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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Travis_Bickle who wrote (59584)	8/10/2006 12:12:15 PM
From: ChanceIs	Respond to of 306849

>>>the loan had to be out at least 18 months for them to turn a profit on it.<<< There you go. I neglected to include in my previous rant, the sad story of Allegheny Energy wrt the California energy crisis. For reasons I never understood (it doesn't matter) Allegheny sold electric power to California in a structured format. The early years were basically under market prices (cheap) while the later years were more dear. After a couple of years, California sued to get out of the contracts, claiming that the latter years were overpriced. Allegheny stuck to its guns (and won). Its stock price dropped to $5 (about $55 currently) and it warded off having to file BK every Friday in early 2003 because its low stock price violated certain loan covenants. They wanted to monetize and sell the power contracts but couldn't because they were disputed - what were their value if California was suing. It was a mess. Eventually it got worked out, but Allegheny stated publicly that it would never do business with California again. So a deal is a deal. You have to look at the big picture - the risks and benefits. Government seems to think I can't plan for my retirement, and therefore makes be participate in Social Security, very much against my will. If government thinks that the aggregate of individuals can't grasp the implications of a prepayment penalty, then maybe we should ban them.