It's interesting to see what is happening in the economy and the markets. Our recent economic capitulation has been a well due punishment for the unwarranted bullishness and greed running rampant--people buying homes they can not afford, things they cannot afford and putting it on their charge cards.
Now, when it comes time for someone to pay for these imbalances, the taxpayer becomes the scapegoat. Humility and individual repayment ought to take place, but the taxpayer has been forced to participate.
In my opinion, to attack the root of the problem, eg., bad mortgages/foreclosures, and financial institutions originative of these, (this equivocally applied to other borrowed products and sources), we need to provide an incentive for the buyer, not the holder of these. The problem is no one desires these products at such a price, hence the excess invetory. how about incentives for buyers. We can do this by capitulating house prices, and by providing incentives to buyers.
Wednesday, December 3, 2008
Tuesday, September 30, 2008
A 700 Billion Dollar Bailout: Botox versus Systemic Change
Hank Paulson, Bernanke, and a morass of immature news reporters and legislators think a 700 billion dollar injection into the banking system will be the nostrum for our "dying" economy. They use doomsday rhetoric and prod us on the exegency of the situation, saying our entire economy will collapse if we do not pass this bill. It is true some people may go homeless, but will the whole economy fall off a cliff? Very unlikely, but I guess it could happen, in the worst case scenario, as it did in the Great Depression. But it would take a complete loss of confidence in the system and a mass run on all the banks.
We all know how we got here, and we all know what needs to be done to fix the situation. Namely, less leveraging and borrowing and more regulation. The US government rather than using taxpayers money to inject the economy with what would be equivalent to botox, need to go in and do some real surgery, in order to restore confidence versus enrage the US citizen and taxpayer with an outrageously expensive bailout bill.
Simply put the reason the bill did not pass was because the Republicans, who were listening to the myriad of phone calls and emails they were receiving from their constituents, that's us, the American people, said nay! becaus we the taxpayers said nay, nay, nay! (The Democrats, by the way, weren't listening). The bill just is not fair. Not only would it cost the taxpayers a lot of money, believe me, we aren't going to recoup anything on these purchases, but it uses our money to artificially sustain the real estate market. There is an underlying greed factor beyind this bill--a good amount of homeowners who dislike seeing their homevalues go down in value, said let's use taxpayers money to keep our massive credit cards afloat, which is what many people have been using their mortgages for, ie., let's use our childrens money to sustain our excessiveness.
Again the real problem needs to be addressed, and not a quick fix used, which would only sustain the problem further. A real long term program needs to be installed in order to rejuvenate confidence in the market. The toxic assets should be brought to the fore, so everyone can see them, and so they can be expunged, ie., whoever bought them should loose them and the money they "invested" in them, and not those who work hard for their money. Banks who sold the bad loans and are on the problem list of the FDIC should be disclosed, and all savings accounts should be moved to strengthen banks who didn't make the mistakes of 5yr APRs, and excessive leveraging.
These politicians are pointing out a fire, and spreading it to the rest of the system. Most banks have sound balance sheets. Since their bill didn't get passed they want to see the economy collapse so they can say I told you so. Pride needs to go away, greed needs to go away, and real, organic, systemic legislation and practices need to be employed.
We all know how we got here, and we all know what needs to be done to fix the situation. Namely, less leveraging and borrowing and more regulation. The US government rather than using taxpayers money to inject the economy with what would be equivalent to botox, need to go in and do some real surgery, in order to restore confidence versus enrage the US citizen and taxpayer with an outrageously expensive bailout bill.
Simply put the reason the bill did not pass was because the Republicans, who were listening to the myriad of phone calls and emails they were receiving from their constituents, that's us, the American people, said nay! becaus we the taxpayers said nay, nay, nay! (The Democrats, by the way, weren't listening). The bill just is not fair. Not only would it cost the taxpayers a lot of money, believe me, we aren't going to recoup anything on these purchases, but it uses our money to artificially sustain the real estate market. There is an underlying greed factor beyind this bill--a good amount of homeowners who dislike seeing their homevalues go down in value, said let's use taxpayers money to keep our massive credit cards afloat, which is what many people have been using their mortgages for, ie., let's use our childrens money to sustain our excessiveness.
Again the real problem needs to be addressed, and not a quick fix used, which would only sustain the problem further. A real long term program needs to be installed in order to rejuvenate confidence in the market. The toxic assets should be brought to the fore, so everyone can see them, and so they can be expunged, ie., whoever bought them should loose them and the money they "invested" in them, and not those who work hard for their money. Banks who sold the bad loans and are on the problem list of the FDIC should be disclosed, and all savings accounts should be moved to strengthen banks who didn't make the mistakes of 5yr APRs, and excessive leveraging.
These politicians are pointing out a fire, and spreading it to the rest of the system. Most banks have sound balance sheets. Since their bill didn't get passed they want to see the economy collapse so they can say I told you so. Pride needs to go away, greed needs to go away, and real, organic, systemic legislation and practices need to be employed.
Friday, August 15, 2008
An Edge for the Economically Savvy and Entreprenurial
The difference between the employer and the employed, the business owner and the one the one who works for him or her, the rich dad and poor dad, is not so much appropriation, but rather a vantage of perspective. Once one realizes the economic world and wealth building depends on the persuasion and spending of another, and that anything that deals with money is a business, things ones economic philosophy and practices changes.
Lets see if I can give some examples to explain this concept. Lets take the insurance industry. Obviously a good industry to be in if you are the owner a company, Warren Buffet, being the paradigm in this field. The vast majority of people think insurance for just about everything is not only a form of security but the smartest choice, and anyone who would want to opt out of this, is not only breaking the law but stupid. However, the actuaries that work for these companies make sure they are not losing money, they are in the business of making money. Thus, simply based on this reasoning, the odds are in the favor the insurance agency. They are like the casino owner. Another interesting thing to consider is that doctors and the medical field would probably do better off if there were no insurance programs, since doctors end up only collecting about 45% of what they charge after the insurance agencies trim the costs. Orthodontists seem to be doing better off then doctors since they have not had insurance programs until now. The solution would be to
Another example of seeing economic exchange as business, is in the event of buying a home. Banks make a nice profit off of lending money. Gone are the days of buying things with cash. The note 220,000 would yield about a $1,800 month payment with taxes, insurance, HOA fees, etc. only about $200-300 of that would actually go towards the principal. Upon doing the math, though there are many variables, in most cases, it makes more sense to rent for about 7.5-15 years, and simply pay for a place with cash. Thus, have a house all paid off, with no payment rather, than have bought a house with only half of it paid off, and paying for it twice.
Just a thought.
Lets see if I can give some examples to explain this concept. Lets take the insurance industry. Obviously a good industry to be in if you are the owner a company, Warren Buffet, being the paradigm in this field. The vast majority of people think insurance for just about everything is not only a form of security but the smartest choice, and anyone who would want to opt out of this, is not only breaking the law but stupid. However, the actuaries that work for these companies make sure they are not losing money, they are in the business of making money. Thus, simply based on this reasoning, the odds are in the favor the insurance agency. They are like the casino owner. Another interesting thing to consider is that doctors and the medical field would probably do better off if there were no insurance programs, since doctors end up only collecting about 45% of what they charge after the insurance agencies trim the costs. Orthodontists seem to be doing better off then doctors since they have not had insurance programs until now. The solution would be to
Another example of seeing economic exchange as business, is in the event of buying a home. Banks make a nice profit off of lending money. Gone are the days of buying things with cash. The note 220,000 would yield about a $1,800 month payment with taxes, insurance, HOA fees, etc. only about $200-300 of that would actually go towards the principal. Upon doing the math, though there are many variables, in most cases, it makes more sense to rent for about 7.5-15 years, and simply pay for a place with cash. Thus, have a house all paid off, with no payment rather, than have bought a house with only half of it paid off, and paying for it twice.
Just a thought.
Friday, May 30, 2008
God Vs. Man
Trying times, these are, in the realm of faith. What to believe, what not to believe, (and to believe at all), that is the question.
Emerging from the dark ages of Modern Times, and the almost dreamlike era of the past, technology has uncovered our world, and removed the previous barriers of ethnicity, nation, and the individual Descartes and Freud. Wikipedia from the mouth of the new God, Google, has become the bible, from which all things are learned. Nasa's Pheonix lands on Mars and uncovers likelihood of life. Evolution more a matter of fact than theory. A continuous uninterrupted, unaided evolved universe the most rational theory.
Not so fast, at least not so furious! Intelligent design struggles to uphold their tenant of a designer, but what of their evidence. There is without question of a doubt mathematical principles inherent within the fabric of the universe, which have guided the production of incredible creature: homo sapiens. Whence the existence of these principles, the existence of matter? The big bang does not explain it
The scientist argues, all one needs is a sufficient environment for life to exist and whola. The precision of the planet earth couldn't get any better. But is it that unlikely given the amount of matter in the universe, the amount of possibilities for planets to form and within a decent position from a star for this to occur. It doesn't take a stretch of the imagination, given enough time, and the conditions and laws of nature. But what of the existences, yes, the raw existence of nature, of these laws, of matter? Has it always simply existed, the first law of thermodynamics, energy can't be created or destroyed.
My conclusion is science can't answer this question or can only assume, and such an assumption is an act of faith. Thus, one is stuck in the realm of faith whether one likes it or not, and there is a lot of evidence at least to be able to say, wow, what a wonderful world we live in, where did it come from?
Emerging from the dark ages of Modern Times, and the almost dreamlike era of the past, technology has uncovered our world, and removed the previous barriers of ethnicity, nation, and the individual Descartes and Freud. Wikipedia from the mouth of the new God, Google, has become the bible, from which all things are learned. Nasa's Pheonix lands on Mars and uncovers likelihood of life. Evolution more a matter of fact than theory. A continuous uninterrupted, unaided evolved universe the most rational theory.
Not so fast, at least not so furious! Intelligent design struggles to uphold their tenant of a designer, but what of their evidence. There is without question of a doubt mathematical principles inherent within the fabric of the universe, which have guided the production of incredible creature: homo sapiens. Whence the existence of these principles, the existence of matter? The big bang does not explain it
The scientist argues, all one needs is a sufficient environment for life to exist and whola. The precision of the planet earth couldn't get any better. But is it that unlikely given the amount of matter in the universe, the amount of possibilities for planets to form and within a decent position from a star for this to occur. It doesn't take a stretch of the imagination, given enough time, and the conditions and laws of nature. But what of the existences, yes, the raw existence of nature, of these laws, of matter? Has it always simply existed, the first law of thermodynamics, energy can't be created or destroyed.
My conclusion is science can't answer this question or can only assume, and such an assumption is an act of faith. Thus, one is stuck in the realm of faith whether one likes it or not, and there is a lot of evidence at least to be able to say, wow, what a wonderful world we live in, where did it come from?
The Cause of the Oil Crisis
My girlfriend surreptitiously burns the midnight oil submitting reports to the democratic news vector CNN Money, saying the cause of the increase in oil goes by the name of nefarious speculator in an unpretentious town home, in Strasburg, VA. That’s right, he’s the culprit for the rise in oil prices, and the reason I have to pay more at the gas tank! Gleefully, he continues to purchase more and more oil stocks such as Apache, and Petrobras, but forgets somebody has to pay for these wicked exploitations.
Certainly, US discretionary habits and oil addiction, the economic big bang in the East and Chinese and Indians purchasing tiny tatas at a neck breaking clip and driving them around like a disturbed ant farm has nothing to do with the growth in demand for oil and the increase in prices at the pump.
A litigationary probe immediately needs to be conducted by the government and a satellite monitoring of this criminal and others who with impunity continue to click buy on Zecco and Etrade.
Certainly, US discretionary habits and oil addiction, the economic big bang in the East and Chinese and Indians purchasing tiny tatas at a neck breaking clip and driving them around like a disturbed ant farm has nothing to do with the growth in demand for oil and the increase in prices at the pump.
A litigationary probe immediately needs to be conducted by the government and a satellite monitoring of this criminal and others who with impunity continue to click buy on Zecco and Etrade.