According to Yahoo! Translation tools, the title of the post is "bubble." My wife is asleep, so I have no way of verifying. But you get the point. According to the Times of London, Greenspan is predicting a crash in housing prices. No new news there. After 9/11 rates were slashed, money was cheaper, the number of qualified buyers grew, and the ripple effect has had prices spiking. I personally have misgivings about a violent burst of the bubble occurring. I think prices will flatten, but barring a stock market crash, an S & L crisis or another calamity on the periphery I can’t see it happening suddenly. This is because, for one thing, the spike has more to do with supply and demand than cheap money. Manhattan is an island. To the east is an island. To the west is a wide river and then another state. There is only so much land in Metro New York, so scarcity will indicate higher value.

Here is the reason for my unusual title: Korea is undergoing a housing value spike as well. Their spike is also accompanied by talk of a crash, although the time frame is quite ambiguous.

Though the report points out that 30 percent of the apartment prices in Seoul are unreasonably overpriced on average, it forecasts the housing market bubble will not be eliminated for the next three to five years.

The last time I looked, Seoul wasn’t getting their mortgages backed by the US Federal Reserve. Is it a coincidence that they are experiencing a bubble too? Here is the problem with predictions: Eventually, everything happens. Korea, like the US, has a finite amount of land and a highly developed economy. Scarcity equals value. If the higher values are more due to that than simply cheap money, then it speaks of a far more stable environment than a bubble enabled by the Fed to offset the recession. Just my humble opinion.

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After reading this post yesterday on A Stitch in Haste, I sent an email to Dave Goebel, the C.O.O. of the New London Development Corp. NLDC, you will recall, is the quasi governmental entity that prevailed in the Kelo Vs New London case, where 7 residents lost their fight to keep their homes from being condemned under Eminent Domain. NLDC, drunk with power, now wants 5 years of theoretical back rent.

This is beyond the pale. So I decided for purely therapeutic reasons to register my disapproval. I never thought the guy would respond. He did. So here, with unedited text, is the entire email thread. I will allow the reader to decide for his or herself if I am indeed reacting ‘viscerally’ and ‘without reason.’ I am allowing the guy to have the last word in our exchange (top email, my initial communique is at the bottom), but will rebut him here. I don’t really want to debate him on it. The white paper he is referring to is here: Download NLDC.pdf .

Mr. Faranda:

Thanks for the response.  Let me address the issues raised.

1.  Since the property was in the name of the City of New London, residents were not required to pay property taxes.

2.  Actually no one paid a mortgage.  In those cases where a mortgage was owed (2 cases), the bank who owned the loan took their money out of the court early on.  They were thereby saved significant interest payments.  This was not an intended part of the action taken by the City, but an unintended action that benefited the residents.

3.  I can not comment on any maintenance they might have done, but it is not evident externally.  But, just so you know, there was a pre-trial agreement that required the residents to inform us of any maintenance charges they incurred, and not a person did it.  Tough for us to fully understand this pat of the issue if we are provided none of the information the court ordered be provided.

4.  This was all about money.  Had we been able to pay the residents what they wanted, all would have been happy.  But, state statue does not permit that. Not here and not in Fairfield.

I find it interesting that you chose to comment on this based on a July 14th article.  That is over one month ago.  It is odd that people’s passions get aroused one month after the article is published.  And, you might be interested to know that I received one other comment from the Fairfield area as well, based on the same article.  Seems odd to me.

I have attached a white paper on the topic we provided to the state legislature.  I thought you might be interested in it.

Dave Goebel

———————————————————————

Dave-

You are being astonishingly intellectually dishonest with the idea that the Kelos and their neighbors have inhabited the property for "free" while the case was litigated. They paid property taxes, and in most cases, mortgages. They have kept the properties up and paid for repairs, maintenance and improvements. How is this "free?" If your property were condemned because some quasi-public entity wanted to convert it to a something else and you invoked your constitutional right to due process and lost, would you feel the same? Would you not then feel obligated to be reimbursed for the taxes, mortgages and upkeep you paid all through the time you litigated?

Just call it what it is- you want your pound of flesh. If the case before the court does not go in your favor, it is you who had the visceral reaction, not I. In a case where the shades of interpretation are so vague that it takes a court to decide, you have real gall to accuse someone who disagrees with being visceral and not reasoned. I look forward to the day that governments amend the laws so that this abuse of power can be prevented in the future.

Phil Faranda
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Dave Goebel wrote on 8/17/2005, 10:19 AM:

Mr. Faranda:

If the City/NLDC ultimately win this case, and that is not decided yet, the result will be that the City has owned the properties for several years.  There will be the owners of property that has been occupied by individuals for those number of years for free.  Would you run your real estate investments that way?  Would you advise your clients in that manner, that is to obtain ownership of property and let individuals occupy it without paying rent?  I doubt it.  What is the difference?  Additionally, these are public tax dollars that are under discussion, not money that is being put into some private individuals pocket.  No it is not pleasant, and it may or may not happen.  But your statement is a visceral reaction and not reasoned on the basis of land use.  I encourage you to re-think your position.  I have attached a copy of a white paper we have done on the issue.  If you have time, I encourage you to read it.

Dave Goebel

—–Original Message—–
From: J. Philip Faranda

Sent: Wednesday, August 17, 2005 9:28 AM
To: davemg@nldc.org
Subject: Kelo Vs New London

If the July 14 Fairfield Weekly story on your organization charging the New London residents who lost the case back rent is true, then I must register my own protest in the strongest terms.

You may have won in court, but in the court of public opinion it would be a horrible thing to promulgate indeed.

Sincerely,

J. Philip 

NLDC – EMINENT DOMAIN WP – W.doc

As for Mr. Goebel’s first two points, if the lender or taxing authority renounces the monies owed them, nobody in their right mind would chase them down to pay it. Had Kelo prevailed, I am certain they would have been told they owed the money.

The notion that the people did not keep the exteriors up simply dovetails with the assertion that the area was blighted to justify the condemnation. He would never admit anything to the contrary because it would hurt his case. I’m sure the exterior of Mr. Goebel’s home is much nicer in any event.

Mr. Goebel’s 4th point is that the residents were greedy and that the maximum amount the law would pay would not be enough to satiate their greed. Ridiculous. The constitution mandates just compensation, so state and local laws are moot. I seriously doubt the people were extorting the NLDC. I have a feeling Mr. Geobel knows more about greediness than Kelo and company.

Mr Goebel’s parting shots are just passive aggressive. I just read the article yesterday, so maybe he’s the one having the visceral reaction.

A big tip of the Yankee cap to KipEsquire/A Stitch in Haste for watching the issue so closely.

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