November 2005 Archives

Fannie, Freddie Raise Limit on Mortgages. Effective January 1, new limits are $417,000 for a conforming mortgage on 1 unit, $533,850 for 2 units, $645,300 for 3 units, and 801,950 for 4 units. I was expecting something significantly lower, in the $380,000 to $400,000 range, but they're likely playing some catch up. It will make a real difference to a lot of folks.

On another front, Lenders Push Envelope to Get More Biz, just like I've been writing about.

Mildly surprising that it wasn't worse: Housing starts drop. I would expect all of the destruction on the Gulf Coast to have ameliorated it. But my brother, who works in home building, has been laid off as the builder he was working for has decided to hold off building stuff they already have permits for. He's not alone by any stretch of the imagination.

Fannie Mae says more errors found. Errors. That's certainly one word for it, but that kind of implies 'honest mistake' to me. If it's intentional, most people call it fraud.

Bernanke Urges Limits on Fannie Mae and Freddie Mac Holdings. Well, I understand why, with accounting fraud like above being endemic at both. On the other hand, if their holdings are limited, that will largely frustrate the reason they exist and have some taxpayer guarantees in the first place. "Shortages" of money at Fannie and Freddie, really them not being able to fund all the A Paper conforming mortgages that are called for, will impact those who really do take good care of their finances and credit in a really negative way, as the margins for A paper loans rise. It would be a better thing to limit, phase down, or even phase out the taxpayer guarantees behind Fannie and Freddie. Of course that might be bad news for Fannie and Freddie investors. But Bernanke's proposal is nothing short of a gold mine for A paper mortgage lenders. Furthermore, it will further exacerbate the pain from any decline in housing values.

Remember, Bernanke and Greenspan are both bankers first, not economists. Although that certainly does enter into their job function, their first loyalties are to the banks they regulate.

As soon as Lorie Limbaugh heard about a 1.25 percent interest rate on a mortgage loan, she figured it was too good to be true. Then why did they go and do it? Basically, they were lied to. If you want to be lied to, I have all kinds of lenders who will do 1 percent nominal rate, but it's not the rate you are really being charged. The more you shop around, the more you increase your likelihood of their competition - who works in this field every day - telling you what's actually going on. They said they talked to other loan officers, but I'll bet a nickel that they are one of those people who thinks they're being slick by demanding "What's your lowest rate?" over the phone, and hangs up when you try to find out what's going on. The other lenders they called were honest, and said they couldn't beat 5.7%. So they ended up rewarding the crook for scamming them.

Caveat Emptor

This is, alas, par for the course: FAA calls for mediator in talks with air traffic controllers. FAA management is a sick, corrupt culture, and they have monopoly power over controllers. There are no other significant jobs in Air Traffic. ATC is pretty unique in the federal government. How many times does the average bureaucrat get to go home saying "I got all those planes down (or through my sector) and did so quickly, and managed to keep them all from crashing into each other and dying." Nobody else has dozens to hundreds of people's lives depending upon them making correct decisions right now, every minute of every day they are at work. Military officers do it in combat. Air Traffic's own lives are not on the line, but they are doing it constantly, every time they sign on a position, from the second they say "I got it," to the second their relief says, "I got it." Yes there are hours of boredom - and that's when you have to be constantly on guard against complacency. The man who first replied to "what could go wrong?" with "The mind boggles," was likely a controller.


This is a good article to read: Social Security could be big chill for 50-somethings. The Donkeys derailed reform this year by saying Social Security is fine. It isn't. With every private insurance company revising their mortality tables upwards, to show people living longer, social security has yet to do so. Raising the age from 65 to 67 or 70 won't cut it. The retirement age of 65 that we had for such a long time is based upon the figure that Germany chose under Von Bismarck, when the average life expectancy was 48. Based upon current life expectancies, to get those same proportions today, we'd have to raise the retirement age to something like 96, and that's without disability figured in. Not many people are in shape to continue working at 96, or even 80.

The Donkeys also told scary stories about investing the trust fund (or a personal segment of it) in private capital markets, saying that it was too likely to lose money right when people can least afford it. Boys and girls, I would rather make an average of 9 to 10 percent per year for 20 years, and then lose half, then make 4 percent per year from the government for those twenty years. Here's the math: Option A (9.5% equity markets that suddenly lose 50% after 20 years), $1000 in the beginning turns into $3071. Option B (4% per year) turns $1000 into $2191. For a 20 year time frame, you would have had to have bought all your investments right at the top in 1929 to have done worse than Option A. Nothing else even comes close. With Dollar Cost Averaging over time, even somebody who started at the worst possible moment in history beats option A, the worst realistic case I can come up with.

So sorry, AARP and Donkey partisans. The facts just aren't on your side.


And for our next trick, we're going to defuse this bomb twenty years after it goes off... France Tightens Controls on Immigration


Jawa Report has hostage video and more.


Congratulations and a heartfelt THANK YOU to Gunnery Sergeant Ismael Sagredo! Awarded the Silver Star!


World According to Nick makes several very good points against a Sheboygan spaceport, as referenced in this article, but misses the biggest reason of them all. The reason that our primary spaceport is in Florida is because that's about as far south (i.e. close to the equator) as we could find a suitable site). Earth's rotational velocity. Cape Canaveral (28.43 N) gets us 916 miles per hour of rotational velocity. Sheboygan, WI (43.75 N) gets us only 753 miles per hour of rotational velocity. 916-753=163 mph, or about 239 feet per second or 72.86 meters per second. This is free velocity that the entire rocket is moving at before it burns one microgram of fuel. And because you have to gain 72.86 meters per second of velocity before you're even with where you would be sitting on the ground in Florida, this means it's more expensive - noticeably more expensive, as that's the first entire second free at 8 gs (7 net), almost three seconds at 4 gs (3 net) - to get to orbit from Wisconsin. Why would anybody want to do that when Canaveral has more capacity than the whole world can use any time soon? (Vandenberg, used for polar orbits, was the furthest south they could get something suitable on the west coast, where polar orbital insertions go out over the water almost immediately, much as the easterly launches off Canaveral do).


HT to Inside Larry's Head for heads up on Mao debunkers defend their book; Critics call it effort to discredit communism. As if communism needs discrediting. Except for killing tens of millions of people, sending large portions of the world economy backwards, causing billions to live in crushing poverty, setting the cause of personal liberty and human rights back decades, enriching and rewarding tyrants who oppress the people worse than any capitalist ever thought about doing, causing multi-decade famines in areas that once were breadbaskets, failing to feed its people for decades at a time, expanding the system of gulags worldwide, causing deadly and widespread environmental damage, literally destroying the means of production it inheritied from its capitalist predecessors so nobody (except the rulers) got anything, stymying the contributions billions of people could have made to the world,and doing its best to cover all of this up, including habitual executions of innocent people who simply stumbled on the wrong piece of evidence, I guess communism wasn't so bad.

At least the nobles in feudalistic societies A) didn't know any better, and B) Come the war, had an obligation/reason to stand in the front lines.

"Joe the Georgian" by Al Stewart

Now I've got my payment

For the service that I gave

They've given me my ticket

To this place beyond the grave

I suppose it's kind of funny

I suppose it's kind of sad

Thinking back on all the times we had

But it's kind of hot and smoky

In this anteroom to Hell

And I won't make up a story

'Cause you know the truth so well

It's much too late to worry

That we never had a chance

And when Joe the Georgian gets here

We will dance, dance dance

When Joe the Georgian gets here

We will dance

We all set off together

On this sorry ship of state

When the captain took the fever

We were hijacked by the mate

And he steered us through the shadows

Upon an angry tide

And cast us one by one over the side

But it's kind of hot and smoky

In this anteroom to Hell

And I won't make up a story

'Cause you know the truth so well

It's much too late to worry

That we never had a chance

And when Joe the Georgian gets here

We will dance, dance dance

When Joe the Georgian gets here

We will dance

There's Kamenev, Zinoviev,

Bukharin and the rest

We're sharpening our pitchforks

And we're heating up the ends

We've got a few surprises

For the mate when he appears

I hope he likes the next few million years

And it's kind of hot and smoky

In this anteroom to Hell

And I won't make up a story

'Cause you know the truth so well

It's much too late to worry

That we never had a chance

And when Joe the Georgian gets here

We will dance, dance dance

When Joe the Georgian gets here

We will dance

(Me again) The problem is that they weren't exactly hijacked by the mate. Stalin didn't take them anywhere that Lenin didn't intend for them to go. Each and every time it's been tried, communism has ended up in the exact same place. It's time to stop pretending this is a freak occurence.

What's the definition of insanity again?


Environmental Republican has quite a nice little article on Joe Lieberman, whom (thus far) is my favorite Donkey for 2008. He'd got integrity, he's got political cojones, he's willing to be villainized for doing the right and correct thing. No, I don't agree with him 100%, but I do admire him for attempting to lead the moonbats away from the cliffs. I'll take him over anyone else the Donkeys have on offer. Heck, I'll take his pet rock over anyone else the Donkeys have shown me.

Tinkerty Tonk has more.

RINO Sightings is up over at Don Surber. Recommended Posts: Strata-Sphere, legal redux

Best of Me Symphony is also up! Recommended posts: TFS Magnum, Living the Scientific Life (Whose experience parallels my own, even if it is in an entirely different discipline).

Carnival of Personal Finance is also up!


WHITE HOUSE PLAN IF SADDAM FOUND 'NOT GUILTY (Yes, the link is Drudge. Get over it). I'm torn between being happy that there is a Plan B, and being nervous that they're going to keep after him with more charges. Oh, I know that they intentionally didn't hit him everything, only the stuff that they thought was the easiest conviction. I also know that he's a mass murderer, serial torturer, human rights wasteland, and all around nutjob. Nonetheless, I'm not happy that they are planning to hit him with more and more until something sticks. Not a good precedent to have in front of you. Stuff like this is why we need to get it right the first time.

While I'm on the subject of Iraq, a little bit of hope for our legacy media in that they picked up this story: The Iraq story: how troops see it

Money quote (From an Iraqi Army officer): "Marines are not friends; marines are brothers." You cannot buy that kind of thinking. Well, actually you can, but not with money.

Captain's Quarters has more on the disconnect between the press and what's happening.


Teen With Peanut Allergy Dies After Kiss. My deepest sympathies with the family. I'm not quite as allergic as she was to anything common, but I've spent a lot of time very sick with nasty allergy attacks due to inconsiderate smokers. This is one of the reasons I don't want to leave California, with its mostly enlightened views on the subject. The time I spend in other states is mostly miserable, and even with the best medications available, foreign travel is worse.


Cool! I just got a neat little bit of consulting work from a certain title company, as a result of this site.


HT to Michael Barone for a pointer to a Washington Post article debunking a lot of rhetoric on the subject of Medicaid.


Stupid, Stupider, and Stupidest: Calif. Congressman Pleads Guilty. Boys and Girls, accepting illegal favors is stupid. Accepting bribes above the level of chump change is stupider - there will always be records that your opponents can find, and both parties have people looking. But doing it on a real estate transaction is King of The Land of Stupid, as the records are explicitly public, freely available for anybody who cares to look. My five year old daughter could have dug this one up. Stuff like this is why I love the concept of transparency, as it holds the rich and powerful accountable to the same degree as everyone else, and largely because they've painted the target on their own backs. Many people, used to the mechanics of bygone eras where this stuff wasn't quite so easily found, still haven't figured it out. Get used to it. If you do something illegal, anybody who really looks is going to find it.

Sadly, this doesn't surprise me from Cunningham, who unlike many who have claimed the accolade, is a legitimate war hero but seems to have been coasting upon that fact ever since. I still respect him (and will humbly thank him to his face if I ever meet him) for what he accomplished back then, but that in no way excuses what he did recently.

And he's out of there! Cunningham Resigns


Here's an interesting site I ran across: Housing Panic. I think they're significantly over the top, but that's just my opinion. Please note that despite the fact I'm a real estate agent, I've been saying prices are in trouble for months, I've been saying it clearly, I've been saying it consistently. I should have some built up credibility on the issue. I have given specific advice on strategies to deal with the possibility, not just stirred up the garbage. My best guess is we're looking at about a 30% loss of real estate value here in San Diego, but that's all it is - an educated guess, based upon numerical computations of similar goods. With inflation revving up a bit, it might be lower than that. Once investor psychology and fear kick in, it could get much worse. Don't panic. Don't ever panic. That's what hurt the poor schlubs worst when the dot com bubble burst. Keep your head about you and you will come out just fine. If you've got the right loan, even those who buy right at market peak will be fine. I bought my current residence right at the last peak, and I'm doing just fine, thank you. If I was offered the chance to go back and do exactly the same thing again or refrain from doing it, I'd do it in a heartbeat.


An excellent, logical, mathematical piece on how many real civilian casualties there have likely been in Iraq at Logic Times. I spotted a couple of adjustments they should have made, but basically solid work.

The Three Day Right of Recission

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One reason to check your referral logs every day: Sometimes you can find great material for an article. I got one about the three day right of recission.

This is a feature (or bug, depending upon your situation) with every refinance on a home that is a primary residence. The reason it exists is that until you see the final documents at signing, there is literally no way to prove that what your prospective loan provider quoted you on the Mortgage Loan Disclosure Statement (California) or Good Faith Estimate (the other 49 states) is actually what they intend to deliver. There's a lot of paperwork I can put under your nose to make it look like that's what I intend to deliver, but until you have the final loan documents sitting in front of you, none of it means anything. Just because they give you those wonderful forms like a MLDS or GFE or TILA or anything else does not mean that is what they intend to deliver. The only document that is required to be an accurate accounting of the loan and all the money that goes into and comes out is the HUD-1, and that comes at the end of the process, and you get it at the same time as you sign the note.

I have said it before, but there are three documents you need to concentrate on at loan closing. Everything else is in support of those. They are the Trust Deed or Mortgage, the Note, and the aforementioned HUD-1. An unscrupulous lender certainly can slip stuff past you on other forms, but most won't bother. These three forms will tell you about 99.9 percent of the shady dealings. Some lenders and brokers will actually train their loan officers in how to distract you from the numbers on these three documents.

Once you have signed all of the requisite paperwork to finalize your loan (the stuff you sign in front of a notary at the theoretical end of the process), there is potentially a waiting period that begins. Purchases have no federal right of recission, nor do refinances of rental or investment property, but if it's your primary residence and you are refinancing, you have three business days to call it off. Note that some states may broaden the right of recission, and some may even lengthen it, but they can't lessen what the federal government gives you.

As an aside, just because you have signed "final" documents does not necessarily mean your loan will fund. There are both "prior to docs" conditions as well as "prior to funding" conditions. The former means they must be satisfied before your final loan documents are generated, the latter means they must be satisfied as a condition of funding the loan. I want to emphasize that there will always be "prior to funding" conditions, but they should be routine things that make sense to do at that time, in that they cannot realistically be done any sooner. Many lenders, however, are moving "prior to docs" conditions to "prior to funding." This has always been prevalent for so-called "hard money" loans, but recently subprime lenders in particular have been emulating their example. The reasoning for doing this is simple. Once you've signed documents, you are bound to them unless you exercise right of recission. Once right of recission expires, you are bound to them period, until they either fund the loan or give up on the possibility of funding it. I strongly advise you to ask for a copy of outstanding conditions on your loan commitment.

Assuming that there is a right of recission applicable, once you have signed final documents, the clock starts ticking. The day you sign documents doesn't count. Sundays and Holidays don't count. It is possible that Saturdays don't count, depending upon the law in your state. Here in California, Saturdays count unless they are holidays. It is three business days. So let's say that you sign final documents with a notary on a Monday of a normal five day week. Tuesday, Wednesday, the Thursday all go by while you have still got your right of recission. Thursday midnight the right of recission expires, and the loan can fund on Friday. Note that no lender can or will fund a loan during your right of recission period, and every so often an otherwise excellent loan officer will have you sign loan documents before some other conditions are finished so that the right of recission will expire in timely fashion to fund your loan before your rate lock expires. Remember that if the rate is not locked, the rate is not real, but all locks have expirations.

Applicable rights of recission cannot be waived, cannot be shortened, and cannot be circumvented. Ever. There literally is no provision to do so in the law. This is both intentional and, in my opinion, correct. Kind of defeats the purpose of having it, which is to give you a couple days to consult with professionals before it's final, if it can be waived, because you can bet millions to milliamps that the sharks you are trying to protect folks from would have the folks sign such a document if it existed.

Now, just because the right of recission has expired and the loan can be funded does not mean that it will be funded, much less on that day. For starters, good escrow officers will not request funding upon a Friday because the client will end up paying interest on both loans over the weekend for no good purpose. Once they request funding, the lender has up to two business days to provide it, and then the escrow officer has two business days to get everybody their money.

Also, remember those "prior to funding" conditions I spoke about a couple of paragraphs ago? If there's something substantive, it usually should have been taken care of prior to signing docs, leaving procedural stuff for prior to funding. But sometimes it can be in your interest to move them, if it means your loan is more likely to fund within the lock period, so you don't have to pay for lock extensions. On the other hand, there has been a movement towards making as many conditions prior to funding as possible, simply because once you have signed final documents you are more tightly bound to that lender.

In summary, if a right of recission is applicable, start counting with the next business day after you sign final loan documents. After three business days, the right of recission has expired and the loan can fund. Assuming a normal five day week, and that Saturday counts, as it does in every state I've worked in:

If you sign: Recission expires:

Monday -- Thursday midnight

Tuesday -- Friday midnight

Wednesday -- Saturday midnight

Thursday -- Monday midnight

Friday -- Tuesday midnight

Saturday -- Wednesday midnight

Sunday -- Wednesday midnight

Caveat Emptor


Here's the website:

Here's the news story: Couple Sues Operators of Evolution Site

Three words: Get. Over. It.

Evolution may not be scientific fact, but it is a scientific theory supported by as much evidence as relativity or quantum mechanics. It was formulated based upon observed evidence. It can be debunked at any time by facts which actually contradict it. We just don't know of any. It is true that it is only the best idea we have so far and that it is possible that we'll come up with something better some day. But thus far subsequent discoveries (in multiple disciplines, yet! Engineering. Mathematics. Physics. Genetics.) have strengthened and reinforced evolutionary theory and our understanding of it. The fershluggin' Catholic Church, of all the world famous stick in the mud institutions, accepts evolutionary theory as the explanation which best fits observed facts.

Get. Over. It.


This is political grandstanding. But notice how the groups accused of abuse - Allawi's fellow Shia - are buried in the third paragraph? For scanners of news who may not read the whole story, the obvious implication is that it's americans who are doing it. Nor does the one place we have found (and dismantled and freed the prisoners) equate to what Saddam Hussein was doing on a wholesale scale. I'm not in any way defending the perpetrators, mind you, and I'll bet that those victimized suffered every bit as much pain as Saddam's victims. Nonetheless, there is a pretty significant difference in scale.

On the subject of Iraq and their upcoming elections, Iraq the Model has an article on the differences in how the votes will be counted in the upcoming election. The way he explains it, it makes a lot of sense. This way a small party that doesn't get the votes for a seat in any one province can still get one - or a few - through amalgamation.


Here's an article on the incredible Dr. Bose and what he's been up to lately.


My wife and I got a volunteer babysitter and decided to go see "Harry Potter and the Goblet of Fire" at a theater on Friday. Great movie, easily better than the last two in the series, and we loved the way the mood changed on a dime at the end.

Nonetheless, we were very conscious that we were going to a maul mall on Black Friday, and were pleasantly surprised at the ease of getting in and getting around. There's even a Wal-Mart in the one we went to (Parkway Plaza), right next to the entrance we used. The crowd wasn't as thick as we've seen on ordinary weekend days. this article confirms what I thought then. Given earlier reports of relatively heavy shopping traffic, the phrase "whistling past the graveyard" popped into my mind. It's not that bad. But I suspect when everything's over that it'll be a disappointing season.


Captain's Quarters has a thoughtful, dead-on analysis of the situation in Iraq (and incidentally, the Donkeys as exemplified by Senator Joe Biden, D - Denial getting it completely wrong).

We're doing better than we did in WWII. That the Iraqis only have one level one battalion means they've got one more than France has today.

Jawa Report has more, with an interview of the commander of the multinational corps in Iraq about the consequences of pulling out now.


Speaking of Iraq, Michelle Malkin has a report that Bruce Willis is intending to make a movie based upon the service of the "deuce-four" as reported by Michael Yon. Bruce seems to be different from the average Hollywood personality, in that he "Gets It" as regards the War on Terror.

Captain's Quarters has more.


Powerline has an excellent snippet on the cooperation between North Korea and Iran.

Personally, I don't find their cooperation to be any stranger than the cooperation between United States and Soviet Union during World War II.

While we're on the subject of Iran, Chequer Board has an article about the President of Iran being in far worse trouble than our own has ever thought about being in. Seems Parliament has denied him three different choices for Oil Minister. A rough equivalent might be Congress voting down three nominees for Secretary of Defense, less than six months into his term. Ouch.


Balloon Juice has an excellent article of the sort the Donkeys dread. Despite Donkey control of most major media outlets, the public "gets it" , and realizes that Donkey criticism of the war is intended for political advantage.

HT to Wizbang for the link to this Big Lizards article about the Afghanistan effect. In reverse. The pravda (official truth, as espoused by most legacy media) says that Iraq is Vietnam: unwinnable and creating further problems. My take is that even Vietnam's problems were mostly mental, and if we'd have had the guts to hang tough despite the liberals in our own ranks sabotaging us, we would have won the war as we won on all of the battlefields except propaganda. Big Lizards' theme is that Iraq could well be the downfall of our self appointed elites, much as Afghanistan was for the communist party in the soviet union. Who are the people going to believe once the troops come back: The mainstream media, who the vast majority of us know are incompetent boobs with their own axes to grind, or their own brother, sister, cousin, or neighbor?

(Think to all of the news stories you have ever witnessed or known some of those involved personally. What's the media's batting average in getting it right? I've been witness to a couple, involved in the aftermath of others, and known those involved firsthand in many more, and the aggregate batting average is so low it wouldn't be tolerated in a pitcher. Even in a league that uses the designated hitter rule.)

I do see a problem with this in that the military is concentrated in so-called "red" states and regions of the country, and so most of the effort will be coals to Newcastle. On the other hand, enough will spill over to the purple or blue states to make a real difference.


Language warning, but it does need to be that explicit to get through to some people: Anti-Idiotarian Rottweiler has the best piece on the mindset necessary to defend yourself in case of violent thugs.

Money quote: "Remember: There are two sides to every story, your side and his side. Make sure he ain't telling his."


A sign that there is hope for this world after all over at Armies of Liberation. Oppressed by the Saleh regime for twenty-seven years now, the political opposition is uniting, and their main platform for the election is... a constitutional government! I really hope it doesn't come to bullets to get rid of Saleh, whose regime is collapsing on multiple fronts. I hope the opposition is prepared either way, but would really prefer the transition happen peacefully.


Captain's Quarters also has an expansion of the confrontation that the Border Patrol lost with Mexican smugglers (and possibly the Mexican Army!). They were outgunned and unable to take the actions that their mandate required of them.

It's past time we took control of our border. If this requires a concrete fence thirty meters high with barbed wire all over it, so be it.


Wizbang has an excellent post up about that Eeevil John Bolton and the horrible things he's done. Like financial reform, condemning Hisbollah attacks upon Israel as terrorist, bringing real pressure to bear on Syria, etcetera. The subject came up in conversation the other day, and I said Reid's best option here is offering to quietly confirm Bolton as a rider on some other unrelated legislation.


If you haven't seen Farenheit 1861 yet, take the two minutes to do so. You'll laugh. You'll cry.


Captain's Quarters also has an article on the Iranian way of saying thanks for supporting them against the West: training Chechen terrorists.


Forward Biased uses this link which goes to Editor:Myself

to illustrate the need for anonymity on the web. Evidently, the border folks googled his name at the crossing, although they declined to let him in only when they discovered he was actually an illegal resident. I can only agree with Forward Biased in the context of not allowing your criminal deeds to come to light, which is just plain stupid. You really shouldn't write about something that's going to cause you legal difficulty.

On the other hand, if everyone gets racked up for stupid little stuff, that's good impetus to change the law making stupid little stuff illegal. I don't agree that this was stupid little stuff, but I'm prepared to debate against that position. Many people misunderstand the purposes of the fourth and fifth amendment. They are not in place to shackle the government in its quest to prove actual illegalities. They are there so the government can't go looking for illegalities on apparently law abiding citizens that it (or some parts of it) may wish to persecute for whatever reason. If the cop on the corner Googles you and finds out you're wanted for rape, murder, and failure to pay parking tickets, that's a good thing, as long as you are indeed wanted for rape, murder, and failure to pay parking tickets.

Now there are some, me included, who don't think failure to pay parking tickets should constitute an arrestible offense. That's an entirely different debate, and the one I should like to force us to have. If, in order to have it, I have to debate over whether rape and murder should be arrestible offenses, I'm willing to have that debate. What I am not willing to do is force us into any kind of informational dark age when the cop has the tools at their fingertips to tell if this is a a person they need to Concern Themselves With. No malice, but I believe the cops in question did exactly the right things for exactly the right reasons, and should be praised for it. If you don't like what the cops did, attempt change the law on which their decision-making is based. Because what he and Forward Biased saying with what was written reduces to merely "I don't want to be bothered."


TMH's Bacon Bits has a wonderful story about the necessary end result of assimilating those who come to this country and their children. "I'm Amelican now."

They must think of themselves as American. Not hyphenated-american. American must have sole pride of first place. Afterwards they can remember (with pride) the "old country", or wherever their ancestors came from, and I'll be happy to oblige them whether their special day is St. Patricks or Cinco de Mayo or Juneteenth. But people who describe themselves as hyphenated-Americans tell me that the other part is more important than the American, practically begging me to label them as deserving of second class status. Because we're all in this together, wherever our ancestors came from, and those who do not realize this truth and live it every day are not, in their hearts, Americans.


Anarchangel has an excellent article that details why our current approach to airline security is wrong. The correct thing, IMHO, would be to ask everyone boarding if they are armed, and if not the next question should be "Would you like to borrow a weapon?" and then after your right thumbprint has been run against a database of convicted felons, they give you a loaner for the duration of the flight. Something standardized, of course, like a 9mm. We might have a few shootings until everybody got the idea that this is for real and they are expected to act like responsible adults, but the end result would be more secure than you can buy with any level of protection. I trust my fellow americans to respond correctly en masse to an obvious threat a lot more than I trust bureaucrats hobbled by political considerations and fear of giving offense to keep the threats off the plane entirely.


Belmont Club has a very thoughtful article on the nature of modern warfare.


Big Cat Chronicles has an excellent article on upcoming Medicare Part D, including resources. I suspect it's going to a boondoggle to beggar the long term care insurance issues. People buy based on emotional "hot button" issues, not based upon the rational thing to do once you have investigated - otherwise every person in a state that has a partnership for long term care would have one of those policies - and Congress would pass by acclamation a recission of the law against the creation of any more.


What he said: BlackFive has an excellent editorial up entitled "Beyond Neocon - Rise of the Rational Hawk."


Out of time on this fine Sunday afternoon. I already have a new article set to go for tomorrow morning. Later!

Games Lenders Play (Part IV)

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I was approached by these folks a few weeks ago via email.

I attempted to get them to write up the experience themselves (and I would still like you to if you're reading this), but I wanted to write something about this before I completely forgot about it. This whole exchange is indicative of games loan providers play in order to make money.

I'm going to sketch this out chronological to the extent possible. What happened was Mr. and Ms. A got a postcard in the mail quoting low payments for their loan amount. They thought it looked great, and called the loan provider. The loan provider talked about these great payments on a loan that looked faily real, and quoted an APR of 6.18. He told them that this was a great loan, and compared it to a 5/1 ARM in such a way that that was what they thought they were getting. No worries, because they were going to be transferred by his company in two to three years.

They asked my opinion about another item having to do with the loan, and something about what they said sounded funky to me.

Well, i believe what I'm getting is called a 5/1 ARM. Each month i have the 4 options of minimum payment, interest only payment, 30 yr payment, or 15 yr payment. (payments respectively would be either $A, $B, $C, or $D)

The minimum payment stays the same for every 12 months, then increases by about $90 each subsequent yr. I know minimum is not ideal, but i live in an area with high appreciation, and because of the ridiculous value of property in the area, & the school system in this county, it continues to appreciate regardless of trends elsewhere.

I'm told the loan comes standard with 3 yr prepay. I can pay the points I mentioned to make it a 1 yr, but it doesn't affect my interest rate coming down. That's at about 6.18%

Well, the part about property appreciating regardless of trends elsewhere is just plain wishful thinking. There is nowhere that is insulated from economic conditions. Nonetheless, it's not what we're talking about here. Does this loan sound like somethink I keep writing about?

Here's what I sent back:

That particular loan is actually a Negative amortization loan. I explain those here (same link as last paragraph - ed).

They are not wholly without redeeming qualities, but they are something to be done with a trembling hand and much looking over your shoulder. At the current rate, expect $725 to get added to your balance the first month - and rates are rising, so this is likely to accelerate, and your underlying rate is completely variable on a month to month basis. Even if they don't rise and you make the minimum payments, you will owe approximately $X after two years - an increase of $18,620 in your balance! Will it be an issue if you owe $18,600 more when you go to sell it? I think it likely that the answer is yes, but it's your call.

A 5/1 is something entirely different. It is a "A Paper" Thirty year loan with the interest rate fixed for the first five years, then adjusting once per year based upon either LIBOR or US Treasury rates, not COFI or MTA. As A paper, there is not an embedded pre-payment penalty. Right now, in California, I have them at about 6.25 no cost no points no prepay, or 6.5 interest only, and truly fixed for five years.

Furthermore, there was another issue with the loan quote:

If I do the math, the first payment gives a principal balance of $X+2000, the second payment gives a principal balance of $X, The third gets $X+500 and the fourth $X+1300. If these are the numbers your loan provider gave you, which of these numbers is correct? Any of them? Unless you're paying the 1.5 points out of pocket, your loan provider should give you a quote which adds them to the amount you are borrowing. Did they do this, or did they pretend it was going away by magic?

They responded:

oooh. sounding scary. So i left them a mssg asking which it was, a negative amortization loan, or a 5/1 ARM. I also asked for more info as I was sent spreadsheet which is missing some info. I am fwding the spreadsheet if you don't mind the attachment.

Well the loan provider had named the spreadsheet "2005_Pay_Option_Work_Sheet.xls" Pay Option is one of those "friendly sounding" names for a negative amortization loan. Well, I knew before what kind of scum bucket this loan provider was before I opened it, but doing so was confirmation, good enough to convict in court except that what he did isn't illegal, only immoral and unethical. Yep, it had all of the characteristics of a negative amortization loan as prepared by the worst kind of financial predator. Three or four payment options, including minimum, interest only, and 30 year amortized? Check. Prepayment penalty if you made any other payments (The so-called "one extra dollar" prepayment penalty I talk about here, which is not necessarily characteristic of negative amortization loans but certainly seems to occur there more than anywhere else). Check. Yearly minimum payment increases of about 7.5 of base minimum payment%? Check. Complete lack of disclosure that if you make the minimum payment your balance increases by hundreds of dollars per month? Check. About a 5 percentage point absolute spread between nominal rate and APR? Check. Complete failure to disclose payment based upon a "nominal" (in name only) rate of 1%? Check. Failure to disclose that the real rate was month to month variable from day one? Check. Failure to disclose that the index it was based on had risen in recent months and that unless said index went back down, the real rate would be rising? Check. Failure to include real and known closing costs in your loan quote? Check. That last is kind of minor as compared to everything else, but I'd be upset in a major way if it was the only thing wrong he did.

I sent Ms. A an email which said, in part:

"Option ARM" is a common, friendly sounding name for what is still a negative amortization loan. Everything about this loan, from the fact that it has a "payment cap" which is unrelated to a rate cap, screams negative amortization loan.

The 5/1 is a different loan provided for comparison, as the sheet tells you, and is a better loan for almost all purposes, as the second column of the comparison tells you. A 3/1 might have a slightly lower rate, or it might not. Ditto any of the 2 or three year subprime variants.

Intro period is telling you the period it is fixed rate for.

MTA loans are based upon a moving average of the treasury rate over the last twelve months. Since they've been going up, your real rate is likely to increase as some older and lower rates drop out of the computation in upcoming months.

Pay attention to the two footnotes on the payment options. "deferred interest" is characteristic of negative amortization.

(Name redacted for publication). They are not the only such company, but the translation into real english of their name must be "watch out for our piranha"

These loans are very commonly pushed because most people "buy" loans based upon payment, making them very easy loans to sell because unless you understand the drawbacks, you will think this is the greatest loan since sliced bread. These are up to forty percent of all new loans in the last year in some areas (including here), and are likely to contribute to a crash in housing values soon.

There are sharks and wolves out there, as this illustrates. Why people who would never buy a toaster oven without checking at least two vendors will sign up for a mortgage without shopping around is beyond me, but people do it. This is a trap that can be very hard to avoid unless you know what's going on, but if you talk to a few loan officers, and and go back and forth, chances become much better that you'll be saved by one of Jaws' competitors telling you what's really going on. Other, competing loan providers deal with this stuff every day. After a very short time, we get to the point where we can recognize it in our sleep. But we can't alert you to these kind of issues if you don't give us the chance.

Luckily, these folks gave me the chance.

They were in another state, and so I didn't get any business out of my good deed, but that's okay. I got this article. And now, you folks can read about it, and be forewarned.

Caveat Emptor

Carnival of the Vanities is up at Don Surber's. Recommended posts: Ruminating Dude, and ROFASix, who writes an excellent article detailing how DDT got banned despite the "science" or doing so being complete junk. In point of fact, DDT may cause problems. But there are no serious scientific papers (peer reviewed, etcetera) backing up this claim. The whole subject has been taboo for over thirty years, and it's past time to revisit it. The world is losing 3000 people per day, dying horrible deaths due to malaria and similar diseases because DDT has been banned. The environmental movement that keeps the subject politically untouchable is performing no favors for the world.

While I'm on the subject of bad science and denial of science, Respectful Insolence has a great debunking of HIV deniers. The actual argument, I confess, had parts that were beyond my understanding of the subject, but I can appreciate the use of scientific method, debunking where lack of evidence was used as if the evidence pointed the other way, etcetera. Well worth reading just to watch the scientific method in action.


Hold The Mayo has a good post up about the UN's attempt to further erode our freedom of speech.


Chris Cam caught something I'd missed in that our asian allies don't think the US can win a war with China. Pay close attention to the reasoning stated. It demonstrates that they are paying attention to our domestic politics.

Justus For All has more on the tactical situation, but fails to take the political one completely into account. The "evil" US fighting "wonderful" "communist" China has all of the elements that would have our domestic america haters thinking they'd be committing treason against mankind if they didn't sabotage us. "But they're not white men! And they have a different culture, not corrupt western chauvinism! And they're communist, which must mean they care about The People®!"


Don Surber has a post up with his reactions to TTLB changing the rules under which the Ecosystem is computed. Well, let's see, I do this Links and Minifeatures column as many days of the week as I have time for, and I admit to sending trackbacks to a lot of the places that take them. But I link because there's something there that I think worth reading. Don (among others) is bigger than I am in the 'sphere, and does open trackbacks to give the little guys some exposure. I don't have a problem with that - it's one of the reasons I have for doing this column. His method is passive and works off of others willingly linking to him. Mine is just active and requires more time on my part, and the other site can always delete my trackback if they don't like it. If I got as much participation as he does, I might do some kind of open thread periodically.

On the other hand, "open" posts do kind of tend to make the large folks bigger (economic principles say that folks will respond to open stuff where it'll do the most good). So it's kind of a negative for the diversity of the Ecosystem, as it allows the "big boys" to coast. But back to the first hand, all of the participants are mutually willing. So both ways have their drawbacks. If NZ wants to change the rules of how his site counts links, that is, of course, his prerogative. I believe, however, that changing them will prove largely a waste of time as the real incentive for the Open Trackbacks lies in the traffic they can generate. If people come to realize that anytime you send a trackback, it is something interesting and relevant, they will follow it, and they are more likely to make you part of their regular routine. If people start thinking "not him again!" (and I can point to many sites I see regularly submitting to carnivals where I just groan and move on, having wasted entirely too much time on their tripe), they will ignore it. Links may be fine and easily quantifiable, but it's traffic (daily eyeballs) that's really important. If we just had a standard tool that did it well (According to Powerblogs' server logs, Sitemeter counts an average of 15 to 25 percent of my unique visitors and page views. The ratio has been under 3 percent, never over 40). I'm sure NZ would switch to traffic, if we had something that measured it reliably.

Poliblogger makes a few more points along these lines. I just hate his trackback machine because Powerblogs doesn't reliably have a permalink until it actually posts ;-). HT to Arguing With Signposts for directing me to an Outside the Beltway post by James Joyner that also mostly agrees with what I've said. Since he's the one who started the open trackback thing, that carries some weight.


Willisms has a heck of a good article about economic creative destruction, and why protectionism of existing jobs is a bad thing. Highly recommended, and a further demonstration of the principal that many times the worst risk is not taking one. Yes, it's a risk to jump out of an airplane with only a parachute. But if all four engines are on fire and it's plummeting towards the ground at terminal velocity, they guy who declines to take the risk is dead for sure.

(HT to Justus for All)


Accuracy in Media has the goods on the press giving Hillary a free pass for far worse infractions of election rules than Bill Frist and Tom DeLay are even accused of. HT to Random Numbers via Wizbang.


Balloon Juice has a hefty thumping of Daily Kos.


Armies of Liberation notes that the Yemeni government seems to be aiding and abetting the Iraqi resistance - the the tune of allowing training and refusing to extradite Saddam's nephew at the request of the Iraqi government.


Captain's Quarters has an excellent article of John Bolton warning the UN that it can clean up it's act, or the United States will invest in a different problem-solving mechanism. The UN has been allowed the illusion that they are important simply because they're the UN. This has never been the case, but even back in the 1980s Jeanne Kirkpatrick and Ronald Reagan never had the guts to go this far.

I think it's time for all of us to sign up for the John Bolton fan club.

Maybe he's a good example for other countries, also: Via Instapundit on Pajamas Media, Germany's new Chancellor made her first foreign trip and said (among other things) "BRUSSELS, Belgium, Nov. 23, 2005 (AP Online delivered by Newstex) -- Angela Merkel made her first foreign trip as German chancellor Wednesday, calling the NATO alliance the main forum for settling world problems and saying her country must heal its rift with the United States."


(BTW, is it just me or is Glenn not linking Althouse nearly so much anymore? I wonder why?)


LGF has the scoop about a Dutch MP Ayaan Hirsi Ali wanting to make a Islamic version of Monty Python's Life of Brian. I see serious problems with the mob outside his window scene: "You are NOT individuals!"

On the other hand, the crack suicide squad bit could easily fill an hour and a half movie. It could trivially be the new ending: "Always look on the bright side of life KABOOM! KABOOM-KABOOM-KABOOM!"

Or the scene in the forum when they're trying to find someone to accuse of being a "splitter!"

LGF also talks about Joe Lieberman standing firm in the War. If he runs for President in '08, I may decide to register Donkey so I can vote for him. He is my nominee for best potential savior for the Donkey party, but I suspect the only way he can get nominated is by switching to Elephant, as the Donkey moonbat base considers him a traitor (considering the source, that's a compliment!). I might vote for him there, too.


Time to sign off. Happy Thanksgiving to all (I will have a real estate article auto post tomorrow morning), but probably won't do anything further until Saturday.

A very partial list of what I am thankful for:

My wife

My children

The rest of the family

The country of my birth and those who have defended her, and all of us, for the past 230 years.

The vast majority of her citizens who are decent, civilized, intelligent folks. If this were not so, we would not be so successful as a nation, not nearly so important to the world.

The fact that we have the right man in the white house for the test we are now facing.

the dogs

My father's influence and good example.

All of those who have won victories for humanity, so that we are able to live the lives we can, doing the things we are able in the comfort we have become accustomed to, rather than beating each other's brains out with rocks every day of our nasty, brutish, unpleasant, and short existence.

Good night.

Carnival of the Capitalists is up! Recommended Posts: View From a Height, Roth and Company (lest it not be clear to you, in addition to everything else, I expect some prosecutions for fraud on this one. I wrote on a related issue here), Econbrowser (hint: the text of questions is worded in a leading way one direction, while the actual answers illustrate the opposite point of view. The test afficianado in me says "Beautiful Work")

Best of Me Symphony is also up!

Carnival of Personal Finance is also up! Recommended Post: Personal Finance Advice,

Now it is Tuesday and Carnival of Liberty is up!


Jawa Report seems to agree with what I wrote here. He minces fewer words than I did, but the basic idea is the same.

Indepundit has a good article upon the westernization and democratization of the arab world - based upon first person observation. It agrees with what I said here, among other places.

Whatever the cause, I am happy to see more people calling the "We've got to get out of Iraq right now before we win!" crowd on their lies.

Out of time for today.

I just got a google search where the question asked was "What if the mortgage is recorded in the wrong county?"

I've never actually seen this (and San Diego County, once upon a time, included what is now Riverside, Imperial and San Bernardino counties), but if it's the mortgage on your loan, no big deal. You should get a copy of the recorded trust deed, and the county recorder's stamp should tell you the county it was recorded in. You probably want to record it in your own county, as when the document is scanned in both recorder's stamps will appear, thus making it obvious that these two documents are one and the same. There may be better ways to deal with it. Since the error was (everywhere I've ever worked) your title company's, they should be willing to repair it to eliminate the cloud on your title. If and when you refinance this loan or sell the property, make sure that the Reconveyance is recorded in both counties, and references both recordings.

More dangerous is the issue of what if it's the previous owner's loan that was wrongly recorded. The previous owner is obviously no longer making payments on the property. The lender may or may not have been paid off properly; if they were there may not be any difficulties. It could just disappear into some metaphorical black hole of things that weren't done right and were never corrected, but just don't matter because everybody's happy and nobody does anything to rock the boat. However, unlike black holes in astronomy, things do come back out of these sorts of black holes.

However, if the previous lender was not paid off correctly, or if they were paid but something causes it to not process correctly, they've got a claim on your property, and because the usual title search that is done is county-based, it won't show up in a regular title search. Let's face it, property in County A usually stays right where it's always been, in County A. There is no reason except error for it to be recorded in County B. Therefore, the title company almost certainly would not catch it when they did a search for documents affecting the property in County A; it would be a rare and lucky title examiner who caught it.

In some states, they still don't use title insurance, merely attorneys examing the state of title. When the previous owner's lender sues you, you're going to have to turn around and sue that attorney who did your title examination for negligence, who is then going to have to turn around and sue whoever recorded the documents wrong. If it's a small attorney's office and they've since gone out of business, best of luck and let me know how it all turns out, but the sharks are going to be circling for years on this one, and the only sure winners are the lawyers.

In most states, however, the concept of title insurance has become de rigeur. Here in California, lenders don't lend the money without a valid policy of title insurance involved.

Let's stop here for a moment and clarify a few things. When we're talking about title insurance, there are, in general, two separate title insurance policies in effect. When you bought the property, you required the previous owner to buy you a policy of title insurance as an assurance that they were the actual owners. By and large, it can only be purchased at the same time you purchase your property. This policy remains in effect as long as you or your heirs own the property. The first Title Company, which became Commonwealth Land Title (now part of LandAmerica), was started in 1876, and there are likely insured properties from the 19th century still covered. If you don't know who your title insurance company is, you should. Most places, the company and the order of title insurance are on the grant deed.

The other policy of title insurance is a lender's policy of title insurance. This insures your lender against loss on that particular loan due to title defects, and when the loan is paid off (either because the property is sold, refinanced, or that rare property where the people now own it free and clear), it's over and done with. Let's face it, most people are not going to continue to make payments if they lose the property. If you take out a new loan, your new lender will require a new policy of title insurance. You pay but they are the ones insured by the policy.

To get back to the situation, what happens when you order title insurance is that a searcher and/or an examiner go out and find all of the documents they can find that are relevant to the title of the property. These days, they typically perform an automated search, and sometimes documents are indexed and cross referenced incorrectly and therefore they do not show up when they should. Nonetheless, the title company takes this list of documents and tells you about known issues with the title, and then basically says "We will sell you a policy of title insurance that covers everything else." This document is variously known as a Preliminary Report, PR, or Commitment.

Now it shouldn't take a genius to figure out why you want a policy of title insurance. Around here, the average single family residence goes for somewhere on the high side of $500,000. You're committing a half million dollars of your money on the representation that Joe Blow owns the property and that if you give him half a million, he'll give you valid title. I would never consider buying property without an owner's policy of title insurance. Even with the best will in the world and my best friend whose family has owned it since the stone age, all kinds of issues really do crop up (Another agent in the office has a client right now who bought a property via an uninsured transfer - and there was an unrecorded tax lien. Ouch. Say bye-bye to your investment). The lenders are the same way. No lender's policy, no loan.

So what happens when this old mortgage document is uncovered? Well, that's one of the hundreds of thousands of reasons why you have that policy of title insurance. You go to your title company and say, "I have a claim." Since they missed that document in their search, they usually pay off the loan (there are other possibilities). After all, if they hadn't missed it, it would have been taken care of before the Joe Blow got paid for the property and split to the Bahamas.

None of this considers the possibility of fraud, among many other possibilities, but those are all beyond the scope of this article.

So when buying, insist that your seller provide you with a policy of title insurance. When selling, it really isn't out of line for your buyer to require it - it shows that you have a serious buyer. Some places may have the buyer purchasing his own policy, but most places that use title insurance, the seller pays for the owner's policy out of the proceeds. Of course, anytime there is a loan done on the property, the lender is going to require you pay for a lender's policy. If the quotes you are given do not include this, be certain to ask why.

Caveat Emptor.

I've been wondering when this shoe would drop: GM Job Cuts Fail to Assuage Investors. The various car makers have been cannibalizing their future business with incentives for several years. It's a vicious cycle that gets the executives involved performance bonuses but leaves the company in a worse position, and vulnerable. Nor is GM the only one. Ford and others have been doing exactly the same thing thing. Anybody want to make a bet about a series of auto companies restating earnings downwards in the near future, as well as accounting standards violations (which almost always translate to major securities violations, fraud convictions, etcetera)?

No? Gee, I don't know why people don't want to give me their money.


Enrevanche has an article about Jews in France voting with their feet. Seems they've been targeted by the Moslems there for at least the last five years, and if the French authorities had had the courage and good sense to deal with the situation instead of sticking their heads ever harder into the sand, they might have headed off the recent riots, not to mention had a better chance of, you know, keeping control of their country.

Committees of Correspondence has an article I wanted to review a few days ago on the same subject. Indeed, this one is more of a predictive nature while Enrevanche's is descriptive, but the prediction has been borne out by the description.

On a very similar subject, Pigilito Says has an article up on the changes in Holland since the assassinations of Pim Fortuyn and Van Gogh.

Especially taken as a group, in a connect the dots fashion, these cautionary tales illustrate the point that there's such a thing as too much tolerance. My working hypothesis is that Europe was playing to avoid the immediate confrontation that confronting its Moslem immigrants and the dictatorships they came from would have engendered, and by so doing placed themselves into a position where they were certain to lose the ultimate confrontation.

Victor Davis Hanson applies the brutal lessons France and the rest of europe are learning to the american domestic situation.


Don Surber has a great round up on Open Source Media, oops, OSM. He even changed his site name to Open Source Media for a while (a couple more ideas like that and we'll be comparing him to Scrappleface).

Remember when I wrote this last Wednesday?

Note to any Open Sourcer who may read this: I have yet to see a coherent mission statement. I have yet to see an "elevator ride" sales pitch. I have yet to see any kind of coherent business strategy articulated. I have yet to see any kind of editorial standards articulated. I'd really like to. I have been paying attention, because I'd like your venture to succeed (I'm probably going to want to advertise if I can be convinced it'll deliver bang for the buck). I poked around on your site today. Maybe I clicked right past them, but I didn't find any of those things. However on target Dilbert is with making fun of those things, when they're done right, they make all the difference. The fact that they seemingly haven't been done at all, and the company is "open for business" says something, and it's not good.

Well, my Edsel sense in tingling more strongly now (I suggest you read the article to understand the sense in which I mean that). They need to find their editorial "voice" and soon. Which means, however much they want to pretend to the contrary, that they need a content and censorship policy and more people are going to be left out in the cold. It would have been better if they had never been let in than to be pushed out. And before any of that, they have to actually articulate what it is that they are trying to do. What is their core business, such that they are willing to cast off everything else if that is the only way to stay in business? Are they an advertising revenue collective? Are they an aggregator? Are they reporters? Sad to say, every time I have dropped by their website,, I have been saddened by the spectacle of people who elsewhere produce resoundingly wonderful, resourceful articles producing bland vanilla cut and paste.

I've just been struck by a thought. Question for consideration: Is OSM a tragedy of the commons (or should I say, commune) in the making?

(And lest you think I am "ragging" on them, I have not changed my opinion that I would like to see them succeed. The question in my mind is whether my desire is going to be matched by observed reality. If any Open Sourcer is actually reading this, please take it in the spirit of someone who may be misplaced or even wrong, but is at least trying to be helpful to a neighbor he perceives as having problems.)


thinks this is just normal "start up" jitters. The problem is that this is a media company of some nature. Yeah, this sort of thing happens in board rooms all the time, particularly start-up board rooms. But when it spills into the public view, that's not good.

PoliBlog wonders what effect OSM will have upon the 'sphere. My opinion: If it succeeds, probably beneficial on the whole. If it fails, nothing of any real significance. Like the dot com bust, a couple of bad years for venture capital is about the extent of it. Everything else that happened there was a result of things returning to economic reality.


Gateway Pundit has a moving article that explains why President Bush stands out from other world leaders. Read the comments as well.

I certainly gripe and moan about some of the man's policies. But on the subjects of being willing to take action in the face of political cost or opposition when he believes it necessary, or of advancing the cause of democracy and freedom in the world, President Bush has done more than any other person in the country going back to at least George C. Marshall. Possibly since Abraham Lincoln. As evidenced by these Azerbaijanis, he is a giant standing amongst dwarves.


Piling On Department: T F Stern's Rantings makes the case that if we need to pull out the situation in Iraq on the basis of troop casualties, we certainly need to pull out of Washington DC as well.


I apologize, but I didn't get a chance to go through the Carnivals for Extra Good Stuff yet. I'll try to link them tomorrow. You'd think I had work to do or something...

RINO Sightings

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Welcome to RINO Sightings for November 21, 2005.

I'm going to lead with Jane at Armies of Liberation, who is doing one of the things about the 'sphere that may really make a difference by keeping the spotlight on the criminals in Yemen. Criminals, tyrants and despots hate their deeds being in the spotlight. She's talking about the aftermath of her appearance on Al-Jazeera in A First for the Blogosphere.

Furthermore, in support of the forgoing piece, for my submission I'm going to run an oldie but goodie: Able Danger, Databases, and the Right to Privacy

Buckley F. Williams at The Nose On Your Face presents Newdow Countersued: Suit Claims He Has Never Seen Money

Louisiana Libertarian tells a certain publicity hound that Your 15 Minutes Are Up

Recovering Democrat tells us that Dick Cheney Blasts Spineless Democrats

Environmental Republican says something that is the essence of RINO-hood in Michelle Malkin and the "Unhinged" Left

Phin's Blog discusses putting two important agenda items, disaster preparedness and Porkbusters, into one legislative act, in OES On the Air

Right Thoughts talks about Bigfoot Spotted in The Wild

Random Fate talks about how science does not contradict religion in First Lesson

Politburo Diktat gets complimented upon some of his work in A welcome email

Respectful Insolence talks about Schadenfreude

Classical Values discusses something near and dear to RINOhood in

Reconstructing the Dark Ages?

Inside Larry's Head takes a couple of momentary breaks from reality in Fantasy Posting and Fantasy Post II

Tinkerty Tonk asks the burning question What's

a few million dead Russians?
, especially when they might mean that the New York Times Walter Duranty didn't deserve his Pulitzer of 1932.

The World According to Nick discusses OSM (Open Source Media) in Changing Perceptions

The Nose On Your Face presents Bush Blasts Critics Again, Crosses Proverbial Line

I'm going to invoke a host's prerogative to direct some attention to my site specialty in Mortgage Rate, Points, and Closing Costs.

Last but definitely not least, we close with Dean of Dean's World who gives us a damning, factual indictment of Lies: WMDs, and "There may have been a good case for war, but they didn't make it"

Next week's carnival will be at Don Surber

Rino Sightings is referenced at TTLB Ubercarnival

I must apologize for my lack of spreading link love around these last few days, but between RINO Sightings and this monster that took me a couple of days to think through, I just didn't get it done.

Stop back bright and early tomorrow morning for RINO Sightings. It's set to autopost 3 AM California time, 6 AM Eastern, so those of you on the east coast have some opportunity to look at it before work.


Carnival of Vanities is up! Recommended: Ruminating Dude debunking the bird flu hysteria, Unrepentant Individual skewering the current politics of abortion,


What a difference a couple of days makes: House Republicans Eke Out Budget Cut. Okay, so it's only walking towards the path to fiscal discipline, from which they have strayed badly. Still, an encouraging sign.


Captain's Quarters has a good article up about the head of the Orange County (Florida) NAACP switching his party affiliation from Donkey to Elephant.

Money quotes:

"Ninety percent of those I do business with are Republicans," he said. "Opportunities that have come to my firm have been brought by Republicans."

Just as importantly, he said, he didn't want people to immediately brand — or dismiss — NAACP concerns as synonymous with those of liberal Democrats. "I want this branch to be respected," he said.

This is not only intelligent and long overdue for the NAACP, but a nightmare scenario for the Donkeys, who have been treating minorities like a wholly owned "cash cow" for votes since the seventies.

While I'm on the subject of race politics, La Shawn Barber has an article about a biracial student who wrote a column in the student newspaper against affirmative action. Those minorities of the party of "diversity", "tolerance" and "inclusiveness" were so "supportive" of her that their actions caused her to leave the university she was enrolled in. Is it just me, or did we all take a wrong turn somewhere and end up on stage in a theater of the absurd?

War on Terror: I think Scrappleface sums it up completely:

Bush Pushes Funding of 'Fear Gene' Research

by Scott Ott

(2005-11-18) -- Reacting quickly to new a study, published in the journal Cell, that shows timid mice can be made bold by removal of a single gene, President George Bush today urged Congress to provide $10 billion of immediate funding for the research "for the benefit of America's fearful rodents."

During a week in which Senate Republicans approved a bill on the Iraq war that was written largely by Democrats, and House Republicans defeated their own budget bill, Mr. Bush said, "It breaks my heart to think of those little mice as they cower in the corner with their whiskers twitching as they read the polling data."

The president acknowledged that the $10 billion for the 'fear gene' research is "a big chunk of change," but he justified the spending as a short-term measure that would be paid back ten-fold if the therapy works beyond mice.

I know. It's supposed to be satire.

Makes me want to repost a link to this Vodkapundit article.

I wonder if we have gotten so lost in our own concerns that we no longer have the ability to wage a war.

My copy of "Art of War" is in storage currently, but here is a link to an online version.

Sun Tzu is not some arcane figure from the annals of military history, like say, Hasdrubal Barca, whose miserable failure in Spain may have been the reason why his brother Hannibal was never able to lead Carthaginian forces to conquer Rome. Sun Tzu is the rough equivalent of Archimedes for scientists. This is basic, "hit the baseball with the bat" level stuff. His work is so pivotal, so important to everyone who came later, that Project Gutenberg has five different translations. Knowing Sun Tzu alone will not win you battles against modern foes with knowledge of those who have built on Sun Tzu's work.

But if you've forgotten (or don't apply) Sun Tzu's lessons, then you are doomed.

It's kind of like forgetting that 2+2=4 when you're doing calculus. Forget the building blocks that enable you to compute the correct answer, and the problem falls apart, disastrously.

The single most important lesson of this work, the earliest basic text on which all military science is based, is the lesson of effective warfare. In the original work, if you're not careful you will read past this very short passage without noticing that it is even important, much less how important it is. "Supreme excellence consists in breaking the enemy's resistance without fighting."

This has been expanded greatly in the 2500 years since. Judging by the entire long, sorry history of warfare, the one sentence that I can come up with that best distills this point is that "A war or a battle is lost when the will to fight it is broken." Not until. No matter how hopeless it looks, so long as the will to fight is there, there is hope.

Lose it, and your cause is dead.

It may flop around for a while, doing a huge amount of damage, spewing blood everywhere, and generally leaving wreckage in its wake, all to no good purpose because it's already dead.

The corollary is that so long as you have the will to fight, there is hope. A lot of hope, if you look at the history of such figures as the Dutch struggle for independence, the Swiss struggle for independence, and our own Revolution. Each of them was greatly outnumbered, out-equipped, and even out-generaled in most instances. They won when the opposition lost the will to contest the issue. So long as you have one person willing to continue the fight, you are "in the game."

History is replete with superior armies, winning armies, defeated because they lost the will to continue. From battles at Cannae and Hastings to entire wars, the struggle is lost when the will to fight is lost.

On historical battlefields, and in historical wars, after this point is where the real carnage begins. However bad it gets, however horrible the casualties before the losers collapse, they usually become an order of magnitude worse afterwards. Roman casualties before the troops panicked at Cannae weren't large. If they had instead of panicking managed to hold cohesion they could have aborted the majority of the Second Punic War right there by breaking Hannibal instead of him breaking them. The well-documented barbarities of the combatants upon the populace in Thirty Years War in Germany, the whole history of the Russian front in World War II, and countless other conflicts are more historical norm than anomaly, and had far longer casualty lists that the battles themselves.

The struggle we are fighting now is no different. Our opponent is not constrained by, indeed, makes no pretense that they are constrained by any consideration of "civilized warfare." They have told us repeatedly, by their actions, that they do not consider civilian targets to be "off limits," indeed, their attacks on civilians, and the number of civilian casualties, greatly outnumber their attacks upon our military and our military casualties.

Furthermore, they have told us repeatedly exactly what their strategic goals are: nothing short of the annihilation of our society and way of life as it exists. This is understandable, as our civilization's great memes are in direct conflict with theirs. Evolving wisdom as opposed to revealed historical wisdom. Individual freedom of religion as opposed to enforced submission to the rule of one particular religion. However recently and imperfectly we may have come to it, respect for women and minorities of all sorts, and participation in our ruling bodies, versus subjugation of women to men, subjugation of others to the dominant religion, heavy ongoing penalties for those outside the favored class of the ruling religion.

That western civilization has wronged islamic civilization is true, and yet so utterly misses the point as to be non-germane to the struggle. Both the chinese and russian empires (for that is what they are) have oppressed and wronged the islamic civilizations far worse than we; the islamics have not declared jihad towards them. Nor have all of the wrongs been unidirectional, indeed the far greater weight of wrong lies in what islamic civilization has done to western. They did not spring up as a major world religion in less than a century, dominating the world from the Pyrenees south through Africa and into Central Asia, from the Carpathians to Indonesia, by peaceful conversion. The Byzantine Empire did not fall to, and Eastern and Central Europe did not quiver under fear of Turkish missionaries for four centuries. Lepanto, and Cyprus, and Malta were not battles fought by ravening Christian hordes against randomly wandering peaceful preachers bound to spread the word of the love of Allah. All of these territories were won by islamic "missionaries" at the point of a sword. All of these battles were waged, at islamic insistence, with sword and gunpowder rather than sweet reason and exhortation, and had western civilization not fought them and won, the world would be a much poorer place than it is today. The very notion of "I disagree with everything you say, but will defend your right to say it," is not only completely alien, but anathema to them. The notion that observable reality trumps interpretation of scripture, however difficult it was to wring from the Catholic Church (among others), is now well established in Christian doctrine, Judaic doctrine, and every other world religion. The official position of Islam remains that if Mohammed said it, it must be true, and any representation with implications to the contrary must be heresy and therefore punished.

I do not fool myself that I can live with allowing the islamic civilization to win this war. They would demand our society make changes that I could not live with. I have two daughters and a wife I love; what the requirements of the society the islamicists would impose upon them I will die before I allow them to take place.

Nonetheless, there are those in our society who cannot abide or agree with any of the reasons that mandate this war, which has been going on since at least 1978 and possibly as far back as the 1930s. That we in the United States did not widely recognize it as a war until our faces were rubbed in it on September 11, 2001 in no alters the fact that this conflict is far older than that. But whether these people cannot believe any war is necessary, whether they would rather lose than fight any war, that they cannot believe this war is necessary, or if they simply wish to remove the political opposition from power and opposing this war is one obvious way to do that, they name themselves as allied to the enemy.

Lest I be misinterpreted, I am not claiming treason in general and I am not naming them traitors in aggregate, although there are certainly those in this country who have crossed that line into treason. But they are nonetheless useful to our enemies, and therefore, allies of our enemies in this war. There are even those who would rather be thought of as allied to the enemy than supportive of our own efforts in this war, and I do not call them traitor. You see, they are protected by our societal meme of political free speech, and where every other nation in the history of the world would name them traitor and expel them or more likely execute them, here they are protected, and rightly so, by this meme.

This does not mean that they are not exploiting this meme against us, the very civilization of which they are, theoretically and legally if not factually or emotionally, members.

Some day, we may have a perfect world of love and peace and rationality, but I really doubt it. We definitely are not there yet. Responses and actions that, no matter how noble their motives, do not consider real world constraints are foolish at best, contemptible at worse. Gandhi's methods of resistance to the British freed India because the British saw themselves as civilized people with a deeply engrained sense of limits upon the power and ability of the state to use force. Had India been a German possession, he would have been hanged or given a bullet to the back of the head before anything noteworthy happened, and gone down in history as a figure of derision such as Peter The Hermit (Additional article here). Had India been still in Mogul hands at the time, not only Mohandas K and his followers would have been executed, but likely their families and a large number of innocent bystanders to make certain of the lesson. Lest you have any doubts, our enemies in the War on Terror are, if anything, less civilized and constrained by their conscience than the Germans; perhaps less so than the Moguls. That they have failed to kill every Jew in the Middle East is more a measure of Israeli competence and determination than any moral constraint that our mutual enemies place themselves under.

Despite all of this, there are those who, for whatever reason, would rather the United States lost the current struggle. This is partly a measure of how long it has been since we really lost a war or had it fought on our own territory; not since the Civil War has any large swath of the country seen military action or the consequences of losing a war. They are immense, and if you're not familiar with them, I suggest you do some research. Within the last century, France during and after both World Wars, Russia and Poland and Japan and Italy and most especially Germany have all been devastated. Austria-Hungary and the Ottoman Empire are defunct because of the First World War. This one would likely be worse than either of those; this is a religious war, at least from the opposition viewpoint. They see themselves as Holy Warriors, sacred in the eyes of God because they are working towards the advancement of their religion. The christian conquistadores and other colonizers of the rest of the globe labored under greater constraints than these.

Despite our impressive military success and work towards democracy in Iraq, we are under daily assault from those working on behalf of our enemies. These assaults have the intent of breaking our will to fight, and not all of them use bullets or explosives. By far the worst, and most effective of them, are undertaken by people who are theoretically and legally members of our own civilization that would have us lose this war.

Thus far, I have observed three categories of those opposing the Iraq War.

The first is those who are opposed to any war, any violence, ever. They can be told by the things such as candlelight vigils before the war, and lines such as "All we are saying is give peace a chance." Well, you are entitled to your opinion and your viewpoint is worthy of a certain respect, but peace was given at least fifty chances over the twelve years between Gulf War I and Gulf War II. At some point, those of us who live in the real world where there are real Wolves circling about the edges of civilization looking for the chance to swoop in and gather some sheep for the slaughter are going to simply ignore you because your assertions do not match observable reality. I admire Gandhi and Martin Luther King greatly, without Dr. King in particular it is my opinion that we would have had a second civil war. Nonetheless their famous mode of response will not serve where the opponents are not themselves civilized.

The second is those who have always been opposed to this war in particular, as opposed to any war. They think it is possible, even likely that some war is justified, but not this one. They may even point to one specific example, so long as it is sufficiently far in the past. World War II is their usual example. They have always been against the war in Iraq, on the eve of it they were doing the same sorts of things as those in first category. They claim Iraq was not threatening us, unfortunately for their point of view neither was Germany at the point we went to war with them. In fact, Hitler was trying to do everything he reasonably could to keep the United States out of the war, ignoring many American actions that would have constituted a valid causus belli, and he quite likely regretted his alliance with Japan from the moment he got the news of Pearl Harbor onwards for the rest of his life. Churchill summed it up perfectly when, upon hearing word of Pearl Harbor, he exclaimed, "The War is Won!" Our role against Germany in World War II was entirely offensive, they staged not one single attack against the laws of war prior to the declaration of war; unlike Iraq, they did not even provide assistance or bases or training or money for such. They staged precisely zero attacks upon United States territory or possessions for the duration of the war. The only thing that war against Germany had going for it that war against Iraq does not is the Germans underlying almost frightening level of competence, driven by the Prussian war machine with its tradition and evolving doctrine that went back at least to Frederick the Great. Not for nothing was Von Clausewitz Prussian. After the Prussians had their metaphorical butts kicked all over europe by a Corsican Colenel for twenty years, as soon as they had a spare moment they sat down and analyzed what had gone wrong and figured out how to fix it. The Iraqi machine, by contrast, rose on its best days to the level of bumbling bozo. The men were brave enough and reasonably well equipped, but most of those leading them and ordering them were worse than a waste of space. Also, given the anti-western intellectual climate in many places, it doesn't hurt the publicity angle that the Germans were considered members of western civilization while the Iraqis are not. Note that this makes essentially no difference factually, it is a difference in perception only. The mental label you apply to gravity makes no difference to the fact that it remains within a fraction of a percent of 9.81 meters per second squared everywhere upon the surface of earth.

The third categry I observe is those that have either forgotten or choose to ignore the extensive case that was made against the war. These people are recognized by their adherence to and repetition of the "Bush lied!" meme. These people are worthy of no respect. The vote to authorize force was bipartisan and a majority of democrats joined in no matter their subsequent revisionism. It listed sixteen separate reasons for the war and the truth of fifteen have been established beyond dispute. The final claim, of "Weapons of Mass Destruction," is subject to significant dispute, but that does not invalidate or in any way lessen the truth of the other fifteen. You cannot fight fifteen sixteenths of a war. You're either in for the whole thing, or you are better off not fighting at all. Furthermore, there is significant evidence that Iraq was working on WMDs, as well as more evidence that they might have gotten some such devices well enough hidden not to be found or even over the border into Syria and the custody of their fellow Ba'athists. We gave them the better part of a year to hide them. Given that long for them to hide the damned things, the amazing thing thing would have been if we actually found any. The strongest claim that may stand up under scrutiny is that the Iraqi Ba'athists were not as far along as we thought they were.

The fact is, our president did not lie. Members of both political parties here in the United States had been making the same claim based upon the same intelligence for the better part of a decade. Every major foreign intelligence body in the world believed that the president's assertion about Iraqi Weapons of Mass Destruction to be fact. The president's claim was based upon this intelligence, which predated 9/11/01 by several years, and it is a matter of undisputed fact that Iraq had, in point of fact, deployed chemical weapons upon their own citizens. The pre-existing intelligence of Iraqi weaponry was not based upon this later claim. Public reports of the intelligence go back further than George W. Bush even declaring that he was running for President, and the left's sainted Clinton duo both made repeated claims on precisely this point, a fact that Bill Clinton has decided to conveniently and politically forget. To be quite frank, those in this category are political opponents of the president hoping to capitalize upon collective amnesia and encouraged by the fact that through long dedication their adherents hold control of our largest aggregators of collective memory, the legacy media. They are, at best, fairweather friends who were trying then to take advantage of public sentiment for increased personal popularity. At worst, they are scum, lying for purposes of political opportunism. They are trading in the well being of us all in exchange for the hope of capturing power, much as the Ducases of Byzantium and with much the same results should they succeed (There are eerie parallels between the Ducases and the Kennedys, IMHO).

Nonetheless, the fact that we have nearly fallen prey to these people for the second time in living memory, when most registered voters still remember (whether they are happy with such memories or not) the consequences of following their siren song of surrender and defeat has caused me to stop and consider: Have we the capacity to wage any war of the future to its full conclusion?

Wars are not, in general, quick affairs of a few months and then over. If they are, then they are most likely part of a larger series of conflicts such as the British (and Portuguese, and French, and Dutch) saw in India from the time of their first involvement right up to independence, North-West Frontier Province was never pacified for five years in a row, and anti-european agitators were never entirely absent from even the major cities. If those major cities were nonetheless safer than cities in Iraqi's Sunni Triangle today, it is because the weapons the Indian insurgents had access to were much less powerful and the British - the civilized British who allowed Gandhi to win India's independence rather than lose their opinions of themselves as civilized human beings - had far fewer qualms and constraints upon their actions than we do today.

The War in Vietnam from lasted from at least 1952 to 1975. World War II in europe lasted, at minimum, from September 1939 to May 1945, over five and one-half years, and had Germany not been so exhausted at the end and in denial until Spring 1945 about whether they were losing the war, the Werewolf resistance would have been much longer and more effective than it was. We never signed an actual treaty ending the war in Korea, merely an armistice. The revolutionary war lasted from April 1775 to September 1783, almost eight and one half years.

In all recent wars of the United States, there have been those who are against the United States fighting, continuing to fight, or prosecuting the war to its proper extent. They begin as soon as any prospect of violence is in the public forum, they continue with unabated criticism, justified or not, until we either collectively admit that they were correct in their viewpoint by quitting the war, or the point becomes moot, as during Gulf War I. By their actions, they are consistently attempting nothing less than the undermining of our collective will to resist, making them, by clear application of Sun Tzu's work, enemies of the United States and traitors de facto although not, because of the incredibly wonderful nature of our society which explicitly defines this heinous crime more narrowly than any other nation in the history of the world, traitors de jure.

But the reason that the point becomes moot, as in Gulf War I, was that our leader at the time caused us to quit and walk away on his own hook, having been too much exposed himself to the Doubting Thomases of antiwar hysteria. And so, having made the investment in lives, treasure, material and alliances necessary towards solving the problem, he deliberately allowed it to remain a problem for another person, another day, another investment of lives and treasure and alliances more dearly bought because he betrayed many of the ones we had on that day. War is not, in general, over within 100 hours or even 100 days, not unless it's a war of a sort such as to utterly destroy the enemy with nuclear weapons or similar arsenal. I do not want our defense policy limited to "Nukes or nothing!", and if those who have opposed every war in the last fifty years thought about it, I'm certain most of them would agree. Nonetheless, this is the de facto goal they are driving our defense policy towards.

Perhaps they would have us fight only defensive wars. This ignores everything history has taught us. First, no purely defensive strategy has ever won a war. Not once. At most, it has played for time while other things happened in the background with the eventual hope of taking the war to the enemy and giving them a reason to stop the war. Purely defensive strategy is a 100 percent pure, guaranteed loser. Second, from a strictly utilitarian viewpoint, if a war must happen, far better it be fought elsewhere. If our country is largely undamaged, we can far more afford to rebuild the enemy, as we did in Germany, Japan, and Italy, than if the war is fought here. If it's fought here, it's certainly a possible indicator that we have already lost. If we lose and our opponent is victorious, evidence is strong that they will not help us rebuild, indeed "reparations" are the historical norm, and (to our eternal credit) we are the only country to have ever

not only forgone reparations but actually given our former enemies the means with which to rebuild stronger than ever. I believe the reparations this particular foe would demand would be heavy indeed. Certainly the evidence of their stated goals points in that direction.

If we must fight only purely defensive wars, better not to bother. No such war has ever been won. Better to honestly decide not to fight. That way we suffer no devastation beyond what our enemies would require be inflicted upon us as a condition of our defeat. That way, at least, we will not squander our treasure upon a military we have no intention of allowing to win any fight. At least this will allow our warriors to choose to join other countries who could profit from their efforts, and perhaps we could even acquire some geld with which to pay our modern day danes by selling off our miltary capabilities. Not that it will make any long term difference. But the more danegeld we start with, the longer before the collapse, translating to more time and opportunity to enable those of us not too far gone in denial to evacuate the country elsewhere before its inevitable conquest.

The alternative? Not really that different from today in fact, but a world of difference in tone. We must respond (in the aggregate) more definitely, more immediately, and more activly to those who would have us bare our civilization's throat to the barbarian knife. Luckily, while the defeatist controlled mainstream legacy media still has all of the advantages in the fight, there now exist not only those outside of the media, but even those media who are not controlled by the defeatists (Ironically enough, the most obvious of these, the media outlet most maligned and yet most loyal to the interests of our country, is currently foreign owned!). There is a whole Community of Milblogs, many of whom are eyewitness reporting from the front lines on what is actually going on in Iraq and Afghanistan, and the news is much different, not only in tone but in content, from what is seen in the legacy media, which is neither unbiased nor even competent in the main to report this story. I certainly cannot name an editor or reporter for any major legacy media with relevant combat or military experience. There are many websites, of which I particularly recommend Mudville Gazette, Austin Bay, Indepundit, Michael Yon, fellow Raging RINO Argghhh!, Blackfive, Froggy Ruminations, and ROFASix (who is retired). From these you can certainly find others who speak to something you understand.

But if you really love this country, appreciate everything she has done for this world (a long laundry list in her short history), and want it to continue to help the world be its best, informing yourself is not enough. You must also refuse to allow those who ally themselves with our country's enemies to control the discussion. Do not allow them to spread their lies, misinformation, and propaganda. They are counting upon the average citizen's unwillingness to confront them, the meme of tolerance that they have twisted to mean the silence of their opposition while they spout their poison - while they regularly turn around and censor the same opposition who allowed them to speak, heaping abuse and allegations of "insensitivity" and "offensive speech" and just plain sarcasm, but rarely debating the actual issues. They can talk, but we, their opposition, have the same right to decry the nudity of their ruling ideas as they do of ours. Indeed, that their emperors are more naked than ours ever thought about being is the root of their "insensitivity" and "offensive speech" memes. Once they allow their ideas, memes, and assumptions to come in for critical analysis based upon observable facts, their emperor is indisputably naked. It is not cruel to do this despite the fact that their feelings may be as hurt of those of a small child. Small children do not grow to being responsible adults without learning the intellectual tools of defending an idea based upon fact, not because they "really really want to believe in it." They certainly do not become adults without the capability of abandoning a closely held precious idea because it does not conform to observable reality.

This work is never done, never over, but it is necessary. It may not be at the soldier's level of "The price of liberty is eternal vigilance," but it is certainly a lesser part of the same equation. If you're not willing to pay it, then get the hell out of the way of those who are.

Gods of the Copybook Headings

The concluding stanzas:

As it will be in the future, it was at the birth of Man

There are only four things certain since Social Progress began.

That the Dog returns to his Vomit and the Sow returns to her Mire,

And the burnt Fool's bandaged finger goes wabbling back to the Fire;

And that after this is accomplished, and the brave new world begins

When all men are paid for existing and no man must pay for his sins,

As surely as Water will wet us, as surely as Fire will bum,

The Gods of the Copybook Headings with terror and slaughter return.

Rudyard Kipling, 1919.

(HT to Volokh Conspiracy for reminding me of the Kipling)

UPDATE: Minor editing correction by inserting words "do not" into paragraph beginning "The struggle we are fighting" where they had been accidentally deleted.

UPDATE II (12/6/2005): I've been reminded by artki that there was a group of eight German saboteurs that were landed upon our shores via U-Boat in 1942. This invalidates the line about "zero attacks upon our territory or possessions during the war" as there was at least this one, albeit after war was declared on both sides and combat was joined. I do not believe it makes material difference to the argument, but it must be acknowledged.

Why You Should Ignore APR

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One of the things you get with every mortgage loan quote is an APR, or Annual Percentage Rate. There is even its own special form, the federal Truth-In-Lending (TILA) form.

This was mandated by congress back in the early 1970s as a way to give consumers some way to compare between competing loans of equal rate, and it is governed by Federal Reserve Regulation Z.

The problems with APR are threefold. First off, it is computed from numbers on the Good Faith Estimate, which are often intentionally and legally under-stated. "Mis-underestimated," to use President Bush's famous phrase in an entirely different context where it is not a good thing. If the numbers on the Good Faith Estimate are incorrect, the computations that result in the APR will be similarly incorrect.

Here is a routine example, from an unfortunate soul I encountered awhile ago. They told him they were going to do his $230,000 loan for 3/8ths of a point and $1895, which works out to about $3400 total, APR was listed as 6.136 on a 6% loan when he signed up. But when the final documents were ready, the interest rate was 1/4 percent higher, the points were 2.25 points, and the closing costs were actually over $4000. Total cost: $9400 added to his mortgage, and the APR on final documents was 6.568 on a 6.25% loan. It stands out in my memory because I had been competing for his business, and offered to do a back up loan because I was certain the first quote wasn't real. He didn't want to do the paperwork for a back-up loan, but he came back to me during his three day right of rescission. Unfortunately, rates had moved up and by that point I couldn't do anything he liked better, so he rewarded the company who misquoted his loan (to use technical parlance, lied) by getting them paid. Unfortunately, you can't go backwards in time with what you learn at the end of the process. You need to be right the first time.

The second reason to ignore APR is that it is an attempt to compress what is fundamentally at least a two-dimensional number into a one dimensional number. Remember back in school when you learned graphing on a "number line" and then a Cartesian Plane? Which of them contains more information? The Cartesian Plane, of course. APR is an attempt to force a Cartesian Plane onto number line. In order to do it, you need to make some assumptions, and you still lose a lot of information.

The third, most important reason to ignore APR is that the assumptions that Congress and the Federal Reserve mandate were reasonably based on the reality of the 1960s, which has now changed. Back then, people bought homes they were going to live in for the rest of their lives, and re-financing was much less common. People are now living in homes about nine years on the average, and refinancing about every two years. But the regulation still reads that the costs of doing the loan, which are included in the APR calculation, are assumed to be spread out over the entire term of the loan, even with ARMs and hybrid ARMs, which almost nobody keeps after the initial fixed period. With the term of most loans being 30 years (some 40 now), and the average person refinancing about every two years, this computation makes absolutely no sense as it exists today. The costs of the loan should be spread over the period that the person getting the loan is likely to keep it, not the entire theoretical term of the loan.

Let us look at the earlier example in this light. Let's assume that it's a five year ARM, and compute APR as if he's going to keep it the full five years of the fixed period, rather than the thirty years he theoretically could keep it. The APR would have been listed as 7.067% on the final documents.

Let us go a step further and assume that instead of keeping his loan 5 full years, like less than 5 percent of the population, he keeps it for something close to the national median of two years, and compute APR based upon that. His final documents would have listed an APR of 8.293 percent.

To offer a better strategy: At the time, I could have done the loan at zero total cost to him - literally nothing. Zero added to his mortgage, he pays for the appraisal but is reimbursed when the loan funds - at 6.75%, APR 6.750 no matter how you compute. Yes, the payment is $17.75 per month higher than what he ended up with. But he wouldn't have added $9400 to his mortgage balance. Let's compare these two loans five years out, when 95 percent of the population has sold or refinanced and is no longer reaping the benefits of that payment that's lower by $17.75 per month. If he has the zero total cost loan I could have put him into his balance is $215,914.00, and he has paid $89,506 in payments. The loan he ended up with, he's going to owe $223,449, and he's paid $88,441 in payments. Okay, he's save $17.75 per month, about $1065 total, in payments. But he owes $7535 more. If he sells the property and puts it all in a savings account, he would have been permanently ahead by $6470 if he initially choses the higher rate, higher payment, but lower cost loan. Not to mention that he would get $7535 extra all at once, as opposed to little dribbles of $17.75 per month that most people would never notice. If he buys another house, or if he keeps this home but refinances, he owes $7535 less with the zero cost loan. Let's say he gets a really great loan next time, with a thirty year fixed rate of 5%. That $17.75 per month he "saved" on his payment for five years is still going to cost him $376.75 per year, $31.40 per month for as long as he keeps the new loan. This is what comes from relying upon APR as a valid measurement of a loan.

This is not nitpicking. The so-called 2/28 and 2/38 are the most common subprime loans nationwide. They are subprime hybrid ARMS with an initial two year fixed period. People get into them because they don't have the money for a down payment. With a dozen agents in my office, I can't tell you when the last time I saw a first time buyer who had the money for a down payment. Considering that they're all straining to buy as much house as they possibly can get a loan for, this means they're in the subprime market. According to SANDICOR figures I saw a while back, something like 40% of all purchase money loans locally in the last year being negative amortization loans which have no truly fixed period and are practically impossible to keep longer than five years with the best will in the world. Another thirty percent plus, according to SANDICOR, were interest only, so my estimate is that subprime lenders have at least eighty percent of the purchase money market locally, and probably fifty percent or more of the refinance market. With the vast majority of these loans being of the short-term variety as illustrated above, APR is worthless as a measure of a loan.

Caveat Emptor

P.S. Just as a parting shot, let us consider the above situation in the context of a fifteen year loan that, to be insanely generous to the $9400 closing cost loan, the gentleman will keep until he pays it off completely. APR for the $9400 closing cost loan: 6.779 percent. APR for the zero closing cost loan remains 6.750. That's not a typo, the loan with the higher rate has the lower APR. Payment for the $9400 in closing costs loan: $2052.67. Payment for the loan with higher rate but zero closing costs: $2035.29. That's not a typo, either. The higher rate loan has a payment that's $17.38 per month lower, because you didn't add $9400 to the loan balance that you've got to pay back.

By the way, my reading of the schedule has me hosting RINO Sightings on Monday. Please send submissions to me or use the Meta Carnival Submission Form at Conservative Cat. And of course stop by here Monday November 21st for Raging RINOs!


On this day in history, Congress actually did something right. Senate Passes Bill to Shore Up Pensions


Art of the Blog has a good bit about Iowa's Senator Grassley (Chairman of the Senate Finance Committee!) being a pandering, demogogue who flunked Econ 1A with his desire for a Windfall Profits Tax. Praise whatever universal powers you worship for Senator Hatch.


Right Wing Of The Gods has the best take on the McCain amendment that I've seen.

McCain may be grandstanding, but all things considered, I think I like the idea of legally prohibiting torture. If there ever is an justified exception where it was necessary, that is what Presidential Pardons are for. Torture is not only unreliable, but is a bad business for everyone involved, and we should discourage it as much as practical.

Looks like Vodkapundit agrees.


No Government Cheese has as exhaustive an analysis of the contrast in legal reproductive rights of the two sexes as I have seen.

Let's get this straight: a woman has the right to do anything she pleases with a prospective child while she is pregnant, up to and including an abortion while she's having labor contractions, while a man basically has the right to keep his pants on, and if he fails to do that, he has no choices and basically unlimited responsibility.

Is there anybody who seriously claims women are the discriminated class here? I would be happy to debate it with you. Just suppose the situation was 180 degrees reversed. Woman has right to keep pants on, but if she fails to do that, no ability to divorce self from baby unless baby's father permits her to do so. Abortion without father's consent illegal, of course. Probably stoning offense. Must support baby throughout life. State will come after her for support. Can even be sued for support by child (or by state!) if father permits her to relinquish responsibility.

Ladies, is being a field hand in the Old Confederacy prior to the Civil War starting to look attractive by comparison? Because as bad as things were for women a hundred years ago, they were never as bad as they are for men right now.


World According to Nick has a good debunking of a pro-illegal immigrant article.


Wizbang has some excellent suggestions to the Donkeys on halting their slide to oblivion as a national party. Problem is that any or all of the suggestions require deep change in the Donkey party and its attitude. And the Donkeys themselves are deep in Denial about their need to change. If they can convince themselves "It's all about Evil Karl Rove and Cheating Chimpy McBushHitlerburton," then they spare themselves the need for any tough choices. And thus far, they appear to be convincing themselves.


Volokh Conspiracy has a nice piece about academic blogging being harder than normal academic writing. "Scholarship without a safety net." Excellent point, and I'm wondering if it won't contribute to more ideas seeing the light of day via serious follow up research. When you self-censor, nobody else sees it. If the prof's best friend happens to be someone who thoroughly but wrongly trashes an idea, it's gone. But once it's out in the 'sphere, anybody can run with it.


No Government Choose has a hilarious satire on on the left wing's take on the whole "Bush lied" meme.

Problem with tinfoil hats is that they actually increase the susceptibilty to mindrays.


Hugh Hewitt has the ultimate roundup on the Elephant Senators trying to woo the Donkey's MoveOff base.


Lot of stuff around the 'sphere today about the launch of Open Source Media. I'm having difficulty putting this into words, but my Edsel Sense is tingling. Many strong egos used to working alone, now trying to work together. They may have a good strong business plan, somewhere, and I realize that pre-launch any business plan has confidential elements, but they have observable effects even when they are confidential. I haven't seen any symptoms of strength yet. The conflicting things that lesser lights of the 'sphere have been told regarding participation would have me concerned, were I an investor.

I'm neither investor nor participant (I'm too new and too small to have been approached, and I didn't approach them as I have a business model of my own that has inherent conflicts with theirs in that it discourages me from accepting advertising). Furthermore, I wish them the best of luck, and the wildest of successes. But if they're trying to be more than a collective bargaining unit (i.e. blogger's union) to get better advertising rates, said effort does not yet seem apparent. Nor do I see the sort of activity which would cause a hypothetical blogger's union to succeed (and no, I'm not talking about kneecapping the competition).

Note to any Open Sourcer who may read this: I have yet to see a coherent mission statement. I have yet to see an "elevator ride" sales pitch. I have yet to see any kind of coherent business strategy articulated. I have yet to see any kind of editorial standards articulated. I'd really like to. I have been paying attention, because I'd like your venture to succeed (I'm probably going to want to advertise if I can be convinced it'll deliver bang for the buck). I poked around on your site today. Maybe I clicked right past them, but I didn't find any of those things. However on target Dilbert is with making fun of those things, when they're done right, they make all the difference. The fact that they seemingly haven't been done at all, and the company is "open for business" says something, and it's not good.

UPDATE: This paragraph got me noticed (in a good way) by legendary blogger Steven Den Beste! The happy dance will now commence! HT to Chapomatic.


UPDATE: Aaron's cc has spades nominations up. I was originally hoping to be able to get in as one of the small diamonds, as my primary issue sphere is appropriate for that. But he's gotten spades down as being issues sites willing to call a spade a spade. Well, that's this place, described precisely. Furthermore, my primary sphere (things financial) is completely unrepresented in the Spades thus far. Should I toss my hat in for the spades? (comment or email)

Biweekly Mortgage Spam

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Sometimes spam makes writing an article all too easy.

Here is a piece of spam I got today because my email at work contains "", with identifying information taken out. This goes to show that the financial ignorance of most mortgage providers is astounding.

Thank you for your interest in the X Broker Program. Our program is designed to help you provide more value added service for your clients, increase your fee income and help you generate more loans. By simply providing a one page custom amortization and a completed one page enrollment form in your loan packages you will achieve a high enrollment ratio. By illustrating the three key benefits of the Bi-Weekly Payment Program for your clients, they will clearly see that your goal is to help them accomplish their financial goals sooner by saving thousands of dollars in interest, paying off their mortgages 5-10 years early and achieving a low effective interest rate. Please find enclosed an example of a custom calculator and our simple one page enrollment form.

Or the client can just make 13/12 of the regular payment, or make an extra payment once per year, and achieve the same result without any cost. This option without cost lets the customer choose to pay however much extra they can afford that month, or pay nothing extra if they're on a tight budget. As I computed in this article, the fact that you're making payments more often saves you almost nothing. It's the fact that you're making an extra mortgage payment per year that's saving you all that money.

Getting started is easy. All you have to do is pay a one time setup fee of $99. You will be provided with custom online tools and resources as well as training upon request. To sign up, just go to our online broker enrollment form and complete the required fields, shortly after you will receive an email with your broker code user name and password. Please be sure to save this email. Once you have these instructions you will be able to go to and access your custom calculator and other online resources.

So I (the provider) pay a sign up fee of $99 for an internet driven startup. Cha-ching!

The X program is a great value at $395.00. You earn 300.00 on each enrollment, X retains only 95.00. We also charge a $3.75 per debit fee (emphasis mine). Our customers truly appreciate our one-time only enrollment fee, if the client moves, refinances or the loan gets sold, X will simply take them off the system and put them back on with the new loan information. Most customers prefer to pay the enrollment fee and choose the 3 debit option, where we will take an additional 135.00, 130.00 and 130.00 over the first three debits to comprise our one-time fee. We pay commissions on the 15th of the month for all enrollments on the system the month prior. Once you receive your approved broker email you'll be able to start signing up clients immediately.

Now we get to the real meat of what's going on. For me doing the work of signing someone up on the internet, they get $95 to start with, while dangling out a $300 stroke to mortgage providers to betray their clients by getting them to pay for something they could do themselves, with more flexibility, for free.

Then, once this is started, they make $3.75 per transaction, every two weeks, for an automated process that costs them somewhere between $0.25 and $0.50. Great work if you can get it. Three guesses who gets stuck with all the problems if they screw up.

This is one more reason why you want to shop your mortgage around and get multiple opinions. Anybody wants you to pay anything for a biweekly payment program, that is a red flag not to do business with them.

Caveat Emptor


New computer was delivered Monday. Finally got it configured about 9PM. How nice it is to have a sharp, easily readable display! Will put the other one in the shop to use as a "learning" computer for Hilda. Will go get a router so both computers can use the nifty new laser printer (or the ancient inkjet when we want color).

And with the largest portion of writing for the commercial sister-site done, I should be back at the site mines more often.


Carnival of The Capitalists is up! Recommended: Financial Methods for his report on the San Francisco Fed noticing what I'd written here back on June 23rd.

Carnival of Personal Finance is also up!

RINO Sightings is also up!

Carnival of Liberty is also up! Recommended: Pubcrawler, who stands up for the politically unpopular but correct notion that the oil companies are not "price gouging."


I'm a Numenorean. Which race of middle earth are you?


Michael Barone has a thoughtful column up about President Bush finally deciding to take the battle back to those who have been slandering and libelling him about the Iraq War. I have long wondered why the administration remained silent on this point. Perhaps the Eeevil Karl Rove was selling the Donkeys rope to hang themselves with. Because the record is decisively damning against them.

Michelle Malkin has a wonderful article going into the nuts and bolts of the Donkey "Bush Lied" meme, and why they thought it would work. They've got way to google the question automatically. For those who haven't seen it there, here it is:


La Shawn Barber has a good entry aggregating ways to help boost your traffic. If you have a site of your own, you can always pick up a couple good tips by following her "how to build your traffic/following" posts.


Looks like Jane of Armies of Liberation was on al Jazeera slamming the Saleh regime in Yemen like she does so well!

She also notes that UPI has taken note of Yemen's arms trafficking, a fact she brought attention to months ago. Maybe somebody at UPI finally got around to Googling Arms trafficking. It puts them well up on the competition.


Jawa Report has a wonderful post up about effective (and not so effective) weapons used by our troops and the insurgenst in Iraq. I don't get dozen's of emails direct from the troops in Iraq, but everything I read in the post is on a par with what I'd expect from my knowledge of the weapons. Never served in the military, but a long time ago, I had occasion to shoot on ranges with M-14 and M-16. I know which I'd want to be plonking bad guys with. Anybody has access to 9mm and M1911A1. Okay, the 9mm is hands down more accurate - not that it matters (much) at handgun ranges. If you're close enough to want to use a handgun, you need to put them down NOW!


Nominations for The Weblog Awards are now open.

I am not going to nominate myself (that's gauche) but I am going to make it easy for others to nominate me in the categories appropriate for this site.

Best of the top 500-1000 Blogs

Best Business Blogs

(I am also eligible for Best New Blog, but think Don Surber stands out amongst sites I know are less than a year old, and probably deserves to win.)

One of the things that always seems to be aiming to confuse mortgage consumers is advertising based upon whether the loan is fixed rate, and for how long.

First, I need to acquaint you with two concepts: amortization and term. The term of the loan is nothing more than how long the loan lasts. How many months or years from the time the documents are signed until it is done. At the end of the term, the loan is over. In some cases, the payoff schedule (or amortization) will not pay the loan off in this amount of time, leaving you with a balance which you must pay off at that time. When this happens, it is known as a "balloon payment."

Amortization is the payoff schedule. In other words, if the term was long enough (it isn't always) how long would it take you to pay the loan off with these payments?

There are four basic types of loan rate determination out there. The first is the "true" fixed rate loan, the second is the "true" ARM, or Adjustable Rate Mortgage, the third is the hybrid, which starts out fixed but switches to adjustable, and finally, the Balloon.

"True" Fixed rate loans have the interest rate fixed for the entire life of the loan. Loan term of a true fixed rate loan is always the same as amortization period. Until you pay it off or refinance, the rate never changes. They are most commonly fixed for thirty years, but are fairly common in fifteen year variety, and widely available in 25, 20, and even 10 year variants, and the 40 year loan appears to be making a comeback. The shorter the period, the lower the rate will be at the same time, but the higher the payment, as you have to get the entire principal paid off in a much shorter period of time. I seem to always use a $270,000 loan amount, so let us consider that. Making and holding a few background constraints constant, a few days ago from a random lender a thirty year fixed rate loan was 6.25% at par (no points, no rebate). The 20 was 6.125, the 15 year 5.75. The 15 sounds like a better deal, right? But where the payment on the 30 year fixed rate loan is $1662.43, the payment on the 20 year fixed rate loan is $1953.88, and the payment on the 15 year loan is $2242.11 So you may not be able to afford the payment on the 15 year loan. (This particular lender doesn't have 25 or 10 year loans.)

Some thirty year fixed rate loans are available with interest only for a certain period, usually five years, and then they amortize over the last 25 years of the period. Some people do this because they expect a raise in their income over the next few years, and some just do it for cash flow reasons, planning to sell or refinance before the end of the fifth year. Using the example in the preceding paragraph, this would have you making a monthly payment of $1406.25 for the first five years, then $1781.11 for the last twenty-five.

If there is a pre-payment penalty on a thirty year fixed rate loan, it is typically in effect for five years. Considering that over 50% of everybody will refinance or sell within two years, and over 95 percent within five, this is an awfully long time for a pre-payment penalty to be in effect. Practically everyone with a five year pre-payment penalty is going to end up paying it.

"True" Adjustable Rate Mortgages, or ARM loans, are adjustable from day one. The interest rate is, from the time the loan starts, always based upon an underlying rate or index, plus a specified margin. There is no fixed period whatsoever on a "true" ARM. This makes them in general hard to sell, because people cannot plan their mortgage payments, and except for the Negative Amortization loan (also known as "Option ARM" or "Pick a Pay") these loans are very rare.

(If someone offers you a rate that appears way below market rates, like 1%, they are offering you a Negative Amortization loan. The 1% is a "nominal" or "in name only" rate, the real rate on these is month to month variable from the start based upon an underlying index, making this a "true" ARM.)

If there is a prepayment penalty on a "true" ARM, it must therefore be for a longer period than the fixed period, which is zero. You are taking a risk that you will have to pay a pre-payment penalty because the rate did something that you did not anticipate, and you may not be able to afford the payments if the rates change but the penalty is still in effect.

Rate adjustments on ARMs can be monthly, quarterly, biannually, or annually, with monthly being most common, including for every Negative Amortization loan I've ever seen.

The third category is the hybrid loan. Hybrids are often called Adjustable Rate Mortgages, and most loan officers are really talking about hybrids when they discuss ARMs. You should ask if uncertain, but in general, everybody from the lender on down calls them ARMs (I myself almost always call them ARMs), but when you get down to the technical details, they are a hybrid. Hybrids start out fixed rate for a given period, then become adjustable. The overall term of the loan is usually thirty years, but the forty is becoming more common again for subprime. Unlike Balloons, if you like what they adjust to, you are welcome to keep hybrids for as long as they fit your needs. There is no requirement to refinance a hybrid after the fixed period.

Hybrids are widely available with 2, 3, 5, 7 and 10 year initial fixed rate periods, and they may also be available "interest only" for the period of fixed rate at a slightly higher interest rate. Two years fixed is typically a subprime loan, and while five and seven and ten year fixed periods are available from some subprime lenders, they are more commonly "A paper" loans. Three is common both subprime and "A paper". Once they begin adjusting, "A paper" typically (not always!) adjusts once per year, while every hybrid subprime I've ever seen adjusts every six months.

WARNING: I often see hybrid loans advertised and quoted as "fixed" rate loans, and you find the fact that they are hybrid ARMs buried in the fine print somewhere. Yes, they are "fixed rate" for X number of years. But this is fundamentally dishonest advertising. This is one of the reasons I keep saying that any time you see the words "Fixed rate," you should immediately ask the question "How long is the rate fixed for?" Please go ahead and ask, for your own protection. Ethical loan officers know that people get sold a bill of goods on this point every day, and so they're not offended. And you don't want to do business with the unethical ones, right?

Now, I am a huge fan of hybrid loans myself. I will go so far as to say that I will never have a thirty year fixed rate loan on my own home (unless the rates do something economically unprecedented, anyway). You get a lower interest rate because you're not paying for an insurance policy that the rate won't change for thirty years, without jacking up the minimum payment to something you may not be able to afford. Most people voluntarily abandon their thirty year interest rate insurance policy (also known as "Thirty year fixed rate loan") within about two years anyway. So why would I want to spend the money for that policy in the first place, when I'm likely to only use two or three or five of those years?

Nonetheless, particularly with subprime loans, you need to be careful. I have seen precisely one subprime loan in my life without a pre-payment penalty, and I've seen a lot of loans (at least thousands, maybe tens of thousands - I wasn't counting at the time - where your average real estate agent has seen maybe a few dozen, and your average bank loan officer maybe a few hundred). Many loan providers, even "A Paper" loan providers will stick you with a three or five year pre-payment penalty on a two year fixed rate loan. Why? Because it increases their commission. So if you take one of these loans, you will have a period of time when you don't know what the rate will be doing, but if you refinance or sell during that period, you will have to pay your lender several thousand extra dollars. This puts many people on the horns of a dilemma - whether to keep making payments they can't afford, or pay the pre-payment penalty. The bank wins either way.

One final point about hybrid loans. Once they adjust, they all adjust to the same rate plus the same margin. Unless you need the lower payment to qualify for the loan, it makes no sense to pay three points to buy the rate down on a five year hybrid ARM (or anything else) when it takes eight to ten years to recover the cost of your points. Why? Because you'll never get the money back! When the rate adjusts on the loan you paid three points for (IF you keep it that long), it goes to the same rate as the loan where they paid all of your closing costs. Judging by the evidence, most people don't understand this.

The final category of loan that I'm going to discuss here is the Balloon. This is a loan where the amortization is longer than the term. So if the amortization is thirty years, you make payments "as if" it were a thirty year loan, but since the actual term of the loan is shorter, you will have to sell, refinance, or somehow make extra payments before the loan term expires. The thing I don't understand is that Balloon rates are typically higher than the comparable hybrid ARM, despite the fact that you either have to come up with a large chunk of cash at the end or sell or refinance prior to that. This makes them a less attractive loan. Furthermore, pre-payment penalties are every bit as common. Balloons are widely available in five and seven year terms with thirty year amortization, and I've seen three and ten, as well. Probably the most common "balloon" loan, though, is for those who do a second fixed rate mortgage, where the best loan available is usually a thirty year amortization with a fifteen year balloon. Since over half of everybody has refinanced within two years anyway, and 95 percent within five, the fact that it's got a fifteen year balloon payment just doesn't affect a whole lot of people.

WARNING!: I have seen Balloon Loans mis-advertised in the same way as I talked about with hybrid ARMS a few paragraphs ago. I regard this as even more misleading than advertising hybrid's as fixed. Unfortunately, many states do not have good regulations on rate advertising, and in many others, enforcement is lax. When a loan provider advertises, the entire game is to get you to call, and then control what you see and what you learn from that point on. Your best protection from this is to talk to other loan providers. Shop around, compare offers, tell them all about each others' offers. If something is not real, or it has a nasty gotcha!, if you talk to enough people, somebody will likely tell you about it. If you only talk to one person, you're at their mercy. Even if you somehow ask the right question to discover the gotcha!, the people who do this have long practice in distracting you, or answering another question that somehow seems similar enough that you let it go.

Caveat Emptor

Apology in advance

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My home computer has just developed a fault somewhere in the video display part of the system. I can read it, but it's really difficult. We're hoping it's just a loose card or dirty contacts, but we won't know until we have a chance to look at it.

Luckily, we just ordered a new home computer a couple of days ago. It might even be here today. But until we get it and get it set up, new articles are going to be hard.

I hate entropy. I mean I really hate entropy.

UPDATE Friday 11 November: No new computer until Monday. I got today's article done between and during phone calls at work. Hoping to have opportunity to get into innards of current one, to see if the video card is loose or the contacts dirty, after the girls go to bed tonight. Otherwise, it just hurts too much to use.

Please, take some time to honor veterans today, and if you see someone in uniform or that you know is or was in the service, thank them in person. They've been where freedom's rubber hits the road.

Well, it looks like California lived down to its reputation. Propositions 74 (change the "teachers make two years and they're impossible to fire" rule), 75 (change law so members have to approve public union political disclosures), 76 (revoke the schools "license to loot") and 77 (revoke part of the Incumbent Politicians Protection Act by giving district drawing authority to judges), all failed. The only bright spots on the statewide news were that 78, 79, and 80 also failed.

I realize it was necessary, but special elections are activists elections. It it worth noting that in San Diego where we elected a new mayor, 74 and 75 got the majority of the vote. Had Arnold waited a year with a governor's race on the line, it might have made the difference between losing all four and winning all four.

Captain's Quarters has a different take. He thinks it's a hole in Arnold's mandate from two years ago; I disagree. I think Arnold got impatient and made a large tactical error by holding the election in an off year.

Can he revisit the issues? I don't think so. It's one of those "The decision is made" things. So this is not good by any stretch of the imagination.

Hugh Hewitt has some advice for Arnold. Comprehensive, well reasoned - and I'm not sure I agree. California is so far to the left it's not funny. You can't win statewide as a hardliner on the right. But Wilson and Deukmejian won by running as centrists, and except for Deukmejian's first win, they were fairly wide margins. I agree that Arnold should appoint more center-right judges. But I'd be more optimistic of his chances if he dragged Pete Wilson or George Deukmejian out of retirement than Bruce Herchensohn.


HT to Instapundit for a pointer to an Opinion Journal article about what is wrong with the CIA: Basically everything.


Aaron's CC is creating a deck of Cards with prominent Blogs as various cards. Nominations for facecard clubs are up. Forced to choose just one, I went with Mudville, but I also would like to mention Blackfive, Indepundit, and (Fellow Raging RINO) Argghhh! as being particularly voteworthy.

Been reading some of your informative tips. I am looking at refinancing and getting a $378000 mortgage. Now in the case of having a 3 yr prepay penalty, vs paying 1.5% in points to make it a 1 yr prepay, am i right in assuming it's wiser for me to pay the points than accept a three yr prepay when i know I will sell/move within 2 yrs? Any info you can provide would be great. I'm wondering if I'm missing something here.

I think they points would cost me around $5800.

I compute 1.5 points on $378,000 as being approximately $5756.

Here in California, the maximum pre-payment penalty is six months interest, and that is the industry standard nationwide for when there is a pre-payment penalty. A few lenders will pro-rate it, but for the vast majority, they will charge the same penalty on the day before it expires as on day one. This is pure profit, and they're generally not going to turn down pure profit any more than most people will turn down a bonus. So if your interest rate is 6 percent, you're going to pay a 3 percent pre-payment penalty if you sell or refinance before the pre-payment penalty expires. For Negative Amortization loans, the pre-payment penalty is based on the real rate, not one percent, of course.

On some loans, the pre-payment penalty is triggered by paying any extra money. One extra dollar and GOTCHA! But probably eighty percent or so give you the option of paying it down a certain amount extra each year, usually 20 percent, without triggering the pre-payment penalty.

Assuming that it is a case of you won't move in less than one year, this is equivalent to the prepayment penalty on a loan with interest rate of between 3.05% (100 percent prepayment penalty) and 3.81% (80% prepayment penalty). Since even the 1 month LIBOR is a little over 3.8 percent right now, this seems like a cut and dried case of pay the point and a half.

Of course, if there is a possibility that you will need to move in less than one year, paying these 1.5 points could well be a costly exercise in futility. I can't begin to gauge that risk without more information. But if you're in any number of professional situations ranging from the military to corporate executive, this is common.

Given that you're talking about pre-payment penalties, you're likely in a subprime situation. Subprime has a fairly uniform rate of 1.5 points of cost equals 3/4 of a point on the interest rate. I'm going to assume you're getting about a 6.25% rate. If you decided to buy it off via rate, you'd be looking at a 7% rate.

Let's punch in the two loans. $383,750 (balance with 1.5 points) at 6.25% gives you a payment of $2362.81. Running it out 24 months gives you a balance of $374,467. You have spent $56,708 on payments.

378,000 at 7% gives you a payment of $2514.84. Running it out 24 months gives you a balance of $370,043.00, and you've spent $60,356 on payments, while paying your balance down $7957.

Now, assume you sell the home for $X at the end of this period. The first loan saves you $3648 in interest. The second loan gives you $4424 more in your pocket in two years. The second loan, with the higher interest rate and higher payment, as opposed to the higher balance, nonetheless saves you $776 as opposed to the loan with the lower interest rate, and also leaves you more money with which to buy your next home, which means lower cost of interest on your next home loan, as well. Of course, this is subject to some pretty significantly naked assumptions as I don't know anything more about your situation. Furthermore, it assumes that your income is not marginal, and that you would qualify for both loans. It is perfectly possible that you would qualify for the lower payment, and hence the lower rate would be approved, but not be able to qualify for the higher payment associated with the higher rate (The reverse is not the case). Finally, I assumed that because you know you're going to have to move in two years, you are looking at a two or three year ARM in the first place, as opposed to a longer fixed term.

I hope this helps you. If you have any further questions, please let me know.

Caveat Emptor


Carnival of Liberty is up!


Captain's Quarters has an excellent post about the demographics of suppressing the riots and actually governing. Money quote: "the combatant ratio in any ethnic war may thus be one to one." That's a wonderful ratio for guerilla activity, absolutely unacceptable in terms of actually governing, if and when the riots are contained. France has been pretending that an obvious problem didn't exist for thirty years, not realizing that they were giving away their country (or at least large chunks of it), and I just don't see them getting it back. Even if they did, given the demographics of the situation, they won't be allowed to keep it. Time to emigrate, because Arabic will be the official language of what's now France within two generations at the very most.

Q: What did one moslem say to the other moslem?

A: We'll always have Paris!

LGF has more about the explicitly racial and ethnic nature of the riots. He also has Kos blaming the riots on Bush (or at least running a poll where the options are France, Bush, and the Rioters, in that order. The votes as of when I looked are 838, 337, and 2136, respectively, so maybe there is hope for almost two thirds of them.

The more I read on the left, the more I think that Eric Flint has a point about Moby Dick in this book. Is it looking a lot like the Liberal Captain Ahab has cast George W. Bush as the Great White Whale?


Powerline has two articles worth reading. One on the CIA's attempt to influence domestic politics, one on the contradiction between investigating Libby and Rove for leaks, while not investigating leaks of actual classified government intelligence to the newspaper. Why aren't those reporters being subpoenaed? Why aren't they being forced to divulge their sources?

Chortle! Hugh Hewitt chimes in with "What did Wilson not know, and when did he invent it?"


Vodkapundit has an excellent essay up on what kind of war this is, what the status really is, and who's really fighting it. Here's a hint: It's not about military position. The US won all the battles in Vietnam.

I fully agree with him that if we lose, it will be because of the media. That's one of the (lesser) reasons why I'm here. Even if it's only with a few hundred readers a day, just because I can only do so much is no excuse to do nothing.

I want to ask the next question that Vodkapundit failed to ask, however: What happens to our domestic politics after we blame the media for losing this war. Well, nothing, really, because if we lose it wil be because we've essentially been conquered. Maybe there won't be Islamic soldiers trooping through our streets a la Germans in 1940 Paris. But we'll be as much under their thumbs as Vichy was under Hitler's (and he rolled in and conquered the rest of France two years later because they were insufficiently submissive). Freedom of the expression will mean, in al practicality, freedom of Islamic expression, which is to say that you are free to worship god how the mullahs tell you to, free to pay the dhimmi tax, free to have fatwas issued against you for offending the clerics.


Mudville Gazette has the very moving story of a survivor of Ia Drang, on the fortieth anniversary of that battle. A man who decided to fight instead of give up, and lived to tell the tale because he refused to give up.


Asymmetrical Information has an excellent post on the subject of abortion, with which I very much agree. Bottom line: The presumption behind going to get an abortion is that you're stopping a human life. I don't agree that it's necessarily murder. It's still not something I want to have be an easy thing to do. In fact, I want it as difficult as practical without outright prohibiting it.


If you're reading this and haven't yet voted, please remember to do so. Particularly in California, where I have already voted in favor of Propositions 74, 75, 76, and 77. The choice is clear: Do you want more of what we've been going through, or do you want the possibility of change for the better? No guarantees, of course. But if we continue on the course we're on, it's a certain disaster. Now I have to get home and watch the kids so my wife can vote!

Activity other than financial and real estate type articles may be light for a while. I'm facing a couple of crunches.

Carnival of Personal Finance is up.

RINO Sightings is up. Recomended: World According to Nick, Pigilito Says,

Carnival of the Capitalists is up. Recommended: Conservative Cat (this is why I tend to prefer FIFO accounting, but most executives, whose bonuses depend upon relative profits, prefer LIFO), The Enterpreneurial Mind, Coyote Blog, Catallarchy, Skeptical Optimist

California Conservative has the inaugural of the Carnival of Arnold. I've given my viewpoints at the bottom of this post.


The right way to do it: Australia foils major attack

Captain's Quarters talks about the planned nature of the riots in France.


Victor Davis Hanson is in favor of removing the agricultural subsidies. We've been trying to get rid of these for thirty years. Why are they still here?


HT to La Shawn Barber for the link to We Hire Aliens, a site listing companies that hire illegals and with resources to report them.


"So much for fact checking" Department: LGF notes that Jimmy Massey, who has been accusing our armed forces of various atrocities, has been determined to be lying.

Michelle Malkin has the categorical rundown. I should have looked there first; she's been all over it while I took the weekend off.


Dr. Sanity has a long and thoughtful post about the civil rights movement and the fact that they have moved away from their previous ideals. I can not think of one instance after 1970 of any "Civil Rights Organization" who, when faced with a choice between increasing their own power and furthering the cause they are allegedly pursuing, chose the latter course.


Instapundit makes a good point in one of his rare site editorials. There's a difference between real torture and just icky.


This woman made herself a victim

stayed in a hotel for 7 weeks looking for my "Dream Home." And, when I found it, even though it wasn't in my price range, I knew I would do anything I could to get it. I was vulnerable, emotional and became a victim.

Actually, that is not quite accurate - I made myself a victim.

First mistake: shopping outside your price range. Assuming that you get it, the bottom line is that you are going to have to make the payments, every month, from here on out. I can get you the loan, any competent loan officer can get you the loan, but I would not even look at any home not in my price range. First, it's a useless exercise. Second, the reason it's outside your price range is because it has something extra. So it's going to be more attractive to the average buyer than the ones you are looking at. Many agents will capitalize on this by showing you such a property, knowing that a large percentage will fall in love with the property right there, and bingo, they've got a higher commission for an easy sale. Despite their highly touted "code of ethics" the proportion of Realtors® who do this is every bit as high as regular agents. "Well, it's just a little bit. I can handle the extra." Demand to know the asking price before you agree to view the property, and if it is outside your range, refuse to go. Fire any agent who suggests this to you more than once. I'd fire them the first time, myself.

Being self-employed, (actually at the time, I was on disability from hand surgery), the only loan I could qualify for was a Stated Income Loan. That's where you just tell them what you make, and it is not verified except through two years od tax records and your FICO score

This is not correct. You do sign a 4506 form, but the whole idea behind a stated income loan is that the bank agrees not to verify your income. They verify only that you have a source of income, and the amount you claim you make must be reasonable for someone in your profession. If you can show income via two years of tax returns, that is a full documentation loan, and you get better rates (See this for information on documenting income). However, documenting income via tax returns is tougher because whereas the bank loves doing it, the number they will accept is the number that is after all the write-offs, often a significantly lower number. This is the reason for the stated income loan in the first place. Many business people, particularly small business people, are earning a heck of a good living but they find legal ways to pay for most of it with before tax dollars that they then are actually able to deduct. So they're living as if they make $10,000 per month, which they do, but the tax return only shows $3000 per month. Stated Income is intended to serve this niche, not the niche of people on weekly paychecks who don't really make enough money to justify this loan.

six months later, when the interest rate changed, my payment went up. But I still had some disability money, so I didn't think about it - I just knew work would come.

What she is saying here is that she had to accept a short-term adjustable rate mortgage in order to get a rate low enough to qualify. Or that she was sold one on the basis of "low payment" and she didn't bother to check the fine print.

There are loan officers and real estate agents and realtors out there who make one heck of a living off the fact that people buy loans (and homes) on the basis of payment. They have "interest only" and even negative amortization loans out there. I'm not going to say you should never buy a home with a negative amortization loan, but it's a good way to get yourself in serious trouble. Let's just say that of all the home loans I've done (and I've done a lot of loans) I've never seen a situation where I would recommend it.

Look for terms that are going to be stable for at least a couple of years, particularly if this is your first time in a home or the payments are going to be near the upper edge of what you're comfortable with.


• Did not shop lenders (I felt I wasn't in a position to).

• Did not tell the truth about my income.

• Took the first loan they offered me.

• Didn't read the fine print.

• Did not fix a budget and stick to it.

• Bought way too much house.

Fact: If anybody tells you not to shop lenders, what they are really telling you is that their loans are not competitive and that they are afraid of the competition. The National Association of Mortgage Brokers got a law through congress a couple of years ago that all the mortgage inquiries within a thirty day period count as one inquiry, so it no longer hurts your credit score to shop around. I tell everybody who comes to this site to apply for a back-up loan if they can find somebody willing to do it.

There are issues out there with loan providers who will tell you with a Good Faith Estimate or, in California, Mortgage Loan Disclosure Statement, that they can do the loan on a given set of terms when they have no intention of and no ability to actually deliver those terms. Certainly the HUD 1 form at the end of the loan process is nothing like the earlier form. Furthermore, many loan providers cannot or will not deliver within a stated time frame, which is critical when you're buying, and still important when you are refinancing. So look for someone who's going to stand behind their quote with something that says they mean it.

(It's hard for anyone you'll actually be able to talk to to use the word "guarantee" with regards to a loan. It's not just loan providers who pull unethical tricks. People attempt fraud regularly. Furthermore, there are "nobody's fault" impediments that happen regularly, and they always change the transaction. That property doesn't appraise for enough value is probably the most common. Only an underwriter can give a loan commitment, you as a loan applicant will never talk to your underwriter, and until you've got that commitment, there is no guarantee it can be done at all. So the real guarantees are always conditional).

Here is a List of Red Flags, real estate and loan practices that should have you running away, and here is a list of Questions to You Should Ask Prospective Loan Providers. Those who are doing business honestly should be happy to answer these sorts of questions - it gives us assurance that we're not going to be competing with somebody blowing sunshine and wet sloppy kisses at you. Because the fact that you're asking the questions means you're not going to do business with those who give you unsatisfactory answers. Finally, here is an article on What to look for at Closing, to make certain all of your due diligence paid off and determine if you should go with your backup loan provider.

Caveat Emptor

(and I'm always happy to get suggestions for additions to either of the lists)

I just got a piece in my mail today from the Donkey Party. They want me to vote against Prop 75. Here are their arguments:

"If Prop. 75 passes, who will stand up for patients?" says the nurse's union representative.

I have a lot of respect for nurses. My mother became a nurse at 52 (retired now and in another state), and my stepmother has been one for almost forty years. But my stepmother is voting yes on 75 because even though she's a Democrat, she's tired of being forced to spend her money to support the politics of her union leadership. It's not about standing up for patients. They can do that, and they can talk to other people who love to do that. The unions can go to voluntary adjunct PACs. But they don't want to because then they have to limit stuff to what the membership will voluntarily contribute to.

"If Prop 75 passes, who will stand up for our kids?" Says the teacher's union representative.

How about the parents, who also have no conflict of interest? I have about two months experience right now with public schools, and I am already disgusted beyond belief.

In college, one of the good history profs had us do a history of literacy project. The 30 second version is that ancient China and ancient Egypt had thousands of symbols for a written language. As a result, it took a lifetime to achieve literacy and literacy levels were very low. Even the noble classes were rarely fully literate. Later, humans moved to syllabaries of about 1500 symbols, and literacy rates went up, and anybody of significant wealth became at least partially literate. Finally, we went to alphabets that create phonemes and literacy became easy and literacy rates went through the cieling because now anybody can learn to read, and in a relatively short period of time. Until after World War Two, this was the method taught in our schools here and everybody who went to school in the United States learned to read. But it requires a certain amount of boring drill and repetition.

Whole language is more fun and less boring for the teachers, and it "respects the children," but it moves us backwards along the literacy curve at least to the Phoenicians. Nonetheless it is what is taught in our public schools, and the "sight-words" the teachers insist upon teaching are a whole language idea.

This situation is what is behind the commercial success of the "Hooked on Phonics" movement. It might as well be a direct subsidy. Actually, a direct subsidy would be better, because then we wouldn't need to pay for teachers and classrooms to teach the less effective "whole language" method. But it is the teacher's unions and professional educators who want to teach "whole language." And this is "Standing up for our kids"? I don't think I've ever seen the CTA or NEA "stand up for the kids." I've seen many individual teachers do so, but never the unions. What they stand up for is pay raises and less work and political machinations to get them, and political machinations on the part of whichever politicians that the union leaders see as more supportive of their power.

"If prop. 75 passes, who will stand up for safe communities?" The Firefighters union representative. He does have part of a point. The employment related speech of Union representatives is legally protected in ways that ordinary workers are not. But he doesn't need to spend union members dues collected at the point of a metaphorical gun on political contributions in order to do it. The union rep who has a real safety issue can call any news provider, down to and including me, and get free press for any real safety concern or improvement. And what they're doing the vast majority of the time is standing up for (you guessed it) more money and the benefit of politicans that are perceived as being more receptive to union leaders.

I've been an elected local-level union leader. Twice. Right here in San Diego. But we had a Political Action Committee where the workers contributed dollars voluntarily instead of having them mandatorily deducted from their paychecks whether they want to or not. It gave the leadership motivation to keep it real and keep it focused on our issues. And it was successful. I've never seen any other union wage such a sucessful political campaign so cheaply. So I suspect that Proposition 75 is really going to prove a long-term blessing to union activism.

So far, I have seen no argument against Proposition 75 that passes logical muster. (Don't even get me started on that nonsense about extending it to corporations. You will bleed by the time I'm done.) I have even tried to construct them. I can't. Maybe I am not properly motivated, you say. Then construct one. Or vote "Yes".

(Mild language warning applies, but nothing you can't say in prime time broadcast TV)

When I was twelve years old, my uncle Robert introduced me to the writings of John Masters. John Masters was an officer in the Indian part of the British Army in the waning days of the Raj, starting in 1934 and ending shortly after World War II. At the tender age of 24, he was named battalion adjutant of the second Battalion, Prince of Wales Own Fourth Gurkha Rifle Regiment. The adjutant's job in the British Army at the time was different in many ways from modern counterparts in the US Army. A large part of the job was to look impressive. "Before the adjutant's feet, pits were filled, obstacles became smooth paths, and order arose out of chaos."

Did this happen on it's own? No, he had a subadar assistant. There is no comparable rank to subadar in the modern US armed forces. They ranked below second lieutenants but were nonetheless full officers commissioned by the Viceroy of India instead of by the King. This subadar was typically an older soldier who had joined as a private and risen through the ranks to his current exalted status. His task was partly to see to it that the adjutant looked impressive, i.e. to fill the pits, knock down the obstacles, pave the paths, and cause order to arise out of chaos. In short, to make it seem as if the adjutant was magically gliding through life on the force of his personality.

I'm doing that subadar's job.

That's it in a nutshell. That is what a good loan officer does. I metaphorically fill in the pits, knock down the walls, pave the paths so that my customer has a clear path to what they want.

A mortgage loan is not something people want. Mortgages suck. People don't want a mortgage. They want the house, and they have to have this sucky thing called a mortgage in order to get it.

Is that a ringing endorsement of the greater half of my profession, or what? I get people something that sucks so they can have something they want. But that thing they want is their new home. A place for their family to be safe and secure and (we hope) happy for as long as they decide to keep it. Also, it happens to be historically the greatest source of personal wealth for large numbers of people ever devised. No trivial thing, when you put it like that.

Okay, you ask, so where is this going?

I'm not one for false modesty. I'm good at what I do and getting better at it. People come to me because I did a good deal for their friend on excellent terms, and I made it look easy. No loan officer can ever really guarantee a loan will go through - that is the exclusive province of the underwriter at whatever lender is being used. You (as a customer) will never talk or communicate directly with your underwriter - it's a universal anti-fraud measure, everywhere in the industry. But I have a bet that I make with those who are dubious. I'll write a check for $1000 and put it in the custody of a neutral party. Providing the client tells me everything, and does what I need them to do in a timely fashion, if the loan doesn't go through, on time and exactly on terms quoted, they get that money.

What I'm really saying, of course, is "I'm this certain I can do the loan."

Sad to say, the average loan officer out there is not up to this standard. Actually, a lot of them are out and out crooks. Oh, they'll get a loan done, most of the time, if only because they don't get paid if they don't close a loan. But the resemblance borne to the originally quoted loan may be extremely vague, and it may be weeks after the date it was originally promised, and therefore useless to you because they guy who was going to sell you the home lost patience and cancelled escrow.

Much as I would like to, I cannot do every loan in the country. I'm only licensed for California as an individual, and I no longer work for firms that have widespread licenses. Furthermore, I can only do so many loans at once. Even with the best support staff, 100 loans a month seems to be about the limit, even if all I do is the submission and customer handholding. Finally, although it strains credibility :-), I have reliable reports of other loan officers here, locally even, earning a living at times when I am not saturated with business.

Your first home and your first loan is a exciting but nervous time for most folks. You obviously want the house, and you don't want the loan to go wrong or you'll lose the house. You have no idea of how to navigate this arcane labyrinthe called real estate. You have no reliable guide to separate the wheat from the chaff of all the claims out there.

Some people never pay it any mind. They go through life and may buy and sell multiple properties and refinance each one several times, and not want any more knowledge than the fact that what they wanted is done. Unless they're my clients, I can't help them.

Some people, however, are like John Masters, who was wary of testing his newly appointed superpowers, and so looked out of the corner of his eyes first to make certain the pit was filled and the obstacle was gone and the path was smooth. They want some way to tell the subadar who's filling the pit with quicksand from the one who fills it with good solid dirt, some method to tell the one who manages to pave the path solidly and perfectly from the one who can't pave it at all, preferably before they trip and break something.

That's what I'm trying to do here, give you a set of skills and strategies to increase your likelihood of having a nice smooth solid path with no obstacles to your real objective: That home.

Some people just want to be float oblivious through life, and if you're only here for the political or other stuff, glad to have you and have fun and please let me know how I'm doing.

Others want to know how the nuts and bolts fit together, at least for the biggest stuff. Not just for mortgage, but also for real estate, insurance and financial planning, (and other fields if I can find co-contributors that will write to my standards) you are the audience I'm trying to help, and will do my darnedest to write informative articles from a real world practical perspective on how to put yourself in a better place than you're in. I don't have any kind of an exclusive Truth on all of it, and alternative viewpoints are both necessary and welcome. Some of what I say may be contrary to what others tell you, and their methods may work just as well. I do know that I am telling you how things work, and I do have a track record of getting the job done.

Why am I doing this? Well, partly in support of a commercial idea that I am working on. Mostly because I'm trying to improve the climate in which we all do business, and every person who reads anything here will raise the bar by just that little bit. I think that if those who aren't the best, most competent, and most ethical have a choice of "improve and make more money or continue as you are and go out of business", most of them will take the former course, and we're all better off without the others. I happen to believe that most of them are victims of the system as much as any client who they've ever taken advantage of; they just don't know that there's a better way to do business. This is the way they were taught, and their trainers before them, and their trainers before that. It ticks me off every time I have to tell someone all of the things that every other loan officer and real estate agent has lied to them about, usually by omitting a nasty gotcha! (or several), and they get mad at me because I told them the truth when the appropriate target for their anger is elsewhere. Yes, sir, I can put you into that $800,000 house and get paid a whole slew of money. But I think you might like to know ahead of time if there's likely to be a problem sometime down the road after I get my check and ride off into the sunset. If you're fine with the problem, step right up and sign on the dotted line and here are the keys and thank you very much. Otherwise, maybe you might want to reconsider your course of action.

What I'm trying to create here is a reality check that you have available to you to warn you of problems when I can't, before you're locked on an irrevocable course for disaster. So pull up a chair, sit down, and enjoy the ride, just like John Masters, secure in the knowledge that you've checked out of the corner of your eyes and your superpowers are fully charged and working.

Caveat Emptor

Number one sign that Alito will be confirmed: Democrats Push to Delay Alito Hearings. If someone is fighting a delaying action, it's another way of saying "Lose slowly and maybe something will happen". In this case, they're just hoping the delay enables them to find something they can derail him with. Note to Spector and other judiciary Elephants: Push like hell to hold them ASAP. Like tomorrow. Yesterday would be even better.

My first reaction on seeing that the Donkeys forced the Senate into closed session was that it was a response to Alito's nomination, playing to their base for brownie points because they know they can't defeat Alito. Indeed, if you read the article, that's aluded to: Democrats Force Secret Senate Session. Anything to distract attention.

Captain's Quarters reports on TV networks attempting a draft dodger smear on the nominee. My take is that he served a commitment which was declared equivalent. Volunteering to fight in the front lines, as John F. Kennedy and George H.W. Bush did, is not necessary. Serving honorably and fulfilling your commitment is. Alito seems to have done that. But CNN seems to remember the issue had some traction against certain Donkeys. Big hint: that's because those Donkey's gamed the system (Kerry) and didn't fulfill their commitment (Clinton).

Michael Barone talks about how, unlike the days of Robert Bork, the left no longer has a stranglehold on the public dialog, so any borking is likely to be met with counter-force on the right. He also directs me to a David Corn article proposing that the Donkeys explicitly politicize the nomination of Alito. The question I would ask of Mr. Corn is "Then what?" Win or lose, you've given the Elephants a fight to energize their base, which is larger than the Donkey base. Furthermore, by explicitly politicizing it, you're going to push a lot of the undecideds away from you, something the Donkeys can not afford. Next question: If the Supreme Court becomes all about politics, why are we even bothering with this fig leaf called qualification? Why not fight over whether Hillary Clinton or Ann Coulter is going to be the next justice? There may be some on the extremes who want that, but I can tell you that the vast majority in the center - including most of the base for both parties - do not. I have this thought, you see, that the majority of the people in the country want judges who at least start out in considering a case on its merits, rather than by its political implications.

Ann Althouse clears the record when a reporter took what she said to mean something a little different.

ED: Update corrected spelling of Ms. Althouse's name.



Money quote:

The chart indicated we were a mile and a half" from the coral reef when the ship ran aground, Constantino told AFP

Does anybody actually believe this? Anybody? Buehler?


Carnival of The Vanities is up!


For the Californians reading this: Eric's Grumbles has an excellent take on why you should vote Yes on 77.


Interesting! Hints of Early Stars May Have Been Found


Captain's Quarters notes that corruption as well as faulty design had a role in the New Orleans levees failing. The Donkeys want to blame Army Corps of Engineers. A more likely culprit is the Louisiana state political machine, which controlled and awarded most of the flood control money.


Opinion Journal makes a point that needs to be made over and over and over again in "Race to the Bottom" (Third Header). Just because you're a member of a minority does not mean you're not a racist.


La Shawn Barber has probably the best take on the Paris Riots that I've seen. I do not agree with her that Islam is inherently violent, but do agree that Islamic violence is tolerated and encouraged by co-religionists to an extent that Christianity hasn't seen since the Inquisition began to decline in the late sixteenth century. We cannot afford to be any more tolerant of those who encourage violence (let alone contribute money to it!) than those who actually commit violence. No other major world religion today tolerates or advocates religious (or other!) violence to anything like the degree that Islam does. This can change, or we can exterminate it, or it will exterminate us. I'd prefer option one, but that's got to come from within the Islamic world. Nobody can force it on them. I'll take option two over option three every time, just the same as I am perfectly willing to kill in self defence and will have no moral qualms over it whatsoever. The two situations are precisely analogous, albeit one on a wholesale, the other on a retail, level. I'd rather not have to do it, but the confrontation is not of our making, and we have done everything that any court could possibly expect a reasonable person to do and then some. My personal weapon of choice is a good strong light to illuminate intolerable practices, but without a willingness to exterminate the revealed cockroaches as they scatter, this is useless. If we have to put a bullet in the head of every last person who supports jihad or terrorism and adopt their children out to parents of other religions (or none), so be it.


I regard this as more good than bad: S.D. makes neglected property an issue. I sympathize when it's a property owner with no available cash to do the rehabilitation, and with a property that is not eligible for a loan. Also, when it's an estate in dispute and the heirs can't agree, there's nothing that can really be done until final resolution of the probate. But even the worst case projection for collapsing real estate value I've seen is still well above property values from just a few years ago. We can't expect the neighborhood to put up with eyesores forever, and all of the other problems that go with neglected property. So it's a case of fix it up or sell it.


NASA isn't the only place that can do spectacular things in space: Japan's Hayabusa Closes in on Asteroid Landing Site


China Reportedly Shuts Down Blog. Except that the story says they actually only blocked it. This is a better written story, with an actual interview, and the information that it's actually defunct (I was hoping to be able to toss the guy a link to raise his search engine ranking even more). This has a little more. Here's an article on the actual shutdown.

Tim Worstall has more, including the text of Wang Yi's thank you and the place to visit in order to vote for him (or anyone else nominated) for BOB and here is his nomination page.


Too weird not to link: Man Kills Buck With Bare Hands in Bedroom


The SEC has issued a warning about online investing. The actual guide is Online Brokerage Accounts. I noticed that I had neglected to add the SEC to my resources list to the right on the bottom. It's there now, and useful.


I love seeing stuff like Muffy the Liberal Slayer over at Wizbang. Money quote: "Sometimes, the baby seal comes up with a shotgun."

This is not so much a liberal versus conservative thing as it is a mindless compassion versus intelligent consideration thing.


Mudville Gazette has the link to a new book about celebrity hypocrisy Michael Moore owns Halliburton


The Immigration Blog has the goods on where to report illegal aliens. No guarantees they'll actually do anything, of course, but you will have tried a legal means.


The Democrats are working on a 2006 version of the Republican Contract With America. The link is here. Looks basically good, especially the Secure America for Our Children Act (if it has any teeth), but except for the Quagmire Avoidance Act, which I sincerely hope is a sop to their base because the whole premise is stupid, they all seem like good ideas. Unfortunately, I don't think any of them are "hot button" issues that will resonate the way the Republican Contract did with voters. (Except the Quagmire Avoidance Act, which according to my understanding of the military and political situation, is plainly stupid denial of the facts, no matter how the legacy media is framing it). Nonetheless, I'm glad to see the Donkeys working on ideas for a national agenda of their own.

Dean's World is where I found the link, and he's got some very worthwhile comments of his own on the issue. He seems to mostly agree with me, but I suggest you read him yourself.

One thing studying military history will give you is an appreciation for the possibility of sneaky tactics, and not just military. Given Pelosi's past history, I have a reasonable suspicion (in the possibility sense of the term, not the innuendo sense) that the rest of it is a smokescreen to make it seen like the so-called "Quagmire Avoidance Act" is backed by the majority of the voters when in fact that is the part everyone went along with in order to get the rest of it.


Armies of Liberation has at least three new good articles on Yemen since the last time I had a chance to look. Saleh's trail of bodies. Death Threats for opposition figures. The ruling party steamrollering an opposition attempt to change from Presidential to Parliamentary authority. Go read her whole front page.

I've been to two conferences this week. The stuff for the other one is more important and is going to have to simmer for a little while longer before I'm ready to write an article on it, but the other is a "direct from the providers" seminar on credit reports and credit scores.

Some of this has changed from last report, and some of it will change in the future.

A FICO score is nothing more or less than a prediction of the likelihood of a particular consumer having a 90 day late in the next 24 months. It is a snapshot, based upon your position and your balances as reported at the exact moment it was run.

I learned a bit more about the various other credit reports besides mortgage. They emphasize different things (naturally) and score differently. Auto scores go to 900, where mortgages range 300 to 850. Landlord tenant screens are different from a mortgage score. Revolving credit screens are different than mortgage screens. Finally, and most important, the "Consumer Screen" reports you get on yourself will always have a higher credit score than the ones mortgage providers run.

Inquiries are 10 percent of your credit score. They only go back twelve months. Whereas I've been informed in the past that additional inquiries will get you zonked, that is not the case currently. Depending upon your length of credit history, after three to five "hard" inquiries in the last twelve months, they quit counting. now. A hard inquiry is done at your request for reasons of granting credit. Fewer is better. Longer history of credit means they will allow you more inquiries.

Mortgage inquiries, if done within the correct time frames, still only count as one, no matter how many. Automobile inquiries also count differently than other inquiries.

Types of credit used is 10%. They're looking for a reasonable balance between types. The absolute worst type of account to have is from one of those zero interest finance companies. You know the ones, "Buy this sofa now and no payments and no interest for twelve months." People who are broke but need or want stuff now do this, and that's why the hit happens. They are deferring payment. You suffer guilt by association.

15 percent is length of credit history. How long you have had revolving accounts divided by the number of revolving accounts you have had. You have three cards that have all been going for thirty years, that's a better picture than five cards of which four are brand new.

I've been telling people not to close open accounts. This is confirmed as not a good thing to do. Closing an open account can cause your credit to drop by as much as 80 points in some circumstances. If it doesn't cost you anything, don't close it.

Balances is thirty percent of your score. There are significant hits at fifty and seventy five percent of your credit limit on each card. Significantly, a small balance is a little bit better than zero, even. This is one reason you want to charge something you'd buy anyway to your credit card. Just make sure you pay it off. Some credit cards (specifically charge cards in particular, not to mention any specific names of charge card companies where the balance is due in full every month) will report your high balance as being your limit. So make certain your credit limit is being accurately reported. If your balance is incorrectly reported, in general the only way to correct it quickly is with a letter from the provider, signed and on their letterhead, saying "Your balance as of (date)is $X"

Payment history is 35 percent of your score. This is divided into three categories: 0-6 months, 7 to 23 months, and 24 months or older. If you have had a delinquent credit reported within 6 months, you are getting the full impact in terms of lowering of credit score. Between 7 and 23 months is a lesser impact. Over 24 months is still less impact.

Important: DO NOT PAY OFF OLD COLLECTION ACCOUNTS! It can cause a 100 point drop in your score. Here's why. You owed $X to company A, and five years ago they sent it out for collection. Now you go back and pay it off, and the date it's marked with is TODAY. It's gone from being over two years old to being current as of now, bringing the full impact to bear once more. The one exception to this is a deletion letter. If you get a deletion letter on their letterhead signed by them saying "Please delete this account," you can make it vanish off your credit report as if it never was. Note that you may still have to pay off collection accounts, but do it as a part of escrow, where the loan is done before your credit is hit.

There are tools out there that can be used to analyze and tell you how to improve your score or how best to improve it with a given amount of money.

Bankruptcy: Three things determine what kind of credit score you'll have coming out of bankruptcy. 1) Percentage of trade lines you include in the bankruptcy. More is worse, lower is better. Including half your trade lines will not hurt you nearly so bad as including all your trade lines. 2) Number of inquiries. If you've still got one or two open lines you didn't include, you may not need more after discharge and you won't go apply for more. The poor schmuck who includes everything needs more to start a credit history, and is dinged HARD for each turndown inquiry. 3) Post bankruptcy payment history: if you included everything in the bankruptcy, you have no history until you get more credit. Can you say, "Vicious Circle," boys and girls? Knew you could. No payment history is even worse than a bad payment history, but any reports of delinquencies after bankruptcy hits you much harder than if you were never bankrupt and had a late.

Last individual points:

Rate on credit card does not affect FICO score.

Nor does salary, occupation, employment history, title, or employer.

Credit Repair Services cost a lot of money for things you can do for free.

If you are disputing a medical collection (only) it doesn't count on your score.

Finally, a note about a likely coming change. If you are a regular around here, you may realize what a hole negative amortization loans can be. There is a high likelihood that in the near future the fact that you possess a negative amortization loan will be counted heavily against you, score-wise. The reasons this change is coming is obvious: Your payment every month is not covering your interest charges. This is not a situation that can go on indefinitely, and it is indicative of someone who is likely to be in over their head.

Caveat Emptor


Every so often, I get a call out of the blue that starts something like this "Hello, I'm shopping for a mortgage. Just tell me your lowest rate."

I try to do the ethical thing, finding out on what sort of loan and all of the ancillary information that would actually make this useful information.

"No. Just tell me your lowest rate."

Every so often, I'll admit, I'm seriously tempted to quote them the lowest rate available on a month-to-month loan where the teaser rate has to be purchased with three and a half points - a loan such that I'd consider going homeless if that was all that was available. Or even a negative amortization loan, where the 1% rate is in name only.

Then I sigh inwardly and try to explain that unless I know the answers to a few question about the kind of loan that would be best for him, that's like being told the ultimate answer to the ultimate question about life, the universe, and everything is 42, without being told what base it's in, much less what the ultimate question is, so that that he, the consumer, has some way of knowing whether the answer may be appropriate.

"If you won't help me, I'm hanging up. *Click*"

And then one of my neighboring co-workers wants to know who that was, and this is what I tell them:

"Some Poor Guy who's terrified of salespeople setting himself up to get rooked for the five millionth time."

Another example: Quite some time ago, I was dropping some papers off with a prospective client, a salesman in a different industry. Somebody came up to him and asked, "How much for an Acme Widget Master 1234?"

"$X" was the reply. The guy walked off immediately. Actually, it was more like the sprint of a deer when the mountain lion breaks cover. I asked my prospect, "Aren't you going to try and stop him? And I thought an Acme Widget Master 1234A56 cost $X+Y. They on sale?"

"Dan, I know you're new to the sales game, so I'll give you some help. That Guy is not my target market. He thinks he knows everything he needs to, and thinks he knows how to get the best price. He may actually know what he's doing and not need my expertise. But he wasn't going to give me the opportunity to explain that this was the price for the base model Widget Master 1234, and the Widget 789 with a couple options for about the same price is probably going to make him happier. You're not my target market, either - you know enough about these to be able to figure your needs pretty accurately. You came in and told me what characteristics you needed it to possess, which is why I told you about the A56 and quoted you that price. I was grateful gave me a chance at your business, but I didn't expect to be able to beat Major Catalog Company. All they're selling is the item. I'm selling not only the item, but also my knowledge and immediate availability, and help setting it up and technical support. Sure, That Guy is probably going to end up with something that frustrates the hell out of him at a price higher than he thought he'd pay, but he's terrified of me. He's not going to give me the opportunity to talk, and until that changes I refuse to waste my time trying."

One final example, even earlier: When my wife and I were newlyweds, we needed a household Major Item because our previous Major Item had failed. We went to several places shopping, among which were stores A and B.

Salesman at A: "You say you need type X? Oh, those are terrible, but if you spend $1000 modifying your home, you'll really love this product. Energy efficient, does a great job, and it's cheaper than the competition. No we don't have any of type X, but like I said, you don't really want those. They are awful."

Salesman at B: "You say you need type X? I'm sorry, but we don't carry any of those. I'm sorry but there's not enough demand, although I understand your situation. Tell me, have you found any anywhere? At C and also at D? What did you think of the alternatives? Thank you for helping me."

Several years later, we had need of a Different Major Item. I had kept the B salesman's card, and we went back and ended up buying from him, although we did shop elsewhere. We tried to go back again for Another Major Item recently, but he had moved on and we were disappointed, but talked with the salesperson who was there, and although we ended up buying elsewhere that time, I could see a cultural influence at work and we will continue to make a point of shopping there.

We haven't gone back to store A since the first conversation.

My point is this: Had I been Mr. Some Poor Guy, or That Guy, I would have bought from the A salesman - it was the cheapest product. Then another A salesman. And yet another A salesman. And been unsatisfied and unhappy, and generally angry at the need to spend a lot of extra money and frustration dealing with it each time - why didn't they tell him? Why weren't they simply honest? It must be because all sales scum are dishonest crooks!

Unfortunately, the real problem is not so much that the A salesman was a crook (he was a misinformed high pressure employing menace to society, but he did tell me I'd have to spend the $1000 extra), but that the strategy the customer employed is counter-productive, and does pretty much guarantee you're going to get conned - he wouldn't give the A salesman a chance to tell him about the $1000. I encourage keeping your guard up, but a request for context is an attempt to find you a product that meets your needs without costing you more than necessary. Wait until somebody actually tries to sucker punch you before you go for the right hook to the jaw followed by the one-two to the kidneys. Because the A salesmen (and women) play this game every day, and they're incredibly good at it, and it's going to be one of them that counters with a karate blow to the throat that scores a knockout (and the sale). Messrs. Some Poor Guy and That Guy are the sort who keeps the A salesmen in Lamborghinis.

The B salesman is good at a different kind of game. Typically make less money, especially at first, and so it is not the model taught by the How To Succeed in Sales Super School, and he's not the Superstar Sales Hotshot that corporate sales managers seek out to help increase their next quarterly bonus for staff productivity, but he's out there if you look, and a lot of companies from the corner shop up to the big corporations understand his value to their bottom line. Where A salesman is always hard at work looking for the next score (and is always a drain on their advertising budget, in whatever form), B salesman gets to the point where he's handling all he can with what comes to him, even generating spillover to other members of the staff. Even when he gets to the point where he's constantly saturated in business, he doesn't get stressed, he doesn't burn out, and he's not a source of problems.

Now, how would you like to find B salesmen reliably?

First, you're going to have to look hard. He's probably not going to be the first one you talk to. You're going to have to do some serious shopping. He's probably busy somewhere talking to a repeat client, not one of the vultures who are waiting around the sales floor to swoop down on you and grasp you in their greedy little talons. Second, don't expect a saint. Yes, he'll ask for the order, he may even use some pressure to try to get it. If he's not especially busy now, he's cultivating habits for later, and frankly, nobody wants to spend more time selling to a given client than is really necessary. They want to make efficient use of their time, and use the extra to either make more money with other sales, or just have fun. They are there to Make Money, not because they think standing around the sale floor (or whatever they do to generate clients) is The Most Fun They've Had With Their Pants On. They may like or even love their clients (I do the vast majority of mine), but if they weren't Making Money they wouldn't be there. The reality is that if they don't sell enough to make a living, they're not there anymore. There is a point, in all transactions, and with all customers, that it just is not worth dealing with them anymore. The sales person has things he'd rather be doing, whether it is dealing with a repeat customer's much larger transaction, spending time with the family, or just watching the game on TV at home. This point comes a lot sooner for a waffle iron than a house or a home loan, but there is a point where even the most desperate real estate agent stops initiating, stops returning, and finally stops accepting phone calls.

There is a cultural difference between the A salesman and the B salesman - they usually don't work in the same place. I've never seen a place that didn't have a strong preponderance of one or the other. There will usually be at least one A salesman on every staff, no matter how B culture the place is. But he'll find another job at an A culture establishment before too long. There are places that are so A culture that the B salesman just can't stand going to work there, so there typically aren't any B salesmen.

How to determine if someone is an A salesman or a B salesman

First off, a B salesman will always ask what you need it for, whatever the item. He may spend quite a bit of time asking about all the stuff you need, what your tradeoffs are, and all sorts of other information. This is a good sign. He's probably not looking for weaponry to force you to accept the El Cheapo Sterno can of fuel for the Bargain Price of only $9999.99, A Fraction Of The Cost (a very large fraction of 99 cents, but still a fraction). I've worked (briefly) with people who can sell ice to Eskimos at exorbitant prices, and if he's that sort, he probably doesn't need the information. Those sales people go straight for the kill. The more time he spends asking you about what you need or what you want or what your tradeoffs are, the happier you should be. The larger and more important the transaction, the more time he should spend asking you this stuff.

When he makes a recommendation or starts telling you about a product, he'll remember enough of what you told him to paraphrase it back to you, "Now, as I remember, you were telling me you were looking for something that A. Well, this item does A. And as I recall, you told me you were looking for B but had a budget of C. Well, I'm afraid all of out widgets with B cost more than C, but this one appears to meet all of your other needs. If you really need B, here's a widget that does B also, although it costs X more than C," or "I'm afraid we don't have any that do D, but I'd like to know if you've found any place that does?" Once he's shown it to you, he'll ask, "So does this do everything you're looking for, or does it fall short?" as well as questions like "So if you had this, you think you'd be happy, right?"

B salesmen will answer your questions clearly, directly, and forthrightly, and ask if this information answered the questions. He will be happy to give amplifications and clarifications, not keep repeating the same phrases.

Every sales person knows - because the sales manager makes sure he knows - that if the client leaves the premises, gets off the phone, whatever, a sale becomes much less likely. Every sales program I've ever heard of goes over and over and over this, ad nauseum. So it's not like it's any great secret. The B salesman knows it as well as the A. And they'll apply some pressure to get the sale now, whether it's considerable (B salesman) or an avalanche (A salesman). The B salesman won't trash the opposing products, though - he'll simply try to tell you where his is better, why it meets your needs, and why you should Buy Now.

It is always a clue that you're dealing with an A salesman if he finally tells you, in desperation as a last resort, "If you find a better price, come back and I'll beat it." First off, the fact that there's suddenly room on the price means it may be overpriced in the first place. Second, the reason the A salesman says that is that he really doesn't know - or care - what you want, and he's figuring to replace it (in most cases) What He Showed You with Something Cheaper That Seems About The Same when you come back. Finally, if a B salesman doesn't quote you a Pretty Damned Good Deal in the first place so he can Get This Transaction Onto The Books and go home, he knows he's going to lose customers, which are then not going to come back to him because he treated them right, and not going to tell others about him because he treated them right.

Getting back to the first shopping trip my new wife and I made together, in search of Major Item, along about the ninth or tenth store when we'd just bought what we needed, my wife said, "There is no in-between with you, is there?"

"Huh?" I replied brilliantly, having no clue what she was getting at. Remember, we were newlyweds at the time.

"These sales people. You're either the nicest guy possible or the worst (expletive) I've ever met. It's a side of you I haven't seen."

I was well aware that she had led a somewhat sheltered life until a few months before we met, and there are obligations that one has to educate your family in case you're not around. "Let me guess. You're talking about how I was joking and pleasant with B, C, and D, but cut A and G off cold, chewed E out, told F to get out of my face, and was hard on H but then friendly, and friendly again while asking pointed questions when we came back to buy?"


"Beloved, B, C, and D were doing the best to help us find what we needed. They asked us intelligent questions about what we needed before showing us an item. They answered the questions I asked instead of trying to distract my attention, didn't push more than they should have, and in general were behaving like our needs were what was important. They knew you were there and were respectful to you, but they realized I was the one who was going to have to be sold, so I was the most important person in the room. Not them.

"H was a miscommunication that got cleared up. And you should ask questions again to make certain you understand just before you buy. She knew that she was likely to get the sale once we came back, and even more likely when she showed us she knew what she was doing. The questions were to make certain there were no more miscommunications - she knows what she's selling better than I do. It would be very easy for any kind of a sales person to misdirect a question while we're in the midst of the hunt. When I'm ready to buy, I'm going to make certain I understand everything I need to know about this Major Item, so I'm asking the questions in a different way to make misdirection or pat phrases obvious. H knew this, and gave me straight answers without evasions. And her product met our needs. So that's where I wanted to buy. As to why I was mean to the others, you know I'm always willing to be an (expletive) in a good cause, right?" She nodded.

"Well, A wanted to make the sale he wanted to make. Our needs weren't important. E thought she could get away with a lie, and I called her on it. I know she's going to make other sales, but not tonight. Penalty Box. F tried to use you as leverage against me. This would be acceptable though not welcome if I thought he was trying to meet our needs, but he wasn't. I told him we had to have X and his item didn't. And G didn't have a clue about X. The appropriate thing would have been to get help or tell me he didn't know but he'd find out and then go find out. He was wasting our time. And now we've got our Major Item, and we're going to go home and be happy with it and not waste any more time on this whole issue."

And we did. Over time, she has discovered the real way to get the best bargain: finding out important information about the prospective purchase and actually listening to the salesfolk, while controlling the conversation. Don't be afraid to walk away, but don't start from a stance that says you're terrified. Control the conversation - take it where you want it to go, but listen to what the salesfolk have to say. If you listen, very frequently something they say to you will help prevent disaster. Listen for catch phrases, things that they repeat word for word every time they say it, particularly if it doesn't fully or directly answer your question ("Nothing out of your pocket" in reponse to questions about loan costs is the number one classic mortgage catch phrase, but there are others. It's true but severely misleading in that they're not making you pay it in cash, they're adding it to your mortgage balance). Catch-phrases are a danger sign, because they are usually a way of hiding or shading the truth. Above all, don't be frightened or allow them to intimidate or buffalo you. Remember, you're the one with the power here, in the form of dollars you have and they want. If you don't want to spend your money, no one can force you. Many salesfolk capitalize on the fact that people avoid confrontations, but nobody can force you to spend your money at all, much less spend it there. Make them show you that this solves your problem, and solves it with a set of trade-offs better for your purposes than anything else. This is your bat, your ball, your rules. If they don't want to play your game, don't play theirs. But if they're happy to play your game, odds are that they are worth hearing out completely, and the time you spend will be well invested.

My wife still lets me do the most of the major shopping. But if a meteor hit me, she'd be a much savvier customer now than she was before I helped her learn how to to be an effective customer. She's not afraid to deal with sales people. Which puts an end, in all senses of the term, to the Ultimate Consumer Horror Story.

Caveat Emptor.

Sorry I didn't post much over the past few days. Flu shot I got Friday kind of got to me, like they say it sometimes does. I still feel like I am going to lose the contents of my stomach - except when I actually eat, I usually find that I am very hungry. The rest of this week is likely to be light also, due to two conferences and a legal deposition in addition to the above.

On the definite plus side, the baby Ramona took her first undeniable steps on Friday, for me. I wasn't expecting it or egging it on; it just happened. She's been "cruising furniture" for several months. She just decided she wanted daddy, and didn't bother to sit down and crawl. A few quick steps and there she was. Ramona (my wife) was jealous of course, especially since she was upstairs at the time and missed them. The baby has since repeated it, of course. But that doesn't change the fact that I was the only one who got to see the first time.

Also on the plus side, Thing has recovered enough that he's chasing his ball, climbing the stairs, and as of Saturday, looking like he's got enough meat on his bones that I reduced him back to his regular rations. There for a while he was looking positively emaciated (and Mellon's weight went up as Thing passed on his food), but he's been eating more of less normally again for a couple of weeks now, and he's filled out to where his vertebrae aren't sticking so far out that they form a high ridgeline along his back. I was worried about a certain little dog for a while.


Here's A Beautiful Tribute.


RINO Sightings is up. Recommended: Armies of Liberation, Louisiana Libertarian


On another subject entirely, Victor Davis Hanson has a much needed dose of reality for the perpetually outraged.

Belmont Club covers someone with the guts to say what may really be necessary.


Michelle Malkin has a short roundup of electoral fraud. As I've said a few times on this site, I want this stuff cleaned up. If it means I've got to go through a little more in order to vote, so be it. Might even be a good thing if people have to go to a little more trouble to vote.


Predictably, Eric's Grumbles thinks the Supreme Court should butt out of the abortion issue, along with the rest of the government. In principle, I agree, and I would in practice also if we could get issues like paternity suits (no authority to make decisions means no imposed legal responsibility) resolved rationally.


Carnival of The Capitalists is up. Recommended: Stone City, Coyote Blog, Pacesetter Mortgage (I don't agree that "Stated Income" should be completely abolished, but there should be a very large print disclosure/affadavit listing the pitfalls, as well as cash reserve requirements, etcetera. It is abused, but sometimes people cannot document the money they really do make. See my essays on Prequalification, and also levels of income documentation).


Carnival of Personal Finance is up. Recommended: Bargaineering


Carnival of Liberty is also up. Recommended: Soldier's Angel = Holly Aho, Watchful Investor (It is to be noted that China has no one on death row because they get taken out and shot in the back of the head immediately - and the family gets a bill for the bullet!)


Despite losing 8 plus days of data due to a server change, finished October with 24,547 visitors from sometime about 7AM on the 9th through the end of the month. That's only 40 less than the entire month of September which counted all 30 days, so I'm happy. 73,593 page views for the same period. Running totals: 82,896 visits, 257,157 page views.

I am grateful to all of you for stopping by. If you have something to say (or a question to ask or a contribution to make), speak up!

The scope of the problems that exist in the United States Mortgage market are huge. Enormously, mind-bogglingly, "How Big Is Space?" type huge. Yet, the problems are almost entirely on a retail level, when one provider works with one consumer. The system works, and it works extremely well. Consider:

Most consumers in Europe or any other country in the world would trade their loans for yours in a heartbeat. Rates there are typically around nine percent or so. Here, that's a ratty sub-prime rate. Mexican rates start at about fourteen percent. Hard money lenders here can sometimes do better than that.

No matter where you are in the United States, you have ready access to home loan capital. It's considered almost a one of our inalienable rights. Due to our secondary markets, as long as you can meet some pretty basic guidelines, you can find somebody eager to lend to you. You can find very long mortgage terms and very short terms. You can find loans without prepayment penalties, and you can choose to get a lower rate by taking a prepayment penalty. You may end up with something that's not as good as someone else if their situation is better, and the lender wants more money to compensate them for the risk of your loan, but even so, the rates here are better than almost anywhere else in the world.

Consumer protections are also better here than almost anywhere else in the world. There are federal laws that give you time to call off a transaction if you change your mind, disclosure requirements, consumer protections against builders with teeth in them, and a tort system that, if it does go overboard some times, still gives you an excellent chance at recovering what unethical people took from you. Many states (California, for instance) go well beyond mandatory federal consumer protections.

So keep this in mind when you see me ranting on and on about the problems with our financial markets here. Consider a capital market willing to loan the average person several years worth of wages. I can get a family making $6000 per month a loan for nearly $400,000 on an A paper 30 year fixed rate basis - most expensive loan there is in the most favorable, hardest to qualify for loan market - no surprises, no prepayment penalties, no "gotchas!" of any kind, and I can do it without hiding or shading the truth in the least. That's more than every dollar they will make for the next five years, and this family is every bit as chased after as the richest person in the world (more actually, because there are more of them). When you stop and think about it, that's a pretty wonderful situation. For all of the rants I make, the unethical things that happen, and the problems that exist in our capital markets, they are pretty damned good, and have chosen a set of tradeoffs that appears to be working better than anywhere else in the world, at any other time in history.


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