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RE: Economical Crisis in Spanish Luthiers
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Pedoviejo
Posts: 59
Joined: Dec. 12 2003
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 RE: Economical Crisis in Spanish Lut... (in reply to Anders Eliasson)
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quote:
when you´re in business and you personally have to deal with those, listen to them on the phone or reding their E-mails, you get really tired.
When you this add that when you´re trying to sell a house, you have to deal with those wanting everything 50% lower than the already highly devaluated markeprice.
Anders, I’ve been through it myself, and as “Uncle Bill” Clinton said, “I feel your pain.” My story:
As I think I wrote somewhere previously, the interesting thing about living in Louisiana (I grew up in California) is that you get to experience a third world country while living in the U.S. (a long story there which I shall omit). I came here in the mid 70’s just when there was an oil boom following the creation of OPEC. In 1981 I and my then wife bought a small house with an 80% mortgage at 12.5% interest (which was a special “reduced” rate through some complicated quasi governmental bond float deal). Then around 1985, “poof!”, the oil bubble burst. Property values crashed, the oil companies had large lay-offs, and then consolidated their HQ’s in Houston, Texas taking the lion’s share of the educated families with them, leaving downtown New Orleans with lots of empty oil-built sky scrapers. The big restaurants downtown, where not long before you couldn’t get a table at lunch for the sea of porcine, Stetson-wearing, loud talking men with hands like meat cleavers who had mini private wine cellars in the basement and dishes on the menu named after them – well, you could shoot a shotgun through the main dining room at noon and not do any more damage than startling the Viennese maître d and Swiss food and beverage manager from their nap. Meanwhile, I was divorced, and stuck with paying the mortgage which was more than the value of the house. So while the rest of the country boomed economically (from Reagan through Clinton), Louisiana sat mired in its swamps and misery. And nary a penny had been invested in the state and its economy for all the billions that had flowed through here: It had all been handed out vis a vis government related contracts, and the insiders got rich while property values were grossly inflated.
After several years, I was finally able to unload that house by essentially signing it over to a buyer for the amount owed on the mortgage; i.e., at a loss. And I grew up with the idea, firmly planted there by my parents, that you could never lose money buying real estate. (“Land, Scarlett, land!” Gone With the Wind) Then I bought another house in a good neighborhood for a good price. But my new wife (there’s a pattern here) decided we needed to completely renovate… and that still could have been okay. Except expenses kept increasing while income did not, the renovation ran over budget, and mortgage followed refinanced mortgage because the national economy and the mortgage boom inflated the value of my house. Also, after 20 years of stagnation, New Orleans had finally achieved something of a state of homeostasis, which the politicos were calling a “recovery.” At the end of a dying marriage and struggling with debt in a corrupt, crapped out economy, on August 27, 2005 we signed a new refinance at 100% of appraised value – at that time, if you had a pulse you could get a mortgage - $485,000 (not much by West or East Coast standards, but enough by down-here-in-the-swamps standards). Three days later, Hurricane Katrina smashed into the city which had already been extremely poorly governed by a succession of corrupt and/or incompetent mayors, and with a levee (dyke) system which had been negligently built and managed by the U.S. Army Core of Engineers. With a buffoon in New Orleans (Mayor Ray Nagin), a cipher in the governor’s mansion (Kathleen Blanco) and an idiot in the White House (George W. Bush), the prognosis was not good. There was a post-disaster uptick in prices of houses which had not been flooded, and mine had not, but now with divorce lawyers hovering there was no way to sell. Within 6 months, all prices crashed. And stayed that way. While the national economy boomed – you got it – Louisiana in general and New Orleans in particular stayed mired in the economic swamps. Then came the 2008 international financial crash which reinforced the damage – just like had occurred in the early 1980’s when the oil crash was followed by a national recession.
I was finally able to sell that New Orleans house 4½ years after Katrina. Four and ½ years of paying that mortgage note, utilities, and property taxes (which had been significantly raised after Katrina because suddenly we had “reform” of a taxation system which had indeed been corrupt and unfair, but why now? When everyone was hurting so bad? Because city hall really, really, really needed the money since sales taxes had dived, and the devil take the hindmost.). AND after a 4½ year succession of merciless bargain-hunters.
So, yes, Anders, I know what it’s like to owe $480,000.00 (approx. €378,000) on a house and be offered $220,000 (€171,875) – and, oh, by the way, I want everything fixed, and this changed, and that repainted, and will you throw in a new appliance budget? I finally sold it for $375,000 (€293,000) AFTER loads of work and paying untold sums to put the house into top-notch, pristine, spotless condition, and yes I had to reach into my pocket and pay the balance on the mortgage to do so, because if I hadn’t the monthly mortgage note would eventually have bankrupted me anyway. And this while being preached at about “financial discipline,” “personal responsibility,” and “creative-destructive capitalism” by rich s.o.b.’s whose liabilities were bailed out at public expense because their investment vehicles were “too big to fail.” It has enabled me to understand the sentiment of Madame Lafarge.
But, believe it or not, you live in a much more enlightened place than I. My observation is that post-Franco Spaniards have been quick studies, and I sure hope that they quickly learn from the present mistakes, mistakes which seem to have been ubiquitous in the West. I remember thinking to myself many a time before 2008: “Just how many finance guys do we need?” This happened each time I traveled by air, since I invariably was seated next to or near some 20 to 40 something person with a degree from Harvard Business School, or Wharton, or the London School of Economics, many with a law degree as well, and all of them employed by a financial business, all flying back and forth from London, New York and so on. I mean, just how many people do you really need handling and lending money? Doesn’t anyone make anything anymore? Well, yes, there were – but in Spain’s case, many were employed in building, and they built and built and built while the financiers lent and lent and lent through very complex financial mechanisms which their fancy business educations had enabled them to create and in a manner which insulated them from the ultimate risk. (But, what the hey, what’s a fancy education for anyway?)
This gave rise to another thought which kept occurring to me: Is this real? I mean, when one day “the market” is worth $10 trillion and two days later it has “lost” $5 trillion – or so we were told repeatedly – how can that be? Where did that money come from and where did it go? Was it stuffed into a giant mattress in the sky while we weren’t looking? Or was it really there to begin with? And then finally I read something in print which echoed my thoughts. “But money is not real. Wealth is real. Money is imaginary.” (John Ralston Sauls in several different works – he’s the one guy who nailed the 2008 financial crisis several years before it happened. See “The Collapse of Globalism”, published September, 2005) Counterfeiting is illegal in every country that has a currency, but that is exactly what was going on – not with printing presses, but with computers which enabled the creation of ever more complicated forms of “financial instruments” (e.g, “credit debt swaps”). They were digitally printing money which was not backed up with real wealth. IT WASN’T REAL. As Sauls has pointed out, the English word “inflation” is from the French word for excess gas; i.e., farting. It collapsed in one, giant financial fart, and we’re all still gagging while those who were most responsible for creating it are provided with taxpayer-financed gas masks.
I believe we can all get out of this. But first we need to throw away Marx and Keynes – AND Milton Friedman, and Mises, and Hayek and the whole Viennese-U. of Chicago school of economics and their whole “laissez faire” clap-trap which is just as much of a utopian fantasy as Marx’s worker’s paradise. (And toss Ayn Rand on top of your Marx and Engels, whose ideology seems to inform so much of the right wing these days. Rand replaced “let them eat cake” with “let them die – it’s their own damn fault.”) The facts are – my observation – that we need to eliminate the lion’s share of “financiers”, especially since they’re really not financiers at all but middle-men brokers, like feudal lords helping themselves to a percentage of the value created by others, inflating the price, adding nothing of value and dumping the risk on the rest of us. And the corporation, a very modern creature which owes its existence to legislative largess and a succession of (bad to very bad) judicial decisions, needs to be drastically revised. Ever notice how many of the people who scream the loudest about personal responsibility and its consequences are made wealthy as owner-employees of corporations, the purpose of which is to insulate them from that same personal responsibility? But I am right with what they say: We need to restore personal responsibility. We need to make corporate executives responsible for the damages caused by their corporations. “Bankaria” did not cause all those losses and problems. The flesh and blood people who ran it did, so why should they not be brought out in the open, in the public eye, tried, judged and held liable for their deeds, instead of being allowed to keep their huge gains and, insult to injury, continue to be handsomely paid while the public now picks up the check?
You, Anders, create something of value, and you deserve to be fairly paid for it. And I believe that that will happen regularly if we can revise the rules of the game to reward the players and not the manipulators. In the meanwhile, "hang in there." I did and I'm still here, scars and all, but still alive, ready to kick corporate butt, enjoying great bulerías more than ever and, if I’m lucky, contribute to making some changes for the better.
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REPORT THIS POST AS INAPPROPRIATE |
Date Jun. 13 2012 0:28:39
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Ricardo
Posts: 14805
Joined: Dec. 14 2004
From: Washington DC
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RE: Economical Crisis in Spanish Lut... (in reply to Stephen Eden)
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I was always confused about this economy stuff. The economy is "bad"....what is that mean? Everyone takes it like "oh no, I need to hold on to my money to fight this thing..." ...and then I wonder how did people HEAR about this economic problem? Logic always told me when I hear the economy is in trouble it means WE ALL need to go out and spend MORE MONEY....it's pretty simple to me really.
Like "oh **** anders, the economy is in trouble....can you build me instead a $10,000 guitar with all the trimings so I can keep the ball rolling since because of economic crisis my boss gave me a raise naturally, and now you too can spend some cash too on more and better materials and other stuff?".... no? Isn't the spread of the idea of a "problem with the economy" the problem ITSELF???? Simple reversal of the WHOLE THING would be tons of public announcements that the economy is doing great everyone spend all you can or want, go nuts.
Anyway, regardless, I feel I understand issues of pride when dealing with "negotiators". As a musician you can imagine, but here is funny story. Few years back I was working a lot and at a club that I played regularly an older woman approached me about a private party. Everyone understands I hope that at steady weekly club gigs we charge much less then private events concerts weddings etc right??? Anyway she inquired my fee and after giving her the run down of options...(how many people, location and time of event, weekend evening if we have to leave our steady the price is inflated etc, can't be in two places at once now can you)... it seemed she wanted me and my partner at prime time....so I let her have out normal rate. She gasped...."oh my, are you joking??? My husband is a doctor and you charge more than HIM per hour"....I just laughed and said "oh really he's that affordable? Then have him play at your party..." and left it at that.
another story was about CD sales...I actually drove my price up when annoyed by someone so that had no choice but to refuse to buy....and another were a talent agent insisted to grab a free CD and I later "convinced" him to pay for it.... 
In the end it's about if you GET IT or not, a sign of simple respect. Hopefully we can leave something for our family, but I don't want to die with piles of money that's for sure...I will rather have spent it and enjoyed whatever I got for it. Fuk the economy. If I wanted to make money then I would have been a banker, if I wanted to heal people a doctor, to free the innocent or convict the guilty a lawyer, etc. People have twisted things so bad into everything about money and how they don't have it. Banker is SUPPOSED to have money...that's why you give it to him.  Other wise keep it under your mattress or spend it on something.
Ricardo
_____________________________
CD's and transcriptions available here:
www.ricardomarlow.com
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REPORT THIS POST AS INAPPROPRIATE |
Date Jun. 19 2012 5:15:10
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