Monday, September 29, 2008

Who's responsible for your home losing value?

Answer: you are.

You bought at too high a price. You knew it at the time. I don't care if the money was easy to get because you knew better. Home prices were having unsustainable double digit increases year over year and yet you still bought into that market because you thought it was an "investment". In fact, you probably offered over the asking price.

The problem with buying illiquid assets for too much money is that you can't unload them quickly enough when that price drops. And with liquid assets, you wouldn't offer too much because you can always find a cheaper deal. How often have you ever offered 10% over the asking price for a share of stock? Never (unless you're a corporate raider). And yet people did this routinely with houses.

Homes are just now being sold at the fair value instead of the uber-ridiculous prices that people bought in at a few years ago. And with the price falling back to a reasonable price for the quality of home and location, they're complaining that they're "losing value." I hear this complaint all the time. But if someone bought a home for the right reasons, even though they paid too much they shouldn't care that a neighbor's home is selling for the fair value now. Because, even as we knew at the time, individuals trying to be real estate speculators is a road to disaster.

So either stop complaining or go bankrupt so I can buy your homes for pennies on the dollar. Yes, I'm a bottom feeder.

Saturday, September 27, 2008

The 100% Honest Debate Results

While every other blogger and pundit on earth is trying to tell you who "won" the debate last night, I'm going to share with you the 100% honest results from last night's debate.

Both candidates did about the same. They avoided the politically hard topics as best as they could and instead continued to stake out their politically easy topics. Jim Lehrer gave up trying to get them to say anything new or real after the first 20 minutes or so.

When I say politically hard vs. politically easy, here are some examples of each:

Politically easy: Abortion, Iraq War, earmarks/"government waste", education, defense budget, Russia/Georgia, "sitting down" with terrorists, oil drilling

Politically hard: Illegal immigration, the bailout

And both candidates avoided the politically hard topic (the bailout) Lehrer threw at them within milliseconds. Lehrer tried to drill into them on it but they avoided it again and again and again for 9 minutes.

Politically easy topics may not seem easy at first -- yes, they're hard actual problems to solve. But they're politically easy because you stake out one end of the spectrum or the other and one-issue idiots will vote for you.

Last night's debate didn't include abortion but it's a great example of political ease. One-issue-idiot-pro-lifers will vote for McCain and one-issue-idiot-pro-choicers will vote for Obama. We knew that before the debate. We could have predicted 20 years ago which way one-issue-idiot-abortioners were going to vote in this election, even though Roe v. Wade was decided 35 years ago and no major changes have come about in abortion rights with pro-lifers dominating the White House for most of that 35 year span.

You do this as a politician because you keep the votes you already had. This is why every politically hard topic must be pushed into a politically easy one.

So back to the politically hard topic that both Obama and McCain deftly punted on: the Bailout. The vast majority of the population is against the bailout. 70% are against this bailout plan. Congress has been flooded with angry calls, emails and faxes all week long. Every Bailout article on the Wall Street Journal is taken over by venom from voters against it.

And neither of these guys said a word about it in either direction -- really for it, or really against it. Just that "we have to do something" and having "faith that an agreement will be reached". Then they went back into the politically easy topics that they already had staked out positions on. Obama talked about alternative energy when asked about the bailout. Alternative energy!

Aren't the two gentlemen on stage supposed to be Senators who represent the will of the people? If so, this was an easy target to gain points on. Be against this crappy plan. Say that the Federal Reserve Act should be repealed. Do something major.

But no. That would have alienated the people who give these clowns all of their money in the first place. The George Soroses of the world. And that's what makes these politically hard for them. Their donors are the 20% who are on the extreme "for" of illegal immigration, the bailout, and other politically hard topics.

Where was the change platform last night? Aren't both of these candidates now supposed to be the candidates of change? I didn't hear about much change last night... and the bailout is a topic that would have been easy to declare how to make some major changes. I honestly can't recall one serious change issue last night from Obama except that he wants to get out of Iraq earlier than McCain. That's it.

So anyway, that's the 100% honest debate results -- neither won. They did about the same. They properly avoided hard topics and staked out their extreme positions on the easy ones. Congratulations guys. If I want the exact same type of politician we've always had in the Federal Government, you're both succeeding at convincing me that you're suited for the job.

Tuesday, September 23, 2008

Proud Parent Inflection

For those of you who are getting bored of my economics rants, I'll take a time out to describe what I call "Proud Parent Inflection".

Proud Parent Inflection is the tone of voice you invoke when a stranger at the park asks you the name of your child, for example. Or her age. That's when you say (example child name): "Jehn-ny". Not just "Jenny", but "Jehn-ny". The tone of voice says "Future-Olympian-Brain-Surgeon-Cancer-Cure-Discoverer-Astronaut-World-Series-MVP-World-Cup-Star-Nobel-Peace-Prize-Winner Jenny, YEAH. And by the way you loser, I chose a GREAT FREAKIN NAME!"

Monday, September 22, 2008

Is burning the Constitution Unconstitutional?

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

That's right... the $700b proposed to be given to the Treasury to buy bad mortgages must be spent without any oversight or reviewed in any court of law. Unconstitutional much?

Here's the full text.

Thursday, September 18, 2008

We're all communists now.

Cramer occasionally has decent insight -- when it's hindsight.

[Edit] -- oh sorry, one thing I don't agree with here is that FDIC is "safe". FDIC is completely NOT safe. If WaMu folds, FDIC will be completely depleted by several times over. You won't be getting your money back unless the federal reserve prints more.

Monday, September 15, 2008

Dumbest idea ever.

What the government can do to speed up this process is to establish a
modestly-capitalized agency that will offer to buy any house up for sale at a
price not greater than three times median household incomes in each market. As I
pointed out last week, the national average is currently 3.6 times
This guy is an "economist"? Unreal.

Click here

Stop talking about Palin

She's irrelevant.

If you believe McCain is too old and might die in office, you shouldn't vote him anyway.

If you believe she's too inexperienced, remember that the only Consitiutional duty of the VP is to break tie votes in the Senate. She's too inexperienced for that?

Basically Palin is a weapon of mass distraction... and it's working. She's all anyone can talk about. She's "rallying" the Republican party base because she's a moose hunter or something. The Democrats have deployed a platoon of dirt-fact-finders to Alaska to dig up everything they can on her.

Meanwhile, the Dow just dropped 500 points, 25,000 people got laid off from HP and when AIG goes under, 100K people will lose their jobs. But let's spend our time worrying about whether Palin's future son-in-law graduated high school. Cripes.

Saturday, September 13, 2008

OK I like the second ad better

Maybe they will make something out of this campaign after all.

Friday, September 12, 2008

On the weekend, beware of your government screwing you over

Don't let a category 2 hurricane distract you this weekend -- it appears the US is poised to bail out yet another investment banker.

Two weeks ago it was the Fannie and Freddie bailouts. A few months ago it was the bailout of Bear Stearns via JP Morgan. This weekend it looks like they're going to print money to bail out Lehman Brothers.

Your country is being given away to Wall Street investment bankers even more than it already was, my friends. And for those of you who think Lehman failing is just another bank failing, this is not the same as FDIC which actually aims to protect the depositors. This is a government takeover to prevent private businesses from folding and affecting their investors and debtors. The difference between an investor and a depositor is that one expects a far better chance of getting their money back than the other.

Where's the march on Washington about this? Where are the demands on the two candidates, forcing them to own up to a plan to fix this? In the late 1800s and early 1900s, banking was a huge issue in this country. Every election was focused on the topic. Today it seems no one cares who actually prints our money. The Federal Reserve Act is abused more than ever, in an open public fashion on the weekends by Hank Paulson and his Wall Street cronies. There's no outcry about that, but there will be hell to pay if someone says something about lipstick on a pig or sex education for kindergartners.

As Jim Rogers said so eloquently last week, "the US is now more communist than China".

Sunday, September 07, 2008

RIP Jerry Reed

Jerry Reed has died, the man who played Snowman in Smokey and the Bandit and is pictured in the upper right hand corner of this blog.

Friday, September 05, 2008

Crispin, Porter + Bogusky EPIC FAIL

You may remember my last post, "Cripsin Porter + Bogusky hit another home run"

I'm now changing that to EPIC FAIL. I also am not sure they did Mojave stuff, given how crappy this new campaign with Seinfeld is.

Monday, September 01, 2008