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Medication Nation, house flippers/speculators, spring thoughts, suspicious REO sales, the Democratic Party race and more  
(week of March 9, 2008)

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Albert T.

AP probe finds drugs in drinking water

"A vast array of pharmaceuticals — including antibiotics, anti-convulsants, mood stabilizers and sex hormones — have been found in the drinking water supplies of at least 41 million Americans, an Associated Press investigation shows."

"Officials in Philadelphia said testing there discovered 56 pharmaceuticals or byproducts in treated drinking water, including medicines for pain, infection, high cholesterol, asthma, epilepsy, mental illness and heart problems. Sixty-three pharmaceuticals or byproducts were found in the city's watersheds.

_Anti-epileptic and anti-anxiety medications were detected in a portion of the treated drinking water for 18.5 million people in Southern California."

Well I guess we are all medicated just to different degrees.

Kenneth P.

An article related to What The Public Wants: Pills (March 4, 2008):

Immune Systems Increasingly On Attack:

"First, asthma cases shot up, along with hay fever and other common allergic reactions, such as eczema. Then, pediatricians started seeing more children with food allergies. Now, experts are increasingly convinced that a suspected jump in lupus, multiple sclerosis and other afflictions caused by misfiring immune systems is real.

Though the data are stronger for some diseases than others, and part of the increase may reflect better diagnoses, experts estimate that many allergies and immune-system diseases have doubled, tripled or even quadrupled in the last few decades, depending on the ailment and country. Some studies now indicate that more than half of the U.S. population has at least one allergy.

The cause remains the focus of intense debate and study, but some researchers suspect the concurrent trends all may have a common explanation rooted in aspects of modern living -- including the "hygiene hypothesis" that blames growing up in increasingly sterile homes, changes in diet, air pollution, and possibly even obesity and increasingly sedentary lifestyles."

Peter N.

The world changed forever in the 90’s when the drug companies successfully lobbied and changed the federal law against advertising directly to the public... before then, they could only advertise to doctors... you may remember waiting in doctors’ offices, in the waiting room for your appointment, and reading some doc’s technical magazine, and seeing the drug ad…it was placed with language specific to doctors, written in black and white, no pictures, and it was the doctor who knew about the drug and told YOU, it was not YOU who saw some billion dollar commercial on TV in prime time, with some grinning zombie running in slow motion through some butterfly-strewn field...

From that point on it was you, the patient, who told your doctor...this change in my opinion is THE ultimate reason and game-changer in this entire story...the drug companies cynically and correctly figured out that Joe Sixpack was so dumb, that they could be sold the drug and then push the demand upstream to their doctor...everything changed after this. (emphasis added-CHS)


I agree that we’re being prescribed too many drugs. At least some drugs are not as well tested as one might think, as evidenced by the number of drugs pulled from the market due to serious side effects that can include death. We may see massive health problems in a few years as a result of over-medication and bad medication. Who really knows what effect Ritalin and other drugs are having on kids long term? Like Thalidomide, we may not know until these kids have kids of their own. Remember “Thalidomide babies” born with deformed, or no, arms? Then there was Acutane, (spelling?) given to young people for acne. Birth defects were also a side effect.

I agree w/you that we’re looking for pills to solve problems. That has to stop. People have to deal with the actual problem, not take a pill to mask the symptoms. Too many doctors are prescribing temporary pill “solutions” instead of looking for causes, or even letting patients go through normal stages following trauma or life’s bad breaks. Stressed? Who cares, take a pill.

Older people, especially, look up to the medical profession and will take whatever drugs they’re advised to, then take more drugs to counteract the side effects of those. I feel many elderly are being used as guinea pigs for these drugs. Seniors may chalk up problems to age, wrongly thinking there is no other measure they can take to get relief. Sometimes a healthier diet would work wonders. Many people are taking several drugs a day, and I question the necessity or wisdom of that. And, how ironic that some of the drugs purported to help with depression or other psychological problems have “thoughts of suicide” as a side effect.

Who’s to blame, the consumer who foolishly buys into the prescription med culture, or the industry? Both to some degree, but like the housing bubble and mortgage fraud, etc, industry insiders cannot legitimately claim ignorance as an excuse. Consumers can be cured of ignorance. Can the industry be cured of greed and lack of ethics?

John P.

Browsing your site I came across this comment by Cathy C.:

"Cathy C. I read your essay about ethics vis-a-vis the current crisis, and found your points to be solid and worthwhile. As with everything I read about this topic, though, I want to tear my hair out about the ten-ton elephant in the room that is being ignored. No one ever mentions or tries to seek out what I think would be a very telling statistic: How many of these defaults are Single-Family Owner-Occupied dwellings? (Not merely listed that way for under-writing purposes, but in actuality.)

I have seen much evidence to suggest that "flippers" and speculators buying/developing property they expected to turn over for quick profit are really behind this crisis. For such people, the types of "mortgage tools" that are most in default; 3-2-1 buydowns, interest-only, ARM's, balloon scenarios, would be of no concern. They would be the easiest types of loans to get, and the debtor would not be planning on owning the home for long enough for the consequences to be felt.

Also, if a property is going to be the "roof over ones own head," one would be unlikely to subject oneself to payments that would/will be unmanageable for ones' economic circumstances. One can live without many things, but shelter is not one of them"

Due to personal experience I believe that Cathy suspicions are exactly right. For the years 2004, 2005 and 2006 I worked as maintenance manager for a property management firm in California. Despite the fact that we always had at least a 5% vacancy rate we expanded rapidly in 2004 and 2005.

Property owners, typically professionals like Doctors and Lawyers were purchasing properties sight unseen, flying in to sign the note in the morning and the management agreement afternoon and out of town by days end. Many of our property owners were from the SF Bay Area, Los Angeles and Phoenix but others were in places as far away as Oman, Kenya and the Cayman Islands. (emphasis added-CHS)

While some owners had 3 or 4 properties the majority would have one or two. In several cases we signed contracts with apartment building owners who purchased distressed properties but obviously had no funds to bring code violating units back to a state in which new renters could be found; pure speculators just like on TV.

The important point is that there was no possible way that rents were going to cover mortgage, taxes, maintenance and management fees. In many cases there were obvious cash flow deficits of over $1500 per month on any reasonable mortgage. Several 4000 sq. ft. ranch homes were renting for only $2k monthly. It became obvious that our average property owner was a speculator rather than attempting to build equity or work towards a positive cash flow position.

The local wage base could not possibly support either the rental market or the building boom and thousands of units have been built that don't have financially valid tenants. At this point I would speculate that we actually have a vacant unit of at least 2 bedrooms for every homeless person in town while low-income families are living with as many as 9 people in a 2 bedroom apartment.

By May 2006 the price growth in local housing was slowing and owners were taking detailed looks at their cash flow. Due to outright fraud on the part of my employer we were hemorrhaging contracts at the rate of almost ten units per day. Still, we were picking up new owners as the last suckers bought in or as owners jumped management companies in search of cost savings. By December first, due to market cannibalism and incompetence of the broker the company I worked for was out of business.

Today, with the cheapest housing prices in California and excellent quality of life Chico is littered with for-sale and for-rent signs on vacant buildings. The housing dependent local economy is hammered but there aren't that many homeless yet. Property owners and banks are very reluctant to evict residents if any income comes in at all as the alternative is no income and expensive clean-out costs.

With the markets frozen in the Bay Area and Los Angeles we no longer can rely on equity refugees to prop up local housing prices. People can't even move here for the cheaper rents as there is no job market for them to move into unless they are in nursing. Everybody is waiting for the other shoe to drop. Bare foundations sit on new housing projects with no work in progress. Jobs are evaporating, housing sits vacant and the new retail centers built to go with the new housing took a massive sales hit this last holiday season. Somethings going to crack eventually and then there will be a flood. A flood of what I don't know.


Comments on this article This Just In--Democrats Lose in November '08 (March 7, 2008) if for no other reason than I haven't seen them elsewhere:

1. Funding exhaustion. This is on the surface is probably the most convincing of "G.F.B.'s" arguments, but it ignores other considerations. John McCain is a notoriously bad fund-raiser. Whether he can improve on past performance remains to be seen. The DNC, who I believe has the advantage in funds over its counterpart, is hoarding funds its going to need to mount a November offensive (no matter who the candidate). Note the recent comment by Mr. Dean that he wasn't going to spend money on recounts in Michigan and Florida. Note also that the Clinton (machine) has agree to provide 15 mil to a recount if the Obama camp does likewise. Doesn't sound like the Democrats are running out of money.

2. Yes the "big tent party" is somewhat of a hoax. The Democratic party has always been known (at least in my lifespan) for its bickering. Such is the nature of "big tent" politics. To imply that because of this animosity a party member will stay home or vote the McCain option is a jump. 85% of Democrats indicate they will support whoever the the party nominee is, be it Obama or Clinton (I can if necessary drag out the sources, but right now I'm going on memory). Given McCain's recent comments "outsourcing is good for America" I'll speculate another 5% to 10% will forget the rancor associated with the primaries and go with their party's nominee (this especially will pertain to blue-collar democrats). Given Democrats, or Democratic leaning independents composed near 60% of the U.S. population, unless the landscape changes, I'll go with their nominee to win. By the way, this is not 1984. The factors affecting blue collar support for Reagan are not in play today. We are now at the other end of the "Reagan Revolution".

3. I not convinced the youth factor, outside its psychological bent, is really as big as factor as advertised. Please see the 1972 classic "Fear and Loathing on the Campaign Trail" for the first incantation of the "youth vote". Moreover, youth is flexible. Many are not bogged down with unending grudges as are some of their older counterparts. (Interestingly the book also deals established Labor's dissatisfaction with the upstart McGovern, (as our writer later alludes to). Although mainstream' party's grudging support of George was seen as contributing boot tread to his eventual trouncing by Nixon, it was not the determining factor in the loss. Missteps along the way aided the general perception (as express by McGovern in retrospect) that no Democrat at that time was going to beat Richard Nixon.).

4. I don't know what poll "G.F.B.'S" referring to. The one I've seen shows Clinton with a slightly greater unfavorable rating than Obama, something like 83% to 89% on the positive side among Democrats. I would suspect Clinton supporters would have a similarly "negative response" to Obama as well as many Republican conservatives' views on John McCain. Isn't this why you support a candidate? It doesn't follow that these negatives are so great that in the end voters won't go the party line.

5. This discourse trashing Hillary Clinton (again for "high-negativity") followed by bashing of Democrat Bill Clinton, finishes in the spirit of "independent" bi-partisanship by saying Bill wasn't all that bad, is particularly rambling and pointless. In the spirit of such pointlessness I'll address part of argument anyway.

I too at one time (during the 90's no less) thought that the economy wasn't a factor of who was president of this country. Now, after 8 years of Republican misrule, I' might be forced to amend my thinking. If the presidency is irrelevant to the economy, then it won't matter who is president, be it Obama, Clinton or McCain. If the economy is the most important issue facing this country (not Iraq, although ultimately it is an economic issue also) and a president can make a difference, then it matters what a candidate's position on the evolving crisis is. While there is no clear indication yet (that I see) on whether Hillary or Barack will deal effectively with this issue, neither are they a John McCain representing the policies that got us here in the first place. I believe most Democrats understand this.

6. "lets be candid"...lets. No mention of sex as a negative. I read a recent poll that reported that among white male voters, 28% said they wouldn't vote a 'black" man, but 38% said they would not (ever?) vote for a women. I don't have the number of Republicans or Independents comprising these percentages, but a thought, is this a major source of the vaulted Clinton negative? Whatever the negative, this suggestion that working class whites are racists and won't support Obama is a slur, even with the equivocal cover of "Perhaps not".

7. "the Democratic Party hacks" will go along with whatever the faithful want. The faithful here includes the long-suffering liberals and A.A.'s who have unflinchingly supported Democratic candidates over the years. Add to this "the youth vote", its a wrap for Obama. (see article Hillary's New Math..). Obama will not need to form a third party or even consider it. As Obama is a loyal Democrat, and as a third party is suicide in this country, and as an Obama third party is a sure way McCain will be elected, I think we can deal with more fertile speculation (see below for wiggle).

8. I won't speculate here on vice-presidential choices - much. Unless Barack's hand is forced, I don't see Clinton as part of his team, but an Obama/Clinton team would play hell with McCain (if you accept the reasoning of "G.F.B."). (this is curious, what starts out being an argument on why the Democrats can't win in November, ends up being an endorsement of Obama. Is there something here I'm not reading?)

So I don't have much confidence in G.F.B.'s analysis of politics. This doesn't mean that he may be not in the end be right, if for entirely different reasons. There is still the great unknown out there, which to the distress of all prognosticators, always becomes the known. Could the lame Bush pull an Iraqi surprise? That is could he withdraw enough troops to look as though the war is ending and get the Republicans are off the hook? This bodes ill for the Obama. Could Barack pull another boneheader?

In this vein, what's to come of the Rezco trial (I don't see much worth to the presumptive Republican opponent, but then - is that the chug of the Swift boaters I hear in the distance?). Is Obama a Republican tool against the Democratic hack Clinton to be made the fool in upcoming general? On a more non-partianship angle, could either candidate screw-up, badly? I don't know, but then again, outside a weighty opinion, "G.F.B." doesn't either.

Michael S.

Since it's spring, I couldn't help but offer up the contrary poetry snippet:

For oft, when on my couch I lie
In vacant or in pensive mood,
They flash upon that inward eye
Which is the bliss of solitude;
And then my heart with pleasure fills,
And dances with the daffodils.

William Wordsworth since you wrote about "community falling apart" and, to me and other poets, there's bliss in solitude and, talking about flowers and solicitude, here's some prose from The Little Prince:

And he was overcome with sadness. His flower had told him that she was the only one of her kind in all the universe. And here were five thousand of them, all alike, in one single garden.

"She would be very much annoyed," he said to himself, "If she would see that... she would pretend that she was dying, to avoid being laughed at. And I should be obliged to pretend that I was nursing her back to life-- for if I did not do that, to humble myself also, she would really allow herself to die..."

To be sure, an ordinary passerby would think that my rose looked just like you--- the rose that belongs to me. But in herself alone she is more important than all the hundreds of you other roses: because it is she that I have watered; because it is she that I have put under the glass globe; because it is she that I have sheltered behind the screen; because it is for her that I have killed the caterpillars (except the two or three that we saved to become butterflies); because it is she that I have listened to, when she grumbled, or boasted, or even sometimes when she said nothing. because she is my rose."

From The Little Prince By Antonine De Saint-Exupery.


M.D. and his wife had been trying to put in a bid on a house in New England which was REO--"real estate owned" by the lender, i.e. foreclosed. The house came on the market for a brief moment and then was mysteriously purchased without any attempt by the bank to elicit a higher bid. M.D. then filed this report:

Found out that the house was sold to someone the listing agent was working with as a buyer. That way he got twice the commission. So, it was rigged from the get go. I suspect that, since we were told our offer was the only one, and were later told that his buyer was in there before anyone else, that the agent waited until he got a few legit offers, told his buyer what they were and then the buyer offered a couple of thousand more to clinch the deal. They yanked the listing off the MLS immediately, it was only on for three days. Nothing like marketing a property for your seller to get the best deal, eh? I also wonder whether the bank employee and the listing agent were more acquainted than one would expect. It's all who you know. The bank didn't counter with "give us your best and final offer", (highly unusual according to our broker), they just took the highest one. Even if we had offered more, the buyer who got the house would have just added a grand to that and it would be all over. God works in strange ways.

Peter N.

Divide et impera... Divide and Conquer…the Romans used it, so did Philip of Macedon in the 4th Century B.C... it looks like the Republicans may as well... however, I think McCain’s quirky personality is only now starting to emerge, and he may shoot himself in the foot... this guy was brutally tortured for five years... he is reputed to have an absolutely explosive temper, much worse than Bill Clinton... that has got to change a person inside somewhere deep down... will he be trusted to take this office? Should be fascinating as we get closer....
Alex A.

From Hillary’s New Math Problem

"I've asked several prominent uncommitted superdelegates if there's any chance they would reverse the will of Democratic voters. They all say no. It would shatter young people and destroy the party."

The main crux of "G.F.B.'s" argument is that the "other half" of the democrats will stay home. I have no proof to state otherwise, but my gut says the statement is wrong. Whoever comes out on top for the dems will be SURE to state that if a supporter of the other democratic candidate stays home, then McCain will win. Since McCain is pro-Iraq war, I think those folks will come out and vote.

I hate to come off age-biased, but there is no way I'd vote for a dinosaur like McCain no matter who the democratic candidate is. I'm going to guess that many people under 40 will have the same view point.

Which one is the third party candidate?

Actually, its Obama. But Hillary, the machine Democrat, is the spoiler this time.

Thanks for the analysis. You right on the mark again. Hillary taking the nomination would be a travesty, and in response I, for one, will throw away my vote by writing in Paul Gravel.

However I am not so sure that the Hillary supporters will cleave off in droves or stay home in numbers great enough to give it to McCain.

I agree about the race bias factor, though. The race thing comes out whenever you get a homogenous group of pale faces together and one of them feels safe uttering some off color remark. I have seen with my own eyes, among friends in such conversations, the slow collective descent to that low spot in our nature. When, after a furtive affirmation of a biased remark, it is as if a heavy burden has been lifted from the group. It is the burden of pretending that the old reflexive way of thinking, learned at a young defenseless age and reinforced by institutionalized habits, is not still very much alive within us.

I would call it a crap shoot at this stage. Many are young enough that the race reflex has not been acquired or reinforced with as much conviction as in previous generations. Besides, the demographics have changed quite a bit as well.
Michael Goodfellow

Interesting speculation on the election. I haven't read that anywhere else. There's a lot of comment that sniping between the Democrats weakens them in the general election, but I haven't seen any surveys on the specific point -- that Obama supporters will sit it out if Hillary wins. It does seem plausible. Also, based on the three (older women) Hillary supporters I've talked to, there's a lot of disdain for Obama as an empty suit. I don't know that they'd vote for McCain instead (they are all pretty opposed to the war), but they might sit it out as well.

Hillary will bring out the Republican vote, but I'm not sure about Obama. The rank and file really aren't thrilled with McCain.

So Obama could still win it, if Hillary gets shot down at the convention. It doesn't sound like she's going to drop out. Of course, after all the Obama mania, it sounds like the press thinks he's ripe for taking down a notch. (Got to keep that horse race going, after all!) So we'll see.

Much more complicated than I was expecting a few months ago.

Thank you, readers, for such thoughtful contributions.

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