Show Me the Mortgage

Some really great stuff coming out on the emerging scandal of foreclosure industry fraud.

Rortybomb has a great two parter explaining what has broken down and why it matters. A winning segment:

In the event, with respect to any Mortgage Loan, that such original or copy of any document submitted for recordation to the appropriate public recording office is not so delivered to the Trustee within 180 days of the applicable Original Purchase Date as specified in the Purchase Agreement, the Trustee shall notify the Depositor and the Depositor shall take or cause to be taken such remedial actions under the Purchase Agreement as may be permitted to be taken thereunder, including without limitation, if applicable, the repurchase by the Responsible Party of such Mortgage Loan.

Read that again through to the end and use the chart to follow the chain. If more than 0.01% (!) of mortgage notes weren’t properly transferred, the trust can force the sponsor (in this case, Goldman Sachs) to repurchase the bad mortgages. And this is just one contract for one part of the ~$2.6 trillion dollar mortgage backed securities market. How’s that for systemic risk? Especially if this is found to be widespread….

Ow. (H/t to Ritholtz)

CJR's Dean Starkman brings a foreclosure linkfest our way.

...as [HuffPo's] Mike Hudson...reminds us, the fraud factories on the back end of the mortgage process are only an extension of the mortgage boiler rooms on the front end that generated millions of what turn out to be the financial equivalent of Ford Pintos and Chevy Chevettes.

Manna From Heaven

It's a truism of home ownership that the prior inhabitants of your home were wrong about a great many things. Our last home had lousy windows, bad attic ventilation and drainage issues that boggled my mind. Didn't these people have EYES?? I would exclaim. HOW could they let this go??

The answer of course is, easily. Selling the house is easier than fixing a great many problems. I solved our old houses drainage by band-aiding it until I could sell. Months after we sold, I ended up getting a tour of the old house from the new owner. The guy was in the process of completely renovating the kitchen and wanted me to see the new stairs he'd installed. As an aside he mentioned fixing the backyard drainage (by drilling through over six feet of clay - running two 4" pipes to the front and installing a french drain). He rattled off the numbers on how much water would pile up in the backyard after a typical deluge (something in the tens of thousands of gallons) and mentioned that after he finished, his neighbors no longer got water in their basements.

Then he showed me the table he was making out of the scrap wood of the old kitchen door and leftover stair parts.

I want to be that guy. The guy who leaves a house in a condition where the new owners say Wow, we SO lucked out! The last owners really fixed this place up."

Better than we found it. Just once.

So we've made some reasonable headway with our current place. Did the kitchen - got the landscaping/drainage out of the way - but there's been a looming issue we've been putting off because it's fabulously expensive.

The roof.

Much like our old place, we were told by our inspector that the roof would need to be replaced in the short term (3-5 years) and two winters have demonstrated beyond any doubt that we have inadequate ventillation.

In our heads, a re-roof job was going to cost us twelve grand or more. Not because we'd done any research, but because our experience has taught us that life sucks and twelve large seemed like the minimum number it would take to utterly suck.

We began getting bids. We called The Man (from our kitchen job) and a few others and the numbers were considerably better. Still expensive - but something we could dig deep to do. We joke to our friends how we're praying for a hailstorm before we get going, but we're going to have to get this done. Our roof is not merely old and badly ventilated, it leaks. A leak that was disclosed as a "fixed" issue by the prior owners - but clearly and obviously has been leaking for some time.

I keep picturing dad's disapproval for my having put in a kitchen without fixing the roof first. Roof! FIRST! You want your fancy kitchen to get wet? Somehow, this is the opposite of motivation. I put off scheduling the job until after the Norway trip. Now here we are in fall, and I'm yet to get something scheduled.

And then... magic:

That, my friends - is a hailstone. One of surely thousands that hurled themselves against my house a few weeks ago. Sounded like a freight train, woke us in the middle of the night. I was positively giddy at the thought that this could help defray the costs of a roof.

With our luck, it wouldn't be much (the roof is old) but anything is something, right?

In the morning, I eyeballed the roof and saw nothing out of order. Downer. The roof vents had serious dents, but I don't know if that means they'd pay for the vent replacement or what. Having never put in a claim for this sort of thing - ya kinda expect the worst.

The adjuster came last Saturday - I wasn't going to be home, but he was early so I was there when he started.

"Sir?" He was over on the side of my house.

I walked over thinking of the disastrous state of my side lawn - and waiting for him to tell me "you can't claim this."

Instead, he points to a length of vinyl rain gutter that looked like it had chunks bitten off of it.

"That's hail there. And this siding is totalled."

WTF?

At this point two thoughts run through my head:

1) I haven't been on this side of my house in three weeks?; and
2) Score!!!!!

I'm unsure what the proper decorum is for dealing with an adjuster. Will he be offended if I whoop with joy and ride horsey in a circle right there? Should I wait??

I opt to focus on reaction one: "Wow! If I'd have seen those holes - I would have called sooner!"

The Adjuster takes a piece of chalk and rubs it sideways across my siding. What should (on undamaged siding) look like a wide blue band looks like polka dots with a blue background.

Siding. Not even what I was calling about or hoping for. The back of my house is the same. Blue with polka dots, over and over.

He goes up on the roof and I have to get the boy ready for his soccer game. We're heading out and I call up "How's it look?"

He snorts at me, as if to say: You really need to ask?

"Totalled. Good time for new roof, too, this one's about done. Good thing you have a replacement policy, eh?"

I have a replacement policy? I am soOOOoooo resisting the urge to go all horsey in a circle.

He throws me a few pieces of the shingles to drive home the point that my roof is kaput and there's no better time to get a new one - especially one that my insurance will pay for.

I bite back euphoria and thank him for his time. "Wow," is the best I can do.

Incredibly, my slow rolling on this particular item has paid off. If we'd have done the roof first thing, we'd have been out of pocket and probably had to cut corners on the kitchen.

Instead, we're going to reroof, ventilate, fix the damn leak and reside with insulation.

Procrastination: Boo yah, baby!

Reading the Fine Print

Okay, first off - if you haven't seen this, watch this as a warm up.




Mortgages were written with crap paperwork that are now being used to foreclose on people's houses. Stewart presents this as a "Sophie's Choice" scenario: we could allow the banks to foreclose using BS paperwork - or we could stop foreclosures and blow huge holes in the finances of the companies who sold securities that were supposedly backed by this paperwork.

That's the soundbite version, complete with flashy visuals.

Here's Yves Smith for the dry, analytical version:

That puts a cloud over the entire US RMBS market, the biggest asset class in the world. This paper was sold as secured; the ability to offset the cost of borrower defaults by seizing and selling his house is critical to the value of the instruments. And if no assets were conveyed to a particular trust by closing, an even uglier possibility exists: under New York law, which was elected by RMBS as governing law for the trust, it would be considered to be “unfunded”, which means it does not exist.

But Yves Smith has a marvelous pushback on they way Stewart (and the financial press) are framing this (emphasis mine):

Now the rather sick irony is that this monster screw-up probably affects Fannie and Freddie paper only indirectly; presumably, it will a given that this will be treated as if the government guarantee covers this little mess. The Obama Administration is the last bunch of folks that will look into the fine print to see if Fannie and Freddie ought to eat this liability.

I’ll admit I have not looked into the Fannie/Freddie procedures on this one, but I’d have trouble believing their rules would include having the government guarantee extend to operational screw ups that prevent losses on guaranteed mortgages being relieved by foreclosures. I’d have to believe they have putback procedures which will not be applied because the consequences would be too devastating to Team Obama’s best friend, the banking industry.

So Frannie and Freddie not pushing the losses related to foreclosures back to the banks would be yet another back door bailout.

In other words:

• If a consumer doesn't read the paperwork, they are bound by the unbreakable bonds of the contract they signed. Tough bounce.
• If a corporation is rescued from bankruptcy owes bonuses to is employees - those bonuses must be paid. There was a contract.
• But if a financial institution ignored proper paperwork in a rush to make money, and everything blew up in its face - the contracts that it signed with secondary lenders (like Freddie and Fannie) that require underwriting and due diligence must be ignored - because otherwise it would end up costing a corporation money.

And banks apparently have veto power on contracts that cost them money.

What a crock of sh!t.

Brace for another backdoor bailout.

(H/t Felix Salmon and if you're in the mood to have your mind blown, by all means read the NC posts he links to. They are simply incredible.)

Inside Job

Charles Ferguson: Why do you think there isn't a more systematic investigation being undertaken?

Nouriel Roubini: Because then you would find the culprits.

Added to my list of must see movies... Inside Job



(H/t Felix Salmon)

Frak You, Right Back

If you haven't heard this guy's story - you should.

(From the trailer for Gasland)

But there's a new chapter to this story that's worth telling. One of the offending companies, Cabot Oil & Gas, is being called on the carpet for destroying people's water supply - and they're digging in their heels (emphasis mine).

"We have had people here in Pennsylvania without safe drinking water for nearly two years," said John Hanger, head of Pennsylvania's [Department of Environmental Protection]. "That is totally unacceptable. It is reprehensible. We have given Cabot every opportunity to resolve this matter."

But Cabot has pushed back against the agency, taking out a full-page ad this week in several local newspapers and calling plans to construct the water system "unreasonable, unprecedented ... and unfair."

...

A group of Dimock residents — among them, a former Cabot employee and several residents whose wells had caught fire — filed a lawsuit last year against the company for the contamination and the health risks it could pose to them.

Cabot mentioned the lawsuit in its ad this week, adding that it "does not believe it caused these conditions and intends to fight these allegations through its scientific findings."

(Via ProPublica)

Writing the Great American ePub

There's one less excuse for writing your novel, courtesy of Barnes & Noble.

PubIt! another entry into the self publishing ePub world - dares you to write, upload and sell your work. No start up fees (just a good amount of personal data) and voila! Your work is global, baby!

Just make sure you give it a good editorial pass before you upload. QA is nonexistent.

You wonder how B&N will help users sift through the flood of mediocrity to reach the good stuff.

Still, you wonder who will be the first ePub writer to make a name for themselves outside of the traditional channels....

(Via Crave Blog)

On the List of Sentences I Didn't Expect to Read...

This would appear somewhere near the top:

The New Orleans police officers charged with shooting Henry Glover and burning his body might not be allowed to use the defense that they were just following orders if federal prosecutors get their way.

Ye gods.

The Latest Development in the War on Vampires

Electricity vampires that is...

Behold, Belkin's partial solution to electronic appliances that draw power for no reason when they have been turned off:

It's a plug that cuts off all power after a set interval (30 min, 3 hours, or 6 hours).

The good: Put it on the end of your Wii plug - and save $25 bucks a year.

The bad: Why do I have to buy something in order to NOT use electricity?

(H/t Good blog)

Lies For Sale

I so love this:

In the constantly-contradicting world of tabloid journalism, is anyone reliable? [Gawker] analyzed 20 months of reported break-ups, marriages, and pregnancies to tabulate our first-ever Tabloid Reality Index, batting averages for America's five major celebrity glossies and the rumors they monger.

I just love to see their batting averages virtually never rise above 50% (and usually hang out south of 25%).

(H/t CJR)

Game Changer

Coming to a garage sale near you.

This is a seriously good idea:

To become a credit card merchant, you have to buy the card-reading equipment, which costs several hundred dollars. You generally pay a setup fee, and you commit to a one- or two-year contract with the processing company. You pay $15 to $25 a month, and minimum transaction fees of $25 a month, even if you had no sales at all.

The Square Up system, on the other hand, eliminates that stuff. All of it. It makes the barrier to entry into the credit card world so low, there’s virtually nothing to stop you, the little guy, from taking the leap.

Sir Terry Pratchett is Way Cooler Than You

How much cooler?

This much cooler:

(Via Geekosystem)

Bloody Brilliant

Aussie or Kiwi - this magician has a simply marvelous card trick (after a quick warm up, that is)

Dear Potential MBS Investor...

On behalf of Goldman Sachs, we would like to inform you that a recent study of their mortgage backed securities showed that over 1 in 10 of the home mortgages they contain did not meet current underwriting standards. This ratio has been increasing each year for the past few years - and we wanted you to be aware of this trend before you made any further investments.

We have contacted the originators of these loans and impressed upon them that while we reserve the right to include them in our securities, we will not pay full price for them. The price savings on securities containing these loans will be passed along to you if you decide to invest in ---

Okay, sorry. I just can't continue writing that without bursting into hysterical laughter.

By now, the news is out that while investment banks knew full well that their MBS pools had loans that didn't pass underwriting - and that the percentage of those loans was increasing.

Thanks to Gretchen Morgenson over at the NYT, we now know that the firm who studied these loans tried to provide the information to the ratings agencies - who weren't interested.

So the banks who paid for the study learned that their MBS pools were getting uglier.

What did they do? They leaned on their loan suppliers to get a discount on ugly loans - continued to charge full fare to their investors - and kept the data to themselves.

Nice.

Felix seems to think prosecutions are nigh. Let's hope so.

If you see the world in terms of Left & Right...

...you really aren’t seeing the world at all.

So sayeth The Big Picture's Barry Ritholtz

Here's a sampling:

For those of you who are stuck in the old Left/Right debate, you are missing the bigger picture. Consider this about the Bailouts: It was a right-winger who bailed out all of the big banks, Fannie Mae, and AIG in the first place; then his left winger successor continued to pour more money into the fire pit.

What difference did the Left/Right dynamic make? Almost none whatsoever.

War Memorial

A propo of nothing-

So, I'm on a tour bus in Bergen and our guide is prattling on about this or that. She has a peculiar way of saying OnTheLeftHandSide or OnTheRightHandSide all run together with perfect clarity - right before dropping her voice so she becomes unintelligible.

Then she'll surge back into my audible range with a painfully earnest IsItOkay? punctuated with a smile you can hear. We'd all given up on listening for detail - so a busload of tourists would nod in unison.

At some point her singsong voice skips out the words war and Germany - and there is mention of a building that is OnTheLeftHandSide. As her perspective shifts from her left to our left - I haven't the foggiest idea which direction I'm supposed to look.

Not that I know what she's even talking about.

I've been snapping pictures at random - so has Mom - and I figure we may have a picture that will make it make sense. She mentioned naval and symbol which ties with the fact that Bergen is a huge port. In any event, whatever it was is long behind us by the time we start to compare notes.

-------
One thing that struck me about Norway - at least in contrast to the UK or the US - there are no war memorials. Which of course is an exaggeration. Yes; surely there are some - somewhere. But wherever they are, they are certainly not front and center. All the statues you see are of musicians, poets, leaders of the fishing guild (seriously). No soliders, no plugged up cannons - not even a plaque. Compare this with a recent side jaunt we took into a town here in the US. A WWII tank displayed on the main road, a WWI cannon in the town square, and civil war monuments graven into the side of their courthouse. This was in a town of barely 10,000.

Bergen has over a quarter of a million people.

Admittedly, Norway was out of the fight pretty early in WWII. There are some truly amazing stories of the resistance - and the odd espionage adventure - but Norway has no Omaha beach. I read somewhere that after the war, the Norwegians located the German cruiser they sunk (the Blücher). They then salvaged the oil from its fuel tanks and cut up the ship for scrap - and sold it. Eminently practical these Norwegians - in contrast with how Americans reverentially allow the USS Arizona to leak oil into Pearl Harbor to this very day.
-------

In any event - up until that muted mention by our guide - there had been no signs of the war. And I was curious what she had meant.

When we stopped for some other photo op (digital cameras have turned tourists into snap happy maniacs - but the truth is volume pays off) I cornered the guide and asked about what she was trying to point out.

I showed her my photographic guess: a grey, ugly building with odd stone sculptures under each window that vaguely resembled eagles. "Is this what you meant?"

The guide shook her head. NoNoNo. The yellow building. It was built by the Germans... I hop through a few of my surrounding snaps - no yellow building.

German, AND yellow. Well, sorry I missed that.

Lots to see and do, that was the last I thought of it. Then after we get back, mom and I exchange pictures and I see this:

A yellow building in Bergen - was it the German one? Pastel yellow buildings in Bergen are like Starbucks in the US. Unless there's some plaque I can see in the picture...

I zoom in with photoshop. Nothing visible by the door - but with this resolution, it's not like I could read it.

I need a sign.

Then I zoom on the window balcony:

And there it is. German Naval Headquarters in Bergen, circa WWII.

The Norwegians will hoist a sunken battlecruiser off the bottom of their fjord for salvage - but the swastika-laced ironwork of their conquerors is preserved for all to see.

Lest anyone forget.

A very different kind of war memorial - and the only one I saw in Norway.

Florida, BofA: "We Don't Know What the F%#* We're Doing"

I gotta read Barry more often.

Here's a gem from his WTF file:

"When Jason Grodensky bought his modest Fort Lauderdale home last December, he paid cash. But seven months later, he was surprised to learn that Bank of America had foreclosed on the house, even though Grodensky did not have a mortgage.

Grodensky knew nothing about the foreclosure until July, when he learned that the title to his home had been transferred to a government-backed lender. “I feel like I’m hanging in the wind and I’m scared to death,” said Grodensky. “How did some attorney put through a foreclosure illegally?”

Bank of America has acknowledged the error and will correct it at its own expense, said spokeswoman Jumana Bauwens."

Barry has a few suggestions - the best of which is his number 3:

3. Freeze the Florida foreclosure mills. IF A COURT CAN FORECLOSE ON A HOUSE WITHOUT A MORTGAGE, THERE IS SOMETHING TERRIBLY FATALLY WRONG WITH THAT COURT SYSTEM. They are administratively incompetent, and until they demonstrate they are not renegade organized criminals (i.e., have some basic competency), they must freeze what they are doing.

I Will Never Complain About My Commute Again

Do this on full screen.

As Barry says, this is "The sickest thing you will watch this weekend":

DADT in Brief

(H/T Will Wheaton)

Stewart vs. O'Reilly: Don't Call it a Battle of Wits

Jon Stewart goes on O'Reilly and just plays straight man to O'Reilly's firehose of stupid.

Part I:


Part II:


It's sad to watch O'Reilly stick to his worn-out playbook as if there is something for him to win.

Bill? Stewart isn't playing - he's just smarter and funnier than you are.

(H/t TPM)

Obama's Kryptonite

This was just too perfect:

Jack Shafer: My Hero

How does a journalist count to three? One, Two, Trend!

Poynter profiles Slate's Jack Shafer - a man who specializes in letting the air out of bogus "Check out this new Trend!" stories. (like "Toothing" or drunkorexics)

Money quote:

"I think we write trend stories because we think they're news," Shafer said in a phone interview. "We write bogus trend stories because we're wrong, we're lazy, and we're mentally tardy."

(Via Felix Salmon)

The Best Way to Take Out a Unicorn

Thanks to The Oatmeal, for teaching grammar with possibly the most attention getting examples.

(Shout out to my man, MTB)

Bucket of Cold Water

(Via CJR)

Bloomberg's Jonathan Weil tells it like it is

Here’s the kind of thing that passes for free enterprise now. Last month a fellow named Michael Carpenter, who is the chief executive officer of Ally Financial, got on a conference call with securities analysts and gushed with delight about the $3.5 billion price that General Motors had just agreed to pay for the subprime auto lender AmeriCredit. Based on that transaction, he proclaimed, Ally might be worth $30 billion.

GM, which owns a 6.7 percent stake in Ally, is Ally’s former parent.

“I love the AmeriCredit deal,” said Carpenter, whom some might remember from his days as the head of the securities firm Kidder Peabody. “I don’t have any doubt about our ability to repay the U.S. Treasury. So I think it’s great.”

The federal government so far has spent $17.2 billion to bail out Ally, the lender formerly known as GMAC Inc. Taxpayers hold a 56.3 percent stake in the company, which says it may hold an initial public offering next year if it can’t find a buyer.

What a spectacle. Here you had the CEO of a thrice-bailed- out zombie bank, drooling over how much a government-owned carmaker was going to pay for a publicly traded subprime lender, and using this price as a yardstick for his own bank’s paper worth. In a sane world, Ally would have been liquidated already. Any capital it’s able to raise is money that otherwise might go to more deserving enterprises.

Bizarro world laid bare.

My Kind of Place

This is a cafe I could seriously get into.

How Old is Your Gas Pipeline?

Why do I ask? Oh, I don't know...

San Bruno, CA: 4 dead and counting

But here's another question - when was the last time your gas lines were evaluated by professionals?

Which is not to say this sort of thing should be on homeowners. It shouldn't. Unseen batallions of quiet professionals should be keeping this off your worry radar by making sure everything is maintained properly.

But here's something to jolt you out of that safe mental picture:

the Pipeline and Hazardous Materials Safety Administration, the federal agency that regulates 2.3 million miles of oil and natural gas pipelines, largely relies on standards written by the oil and gas industry. It has about 100 inspectors, leaving industry a great deal of latitude with inspections. (Even after the blast, state utility regulators ordered PG&E to inspect its own network of gas pipelines.)

And according to The Washington Independent, federal regulators are required to inspect only about 7 percent of the country’s natural gas pipelines. That percentage is based on how populated the surrounding area is, and not the actual conditions of the pipelines.

Regulating agency dependent on industry expertise? Check. Regulator's resources laughably inadequate to the task it is given? Check.

Now where have I seen that pattern before?

Zero Tolerance

Let's do a little role play, shall we?

Imagine you are the principal of a middle school.

A 13 year old boy is brought into your office. He was overheard talking about firearms, then threatened another student and himself.

A search of the boy and his locker have produced no weapons or contraband. The boy admits to talking about target shooting - and mouthing off to another student who overheard the discussion.

His version - the exchange went like this:

Q:What would you do with a gun if you had one?

A:Well, I'd shoot you and then myself.

"You see," says the kid - "I was making a joke."

There were no injuries and no altercation between the kids involved. This kid has no priors, lives with both parents, and seems embarrassed by the whole thing.

What do you do?

Talking to the kids parents is a given, as is telling the kid that this kind of "joke" is not funny at all - nor something that is taken lightly in the post-Columbine world.

But what else?

Do you suspend the kid?
Call the police and have them investigate?
Schedule a meeting with the school counselor to figure out if this kid is dangerous or merely foolish?

Take a few seconds and think what you should do - as the responsible administrator of a public school.

Then relax - because apparently (at least in southern Illinois) you don't get to decide. School policy suspends the boy immediately and refers him to juve mental health. They take him and hold him for five days of observation, where he will be evaluated for possible treatment. If his parents object to his being treated - mental health officials can overrule them and treat him anyway.

Both of the kid's parents are deaf - so communication between the school, the mental health facility lags far behind the events on the ground.

[By now, you will have guessed - this is not a hypothetical. This is what is currently happening to the family of one of my colleagues]

The boy speaks to his hearing relatives by phone, who relay messages to his parents. He has not showered since his arrival at juve mental health - as group showers are a new and frightening thing for him.

No word on weather treatment will be administered - I would hope the probability would be low - but there's the open question of how five days of incarceration will alter the trajectory of this boy's life. How will he view himself ?- and how will he be labeled by his peers?

Think of all the stupid things you ever said in your adolescence - would you have ever believed that one of them could land you in a juve mental ward?

Messed up.

Which is worse: HAMP or Wells Fargo?

(Via Felix Salmon)

As if further proof was needed - when banks and governments jointly declare their eagerness to "help homeowners" - that's the time to put them under the frigging microscope until they scream for mercy:

[David Lazarus] is telling the story of Mike and Ellen Kahara, who signed up for a HAMP mortgage-modification program through their lender, Wells Fargo. They made all their HAMP payments in full for the three-month trial period, and then continued to make payments as Wells dawdled over whether or not to make the loan-mod permanent.

Eventually, on August 11, Wells Fargo sent the Kaharas a letter saying that the bank had rejected their application for a permanent loan modification. That’s bad enough — but the bank made matters infinitely worse by then turning around and selling the Kaharas’ house, in a foreclosure sale, just five days later, on August 16.

And yes - it gets worse from there.

Wall and Peace

Just flipped through a copy of Wall and Peace by the guerrilla artist extraordinaire, Banksy.

Just a rollicking good time.

His art and clandestine art installations are brilliant, of course - but he intersperses it with copy that is as delightfully venomous as the rest of his work.

I especially like his observation that giving respect to the property rights of public advertisements is like "asking for permission to keep a rock that someone's just thrown at your head."

My Big Fat Greek Bankruptcy

(Via Felix Salmon)

Michael Lewis scrapes off Greece's financial scab and reveals the horrors underneath.

The [Greek] national railroad has annual revenues of 100 million euros [yet pays its workers] 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true. “We have a railroad company which is bankrupt beyond comprehension,” Manos put it to me. “And yet there isn’t a single private company in Greece with that kind of average pay.”

And that's just the beginning.

a law on the books [makes] it a jailable offense to cheat the [Greek] government out of more than 150,000 euros [in taxes]—but its enforcement. “If the law was enforced,” the tax collector said, “every doctor in Greece would be in jail.” I laughed, and he gave me a stare. “I am completely serious.” One reason no one is ever prosecuted—apart from the fact that prosecution would seem arbitrary, as everyone is doing it—is that the Greek courts take up to 15 years to resolve tax cases.

Perhaps the most entertainingly horrific thing you will read this month.

Your Best Friend is Suing You For 600 Million Dollars

It's no secret that I'm a Facebook holdout.

I view Facebook as more of a disease than a pastime - a tool that entices people to give up their personal data in exchange for its aggregated entertainment and networking tools.

So it's no small surprise that I feel like watching a movie about the creation of Facebook.

All of this you could put down to the fact that we have gotten very, very good at making movie trailers - but I like to think it's because I really liked Radiohead.



Slick.

13 Out of 1,000

Caught this off CJR

You remember back when we had that flash crash on the stock market? The market lost a staggering number of points, then got them back just as fast.

The WSJ reports that the SEC is looking into quote stuffing as a potential factor in that mess. Quote stuffing is flooding the market with orders that are visible enough to influence other trades - but are canceled before they are completed.

Head-faking the market, in other words. But how bad could these signals be?

According to the WSJ - which uses the NASDAQ trading volume of Feb 18, 2010 as an example.

There were offers to buy or sell 89.704 billion shares on NASDAQ that day.

These offers resulted in 1.247 billion shares being traded.

That's a completion rate of  1.3%

Chittum says "Dang" - I'd use something a bit stronger.

Sure, offers to buy and sell will outstrip what can actually change hands - but 98.7% of all offers on the NASDAQ don't happen?

Really?

I'd love to see that metric plotted over a the life of the NASDAQ.

Taxes for Thee, but not for Me

(Via CJR Yves Smith, and Loren Steffy)

Because this just rocked:

Dear IRS: Please note that beginning this year, I am no longer earning an income. From now on, I am compensated through what I like to call column interest. It isn't pay. It's a capital gain that I receive in exchange for providing about 2,000 words a week to this newspaper. Please lower my tax rate accordingly.

Hey, you can't blame me for trying. After all, a similar strategy has worked for years for money managers at hedge funds and private equity firms. In fact, now that Congress is threatening to close that loophole, the private equity world has erupted with an anguished wail. Such is the reaction when the privileged few are asked to pay their fair share.

Asymmetrical Warfare

I've been reading Free Range International for awhile now, a blog by Tim Lynch - a private security contractor in Afghanistan - and one of the recurring themes of his blog is that the Taliban really, really suck at fighting:

There was an attack on the HQ of one of the security firms in Kabul last week involving two suicide bombers.  They popped up well inside the new Kabul “Ring of Steel” checkpoint system which seems to be designed to harass internationals and opened up on the exterior guards as they walked down the street housing Hart Security.  The Hart guards returned fire for a second or two and locked themselves inside the compound as did the exterior guards outside the gates of every other compound on that street which means about 25 men jumped inside their compounds when the two attackers unmasked.  The attackers reached the gate and, according to eye witnesses, one said he’ll take the gate down and the other moved back about 20 feet. When bad guy one blew down the gate, bad guy two also perished because 20 feet of stand off is inadequate for powerful suicide vests.

FRI points out, this is despite years and years of experience planning such operations. Granted the participants are always noobs - but you wouldn't be out of line expecting the people who orchestrate these attacks to learn from failure. And there is plenty of failure - trouble is, when a bomb goes off in a city - very few people know what the original plan was. It is very easy to assume that a detonation is a success - and reporters love an easy story.

Which is precisely why I like to read FRI and articles like the one in The Atlantic he's posting about - The Case for Calling Them Nitwits. Not just because it heaps abuse on those who are attempting to kill our soldiers and pretty much anyone they dislike - but because it presents a deeper analysis of what truly happened when a bomb goes off.

It is depressing to learn that an almost random assortment of tactics, executed by impressionable and gullible novices can simultaneously threaten two nations - and be thought to be a cohesive, organized enemy.

Which is not to dismiss them - they are not losing because they do not give up. The fact that any success in Afghanistan hinges on getting them to do something other than kill people is even less encouraging.

But still - the perspective is useful.

For the Good of the Public

ProPublica knocks two out of the park:

1) Bank's Self Dealing Super-Charged Financial Crisis -
Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history.

Faced with increasing difficulty in selling the mortgage-backed securities that had been among their most lucrative products, the banks hit on a solution that preserved their quarterly earnings and huge bonuses:

They created fake demand.

2) Take It With a Grain of (Sea) Salt: Gulf Microbe Study Was Funded by BP 

Earlier this week, major news outlets ran with headlines about how a new microbe [4] has been found eating up BP’s oil  and how microbes have degraded the hydrocarbons so efficiently that the vast plumes of oil in the Gulf are now undetectable. No joke.

A bit skeptical of all the oil-is-mostly-gone claims, the day that microbe study was released we chose instead to focus on the Gulf’s thousands of dead fish. Lucky for us.

MIT’s Science Tracker, in a post published yesterday, noted that the microbe study was conducted by U.C. Berkeley scientists through a grant with the Energy Biosciences Institute, and that the Energy Biosciences Institute is funded by none other than BP, through a $500 million, 10-year grant. (To the researchers' credit, they also mentioned the funding in their press release — you just had to read about three-quarters of the way through.)

Stewart on Heston on the Bill of Rights

I just love this:


(H/t TPM)

Hallowed, My Butt

(via Felix Salmon)

The brilliantly named History Eraser Button blog shows you some of the sights and sounds surrounding our most hallowed ground zero.

Short version: It's only hallowed if strip clubs and bars are now holy.

But see for yourself

Oh... you meant THIS torture tape???

You gotta be sh!tting me.

Gitmo in Brief

(Via ProPublica)

So far, only 24 of the 779 men held at Guantánamo at some point have been charged with a crime to be heard by a military commission. Four of them have been convicted. Only one detainee, Ahmed Khalfan Ghailani, has been moved from Guantánamo to face charges in a civilian court; that case is currently unfolding in federal court in New York.

For those of you keeping score at home, that would be 3% of those ever held at Gitmo end up getting charged - and 17% of those charged so far have been convicted.

Google-Verizon: C|net's Telling Me It's Nothing To Worry About

This year, I'd love something to not be as bad as I thought.

'spose this is it?

Here's C|net's Marguerite Reardon:

...most of the [Google-Verizon] proposal sounded a lot like a plan FCC Chairman Julius Genachowski offered nearly a year ago, which many Net neutrality proponents seemed to support.

In short, Google and Verizon say they agree to a set of rules for the Internet that would prohibit broadband providers from blocking or degrading lawful content on the Internet. Broadband providers would also not be allowed to take action to impede competition.

This is pretty much what Genachowski has proposed.

The CRA: Weaker Than Weak

Felix Salmon catches a nice one: National People's Action released a report showing how the nation's top banks have managed to end run the Community Reinvestment Act.

Banks beating a particular regulation is not exactly an earth shattering revelation - but you'll remember that the CRA is the law Wall Street apologists were blaming for causing the financial crisis.

The argument went - the CRA "forced" banks to lend money to poor people, so bad loans got made and the crisis followed.

Which is total crap for all sorts of reasons:

1. the CRA was passed almost a quarter century ago and the subprime bubble didn't swell until after 2000 (and oh-by-the-way the CRA is still in effect, yet banks have somehow managed to stop making subprime loans now that they cannot be securitized for profit).
2. The CRA explicitly (and repeatedly) states that community lending should not be at odds with sound business practices
3. There are no mandatory punitive measures for being out of compliance with the CRA.

National People's Action adds another item to this list:

4. The banks were using subsidiaries to lend to the low income market - so the parent bank's CRA evaluation would be unaffected

Here's Felix

...if you get a mortgage from Citimortgage or Citifinancial rather than from Citibank, you’re not going to get noticed in Citi’s CRA exam. And at Wells Fargo, the list of affiliate mortgage lenders [in NPA's report] goes on for the best part of three pages.

Nice.

A Bar In Amsterdam

Back from my trip. Short version - it rocked.

I'll post pics when I have my act together. In the spirit of my Norwegian interlude (and at the suggestion of Penguin) - here's a video from an offbeat Norwegian band called Katzenjammer.

Good fun.

A Better General vs. the Army of Death

Atul Guwande writes another thought provoking article about the state of health care:

The simple view is that medicine exists to fight death and disease, and that is, of course, its most basic task. Death is the enemy. But the enemy has superior forces. Eventually, it wins. And, in a war that you cannot win, you don't want a general who fights to the point of total annihilation. You don't want Custer. You want Robert E. Lee, someone who knew how to fight for territory when he could and how to surrender when he couldn't, someone who understood that the damage is greatest if all you do is fight to the bitter end.

(H/t Atlantic)

Some Great Resources on Global Warming

POD passed along this article from The Big Picture -
Everything You Need to Know About Global Warming in 5 Minutes - Jeremy Grantham

Which rocks, but TBP had a follow up that says it with video.

Climate Change: The Scientific Debate

I especially like video 3 - because it chases a lot of the global cooling bunk back to their source material. (Spoiler: global cooling evidence in the 70's is a total joke)

Random Sip From the Firehose, III

Krugman: Conservatives can quit Bush - just not his policies.

Salmon: Obama will nominate Elizabeth Warren to head the Bureau of Consumer Financial Protection (Me: Seriously?)

Ritholtz (well, Katsenelson actually): Japan is worse off than the PIGS?

Plait: Savage? Hyneman? I'm coming for you!!

Pigford

TPM has a fascinating look at the timing of the Shirley Sherrod hit job - tying it to the pending grant of $1.25 billion dollars to compensate black farmers for past USDA discrimination.

While I don't see a line of effect from Sherrod's ouster to opponents of the grant getting what they want, I'd certainly be interested in hearing more about this story.

Looking into the Pigford case (Pigford v. Glickman PDF) I ran across this rather grim story on Salon - Black Wednesday

Check this out:

Virginia farmer John Boyd describes a scene from a painful past: a white U.S. Department of Agriculture loan officer only allows black farmers to apply for loans one day a week. "Black Wednesday," the farmers call it, and they line up outside the USDA office in Richmond, Va. The loan officer, James Garnett, leaves the door to his office open so that all the farmers in the hallway can hear the loan requests of their colleagues be summarily, and vehemently, denied.

...

What happened between you and the USDA loan officer in Richmond?

Mr. Garnett had made 147 farm loans in Mecklenburg County, Va. Only one of those loans was to a black farmer, and he was the minority advisor to the USDA county committee. When they investigated Mr. Garnett, they asked him, "Do you have a problem making black farm loans?" Guess what he said? He said yes. He said yes, I think that they're lazy, and they're just looking for a paycheck every Friday.

Mr. Garnett took my loan application and tore it up and threw it in the trash can while I was sitting there in front of him. And he said he wasn't going to lend me any of his money. When I asked him why he wasn't going to make the loan, he said, "Well, I don't have any money now. If you want to come back again next year, that's up to you, but I think you need to go ahead and just sell your farm. I've got a farmer, Mr. Blaylock, and you can milk cows on his farm. I think that would be the best opportunity for you and your family."

I was mad. I was looking for a $10,000 operating loan to plant my crop. After nine years in a row I'd only gotten one loan from the USDA farm services, and I would apply every year.

I said, "Mr. Garnett, I don't think I can go back and tell my wife that I'm not going to get an operating loan again." And he said he didn't care. And when he said he didn't care, I told him to go to hell in a handbasket, and he began to use profanity, and he spit tobacco on my shirt.

When the investigator asked him, "Did you spit chewing tobacco on John Boyd's shirt?" He said, "Well, yeah." He claimed he accidentally missed his spit can.

When was this?

This was in 1994.

What was the result of the investigation?

In my case, they found Mr. Garnett guilty of discrimination. But they didn't terminate him. They allowed him to move to the sister county, which is Greensville County, Va., and they let him retire after two months in Greensville. He didn't see anything wrong with that.

It's easy to think that this kind of virulent racism is a thing of the past - but here's the USDA barring farmers from financing because of their race less than 20 years ago.

Drone Wars

The BBC had an interesting blob of data about the US drone strikes in Afghanistan/Pakistan.

Here's a sample:

Nuclear Detonations 1945-1998

(Via Bad Astronomy)

Here's a video representation of the first five decades of nuclear detonations - by location and country responsible.

It starts slow - but picks up rather dramatically.



As Phil Plait rightly asks, What the hell were we thinking?

Ratings Agencies Will Be Held Accountable?

(Via the WSJ and CJR)

Surely that's a misprint.

Standard & Poor's, Moody's Investors Service and Fitch Ratings are all refusing to allow their ratings to be used in documentation for new bond sales, each said in statements in recent days. Each says it fears being exposed to new legal liability created by the landmark Dodd-Frank financial reform law.

The new law will make ratings firms liable for the quality of their ratings decisions, effective immediately. The companies say that, until they get a better understanding of their legal exposure, they are refusing to let bond issuers use their ratings.

Or, more likely - that's something that will be swiftly reversed in some non-accountable way.

Still, fun to watch them squirm.

And Chittum's right - nice to know this little element got pretty much zero press up until now. Why do we have a media again? Yeesh.

The Phantom Menace of Social Security

There's an oddly comforting discussion posted at Columbia Journalism Review.

Yale Professor Ted Marmor lets the air out of a few of the more common depictions of Social Security.

Trudy Lieberman: What do you say to young people who believe that Social Security won’t be there for them?

Ted Marmor: They are being misled. If the proportion of Americans living beyond sixty-five is rising, as is the case, and if their voting strength will increase, as will be the case, why should their promised pensions be endangered? Put another way, if Social Security is a sacred cow, why will it be sacrificed when its worshippers are more numerous?

Interesting stuff.

The verdict on 'A Whale'

Uber oil skimmer "A Whale" is a flop.

Subprime Goes to College

---

Are we going to do this all over again?
-Steven Eisman, Testimony Before the U.S. Senate Committee on Health, Education, Labor and Pensions, June 24th, 2010

---

Steven Eisman has a J'accuse moment with the for-profit education industry. He's talking about the excesses and misdeeds of the federally backed student loan industry (Title IV loans).

The for-profit education industry accounts for 9% of the students, 25% of all Title IV disbursements but 44% of all defaults. And the President of the largest for-profit institution is paid nearly 25x the compensation level of the President of Harvard. There is something wrong with this statistical progression....

Here is one of the more upsetting statistics. In fiscal 2009, Apollo, the largest company in the industry, grew total revenues by $833 million. Of that amount, $1.1 billion came from Title IV federally-funded student loans and grants. More than 100% of the revenue growth came from the federal government. But of this incremental $1.1 billion in federal loan and grant dollars, the company spent only an incremental $99 million on faculty compensation and instructional costs – that’s 9 cents on every dollar received from the government going towards actual education. The rest went to marketing and paying the executives. One major reason why the industry has taken an ever increasing share of government dollars is that it has turned the typical education model on its head. And here is where the subprime analogy becomes very clear.

There is a traditional relationship between matching means and cost in education. Typically, families of lesser financial means seek lower cost institutions in order to maximize the available Title IV loans and grants – thereby getting the most out of every dollar and minimizing debt burdens. Families with greater financial resources often seek higher cost institutions because they can afford it more easily. The for-profit model seeks to recruit those with the greatest financial need and put them in high cost institutions. This formula maximizes the amount of Title IV loans and grants that these students receive.

With billboards lining the poorest neighborhoods in America and recruiters trolling casinos and homeless shelters (and I mean that literally), the for-profits have become increasingly adept at pitching the dream of a better life and higher earnings to the most vulnerable of society.

He also beats plenty hard on the for-profit education served up after families dive deep into debt.

If the [for-profit education] industry provided the right services, drop out rates and default rates should be low.

Let’s first look at drop out rates. Companies don’t fully disclose graduation rates, but using both DOE data, company-provided information and admittedly some of our own assumptions regarding the level of transfer students, we calculate drop out rates at most for-profit schools are 50%+ per year.

How good could the product be if drop out rates are so stratospheric? These statistics are quite alarming, especially given the enormous amount of debt most for-profit students must borrow to attend school.

But what about default rates? Eisner is convinced the industry manipulates the default rates, but he paints a truly horrifying picture with what information is available.

The federal government is covering defaults for the Title IV loans, so the lender has every incentive to write crap loans. After all, they're not stuck with the bill. This is awful for lots of reasons, but wait! There's more...

The companies who offer Title IV student loans also offer their own private loans as well. The loan loss provision for these loans is 50%-60%. That's money the bank is setting aside to cover defaults. When you're setting aside more than half the the amount you're loaning out to cover defaults - you're expecting a massive default rate. Under 10% is what you're looking for if you're planning on getting money out of your loans.

But why are Title IV lenders reporting that their private loans are tanking so hard?

According to Eisner, this is why:

There are two key statistics. No school can get more than 90% of its revenue from the government and 2 year cohort default rates cannot exceed 25% for 3 consecutive years. Failure to comply with either of these rules and you lose Title IV eligibility. Lose Title IV eligibility and you’re company’s a zero.

With respect to the default statistics, it is my belief that they are manipulated. Since the rule currently revolves around the 2 year default rate, the companies have every incentive to keep that statistic below 25%.

Isn’t it amazing that [leading Title IV lender] Apollo’s percentage of revenue from Title IV is 89% and not over 90%. How lucky can they be? We believe (and many recent lawsuits support) that schools actively manipulate the receipt, disbursement and especially the return of Title IV dollars to their students to remain under the 90/10 threshold. And again, unprofitable private student loans is also a way to keep below the 90/10 threshold.

Incredibly, it gets worse from there. Read Eisman's testimony (PDF)

(H/t Felix Salmon)

Late edit: Eisman's presentation is also available on Marketfolly.

A sample:

The Bitter End

Iniesta: Suck it, Villa

In any tournament that begins with a large pool of teams - the early rounds are the most exciting.

The World Cup encourages this - with rules that reward teams for winning big. Teams commit to attack, because a big win is more valuable than a marginal one.

In the knockout rounds, any will will do - even a penalty crapshoot. So percentage play shifts to cautious play - and scorelines usually trend towards marathon struggles that end in 1-nil.

Sooner or later, the stakes catch up with the game - and you get a total crapfest like this cup's final match.

I've said before that soccer played well is amazing, captivating even. But soccer played badly is about the worst thing you can watch.

This was the final, so people hung in there to see every last godawful moment. If you could have gotten 700 million football fans to screen this game without context, as if it were a friendly - I doubt a tenth of them would have kept watching past the half.

It was horrid.

Dutch hacking vs. Spanish diving vs. the English ref.

I started the match rooting for Spain - and by the end was wishing that the Dutch would send Spain home in a bucket. Naturally, the Dutch disappointed. Clear shots on goal, and Robben couldn't get it done over and over. I'd criticize Van Persie - but I honestly can't be sure he was on the field. FIFA says he was - but I'll need to review the tape.

I still believe the ref was over the top, but it's fair to say the Dutch were trying to hack their opponents into submission. John Nicholson points out this was a deliberate choice:

Had they played an open, attacking game, they'd have got creamed senseless by Spain. Yes, that would have been fun for the neutral but the Dutch don't owe ...commentators or anyone else anything. They're there to win and win by any means possible. It wasn't some sort of gross, immoral attitude they took to the game, merely a pragmatic one born out of knowing exactly what would suppress Spain most successfully. I admire that.

He's right, but I don't admire it. I had to watch that crap.

Two highlights of the night for me:

1. The Dutch coach receives his second place medal - and then takes it off and pockets it before he even gets off the podium. Nice.
   
2. The American booth minder, Bob Ley, trying to convince his audience that they have witnessed a "celebration of soccer" - right before they cut to Ruud Gullit who denounces the match in terms usually reserved for acts of genocide.

Oh, there was a goal, too - but whatever.

Spain gets the trophy, Holland gets the shaft (again) and the soccer gods smile down at the evil they have wrought.

Ugh.

One thing to look forward to - we start qualifying matches in two years.

Switzerland, You Suck

Letting Polanski go because the US hadn't filed an extridition request "for years."

So, Polanski went to Switzerland because he "trusted that the journey would not entail any legal disadvantages for him."

And that would not be fair.

So, Swiss extradition law requires that fugitives get advance warning that they are subject to arrest and extradition?

More like Switzerland screwed up and arrested a man who clearly is not subject to law - then found an excuse to let him go.

BP's Turf War With the Media - Not Even Close

You read stuff like this (from ProPublica) and you seriously wonder what the hell is going on in this country. Here's a freelance photojournalist describing what happened to him when he took photographs near a BP refinery in

I parked my car on the shoulder of Hwy. 197 near the Texas City sign that is in the pictures, on the south side of town and the refinery. I walked onto the median where the sign is and took the pictures. I walked back to my car and drove a couple of miles to a gas station that is on the way to my hotel. I noticed that what looked like a security truck, which had a light on the top, was following me, although he continued on when I pulled into the Valero gas station. I got out of my car to fill the tank and moments later two Texas City police cars pulled in next to my car, essentially blocking me in, although I wasn't trying to go anywhere, I was trying to get gas.

The first police officer asked me what I was doing and said he had gotten a report that I was taking pictures near the [BP] refinery. I told him I am a photojournalist and had only taken some pictures of a Texas City sign. He asked to see the pictures and I told him I didn't think I had to show them, legally. Another police officer walked up and again asked to see the pictures. I told him the same thing, but assured him that they were just pictures of the city sign, taken while I was in the public right of way.

He said I could show him the pictures or he could handle this another way, including calling Homeland Security and taking me in.

Read the rest.This crap just keeps happening. Limiting access in the name of 'Safety Zones'? Are we really that passive? Surely there are ways around this kind of stupidity.

Also: AUL sent me this link -which details the lengths some journalists have to go to get visuals of the BP mess.

Completely nuts.

Ultimate Betrayal

Just adding these two items up in my head.

One:

The US and Russia have taken part in the biggest spy swap since the Cold War, in an exchange at Vienna airport. One plane brought 10 Russian agents deported from the US after a court hearing at which they admitted being agents for a foreign country. The other was said to have brought four people convicted of spying in Russia but given a presidential pardon after they signed to admit their guilt. Both planes took off again after about 90 minutes.

and two:

It is not clear what will happen to ...the 7- and 11-year-old daughters of Vladimir and Lydia Guryev (Richard and Cynthia Murphy)...

Cripes. If the BBC is right, these kids were not on the plane - so their parents were (suprise!) spies - and they've been flown out of the country. If Elian was any example - we can expect these kids to join their parents - but wow, talk about paying for your parents sins...

That's just sick.

Nailed It!

With a few strategic edits...Pretty much as I predicted*.

That's a huge step up from my prior calls.

So the soccer gods have decreed that there will be a new champion. In their limitless evil, they have allowed two virgin nations to the final.

Presumably, this is so the crushing letdown of defeat will be completely unbearable for the loser. THIS was going to be the year!! We were SO close...!!

Good times. No Germany, No Italy, No Brazil or Argentina.

This has been a pretty solid cup.

*Assuming you ignore the fact that I started with the round of 16 set and that I was hopelessly wrong about the US and Argentina. And a few other things.

@Twitter

Proof that tweets can make anything lame...

God tweets the creation of the universe

God: @adam @eve I am the LORD your God who separated the light from the darkness. You shall have no other God before me for I am the LORD your Go
2 days ago

God: &#$%ing character limits. Point is, yay! I made you! Hi! Do what i say.
2 days ago

And so on

BP's to-do list

Poison water? Check. Poison the air? Check.

TEXAS CITY — At BP’s Texas City refinery, more than 400 pounds a day of benzene — 40 times the state reportable levels — was released during a 40-day period while a subunit of the refinery’s ultracracker unit was offline, according to a company filing with the state’s environmental agency Friday.

In all, BP officials said more than 500,000 pounds of pollutants and nonpollutants were released while the company increased flaring as they tried to repair a compressor on the faulty unit.

When did this happen? The week before the Deepwater Horizon disaster.

Next up, the ground beneath your feet. Then maybe they'll waltze over to your house and shoot your puppy.


(H/t CJR)

Whose Side Are You On?

(Via the Reality Based Community)

While the recent walkbacks on financial regulation demonstrate that Congress bows to corporate pressure regardless of who is in charge - this recent DNC ad nicely demonstrates that the GOP is particularly shameless when it comes to saying who they work for on the record:



And that isn't even the highlight reel. Anybody else remember Romney's convention speech where he promised the faithful that McCain would "take a weed whacker" to excessive regulation on Wall Street (right before the economy imploded).

There's got to be an avalanche of stupid quotes out there just looking for a home in one of these ads.

Lowes: Fail (Still)

For no particular reason, I revisited a poor shopping experience I had on Lowes.com the other day.

Previously, I'd tried to use a gift certificate I had to buy a fire extinguisher for my kitchen - and it did not go well.

I could still use another extinguisher - and I figured I'd give them another shot. Trying to re-create the same scenario - I tried the exact same item the Kidde 10-B:C Kitchen Fire Extinguisher.

Now, when I call up the item from a search - I am prompted to enter my ZIP code.

This is good, but I have to do this before I even see how much the item costs. Which is odd.

(Looking back at what used to happen on the site - I'm unsure if I'd entered a ZIP code prior to seeing the item. I did get an Add to Cart button for a screenshot - but if memory serves, this was after I'd lied about my ZIP to see if the site even had the ability to add to cart).

In any event - I plug in my ZIP code and get the following:

Okay, so I'm still out of luck at my location. The nearest Lowes doesn't carry this item.

Not to worry, they're offering the ability to check other stores.

I try that:

Okay, none of the five nearest Lowes carry this item either. Not a huge deal, only the site isn't offering any other options for me. I can Shop This Store (which changes which store I'm currently "located" at) but this will only allow me to look at the inventory of another store that doesn't carry my item.

There's a help icon next to the Unavailable status. Perhaps it has more information...

That'd be a no. What's interesting here is that the store search has returned a list of 5 stores and none of them have my item. You would think a better option would be if the site knew that the status on all 5 stores was Unavailable - it would provide you with a custom message like "No Lowes location within X miles carries this item. Here are some other options you could try."

It would hardly be fair to criticize Lowes for not stocking this item in a store near me. They can't be everywhere.

I cannot fathom why they cannot ship it to me - however. There's arguably no reason why the product cannot be boxed up and sent to me for a fee. If I'm in the US, you can ship it to me, regardless of what my nearest Lowes store has in their inventory.

You would think their website would support this.

Somewhere in their business model - they've made the decision that their website will not compete with their brick and mortar stores. That makes sense from a central office mindset - but from a customer mindset, I want to buy from you - and you won't let me.

Assuming I happened to live near a store that did have this item what would I see?

I plugged in 40036 (Kentucky) at random.

Kentucky's Lowes does stock this item.

So far, so good - but let's say I still wanted this item to be sent to me. I don't want to drive to them, and the website is offering to have it delivered.

Here's what the shipping estimate is:

You have got to be kidding me. $79 for home delivery of a 3 lb fire extinguisher?

The sticker shock would drive away your average mortal.


Reality check time. Yes, a fire extinguisher is considered hazardous material, so there's an additional fee. Good user interface would explain this so people wouldn't freak out when they saw a shipping rate that was four times the price of the item.

But is that rate even fair? What should it cost to ship a 3 lb fire extinguisher?

If you check with UPS the basic ground rate is around $15, plus another $25 fee because it's hazardous. (I tried LA to Portland, ME or LA to Kentucky without much variance)

So around $40 bucks to ship a $20 item via UPS - which is reason enough to drive to the store and pick it up -

Lowes is charging almost double that rate.

Which is reason enough to try another vendor.

Weak.