OT

How's holiday shopping?

Best Buy came out with a sunny earnings report this a.m.

In an up market, Best Buy is down 2%.

Circuit City is down 9%!

Tells you all you need to know.

Best Buy, one of the best-run chains out there, is struggling this Xmas.

Circuit City, one of the worst, is gone.

"friends don't let friends install IE7."

From what my friends tell me, the same could be said about Vista.

Warms my heart. Especially since I'm a Linux/Firefox/Open Source user. At work where I'm forced to use Windows, it's Firefox or I'm going back to gopher and telnet.

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Thanks, Tanta, for making my point about the system of...

Somewhat along the lines, someone asked,” Why can’t the American voter just say NO to taxpayer-provided giveaways to bad actors in the lending industry?"

LOL!!!!!!!

Who asks the "American voter?" Do voters matter in these matters? Just like the Fed's impotence, "American People" are politically impotent. Sorry, but someone must point out the reality of the econo-political system as opposed to the fantasy version.

Jas

"How's holiday shopping?..."

I get the impression that these retailers are more and more just credit card companies that happen to have a bunch of stuff you can burn up your credit with, as opposed to actually being in the business of selling things people want or need. You can buy that TV or iPod or whatnot, but the real score is if they can sign you up for the XXX Visa card.

I was in Best Buy a couple of years ago buying a new car stereo, and the floor person told me I could get free theft insurance on the stereo (my previous one actually had been stolen!) if I purchase it with a Best Buy credit card. Curious, I went over to the service desk and asked about it. They handed me a pamphlet, which I read, and sure enough, they offered insurance against theft of the item. But the string was I had to be keeping x% of the purchase as a credit card balance, which of course meant financing charges.

So I didn't go for it. Clever trick though. Happily, I got to be on the other end of the bargain anyway, as a BBY shareholder until last year.

I hope the steel-toed bunny slippers didn't get ruined.

Well, my oven's working again, so I'm off to do real work. I asked about my DW leak, and the guy suggested I just get a new one. Apparently mine is a POS. But at least its overflow points sinkward.

I get the impression that these retailers are more and more just credit card companies that happen to have a bunch of stuff you can burn up your credit with, as opposed to actually being in the business of selling things people want or need. You can buy that TV or iPod or whatnot, but the real score is if they can sign you up for the XXX Visa card.

There's an interesting post in the Yahoo message board for Circuit City this a.m., from a guy ("I") who visited a CC store and talked to a clerk ("he"):

I said, "what about profit margins, if you offer products cheaper than your competitors wouldn't that hurt the bottom line"? He said that "they buy in tremendous bulk and might offer a flat panel t.v. 1-2% less margin thatn BBY, however that isn't where anyone makes their bread and butter, it's in selling the services and accesories associated with the product". I said explain please. He said that "a person will buy a flat panel t.v. and then they will need the cables for it, and surge protection, etc., for all that stuff they sell it's about a 75% margin on profit" then he said, "about 50% of the people that buy a t.v. will want the extended warranty, that's almost 100% profit" and he noted, "about 50% of the people whi buy will want our firedog service to come to their house and install it" that's about 90% profit".

"So about 100 bucks for accessories, 300 for firedog install and another 200 bucks or so for the extended warranty and the profits casn be substantial" This I didn't ever think about and impressed me quite a bit.

Now is where things get interesting. I mentioned if he knew if CC was going to get bought out. He said that he didn't know, however whithin a couple of months the entire store chain was going to change their name from "Circuit City" to "The City". He said that thier store should recieve the interactive part within the next month.

The problem is...when people aren't buying big flat-panels, all that profit disappears. A chain here in NYC tried what CC apparently is going to do, converting themselves from an electronics retailer into a distribution outlet for interactive cable services. They were called Nobody Beats the Wiz. Less than a year after they were acquired by Cablevision, they were gone.

Tanta -

Thanks so much for making me feel a little better - I'm one of those bitter anti-escrowers...and yeah, I'd be onery enough about it to not refi. I've taken the .25 APR hit for not giving up free capital for 'float'. I would definitely shop a different lender if I had to escrow.

BTW - Ditto on the Firefox - get yourself free from IE.

So let me get this straight--In the middle of the night Microsoft installed a new dishwasher drain-thingy? And when they asked, you said yes, because you have a valuable French coffee press that you hadn't yet slurped from?

Tanta - HOA dues can be somewhat high in gated communities

When a virtuous cycle turns vicious, things get ugly fast.

An HOA with many members in arrears presents a particularly unappealing picture to buyers, lowering property values. And as maintenance is deferred and the tennis courts get ratty, property values go down even further. Add a hike in fees or an assessment to make up for the arrearages, and you're steps away from trailer park desirability.

And what happens to arrearages when people see their property values decline?

Exactly.

Markel,
So the moral to the story is don't buy into a HOA with a tennis court, buy one with a ping pong table, because they are cheaper to replace?

"Microsoft Dishwasher(R) has encountered a problem"

See, that's the problem with Microsoft these days, they've gone soft and they're always admitting their weaknesses.

In the old days it was always "you have performed an illegal operation" regardless of whether the operator had done anything at all. Customer was always wrong, and they liked it.

albrt, I don't speak for others but I think that there is a general consensus that we don't want to turn this fine blog into a traders forum. There are plenty of other boards for that, like Denninger market ticker, for example.

I've broken this rule myself, but generally I think it is bad etiquette to obsess too much here about the stock market.

"We need fewer sales people making $150,000 and fewer funding auditors making $45,000. Start equalizing those things, and you don't have to raise consumer costs so much."

I think the market is fixing the sales people making $150,000 part.

Tanta, you lay out a superb program for a well-meaning, ethical CEO to implement.

Since those are currently significantly outnumbered by dodo birds, I'm going to scratch my head thinking of regulatory approaches to the problem--rules that will get the industry to actually do what you suggest.

Regulation is coming anyway; the question is only whether it will do good or harm.

Put the loan officers on salary. Eliminate broker compensation paid as a percentage of loan amount.

Dare I ask - what's your fix for the wholesale channel, then?

Is it akin to the fix for my dishwasher?

--
Ohio AG (on Boob-berg a minute ago):

“Everyone up and down the chain, including the rating agencies” were involved in the mortgage fraud. He said that Wall Street financed the mortgage companies that were pushing fraudulent loans.

The whole financial system is infested with Conflicts Of Interests. Charlie Gasparino: "Goldman is the king of conflicts."

As I have been saying, a system of the Crooks, by the Crooks, and for the Crooks.

Need more evidence?

Jas

Having worked in pretty much every area of mortgages in the past 20 years, including origination, I agree that salaried LO's would be a big step in the right direction.

It occurs to me that the mortgage business would benefit from some rules drawn from analogies with old-timey investment company regulation (before it was gutted by, among others, Him Who Must Not Be Named).

I think we've already talked about importing a know-your-customer rule from the brokerage industry into the mortgage business.

Perhaps restricting commissions could also be compared to the rules affecting mutual fund companies. You can't be a no-load mutual fund and pay commissions to your phone reps. So, there is precedent for this kind of restriction.

If this seems like a strange exercise to you, just remember that many regulators and legislators are very literal-minded and need to be reassured that "it's been done before" without reducing the economy to bartering eggs for butter.

--
Fed and Regulators Shrugged As the Subprime Crisis Spread - NY Times

December 18, 2007
Fed Shrugged as Subprime Crisis Spread
By EDMUND L. ANDREWS

WASHINGTON — Until the boom in subprime mortgages turned into a national nightmare this summer, the few people who tried to warn federal banking officials might as well have been talking to themselves.

Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.

But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.
In 2001, a senior Treasury official, Sheila C. Bair, tried to persuade subprime lenders to adopt a code of “best practices” and to let outside monitors verify their compliance. None of the lenders would agree to the monitors, and many rejected the code itself. Even those who did adopt those practices, Ms. Bair recalled recently, soon let them slip.

And leaders of a housing advocacy group in California, meeting with Mr. Greenspan in 2004, warned that deception was increasing and unscrupulous practices were spreading.

John C. Gamboa and Robert L. Gnaizda of the Greenlining Institute implored Mr. Greenspan to use his bully pulpit and press for a voluntary code of conduct.

“He never gave us a good reason, but he didn’t want to do it,” Mr. Gnaizda said last week. “He just wasn’t interested.”

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