Recession

Americans historically live through hard times and are usually the better for it. People who were born around 1970 actually lived through two major meltdowns but were too young to remember them.  A few of them are old enough to recall what the country was like from 1987-1992 but not from 1977-1982. As adults now with families of their own they find themselves facing an economic crisis with no prior experience.
The Great Depression in 1929 has little to compare with today. In 1929, the people panicked. In 2008, the government panicked. Except for congressional interference in the market that delayed the recovery, there are few similarities.

The two periods that most people alive today will recall, happened while President’s Carter, Reagan and Bush were in office. I remember the Carter years being the worst of the two periods but I chose the Reagan-Bush meltdown for my topic simply because the events are more similar to today’s crisis.

The Crash of 1987 seems to have been forgotten by too many of us who were actually a functioning part of the work force so many decades ago. Trying to recall the names of any of the “players” on Wall Street back then is like trying to name President Truman's vice president. The number of crooks on Wall Street and other venues that the Securities Exchange Commission (SEC) was investigating for fraud and insider trading was staggering.

Names like Merrill Lynch's Nahum Vaskevitch or Ivan Boesky, Lyndon LaRouche, Robert M. Wilkis, EF Hutton and Leslie Roberts haven’t been mentioned for a long time. Paine-Webber’s Gary Eder, Carl Icahn, Robert Freeman, Martin Siegel, Michael Milken, Fireman's Fund, teachers pensions all made headlines at that time.

Corruption was prevalent on Wall Street even before fifteen employees of Wall Street firms were arrested and charged with selling cocaine within a network of high rollers. These bad boys were exchanging much more than ideas. Two differences between then and now is that the names are different and the actors are smarter now.

In my area, Dallas/Fort Worth, Federal regulators owned prime real estate like Valley Ranch, we lost a major newspaper [The Dallas Times-Herald] and by Christmas of 1990, the government reported that 800,000 jobs had been lost in the past two years. Sales of "big ticket' durable goods plummeted 10.5 percent in the month before.
Although the numbers are larger in this recession we must keep in mind that in 1987 the minimum wage was $3.35, the average yearly income was around $36,000 and the Dow was hovering around 2,000.

In spite of the bad things that were happening back then, good things like the Berlin Wall coming down gave that part of the world a new sense of freedom and peace. However things got worse on the global stage before they got better. Saddam Hussein defied the world and moved his armies into Kuwait. The Soviet Union was in economic chaos. World markets were growing nervous again with investors carefully watching the market fluctuations.

On a Friday in November of 1991, our own Dow Jones experienced a major sell-off of 30 leading stocks. Almost 4 years to the day after the Crash of 1987, Citicorp announced that it lost $885 million in the third quarter of 1991. Real estate values throughout the country had declined 20 to 30 percent during the previous two years and was expected to get worse.

As one might expect after all the bad mortgage loans, FHA loans became harder to get. The Federal Housing Administration had stricter requirements even for first-time home buyers.
There was fraud everywhere. A Dallas man bilked the federal government and Dallas-area homeowners of nearly $600,000 in a scheme involving home mortgages. A paltry sum by today's criminal standards but a serious crime no less. Some high-profile investment groups and developers in Dallas were still smarting from over-valued projects and a few local crooks were either in jail or facing it for their part in the schemes. Dishonest schemers reached much higher numbers and left an exponentially higher number of casualties in their wake.

The United States government had become one of the largest owners of foreclosed hotels through the Resolution Trust Corporation. [RTC].
The U.S. Comptroller General, told Congress that the Resolution Trust Corp. was in such a mess that it couldn’t even be audited. The ultimate cost of the savings and loan bailout could not be calculated.

By September of 1989, the stock market had begun to recover from the Crash of 1987. It only took 2 years for Wall Street to begin to rebound. In spite of the overwhelming number of foreclosed real estate properties, the recession didn’t actually occur until mid-1990. Foreclosures were slow to be processed and this caused the recovery to stall, much like 2009.
Mortgage companies being careful not to flood the real estate market too early began trickling foreclosed properties out for sale in early 1991. By the middle of 1992, so many of them were offered for sale that it triggered an upturn and lots of bargain parcels found new owners. This lured anxious buyers back into the real estate market as an alternative to stocks and bonds as it has done recently.

By December of 1991 the Fed had cut short-term interest rates 14 times since the recession began in July 1990. [Fourteen times in a year and a half.]

Signs of a recovery were beginning to appear in other places too. By November 1991, the percentage of Americans behind on their mortgage payments had improved slightly during the July-September quarter but by then we had depleted the Federal Deposit Insurance Corporation. The Resolution Trust Corporation had to be re-funded by Congress as well.

On March 6, 1992 The Fort Worth Star Telegram reported that 13.4 million people were receiving money from the government's welfare program to help families pay for food, clothing and shelter [almost 2 million more than when the recession began in mid-1990, it said.]

In 1992, I wrote a letter to my local newspaper editor criticizing the media for talking us into a recession. I am admitting now that I was wrong but my anger was overwhelming at the time. The media didn’t cause the recession but they caused it to last longer than it should have by beating us down with negative headlines and over-reporting stories much like television is doing now.

Nineteen eighty-seven gave some convincing evidence that life imitates art. Michael Douglas won an Academy Award for his performance in the box office hit “Wall Street”. Songs like “Didn’t We Almost Have It All?” [Whitney Houston], “Livin’ On A Prayer [Bon Jovi], and “Nothin’s Gonna Stop Us Now” [Starship] were more appropriate than we realized.

The government doesn't have any idea what the last bailout will eventually cost us. Congress picked a number out of thin air and ran with it. The magic number would have been $700 billion until they realized that they needed about $300 billion more. They simply rounded-off to the nearest trillion so they could cover the cost of the extra barrels needed for the added "pork" and to buy new calulators with 4 more digits.

As we did in 1991, we did in 2012. We recovered. Recessions teach great lessons but only to those who are paying attention. Recovery tends to make most of us forget that anything happened at all. Are we paying attention?

Dave Padgett

What is a Post-tension slab?

It is a particular design and method of constructing a sound foundation for a house. This house is almost ready for cement.
If you notice in this photo there is no re-bar or wire mesh. Instead the red plastic sleeves contain steel cables that will be drawn tightly and locked in place. Each cable will be stretched to a specific tension as prescribed by the engineer who designed the foundation.
As the concrete continues to cure, these cables will remain taught [hopefully] for some time.
This design may or may not be better than other methods but it is now the industry standard in North Texas . Until a better design comes along, builders and engineers will continue to use what works best.
Soil composition and site preparation are the most crucial elements of a sound foundation; hiring a highly-skilled foundation contractor is essential but may be secondary. If the developer and the builder fail to choose the right location to develop or fail to prepare the site, the skills of the foundation contractor and the quality of the foundation he installs will mean very little.
If you are building or buying a new home, premature failure of the slab is not good.
My experience with foundations has lead me to several conclusions. First, all concrete slabs fail. That is, they fail to remain intact, pristine, whole, etc. for much more than 3 or 4 years. Don't panic. [Stop shaking.] I should add the word....eventually.
All foundations move but probably much sooner than most people think. Slabs just can't move up or down without cracking. Pier and beam foundations move also, the floors just don't crack.
Most houses in North Texas move between the 3rd and 5th year. This movement usually is so subtle that no one notices. It may show up as a hairline crack or a sheet rock tape joint separation. Five years requires some level of forgiveness but not too much.
If this movement occurs in the 3rd year, it is likely right on schedule. If it happens in the 2nd year, it is premature and may not be a good sign. If movement occurs in the first year, it has to be addressed. Contact the builder, an engineer or an inspector and get it documented, especially if no action to repair it is taken. It must be documented in case serious problems develop well outside of the warranty period. You can at least contend and prove that problems began to manifest much too soon.
A good builder will take the movement seriously and will consult with their engineer as well, especially if it is still in warranty. Others might try to explain the condition as normal when in fact it may not be and hope to get through the warranty period.
Builders are not scientists but they have to deal with the laws of physics indirectly. Three elements of these laws are common to foundation and structural movement: expansion, contraction and that wonderful, always-available gravity.
Whenever structural movement is discovered during the inspection for the first owner, there is no level of forgiveness. It has to be addressed because something has failed.

Who used the bath tub last?

...and whoever told you that you could dye Easter eggs in the bathtub?

Tornadoes

A strange thing happened when a tornado hit the farm of Clyde Vinson in the small town of Orestes, Indiana in 1922. The home was picked up and set down about one hundred feet from where it originally stood. The dining table and furniture were damaged and most everything was rearranged but the hanging oil lamp was still hanging suspended from the ceiling and continued to send out rays of light throughout the night. A basket of eggs that was sitting in the dining room was not disturbed.


In 2000, a tornado raged through Tarrant County. I don’t have any information regarding anything similar happening during this storm but you can bet some bizarre things happened.
I was a mile away from the storm when it passed through. My neighborhood experienced some high winds and heavy rains but sustained no major damage.
The storm hit late in the day but it was still daylight.
News broadcasters were beginning to show up at many of the areas hit hardest.

I never considered myself a gawker but I’m as curious as the next guy.
So shortly after dark, I headed to Monticello, a west-side neighborhood in Fort Worth filled with elegant older homes. On my way to downtown to view the damage done to several of Fort Worth's landmarks, I was quickly turned away. Too many power lines and trees were down. There were no street lights and more gawkers were coming out.

It was just as well. I was already beginning to get uneasy, seeing what devastation that an ordinary tornado can do to an ordinary neighborhood.

It’s anthropological, I’m sure, but is there something inherently wrong about being so curious when it comes to someone else’s misfortune? Perhaps it’s nothing more than feeling lucky; grateful that it wasn’t me.
Knowing that it could easily be my house with the roof that's gone or my house that's ripped completely off its foundation. Or worse.

My consolation is that it is an inherited trait; I didn’t invent curiosity.
I'd like to think that all my bad traits are inherited and all my good ones are acquired but I know better.

Now many years after, Fort Worth, Arlington and other cities who were smitten by Mother Nature and her wrath have completely restored their communities.
That is a good thing.

Who Do You Trust?

Some photographs require no explanation but this one may.

This is not a snowbank in Wisconsin. This is insulation in some one's attic. Gosh, if you can't trust the insulation guy, who can you?

NEW HOME OR OLD HOME?

There was a time, before you and I, that people said that they would never own a house that had electric wires running through it.
We've come a long way since then.

The old saying "They don't build 'em like they used to" is true.
[But] That is a good thing. Materials were stronger and methods were more traditional but there are several misconceptions about the old days.
I had the privilege of working with some of the Old World craftsmen as a young carpenter. They grumbled when plywood became more prevalent; they snarled when air nailers were changing the way wood was fastened. They would never "use a stapler for anything but paper".

These methods merely changed the delivery of the product; they did not compromise the integrity of the structure as many think. Architects and engineers have made certain of that. As new products are introduced, cynicism or reservations will always accompany a new idea.
Houses are much safer, easier to maintain and much more affordable. On top of that, they are much more energy efficient.

Many of the things they did as home constructors were actually harmful to us or the building. At times, home builders were careless and abusive with poisonous chemicals. These chemicals are now regulated.
Builders no longer treat every new house with pesticides as they once did. Pre-treating was at least unnecessary and at most, reckless.

At least in North Texas, builders no longer install heating and air conditioning systems in crawl spaces under our house. They no longer embed ductwork into and under our concrete slabs.
They vent clothes dryers to the exterior instead of into the garage or the attic.
They install shut-off valves on all of our gas appliances that don't require special tools to turn in case we need to shut them off.
They install smoke detectors and fire alarms.
They elevate appliances in our garages to reduce the risk of fire.
They install special firewalls, fire-rated doors and fire stops.
They install special electrical devices to keep us from accidentally electrocuting ourselves. They now install devices that can detect a faulty electrical outlet as we sleep. Builders use more fire-rated materials than ever before.
They use plumbing materials that don't rust and that make our drinking water safer. They install water heaters in a way that prevents flooding of our interiors if they leak or burst.

Our homes are better insulated and no longer contain asbestos.
They are equipped with windows that allow more light and keep out more heat and cold. Fireplaces now require less maintenance and provide more heat. Our carpeting and other products no longer contain high levels of formaldehydes. Our paints no longer contain lead.

And yes, they are right. "They don't build 'em like they used to"..........
and that is a good thing.

Do electric heating systems have problems?

Yes Virginia, they do. An electric heating system is as reliable as any other, safer than most others. But they can overheat and malfunction or malfunction then overheat. Either way, this is a photo of a 20 year old electric heating unit that someone rigged. By eliminating the circuit breakers that would likely have prevented this meltdown, this handyman’s work could have burned down the whole building. Sparks flew here but lucky for them, not for long. [Picture in your minds eye going into your attic and firing up your arc welder.]