When the Trust Fund Money Runs Out

There are two lakes or "chain of lakes" prominent in my life.

1. The Calhoun-Lake of the Isles lake chain and
2. Lake Minnetonka.

I run regularly around the Calhoun-Isles chain for a semi-daily 7 mile run whereas I ride my motorcycle around the much larger 98 mile Lake Minnetonka. However, both lakes as of recent have started to serve as an obscure economic barometer for me.

Understand the two lakes are quite similar when it comes to the people who live on them - rich. And not just rich, I'm talking super rich. Mark Dayton, trust fund baby extraordinaire of the Target Corporation family lives (or at least did live) on Lake of the Isles. The Pillsburies, the Kenwoods, the Lowry's, all of Minnesota's industrialists back in the olden days lived around Lake of the Isles. Their modern day counterparts live around the much larger Lake Minnetonka. The Heckers, the Petters, the Cargills, the LaFavres and many more.

But what is great is what my little eye spies when either running around the lakes or motorcycling around the lake and that is "For Sale" signs. And not just a handful here or there, but more than I've ever seen. And not just more than I've ever seen, the signs aren't going away. The houses are not selling.

Now what this tells me is two different (albeit related) things between the two lakes.

In the Lake Calhoun/Lake of the Isles area the trust fund money is finally running out. Understand they don't have the run of the mill "Edina Realty" or "Coldwell Banker Burnett" realtors selling their properties, they have a division of SOTHEBY'S the luxurious auctioning house doing it. Of course Sotheby's ain't getting a dimes' worth of commission because (and understand the linking here because the domino effect is awesome);

their clients are basically spoiled brat trust fund babies who

have voted liberal/leftist since the 1960's

and have voted also to jack up property taxes in the city of Minneapolis

which have put left leaning politicians in office who

vote to increase taxes on not just income, but property and capital gains tax

which (here's the good part)

DIRECTLY undermines, if not, destroys the assets that constitute the trust fund babies' trust funds

thereby

forcing them to sell and liquidate their investments for a fraction of what they thought they had

and maybe,

(GASP) FORCE THEM TO GET REAL JOBS!!! (or in the case of Mark Dayton, run for governor).

For some reason, I have a much bigger smile running around the Kenwood neighborhood (which is where all these elite, liberal trust fund babies live) looking at all the houses not selling.

Then there is Lake Minnetonka. This is a more familiar refrain of Cappy Cap readers in that it is the "new" money, largely made either by investing in the real estate market or by swindling and fraud. Whereas there are no big names being arrested in the Lake of the Isles area, it seems every third millionaire is getting arrested; Denny Hecker, Adam LaFavre and Minnesota's very own Tom Petters.

Now, of course not all the properties for sale in the Lake Minnetonka area are up for sale due to criminal activity. Most of them are up for sale due to the collapsing housing market and the fact idiotic real estate developers kept on building despite warnings from (ahem ahem) brilliant economists, not to mention brainwashed mentality of pretty suburbanites who thought they could afford a house on lake Minnetonka. But here too my motorcycle ride seems only improved as I see McMansion after McMansion go up for sale or in the case of Adam LaFavre's old house, it is completely destroyed.

What is also another cute little economic observation I have in my rides around Minnetonka is First National Bank of the Lakes. They are a small bank with only 3 branches, one of which is located in the town of Navarre (right on Lake Minnetonka). Over the past 3 years I can always tell when this guy is in trouble because when he is forced to foreclose on a loan he usually repossess the collateral. This not just includes the house, but VERY nice Lake Minnetonka cars which he then parks in the banks parking lot with a for-sale sign on it. Ever since I've seen an increasing amount of cars for sale, but they are no longer the Mercedes and Beamers I once saw. They're now domestics signaling times are getting worse.

However, what makes this particular stretch of my ride great is I interviewed with their CEO about a year ago who wanted me to "start in two weeks" to help tighten up his underwriting "problems" the bank had. Naturally as one can guess I never received a call back as my reputation and book preceded me. But I recall one thing during the interview that was hilarious. He blamed the ENTIRE housing crash on "those mortgage brokers."

No, couldn't have ANYTHING to do with a complete lack of underwriting standards of credit control now could it? It couldn't be yet ANOTHER incompetent middle-aged man who made it to CEO of a small community bank because he was a good salesmans during a housing boom, yet had no credit analysis or economic analysis skills to speak of. No, that could NEVER be the source of your problems.

I occasionally look up their financial statements, they're doing about as good as most banks who don't listen to me.

The larger point is there is none.

I'm just basking in the glow of "I told you so" and thought you Cappy Cap readers might be happy to enjoy the pain of others, namely those that brought the housing crash and subsequent economic crisis upon us.

Here's some other banks in the Lake Minnetonka area (most of which either the Captain worked for or applied to work for)

Americana Community Bank

MidCountry Bank

Minnwest

There are others, but you get the idea.

Oh, and as always, enjoy the decline!






Enjoy the decline!