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alstry (36.57)

Keep drinking the Kool Aid!!!!

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May 14, 2008 – Comments (3)

When people buy condos, they expect their monthly fees will cover many of the responsibilities that they would otherwise have as single-family homeowners, like cutting the grass and paying the water bills. Now many find themselves nagging each other in the hallways to pay their assessments and adding special fees while haggling over chores. In Miami, Chicago and San Diego, condo owners are adjusting to the economic woes, sometimes by mowing themselves and working shifts for building security — all while lamenting their lost community.

http://www.nytimes.com/2008/05/15/business/15condo.html?_r=1&oref=slogin

 

In many HOA communities, over 40, 50, 60% and more of the occupants are not paying their respective fees.

What funny is that some say so what...that is not a big deal because I don't live in a HOA community and even if I did, who needs a pool and manicured common areas? 

Well guess what, if we live in America, we all live in a HOA community of sorts...it is called the United States and the fees are the taxes we pay.  Right now tax delinquincies are rising at record rates...even in municipalities and states that were not hit by the current housing crisis.  The Federal Deficit is running at a record level.

Instead of lawns not being cut, or pools growing algae...... police officers, firefighters, and school teachers are getting fired.  Services are getting cut.  Crime is rising in many communities and there is less enforcement officers to assist.  Homeless shelters are running out of space, animal shelters are overflowing, and food shelves are running out of food.

In April, not only did we have record foreclosures, we had record notices of foreclosure.  Guess what?  That means even more foreclosures ahead, lower property values, and even less tax revenues to our government.

We have one branch of our government telling us that Gas prices went up over 9% in April alone and today another branch tells us that Gas prices fell in April at an ANNUALIZED rate of negative 2%?

The problem with drinking laced Kool-Aid-it tastes great until you start to feel the poison kick in.

Keep making fun of those people that live in condos and communities that are seeing their funds dry up.....pretty soon it may happen to your local, state or federal government.  When that happens.....you may have a different perspective when it starts to effect you.

What flavor Kool Aid do you favor?

3 Comments – Post Your Own

#1) On May 15, 2008 at 12:18 AM, costanostra (< 20) wrote:

Great post, any stocks for companies involved with managing condos?

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#2) On May 15, 2008 at 12:53 AM, alstry (36.57) wrote:

The point of the post really isn't condos, but rather interdependant systems.  The fact that some people in a group behave "correctly" does not vitiate  the fact that they are negatively affected when enough other members of the group fail.

In the case of an HOA, it is necessary that a certain high percentage of the homeowners pay their dues or the entire system fails.

In a tax based representative democracy, it is necessary that a certain percentage of the  citizens  pay taxes for the system to function effectively.

For a strip mall owner, it is necessary for a certain percentage of the tenants pay rent for the mall to function economically.

For a private healthcare system, it is imperitive that a certain percentage of the  patients are insured or capable of self paying for the system to work.

I developed a theory I call concentric contraction a few years ago that addresses the issue imploding systems  I noticed a number of various systems in America are  all on the verge of failure simutaneously.   The irony is that there is even interdependency between systems and rollover effects of failure (but that  gets too  complicated for this blog).

Never in the history of our nation have we been set up for this.  Nassim Taleb would call this event a Black Swan.  Right now the bird seems to be swimming right for us.....we should know with certainty within the next six months or so.

If the theory pans out, absent drastic action, the net result will likely be a depression much deeper than 1929.

The argument that we have never had a depression in two generations is really not relavent as we have never faced issues like this before.  Further, for those chartists out there, America generally faces a severe financial crisis every two generations.  We had one  in the  1870's when  over 80% of the family farms were foreclosed and again in the 1930s with The Great Depression.  For those that  like a consistent  beat, we are about due don't you think?

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#3) On May 15, 2008 at 1:04 AM, Tastylunch (29.50) wrote:

If the theory pans out, absent drastic action, the net result will likely be a depression much deeper than 1929.

oh fantastic. Not that  I necessarily disagree but this makes the cherry Kool-aid sound especially appealing. 

Maybe i'll try the grape 

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