portfolio. In my personal experience dealing with borrowers with Countrywide loans in what is probably an average market (not California, Arizona, Nevada or Florida), the real asset value of the Countrywide loans that I've seen is less than 80% of face value. From first hand and anecdotal reports by homeowners trying to get loans modified, my general impression is that BoA is mostly uncooperative and forces foreclosures that are in nobody's interest. You can expect this story to develop further in the coming months.

Friday, November 05, 2010

The "Slurpee Summit"

The hot fluff news of the day involves President Obama's talk of sharing a Slurpee with the Republican leaders. There's no question that a Slurpee is a good way to unwind at the end of a hard day at the White House. Ask Bill Clinton.

Thursday, November 04, 2010

Aircraft Carrier vs. Cruise Ship

Here's a neat video of the British aircraft carrier HMS Illustrious docked next to a typical (not the largest) cruise ship, the Celebrity Century. I never thought I'd see an aircraft carrier look tiny.
Need to Get out of a Timeshare - It's Easy
- If You're Dead

I was forwarded a link to a fluff piece from television station WPTV6 in Palm Beach Florida. The purpose of the article is to warn viewers against scam artists who want you to pay money to sell your timeshare. That's good, but ending advice is very misleading. They quote a well-circulated 2006 article from SmartMoney magazine titled Escape from Timeshare Hell that says it's easy to get out of a timeshare. Here are the 4 steps that SmartMoney says you can use to get out of a timeshare:

* Ask the condo developer if it buys shares back.
* List with a Realtor.
* Rent it out.
* Donate it to charity, for a tax break.

Great advice, too bad the chances of it working are about the same as me flapping my arms and flying home from work. I've never seen a condo developer buy a timeshare back. I've never seen a reputable Realtor list and sell timeshares. The covenants generally keep you from renting it out; however for additional fees, you can enroll in a swap program. The few charities that dabbled in taking timeshares have largely stopped, and to the extent they take them now, you have to have everything paid and pay an outside company a service charge to take the timeshare.

The Great Recession has really hammered timeshares and timeshare investors. Many of the "resorts" are on the Gulf of Mexico. Between oil spills and hurricanes, the resorts have faced huge capital expenditures and reduced tourism. This results in higher annual assessments. The annual assessments as well as a poor economy cause owners to default on their timeshare payments. This, in turn, can result in a death spiral where more and more expenses fall on fewer and fewer owners.

I've had more and more clients call with vexing timeshare problems, and I am convinced that there is no difference between a timeshare and a roach motel. You can get in, but you can't get out. The best solution that I've found is, believe it or not, to give the timeshare to a dying relative, a relative who isn't going to leave an estate, make sure the timeshare is transferred on the books of the resort to the relative, and when the relative dies, the timeshare problem dies too.

In my opinion, when it is up and running, the Consumer Financial Protection Bureau should take a very close look at timeshares. The ownership interests actually have more in common with securities than traditional land ownership. The perpetual obligations of timeshare ownership are unconscionable even if the other terms aren't.

Instead of the bad story from WPTV, I'm embedding a youtube video of a Nightline feature on the problems with timeshares.

Tuesday, November 02, 2010

Lindsay Lohan Can't Afford Rehab

This is a few days old now, but it was reported that Lindsay Lohan can't afford the court-ordered rehab at the Betty Ford Clinic.

If she can't afford the Betty Ford Clinic, maybe she can afford the Gerald Ford Clinic.

Monday, November 01, 2010

John Stewart: Restoring Sanity with Autotune

Chinese Car Sales to Set a New World Record

Going into 2010, no nation exceeded the number of cars sold in the US in 2000, roughly 17 million. This year China is on target to match the 2000 US figure, and China should top 19 million next year. This is according to Right now, it looks like the total US light vehicle sales for 2010 will come out to about 12 million, so China is blowing away US sales right now.

In the short term, the growth in the Chinese market is good news for General Motors. GM can use profits from China to pay off pension and other obligations in the US. In the long term, though, the growth of the Chinese market is problematic. Over the next 20 years, Chinese car sales could hit 50 million per year. Keep in mind that although most US car sales replace a vehicle taken off the road, in China, most of the new cars sold will become an additional vehicle in service. This means that each vehicle sold in China will amount to more competition for the global oil supply and will produce more emissions contributing to global warming. In short, the closer China comes to US consumption patterns, the more Americans will have to conserve to keep from outstripping our resources.

Also, as China produces more units than the United States, China will increasingly see new economies of scale and will benefit from the learning curve cost declines on new technologies. In short, the same advantages that the US automakers had until recently will start working to the advantage of chinese manufacturers. This would be in addition to lower cost labor and newer factories. It will increasingly be difficult to maintain a domestic automobile industry while following a free trade economic policy.