The avalanche of news items concerning San Bernardino County’s idea of taking mortgages on “underwater” homes at their fair market value, agreeing with the homeowners who  would assume the debt obligation at a new, reduced figure (as opposed to the nominal loan balance), and then live happily ever after is gaining steam — at least in press coverage — like a runaway locomotive.

But the problem is that the press has presented us with contradictory stories on how this scheme would be implemented. Would “bundled,” securitized mortgages be included? Would only performing mortgages be subject to this scheme? Some reports say “yes,” to both questions, while others say “no.” Also, no one seems to give much thought to how those “underwater” mortgages would be valued under eminent domain valuation rules — not as simple as it may seem at first.

Most of these posts out there are not addressing the valuation problems inherent in this scheme. So don’t be hasty in drawing any firm conclusions, at least until we see what emerges from this sausage machine. Stay tuned.

For our earlier posts click here.

Remember the Gyrodyne case? That was the one in which the New York State University took  245.5 acres of Gyrodyne’s land in 2005 for its Stonybrook campus expansion, and deposited $26.3 million. Nice try. It turned out that the value determined by New York courts was much highher ($98.8 million) and with interest and costs it came to $167.5 million, which we are informed by Long Island Business News has just been paid to Gyrodyne. David Winzelberg,  libn.com, NY State Pays $167.5M Gyrodyne Settlement, July 7, 2012. Click here .

A couple of days have gone by since the Obamacare SCOTUS decision, during which we have been treated — if that word can be used without doing violence to the English language — to the spectacle of the usual suspects, the assorted academics and other intellectual grandees, jumping through semantic hoops, explaining one of two remarkable propositions to the Great Unwashed: (a) that a penalty is actually a tax, which is another way of saying that a creature that looks like duck, quacks like a duck, and waddles like duck is really an ostrich, and (b) how losing a big landmark case before the U.S. Supreme Court is really a grand strategic victory.  And whichever of these two odd propositions they espouse, what a genius Chief Justice John Roberts is, for being able to pull this political rabbit out of his doctrinal hat.

The basic fallacy of these folks’ arguments is the assumption that SCOTUS will be vigilant and consistent in future cases in curbing the excesses of the Commerce Clause, and cautious in applying this newfangled when-is-a-penalty-a-tax notion. Not necessarily. There is a lesson to be learned from the court’s recent treatment of eminent domain law.

A scant eight years ago, SCOTUS announced that property rights and the Takings Clause that protects them are every bit as good as the revered freedom of speech protected by the First Amendment, and are not the law’s “poor relation.” Dolan v. City of Tigard, 512 U.S. 374, 292 (1994). Sure sounded good. But look at what happened shortly thereafter — property rights became not a poor but a destitute relation, and are not being enforced either by SCOTUS or by the lower federal courts. In fact, after the notorious San Remo Hotel case, property rights became the only species of constitutional “rights” whose conceded violation does not entitle their ostensible beneficiaries to judicial consideration on the merits as of right or at all — not in state courts and certainly not in federal courts. See San Remo Hotel v. San Francisco, 545 U.S. 323, at 342 (2005), Rehnqist C.J., O’Connor, J., Kennedy, J. and Thomas, J. concurring, but noting the resulting anomaly in constitutional law. There is a lesson in that, but we are willing to bet you a fine nickel cigar that the aforemetioned intellectual grandees will not deign to consider it as having any merit. We would sure like to be wrong on that one, but reality and harsh experience are not to be denied.

There is an interesting front-page story in today’s New York Times. Nelson D. Schwartz, Financial Giants Are Moving Jobs Off Wall Street, N.Y. Times, July 2, 2012 — click here. Motivated by the economic pressure of the recession, Big Apple’s financial biggies are realizing that salaries are so much higher in New York that they can save a bundle by moving jobs elsewhere. “[S]ervices like accounting, trading and legal support, and human resources and compliance are being shifted to places like Salt Lake City, North Carolina and Jacksonville, Fla.” And why not? The Times reports the case of one such employee whose $100,000 per year job was moved to Salt Lake City where the going rate for such work is $60,000 per year. So why not move it, particularly where these days most of this sort of work is done by a computer online. This work can also be streamlined by using the Best Employee Benefits Software to help manage every detail once inputted to the software itself, so the trend makes sense. It sounds like a no-brainer. This could be an opportunity for those looking for a new job, especially if they’re not needing a “New York Salary”. If you’re wanting to try for these job vacancies could even look into help with your resume to hopefully strengthen your chance at securing the position.

But this only raises the question of why are salaries so much higher in New York? Our take is that it’s closely related to the cost of housing. Rents and condo prices in Manhattan and other desirable places in New York have been outlandishly high for decades, so it’s hardly surprising that experienced employees whose work adds value to their employers’ enterprises are getting paid so much. Moreover, such employees are scared and are roped in instantly by organisations as soon as they update their CV on online platforms. Any employer would do that. Let’s say that you are an entrepreneur and employer and you have sighted the CV of an experienced employee on job portals. Would you just pass by it or instantly contact him? The possibility of the latter is higher. Moreover, there are chances that as an employer you would also go that extra mile to design activities that train and engage your employees in a way that they can get started with the work ASAP! After all, you wouldn’t want your chance of obtaining high sales deferred.

That said, it is true that experienced employees get more benefits than freshers. Their opinions may be rated higher too, given these workplaces often employ the use of employee morale surveys to keep tabs on their best talent, and who are therefore in a position to demand pay that is commensurate with their cost of living, are demanding and getting higher salaries than their counterparts in Salt Lake City or Charlotte, where you can buy a nice, 3500 sq.ft. house in a pretty good suburb for $300,000.