"Our" Banks, Warren? No, YOUR Banks

Warren Buffett's Freudian Slip

This land is your land
This land is my(?) land
From California to the New York island
From the red wood forest to the Gulf Stream waters
This land was made for you (and me?).

--Lyrics, "This Land is Your Land"; Woody Guthrie (tweaked by Ross Kaplan)

The first time I read "Pretty Good for Government Work," Warren Buffett's defense of the bank bailouts in The New York Times this week, it all seemed perfectly reasonable and logical: the system truly was on the verge of a melt-down in September, 2008, and doing nothing surely would have brought on -- if not a financial apocalypse -- something very, very nasty.

But re-reading it, I couldn't help coming back to a single, offending word: 'our.'

Here's the context:

Just over two years ago, in September 2008, our country faced an economic meltdown. Fannie Mae and Freddie Mac, the pillars that supported our mortgage system, had been forced into conservatorship. Several of our largest commercial banks were teetering. One of Wall Street’s giant investment banks had gone bankrupt, and the remaining three were poised to follow. A.I.G., the world’s most famous insurer, was at death’s door.

--Warren Buffett, "Pretty Good for Government Work"; The New York Times (11/16/2010)

I suppose if I owned tens of millions of shares in Wells Fargo, Wachovia, and Moody's (the credit rating agency); $10 billion in Goldman Sachs bonds that I very much wanted repaid; billions in credit default swap positions, etc. etc. -- I would start to think of the financial system as "our" financial system, too.

But in reality, it's "their" financial system.

They own it, they derive the lion's share of benefits from it, and they -- quite logically -- defend it.

Bailout Red Herring

The second canard buried in Buffett's apologia is the inference that critics of the bailout advocated doing nothing.

Hardly.

Away from the Op-Ed pages of The Wall Street Journal and The New York Times, there has been a deafening chorus -- nay, consensus -- on what government properly should have done -- in fact, should still do now -- in response to the Wall Street-engineered financial melt-down.

Of course, that's after acknowledging that the very best course of action would have been actually trying to prevent it in the first place (vs. enabling it).

In a mythical letter addressed to "Uncle Sucker," Blogger Barry Ritholtz puts it best:

When the crisis struck, you did not seem to understand the role you should play. Instead of stepping up to halt the financialization, to unwind it, you gave away the shop. You failed to extract concessions from firms on the verge of bankruptcy. Your negotiating skills were embarrassing. In the face of meltdown, you panicked.

You could have undone the decades of radical deregulation at that moment. You could have fired the incompetent management, wiped out the shareholders who invested in insolvent companies, gave the creditors and bond holders a major haircut for their foolish lending. Instead, you rewarded them for their gross incompetence.

The solutions you ran with were ad hoc, poorly thought out, improvised. You crossed legal boundaries, putting the Fed in the position of violating its charter and exceeding its mandates. You created a Moral Hazard, the impact of which may not be felt until decades in the future.

--Barry Ritholtz, "Dear Uncle Sucker . . ."; The Big Picture (11/17/2010)

There are no Pulitzers -- yet -- for blog posts, but if there were, I'd nominate "Dear Uncle Sucker."

Read Buffett's piece, then Ritholtz's in its entirety, and decide for yourself.

P.S.: Dear RE/MAX and Coldwell Banker Burnet: looking for an experienced -- albeit opinionated -- Twin Cities Realtor (and blogger)?

If my boss, Mr. Buffett, reads this, I may be available (Buffett is chairman of Berkshire Hathaway, the ultimate parent company of Edina Realty).

Profiting from Bubbles: 'Grab Marshmallows'

What's an Investor to Do?

[But] as long as the music is playing, you've got to get up and dance.

--Former Citigroup CEO Chuck Prince

Perplexed by a stock market that (inexplicably?) is once again on the rise -- along with all manner of commodities (oil, gold, silver, etc.)?

That, despite at best conflicting economic signals (continuing weak employment numbers, constricted lending, soft housing, etc.).

You shouldn't be.

Behind the scenes, the Federal Reserve has signalled its ongoing commitment to print money as a way to stimulate the economy, via a mechanism euphemistically labelled "quantitative easing."

"Grabbing Marshmallows"

So how should investors play such an environment?

If you have the stomach, take Barry Ritholtz's advice (my paraphrase):

When the Fed adds even more gasoline to the conflagration, [investors] should grab some some marshmallows and sticks and head over to the boy scout jamboree campfire.

--Barry Ritholtz, "Do You Wanna Be Right, or Do You Wanna Make Money?"

Note to the intrepid: the trick is not waiting around for the embers.

Housing "Buy" Signal

Contrarian Indicators -- Housing Market Edition

If you like contrarian indicators, here's a good one, courtesy of today's New York Times:

"Housing Fades as a Means to Build Wealth, Analysts Say"

--headline, NYT (8/23/2010)

Or as Barry Ritholtz puts it, "the time to be an über-bear on Housing (or anything, really) is before the collapse — not afterwards."

Let's Hear it For Weak Leaders!

This exchange, between blogger Barry Ritholtz and renowned investor Felix Zulauf, caught my eye:

Ritholtz: In the US, we only have politicians who tell people what they want to hear, and very few who say “Here’s some medicine, it’s going to be uncomfortable, but you got to suck it up because the alternative is far worse.”

Zulauf: That is the case everywhere, but I’m hoping that can change. It doesn’t change just by saying things. You get strong leaders only after a period of pain and hardship. You don’t get them in a world of high prosperity.

--The Big Picture blog

So, let's hear it for weak leaders.

The Lincoln's and Roosevelt's only appear when times are really tough.

The Blogging Impulse

Blogging & Solipsism

Substitute "real estate" for "Wall Street," and the following fits me pretty well:

[My blog posts are] simply what someone who works on Wall Street is thinking about or looking at. “Helping to quiet down the voices in my head” would be a more suitable tag line.

I find myself in agreement with Daniel Boorstin, Librarian of Congress, who said “I write to find out what I think.” Setting down ideas each day is a helpful process. It creates a searchable archive of commentary. Best of all, it generates immediate feedback, tremendous ideas and additional suggestions from readers.

Of course, it also gives me a platform to push back against the tyranny of stupidity in the world, the foolishness of our most esteemed institutions, and to counter the mainstream silliness that passes for American public discourse. Now that I reread this, I think I may have to change the tagline to “Helping to quiet down the voices in my head . . . "

--Barry Ritholtz, The Big Picture blog

The only thing I'd add to the foregoing is, sometimes the best way to clear your head is to . . . empty it.

Nothing accomplishes that better than a good post!

Forecasting Gobbledygook from Barry Ritholtz

Which Way Stocks?
"Up, Down, or Sideways"
(I think that about covers it)

Blogger Barry Ritholtz ("The Big Picture") is not exactly shy about criticizing Realtor foibles (I think it's got something to do with his mother being one).

So it certainly seems fair to point out some of the fence-straddling, cover-all-bases gobbledygook investment managers like Ritholtz (his other hat) periodically spew.

See if you can discern what the normally pull-no-punches Ritholtz thinks stocks are going to do from this excerpt:

The conditions for a major reversal are not conclusive. That doesn’t mean it cannot happen, it just means that at this moment, making decisions with imperfect information, we put the odds of a hefty drop of 20+% at about 25%.

Given that liquidity is still so abundant, we expect the pullback to be somewhat contained, but deeper than the prior 3 wobbles (June, September, January) since the rally began. We could see a deeper than 10% pullback. Depending upon conditions and internals, our expectations are that we will be buyers into a 10-20% correction. From current levels, we do not expect to revisit the lows.

If the correction fails to materialize, and the market rallies aggressively, with firming internals, we will reconsider our posture. We are always willing to redeploy cash higher into a possible melt up.

I still expect a 25% correction at the end of this rally. I am unable to say with any degree of conviction that the current market turmoil is that major move down.

--Barry Ritholtz, "Market Changes Tone During Correction"; The Big Picture (5/5/10)

Got all that?

Can you say, "hedge your bets??"

How about, "I haven't a clue."

Personally, I prefer the answer J.P. Morgan gave when he was asked what stocks were going to do: "they're likely to fluctuate."

Ritholtz: CEO's Paid for Volatility, Not Performance

Making the Janitor's Annual Salary . . . Every 3 Hours!

The inimitable (and frequently bombastic) Barry Ritholtz, author of The Big Picture blog, has a great post today dissecting absurd CEO compensation titled "American Pastime: Overpaying CEO's."

His piece basically picks up where my post last Thursday ("Parsing Occidental CEO Ray Irani's 'Excellent Performance'") left off.

If you don't have time to read my post, here's a one sentence summary: Occidental's Ray Irani got paid more than $1.5 billion since 1990 for deftly outperforming the overall stock market by . . . less than 2%!

In fact, once you scrutinize Occidental's board of directors and how they got there, it would be more accurate to say that Irani paid himself that money.

The only thing I omitted from my post was a stunning little factoid explaining why galloping exec comp seems to have slowed down in recent years.

Namely, sometime in the last decade, The Conference Board, which represents CEO's at the largest publicly traded companies, successfully led an effort to redefine the ratio of CEO pay to that of the rank-and-file.

So, whereas for decades the ratio had been "top-to-bottom," i.e., comparing the CEO to the janitor, in recent years it has been redefined as the CEO's pay relative to the average worker's pay.

Ergo, you get an instant, big contraction in the ratio.

As a result, instead of (accurately) reporting that exec comp has ballooned from 30:1 to something like 1,000:1 in the last 30 years or so, the mainstream media ("msm") now universally reports that the ratio is "only" 400:1.

How . . . 1984-ish.

Ritholtz on Exec Pay

But I digress.

Once you navigate the assorted F-bomb's and "colorful language" in a typical Ritholtz post, his underlying arguments and logic are unassailable:

Five Steps to Shareholder Wealth Transfer

1. The Board of Directors, usually cronies of the CEO (often hand picked by him) forms a compensation committee. To appear “objective,” the committee hires an outside compensation consultant.

2. The compensation consultants are themselves well paid whores, who rather than turning tricks outside the Holland tunnel, offer up absurdly generous comp package. They deliver what they are paid to: They provide cover for the boards to make an otherwise indefensible giveaway of shareholder monies in the form of cash and stock options. It is typically called “Pay for Performance,” but that is a horrific misnomer, as we see in step #3. The comp committee approves the consultants’ nonsense, forwards it to the Board, who rubber stamps it.

3. Here’s where things get interesting: If the stock price rallies, the exec can exercise and cash out, risk free. If the stock price falls, the exec requests a new round of options — or even easier, asks for a repricing of the old ones.

4. After the options are repriced, the exec simply waits. Whether the market rallies or falls . . . you simply go back to step three. Repeat until stock options are in the money. There is no risk or outlay of cash on the part of execs.

5. True “performance” is not a factor. Stock prices can rally for a vast range of reasons having nothing whatsoever to do with management or CEO performance. The market can rally, a sector can come into favor, or even when the Fed can cut rates.

This is not pay for performance, it is pay for stock price volatility.

Actual performance would look at factors such as peer profitability, sector performance, SPX index gains. Bonus payments and stock option exercise should be for gains OVER AND ABOVE these factors — but sadly, rarely if ever are.

--Barry Ritholtz, The Big Picture

Ritholtz's policy prescription is equally blunt, on target -- and politically far fetched (which he readily acknowledges).

Read the full post for the particulars . . .

Next!

On to Financial Reform!

With Health Care now out of the way, we can get to what I consider to be the more important issue: Reforming Wall Street and the banking sector . . . Essentially, I am advocating a “Do Over.” Reverse the past 3 decades of radical deregulation. The alternative is an even bigger financial crisis, and sooner than you imagine. The next time around, I plan on watching it all unfold from St. Barts.

--Barry Ritholtz, The Big Picture

My sentiments, exactly.

The only thing I would substitute in Ritholtz's quote is "Palm Springs" for "St. Barts" (I prefer the desert -- and U.S. soil!).

P.S.: stray tidbit -- St. Bart's was named after Christopher Columbus' younger brother, Bartolomeo.

"YMMV": Successor to "Whatever"

"Stop Stabbing Your Brother!!" "Whatever"

OK, I got it from Barry Ritholtz's blog -- not my 10 year-old son (who started saying "whatever" at age 5: Examples: "Go to your room!" "Whatever." "Stop stabbing your brother!!" "Whatever.")

So what is it?

"YMMV" -- as in, "your mileage may vary."

Use as appropriate -- YMMV.

P.S.: are all kids now precociously sardonic, or just mine?

Can't Anyone Write a Headline Anymore?

Misleading, Sensationalized Headlines

Just days ago, Barry Ritholtz called out The Wall Street Journal for its (increasingly) misleading, out-of-context headlines.

I just ran into another example yesterday on the otherwise credible RealClearMarkets.com, which aggregates the top 30 or so business-related print and blog pieces daily (mine have appeared more than a dozen times in the last two years!).

Compare this headline on RealClearMarkets (look under "Evening Edition" for Jan. 26):

"Looks Like the S&P Is Going to 1,200 or Higher" -- Jeremy Grantham

With this quote, directly from Grantham's (excellent) piece:

I thought last April that the market (S&P 500) would scoot up to 1,000 to 1,100 on a typical relief rally. Now it seems likely to go through 1,200 and possibly higher. The market, however, is worth only 850 or so; thus, any advance from here will make it once again seriously overpriced.

Just in case the foregoing is too subtle, Grantham continues:

Equity markets almost always peak when rates are low, so moving in desperation away from low rates into substantially overpriced equities always ends badly.

See my point!!?

P.S.: If you haven't read Grantham's missives, you should; they're every bit as pithy as Warren Buffett's. In particular, his "Lessons Learned in the Decade" at the end of his most recent quarterly newsletter is full of great nuggets.

In fact, when it comes to "pithy financial insights," these two are really on a plane of their own (Michael Lewis and Thomas L. Friedman also write at this altitude, but, unfortunately, they both cover business all too rarely).

Online Shorthand, or, "Joke #37!"

Tweets, Grunters & Grimacers

Every day, it seems like online communication is devolving into ever more succinct, real-time "bursts" of information.

Other bloggers have noted this phenomenon as well:

Perhaps [Twitter] is just the first step. The text-based Twitter will be replaced with an audio-based “Grunter.” Rather than spend a full 140 characters, you have your choice of 10 gutteral grunts registering surprise, anger, sadness, joy, etc. Then we can move to the next phase: Grimacer. Just pictures depicting how you feel.

--Barry Ritholtz, The Big Picture

"Joke #37!"

Personally, I think it's more analogous to physics.

First there were blogs, which would be the equivalent of molecules.

Then came Twitter (and "tweets"), which would be the "atoms" of the online world.

For awhile, that was it; nothing was supposed to be more elemental than atoms.

Of course, physicists went on to discover all manner of sub-atomic particles, including quarks, electrons, and neutrino's (this effectively exhausts my physics vocabulary).

So, perhaps Ritholtz is right.

P.S.: Natan Sharansky, the Soviet dissident, tells an anecdote about how he and his fellow prisoners killed time while enduring long stretches of solitary confinement. Through Morse code, they would take turns "telling" their favorite jokes.

As the years went by, everyone knew everyone's repertoire by heart. So, instead of tapping the whole joke, they would just tap the punch line. Eventually, even that became truncated. So, one prisoner would tap to the others: "[joke] #37."

Dispatches from NY

Barry Ritholtz Talk

I'm in NY the next few days, mainly to serve as a chaperone to a few kids (at least they're my own!).

However, I did manage to break away to hear Barry Ritholtz, of The Big Picture blog (see, my Blog Roll) at a midtown Barnes & Noble. Or, more accurately, see him sign his new book, Bailout Nation -- family responsibilities came first, and I got there at the tail end.

I still caught one good tidbit, though.

Ritholtz speculates that the reason why JP Morgan Chase has held up so much better than Citigroup is that its CEO, Jamie Dimon, was the one-time heir apparent at Citigroup, before being passed over.

Privy to all the excessive risk-taking at Citigroup, Dimon made sure that JP Morgan Chase steered clear (relatively speaking).

P.S.: Showing up late meant I didn't get to engage Ritholtz on a topic nearer and dearer to my heart: why he heaps so much scorn on Realtors (to be fair, his shots at NAR, the National Association of Realtors, are all too often on the mark -- unfortunately).

On the Blogs: Reaction to the AIG Reaction

If you've been out of the loop the last 48 hours or so, the big finance-related news is the political firestorm precipitated by AIG's bonuses, and the Fed's decision to create $1 trillion in new money (by buying mortgages and mortgage-backed securities).

On the blogosphere, there is a quick consensus emerging that the the public, led(?) by Congress, is missing the point (or more accurately, the forest for the trees).

In this case, the $165 million in bonuses are the trees; the $170 billion -- immediately paid out to the likes of Goldman Sachs and Merrill Lynch -- is the forest.

Michael Lewis puts it this way: 'the complexity of the issues at the heart of the crisis paralyzes the political processes’ ability to deal with them intelligently. I have no doubt that, by the time this saga ends, we will all know what happened to every penny of that $165 million in bonuses and each have our opinion of the morality of it. I doubt seriously we will ever understand the morality of the $173 billion payment that is the far more serious issue.'

While the AIG bonuses are the latest political lightning rod, the real scandal is where all the money given to AIG ended up -- and why.

P.S.: thanks to Barry Ritholtz's The Big Picture blog for the cartoon at the top.

"For Sale, Foreclosed, and Forlorned"

Confused by the Crisis? Watch This

Barry Ritholtz's blog, "The Big Picture," features a video -- "The Crisis of Credit Visualized" -- that provides one of the single best explanations of today's market melt-down/credit crisis I've seen yet. (The video is also available on YouTube in two installments).

It identifies all the players and pieces, puts them in the right order, and gets the interactions right. Superb!

Ritholtz: 'Affordability Index' is Worthless

Rebutting Ritholtz on "Housing Affordability"

The [Housing Affordability Index] as presently constructed is utterly worthless. It provides little or no insight into how affordable US Housing actually is. Further, what is omitted from the index is especially relevant to the problems occurring in the housing market today. The Index fails to account for -- or even recognize -- any of the out of the ordinary circumstances that are currently bedeviling the Housing market.

--Barry Ritholtz, "NAR Housing Affordability Index is Worthless" (The Big Picture; 8/13/2008)

If you don't read Barry Ritholtz's blog, The Big Picture, you should: his unvarnished take on finance and the economy is consistently superb.

That said, his relentless criticism of Realtors, and, in particular, their trade association, the National Association of Realtors ("NAR"), should be taken with a grain of salt -- just as NAR's pronouncements should be.

First, two stipulations:

One. NAR is a trade organization. Like the Investment Company Institute (stocks) or the National Association of Real Estate Investment Trusts (real estate), it can reliably be counted on to put the best possible face on whatever's happening at the moment. That's what trade associations do.

While I certainly wouldn't decide to buy or sell stocks based on the latest ICI press release, neither would I dismiss everything they say as unadulterated lies and spin. Ditto for NAR and housing.

Two. Most Realtors -- myself included -- don't sell real estate nationally, they sell locally. I focus exclusively on the Twin Cities market. So the HAI chart at the top of this post, and my discussion of HAI statistics generally, pertain primarily to the Twin Cities.

In that vein . . consider NAR's housing affordability index ("HAI").

To come up with a single gauge of relative housing prices, it takes three key variables -- interest rates, median family income, and median housing prices -- and puts them in a blender. The resulting number offers a relative measure of housing's affordability nationally (NAR actually puts out four regional calculations, but it is the national one that receives the most attention).

Back-testing the HAI, you'd expect it to be highest when housing prices were near their low, and lowest when housing prices approached their peak.

Locally, that's exactly what you find. After plateauing in 2003, the Twin Cities HAI deteriorated steadily until the third quarter of 2006. The chart's next installment, showing the change from January, 2008 through January, 2009, will show it skyrocketing (to over 192).

So what are Ritholtz's principal beefs?

One. The HAI remained well north of 100 -- its baseline measure of housing affordability -- throughout the period when the housing bubble was inflating, up to and including the peak (completely true, by the way).

Rebuttal: the HAI should be viewed as a relative measure of affordability.

In the stock market, a Price-Earnings ("P/E") ratio of 8 doesn't necessarily mean that stocks are cheap, just as a PE of 20 doesn't necessarily mean that they're expensive. It's also true that stock values tend to overshoot on both the high and low ends.

Historically, however, lower P/E's correlate with better value, higher with less. Ditto with the HAI and housing.

Two. The NAR methodology doesn't take into account today's much tighter credit conditions, weak economy, and tapped-out consumer.

Rebuttal: Wrong. Those factors are captured by two of the HAI's three inputs -- housing prices and interest rates.

Housing prices clearly are dropping now for all the reasons Ritholtz mentions (fewer Buyers have 20% downpayments, their credit scores are deteriorating, etc.). That feeds directly into the HAI's (shrinking) denominator.

Meanwhile, recessions crimp demand for money, which results in lower interest rates. That, too, is captured by the HAI (its numerator increases). The HAI may be a gross benchmark, but its very consistency means that it can be compared across time intervals.

Three. Regional variations in home prices and income are ignored.

Rebuttal: Wrong. The HAI is computed nationally, but also by region (Northeast, Midwest, South, and West). Even after huge price drops, the HAI in the West is quite low: 108.4. Meanwhile, it's setting records in the Midwest: 186.0 (both numbers as of November, 2008).

For Ritholtz to say that the national HAI ignores regional variations is like saying the Wilshire 5,000 obscures the fact that some market sectors (energy, consumer durables) have outperformed others (tech, small cap stocks). Undeniably true -- and meaningless.

There's no denying that Mr. Ritholtz's skepticism towards NAR is historically warranted. However, trashing a useful tool such as HAI -- without regard to context or application -- is effectively throwing the housing baby out with the bathwater.

Shill or Schlimazel?

Is Barry Ritholtz Right About Realtors?

"$#@%&realtors . . .%&*!! NAR . . !!#%@!! . . David Lereah . . .$#%&! . . . NAR . . . %&!!@realtors . . .%&*!! NAR."
--"Former NAR Economist David Lereah is a Jackass," Barry Ritholtz; The Big Picture blog (1/6/09)

As a real estate agent active in the Twin Cities housing market, I find Barry Ritholtz's latest anti-realtor rant to be offensive. Perhaps more to the point, Ritholtz is also fundamentally wrong -- and more than a little unfair (if not unjust).

Blaming realtors for the direction of housing prices is like blaming physicists for gravity, or weathermen for . . the weather.

Of course, the housing and credit debacle wasn't an act of God, but very much man-made. Which men?

Let's see . . .

--Who designed the securitized debt juggernaut that rained hundreds of billions in phony profits on Wall Street firms and their extravagantly paid leaders?

--Who rated trillions in such securities "Triple-A," making them palatable to investors and banks world-wide?

--Who led Wall Street's effort to get the SEC to relax leverage limits on investment banks, allowing them to bet $30, $40 or more for every $1 they put up? (Hint: his name rhymes with "Schmaulson," and as Treasury Secretary he's been using A LOT of your money to plug holes in his former company's balance sheet.)

--Who dropped interest rates to near-zero in 2002, then dismissed concerns about the consequences of easy money and excessive debt?

--Who put millions of marginal borrowers into nothing-down, toxic mortgages that acted as kindling to Wall Street's conflagration?

Unlike Ritholtz, I don't see realtors' fingerprints on any of the above.

If Ritholtz is right that realtors somehow enabled the housing market bubble, how does he explain housing's relatively modest appreciation the preceding 20 years?

What caused realtors to suddenly become Pied Pipers beginning in 2002, seemingly able to convince Buyers to throw caution to the wind and load up on real estate, no matter the price?

Maybe there was something else afoot. Hmm, I wonder . .

Shill or Schlimazel?

From my vantage point, realtors look a lot less like culprits or even accomplices in the housing mess, and more like something else: "schlimazels."

For the uninitiated, a "schlemiel" is traditionally defined as the guy who trips carrying a bowl of soup back to his table; the "schlimazel" is the hapless guy whose lap it falls into.

When it comes to Wall Street and the current financial melt-down, we're all schlimazels.

To date, millions of Americans have lost a big chunk of their retirement savings, their home equity (if not homes), and now possibly their jobs.

Professionally, however, realtors not only are the group suffering the most financially, but the ones bearing the brunt of the clean-up.

Consider:

•At the market peak, in 2006, the average realtor made less in a year -- about $35,000 -- than some investment bankers made in a day. Of course, since then housing sales volume and prices have spiraled downward nationally, reducing realtor income by almost 50%. In the worst economy in decades, realtors by the tens of thousands are being forced to look for jobs in other fields.

•The housing deals that are being done now are disproportionately "lender-mediated," i.e., foreclosures and short sales.

Cleaning up a spilt bowl of soup is a snap compared to cutting the Gordian knot that these deals present. In the case of short sales, getting the mortgage holder's assent to reduce the principal owed can require getting approvals from no fewer than 15-20 lenders, who all took a thinly sliced piece of the deal (thanks, Wall Street).

That's just one reason such deals are slow, complicated, and, for realtors, anything but lucrative (see, "Foreclosure Headache #7"; "Short Sale Hurdles").

Personally, I think of handling short sales and foreclosures as the realtor equivalent of combat pay -- minus the pay. Yet until millions of these homes are absorbed, the real estate market is unlikely to stabilize and eventually recover. And until that happens, neither will the economy.

Maybe someone should put out a bumper sticker reading, "Be Nice to Your Realtor."

•So how are Wall Street's schlemiels faring? Very nicely, thank you.

To pick just one, especially incendiary example: the $10 billion in TARP money handed to a single firm, Goldman Sachs, comes to about $10 million per partner. Aside from the bailout money, Wall Street stands to collect billions in fees helping Washington fix the mess it made. Schlemiels, indeed.

While many realtors are maxing out their credit cards or looking for new jobs, Wall Street's unwise men are anything but broke. As Michael Lewis puts it, "why on earth should Stan O'Neal (Merrill Lynch), Chuck Prince (Citigroup), and Jimmy Cayne (Bear Stearns) still be walking around with billions of dollars that they never should have been paid in the first place?"

The criticisms lodged by Ritholtz and others at realtors are hardly new ("Do Realtors Really Add Value?"). But they do beg the question: if realtors are nothing more than shills or hustlers, as Ritholtz asserts, why do consumers trust (and pay!) them to handle almost 90% of all residential housing transactions?

That seems especially perplexing in an age when information about homes is both ubiquitous and free, and advancing technology has not exactly been kind to other middlemen (travel agents, stock brokers, bank tellers, etc.).

Perplexing, of course, unless realtors actually add value.

If only the same could be said of Wall Street . . .