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Wednesday, March 04, 2015 4:47 PM

Toronto's Hypocritical Real Estate Boards Suppress Price Information; One Broker Strikes Back with "Pay-What-You-Want" MLS Listing

Hypocrisy of the Toronto real estate board is stunning. The board threatened brokers who list sales prices. Their excuse is "privacy".

"If 41,160 members have access to this information and are free to give it to [clients], I don't think it is private information." said Fraser Beach, a broker who caved into the demand out of fear he would lose access to the data himself.

"I think that the public is well-served if they can do their own due diligence," Beach says.

Self-Serving Hypocrites Suppress Data

Please consider Toronto Real Estate Board Demands Brokers Halt Online Sales Stats.

This week, three real estate brokers are cutting off customers’ online access to recent final home sales prices — coveted information that can help buyers and sellers gauge a property’s worth.

The trio are the latest to give in to a threat made by the Toronto Real Estate Board (TREB) to stop doling out home sales information or risk losing a lifeline to all privileged industry data.

Late last night, real estate broker Fraser Beach posted an online alert he called “bad news.”

He explained to his almost 30,000 registered users that he is temporarily halting daily emails connecting them online to the latest prices of homes sold in Toronto.

"In light of recent developments, we fear that making this information available to you, in this form, may be threatening our ability to continue operating as a real estate brokerage," he wrote.

The broker feels Canadians should have access to sales information online. He believes when Realtors control and selectively distribute the data, they may provide only details that benefit their business, not the client.

TREB gives agents access to recent final sales prices that they can offer to their personal clients. But Canada’s largest real estate board maintains that Realtors cannot widely distribute the information over the internet because of privacy issues.

Battle not over

The battle is waging on another front. Canada’s Competition Bureau goes head to head with TREB at a hearing in May. The bureau wants to break the board’s monopoly over vital real estate information like sales stats.

It’s a test case that could end up affecting other real estate markets in Canada.

Already in Nova Scotia, and for years across the U.S., realty websites publicly post home sales history online.

In the meantime, brokers Beach and Mamourian are determined to find a way to relaunch their services.

"We’re going to sit down and find a more creative way to get this information to the public in the future," says Mamourian.

Beach ended last night’s online alert with the pledge: "Stay tuned … We will be back."
Fraser Beach Strikes Back

Beach has 30,000 registered users of his site. That sounds like he is doing something right. Are the other brokers a bit envious perhaps? Are prices falling? Sales declining? All three?

Regardless of the answer, in his Good News and Bad News blog post, Beach made an announcement that he is launching a Pay-What-You-Want MLS® listing.
The Toronto Homes Sold report has been distributed as an email linking to all residential listings reported sold on the Toronto Real Estate Board’s MLS® system since May of 2011.

During that time we have received countless expressions of appreciation from our growing list of subscribers now approaching 30,000. But in light of recent developments, we fear that making this information available to you, in this form, may be threatening our ability to continue operating as a real estate brokerage.

We firmly believe that unfiltered information about the real estate market is necessary to fully inform home buyers and sellers. Others say that agents are necessary to “interpret” market information we would use a different word.

But stay tuned … WE WILL BE BACK.

Now the Good News

Today we are officially launching a one-of-a-kind brokerage service … the Pay-What-You-Want MLS® listing.

Our Feeless MLS® Listing is a solution for you to list, promote and manage the sale of your property at a cost determined by you. While other real estate brokerages contract for substantial percentage fees, our mission is to empower our clients to realize more — both figuratively and literally. The price you pay for our MLS® listing, marketing and agency services is completely up to you.

We know, we know … what’s the catch?

Well, there isn’t one. We call it FairFee. If you appreciate and value the service you receive from us we’d truly appreciate your kind consideration.

You see, our approach to real estate brokerage is built on trust – and trust is a two way street. If we are asking you to trust us to represent your best interests, then it’s only right that we trust you to be fair with us.
How Does it Work?

Anyone striking back at the hypocrisy of real estate agencies, especially an insider who sees trust as a two-way street, wants accurate price disclosure, and puts his business at risk while doing so, gets a free plug from me.

Here are details of the Pay-What-You-Want program.

Mike "Mish" Shedlock

1:45 PM

60 Minute Investigation shows Lumber Liquidators Laminate Flooring Contains Toxic Amounts of Formaldehyde; Democrats Want Federal Probe

People in California complain their flooring is making them sick. The complaints have one source in common, Lumber Liquidators laminate flooring from China with toxic levels of Formaldehyde, up to 20 times the maximum amount in one test. US manufactured flooring does not have the same defects.

Health and Safety Violations

Please consider Lumber Liquidators Linked to Health and Safety Violations.

The following is a script from "Lumber Liquidators" which aired on March 1, 2015. Anderson Cooper is the correspondent. Katherine Davis and Sam Hornblower, producers.

Lumber Liquidators is the largest and fastest-growing retailer of hardwood flooring in North America, with over 360 stores in 46 states and revenues of more than a billion dollars a year. But hardwood isn't the only product they sell. More than 100 million square feet of the company's cheaper laminate flooring is installed in American homes every year. Lumber Liquidators is a U.S. company, but much of its laminate flooring is made in China, and as we discovered during our investigation, may fail to meet health and safety standards, because it contains high levels of formaldehyde, a known cancer causing chemical.

Lumber Liquidators insists its Chinese-made laminate flooring is safe, but it doesn't appear that way based on what we learned from our own reporting and from the work of people like Denny Larson [executive director of a nonprofit group called Global Community who teamed up with Richard Drury, a prominent environmental attorney, to test Lumber Liquidators Chinese-made laminate flooring.]

Anderson Cooper: You want the company to remove all the flooring?

Denny Larson: Every single board. At their cost and replace it with clean flooring.

Anderson Cooper: How much is that gonna cost?

Denny Larson: You know what? I don't care. Because they're guilty of selling people product that could make them sick. These worried California homeowners, who didn't want to be identified, aren't waiting for Lumber Liquidators. They are ripping up their floors now. But many can't afford to replace the flooring on their own.

Anderson Cooper: Do you have any idea how much of this wood is in people's homes right now?

Richard Drury: We believe there are probably tens of thousands of households in California that have installed Lumber Liquidators Chinese laminates that may exceed formaldehyde standards.

Drury and Larson bought more than 150 boxes of laminate flooring at stores around California and sent them to three certified labs for a series of tests. The results? While laminate flooring from Home Depot and Lowes had acceptable levels of formaldehyde, as did Lumber Liquidators American-made laminates, every single sample of Chinese-made laminate flooring from Lumber Liquidators failed to meet California formaldehyde emissions standards. Many by a large margin.

Richard Drury: The average level in Lumber Liquidators products that we found was over six to seven times above the state standard for formaldehyde. And we found some that were close to 20 times above the level that's allowed to be sold. ... It's a startling amount. It was so high, in fact, that one of our test labs thought their machine was broken. ...It hit the upper limit on the radar gun. And they thought it was broken.

Dr. Philip Landrigan: It's not a safe level, it's a level that the US EPA calls polluted indoor conditions. ... I would say long-term exposure at that level would be risky because it would increase the risk for chronic respiratory irritation, change in a person's lung function, increased risk of asthma. It's not going to produce symptoms in everyone but children will be the people most likely to show symptoms at that sort of level.

Denny Larson: You're in a chamber so you're living with it. You're sleeping in there. And you're constantly exposed. That's the threat. The constant exposure to a potent carcinogen over a long period of time.

Because formaldehyde can cause myeloid leukemia and nasopharyngeal cancer at high levels and respiratory issues as well as eye, nose and throat irritation at even low levels, California has strict standards for how much of the chemical the core boards in laminate flooring can emit.

Every box of laminate flooring Lumber Liquidators sells carries this label - stating its CARB Phase 2 Compliant - CARB is an acronym for the California Air Resources Board, which sets strict standards for formaldehyde emissions in wood flooring. Congress adopted California's limits when it passed the Formaldehyde Standards Act in 2010. That law is scheduled to take effect nationwide this year.

Drury and Larson only had wood tested that was being sold in California. But we wondered if the Chinese-made laminate flooring that Lumber Liquidators is selling nationwide also has high levels of formaldehyde. So we went to stores in Virginia, Florida, Texas, Illinois and New York, and bought 31 boxes of it.

We sent the samples for testing at two certified labs. It turns out of the 31 samples of Chinese-made laminate flooring, only one was compliant with formaldehyde emissions standards. Some were more than 13x over the California limit. Both labs told us they had never seen formaldehyde levels that high.


Posing as buyers, and using hidden cameras, the investigators visited three different mills that manufacture laminates for Lumber Liquidators.

Employees at the mills openly admitted that they use core boards with higher levels of formaldehyde to make Lumber Liquidators laminates, saving the company 10-15 percent on the price. At all three mills they also admitted falsely labeling the company's laminate flooring as CARB 2, meaning it meets California formaldehyde emissions standards, and the new U.S. federal law.

Manager [at Chinese factory]: This is a best-seller for Lumber Liquidators.

Investigator: Is this CARB 2?

Manager: No, no, no... I have to be honest with you. It's not CARB 2.

Investigator: Can I get CARB 2?

Manager: Yes, you can. It's just the price issue. We can make CARB 2 but it would be very expensive.

Investigator: All this stuff here, Lumber Liquidators... All their labeling is CARB 2 right? But it's not CARB 2?

Employee: Not CARB 2.

Anderson Cooper: Employees at all three mills told us the laminates they make are not CARB 2 compliant.
Senate Democrat Calls for Federal Probe

MarketWatch reports Lumber Liquidators Shares Turn Sharply Lower as Senate Democrat Calls for Federal Probe.
Sen. Bill Nelson of Florida called on the government to investigate whether Lumber Liquidators has made false marketing claims about the safety of its products. “Because this could affect millions of homeowners, it’s imperative we get some answers quickly,” Nelson said.

Lumber Liquidators has already released one statement challenging the testing used by “60 Minutes” and insisting its products are completely safe. The statement also questioned the on-camera accounts from the Chinese suppliers, saying the company didn't recognize any of the individuals interviewed.

The company insists it is under “attack” from short sellers who are colluding to drive down its stock price. It is currently being sued by environmentalists, backed by a group of Wall Street short sellers, who accuse the company of violating California’s toxic-warning statute.

Pressure has stepped up on the Environmental Protection Agency to complete and enforce the legislation that Congress passed in 2010. U.S. Sens. Amy Klobuchar, a Minnesota Democrat, and Mike Crapo, a Republican from Idaho, along with U.S. Rep. Doris Matsui, a Democrat from California, sent a letter to the EPA on Tuesday, urging swift action. The law was meant to be completed no later than Jan. 1, 2013, they wrote.

“New reports that certain laminate flooring products may still contain dangerous levels of formaldehyde should be a serious wake-up call that spurs action to protect consumers,” Klobuchar said in a statement.

EPA officials were not immediately available for comment.
Lumber Liquidators Chart

Ahead of the report, shares of Lumber Liquidators (LL) had already plunged. Someone sure knew what was in the report  in advance. It may have been publicly announced.

Front month strike $60 puts may have been available a week or so ago for something like $0.25. They are now worth over $24.00.

No, I did not buy any.

CBOE Options

Out of curiosity I checked Put Activity of LL on CBOE. It looks like this.

Someone or some ones bought over 15,000 LL strike 60 puts. I do not know what they paid, but my guess is something like $0.25 (that guess could be way off).

Each put represents 100 shares. So 15,0000 puts would be the equivalent of shorting 1,500,000 shares. Current price is $35.81. Let's call the profit roughly $24 per share.

That's a cool aggregate profit of $36 million. Not bad for a week's work.

Shorts Not to Blame

No one should blame the shorts here. In fact, everyone should thank the shorts.

They are the ones who laid out money, did tests, and conducted an investigation into the environmentally unsafe products of Lumber Liquidators.

When companies play the "blame the shorts" game, they are usually in serious trouble. 

Whether LL executives knew what was going on or not  is a separate issue. If they did, then they should be criminally prosecuted.

Mike "Mish" Shedlock

12:22 AM

Greecification of Spanish Politics and the Lies of Spain's Ministers

There's an excellent post on Keep Talking Greece this evening on the simmering feud between Greek prime minister Alexis Tsipras and Spanish prime minister Minister Mariano Rajoy.

Tsipras made a claim that Rajoy's plan is to "wear down, topple or bring our government to unconditional surrender before our work begins to bear fruit and before the Greek example affects other countries… And mainly before the elections in Spain. ... for obvious political reasons".

Spanish foreign minister García Margallo, returned fire with a statement (a lie actually), that “Had Spain not given  €32.744 billion to Greece, it could have increased the unemployment benefits by 50 percent or increase pensions by 38 percent.

Theheart of the bickering is the rise of the Spanish political party Podemos to the top of the Spanish polls. Elections are later this year. Pablo Iglesias, the leader of Podemos, and Tsipras are good friends.

Greecification of Spanish Politics

With that backdrop, let's pick up the discussion with a look at the Keep Talking Greece article “Hellenization” of Spanish politics or How PM Rajoy lies about the Greek loan.

It doesn’t matter whether SYRIZA and PODEMOs have a lot or just a few things in common. PM Rajoy is concerned that if SYRIZA manages to achieve some austerity relaxation, his days on the Spanish PM’s chair are counted.

So what does PM Rajoy do in order to undermine his enemy abroad? He blocks any Greek attempts to reach some concessions by the Euro zone partners, he does his best to crash the slightest hint of a compromise.

I often discussed the Rajoy-SYRIZA conflict with my colleague blogger from Spain Todos Somos Griegos. She had recently published an interesting report and I asked her to translate it in English. Original text in Spanish on Info-Grecia.com.
The slogan “First we take Athens, then we take Madrid” of Alexis Tsipras and Podemos during SYRIZA’s pre-election rally is the perfect justification for the Spanish government to block any concession to Syriza in Europe.

During the Eurogroup meeting in February Rajoy had the harshest and most uncompromising stance against Greece, even towards the proposal to dissolve the Troika. Despite the fact that the troika had caused a true humanitarian and economic disaster, Rajoy insisted that Greece must follow the same path, in unprecedented partisan egoism, because any minimal concession to Greece, could serve in the future to Spain and other southern countries.

It’s very unfortunate that both the government and the PSOE (Social Democrats) agree that concessions to Syriza can skyrocket the vote to Podemos. [They] have sent to Brussels, separately, a warning: "If the troika made excessive concessions to the reforms demanded Syriza in Greece, the door will open and votes for Podemos can skyrocket at a time crucial for Spain and for the EU."

The People’s Party has begun his campaign centered on the idea of “either PP or chaos” (looking like a carbon copy of the one made by his counterpart Samaras in Greece).

In Spanish press: Podemos slogan ”Tick Tack” indicating time is running out is being displayed with an picture of Tsipras. Is this the Hispanization of the Greek reality or the Hellenization of the Spanish reality?

Lies about the Spanish Bailout to Greece

Foreign Minister, García Margallo, said that “Had Spain not given €32.744 billion to Greece, it could have increased the unemployment benefits by 50 percent or increase pensions by 38 percent.

The economy minister Luis de Guindos had talked of €26 billion.

In the first Greek bailout through bilateral loans, Spain paid directly €6.6 billion. And this is the real Greek debt to Spain. The second Greek bailout was through the European Financial Stability Fund. Spain is basically guarantor of Greece and it has not taken the loan money to Greece from the pockets of the low pensioners and the poor jobless.

To say it simple: if you’re guarantor to someone’s loan to the bank 1) the borrower does not owe you 2) you will only be called to pay to the bank if the borrower will be unable to pay back the loan.

The lie about the Spanish loan to Greece is becoming central to the People’s Party. Deputy Secretary of Studies and Programs of PP, Gonzalez Pons, said the same nonsense in a press conference. "What is worst is that Spain lent to Greece €26 billion, while 26 million people in Spain could have benefited from this money. I don´t advocate that we don’t pay. I support the return. We still need this money."

Fact is that Spain never gave all this money to Greece, it only runs the risk of being a guarantor. And these loans shall be returned in a period of 15-30 years anyway.
Adding Up the Numbers

First let's take a look at the numbers as discussed in Revised Greek Default Scenario: Liabilities Shifted to German and French Taxpayers; Bluff of the Day Revisited.

Dr. Eric Dor, director of IESEG School of Management in Lille has the following numbers.

  • Bilateral loans: €6.65 billion 
  • EFSF: €18.113 billion 
  • Target2: €5.394 billion 
  • SMP Bond Holdings: €2.587 billion 
  • Total: €32.744 billion 

Foreign Minister, García Margallo has the total on the nose, but only €6.65 billion was a loan. The rest was a guarantee that could not be spent. Without a doubt Margallo knows the rest were not loans and is thus purposely telling a lie.

The €26 billion mentioned by economy minister Luis de Guindos appears to be roughly bilateral loans plus EFSF plus SMP.

Conspiracy Charges
I commented on the conspiracy charges in Greece Accuses Spain and Portugal of Conspiracy; 3rd Greece Bailout Discussion Under Way for €30-50 Billion.
Spanish Prime Minisiter Mariano Rajoy is making a big mistake. Spain can use debt relief. And the citizens of Spain want debt relief.

By taking a hard stance in favor of Berlin, Rajoy adds fuel to the rise of Podemos. Siding with Germany is the wrong thing to do if Rajoy wants to win reelection.

Playing with Fire

Tsipras is a close friend and political ally of Pablo Iglesias, the former political science lecturer who founded Spain’s anti-establishment Podemos movement.

Podemos is currently in the lead in Spanish polls. Elections are later this year.

Recall that the Podemos "Economic Manifesto" Calls for Debt Restructuring, Spain to Abandon the "Euro Trap".

"Spaniards should be aware that it is physically impossible that they can pursue policies that meet the national interest, within the euro as it is designed. The euro was conceived as a real trap, but nowhere is it written that people have to accept it ." said Iglesias.

Also consider Incredible Populist Positions in Podemos' "Economic Manifesto".

An anti-austerity, anti-euro party is leading in the polls. Podemos has an excellent chance of winning the election and putting together a coalition.

The next set of Spanish polls will be very interesting. It's possible the charges by Tsipras unite a rally behind Rajoy. But if not, it's all over for the current prime minister.


Reuters reports Juncker says no talks in the euro zone for a third Greek bailout. Why Reuters would even bother posting a denial like that is the question on my mind.

Recall that Jean-Claude Juncker, former Luxembourg PM and former Head Euro-Zone Finance Minister is famous for saying "When it becomes serious, you have to lie".
Third Bailout Discussions or Not?

Economy Minister Luis de Guindos said third bailout talks are underway.

Juncker said they are not underway. Jeroen Dijsselbloem, who chairs the euro zone finance ministers' group said the same thing. Spokeswoman Simone Boitelle joined the deniers with this statement "Euro zone finance ministers are not discussing a third bailout."

It's possible that Juncker, backed up by two others, is actually telling the truth. Known liars don't always lie.

If so, the only possible conclusion is that Spain's, Economy Minister Luis de Guindos lied when he stated such discussions were underway.

Given that a key campaign pledge of Syriza was no more bailouts, and given the other lies by Spanish officials for political purposes, I think we know who's lying and why, even if such discussion will become necessary in the next four months.

Mike "Mish" Shedlock

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