Dan Melson: February 2009 Archives

The guidelines for this carnival.

As always, I arranged the entries that met guidelines into three levels, based upon originality, usefulness to the consumer, and how much thought and effort and research went into an entry.

STRONGLY RECOMMENDED

HOST'S CHOICE AWARD: An Excellent point from Reba Haas: Did you know that spot approvals can be used for FHA financing on condos?. Some people advise FHA loan property shoppers to start with the FHA approved list of condos. This is horrid advice, especially as those units usually know they're on the list and try to ask for a price premium. The rules have changed a bit (spot approval now requires 60% owner occupancy), but if the complex meets those requirements, you can get an FHA loan.

Your Host presents Finding a Good Buyer's Agent (And Eliminating Bad Ones)

RECOMMENDED

First Time Home Buyer Tax Credit

From Australia comes House-hunting expenses and how to minimize them (part 2). They must do things really differently over there.

Should You Buy A House If You Are In Debt?. Tellingly, none of the people he asked are either Realtors or Loan Officers, but the answer is "almost certainly not". No money at all for a down payment, no room in the budget for increased home expenses, and payments on $36,000 of debt that eat up (at a guess) about $900 out of a total back end monthly allowance of $1425 for housing plus debt service. So $525 has to pay for the mortgage plus taxes and insurance and maintenance? Not anywhere I know of. But halve the debt and double the income (or even just increase it a little), and the answer becomes quite different.

MET GUIDELINES

50 Tools to Research Your New Home, Neighborhood, and Community Some of the tools are useful, but others are a waste of time or worse.

How Do You Lower Your Real Estate Taxes? suffers a mandatory one category downgrade for explicit solicitation, but actually gives some decent information for Minnesota. If you're in California, the property will be automatically reassessed to the purchase price. If your value has fallen since purchase, your county tax assessor has a simple form. The San Diego Assessment Appeals Board website is here

Home Mistake needs a lot more analysis to say whether it really was a mistake, but it met guidelines.

Lowest Mortgage Refinance Rate Comparison by the Readers! is an entry I'm going to include despite some basic misconceptions because it allows me to tell you some of what is wrong about it. If you want the lowest rate, you're always going to pay a lot of points because there is a tradeoff between rate and cost, one that varies every single day (and often, within a day) dependent upon the bond market. Furthermore, it relied upon allowing lenders to tell you what they have - with absolutely no assurance that the lender intends to actually deliver what they talk about. Lenders are permitted to lowball quotes shamelessly, and neither a Good Faith Estimate, an MLDS (the California equivalent) or any other standard form you get at the beginning of a loan prevents this. New regulations take effect at the end of 2009 that will make it a little harder for them to get away with lying - but not much. I could go on at length, but I think the point has been made.

SPAM AND OTHER RIDICULOUS SUBMISSIONS

I got a blortload of spam submissions this month. Uselessly vague, misinformed, and flat out wrong information. I don't know who posted the carnival to the spammeisters forum, but it's not doing you any good. However, most of them at least mentioned real estate, and it's vaguely possible that some of them were written in good faith by hydrocephalic six year olds who have no clue what they're talking about. Be careful about what you trust on the internet - ask yourself what assurance do you have that this writer has a clue about what they're writing on, because I got at least a dozen submissions that would cost you tens of thousands of dollars if you paid attention to their advice. Nonetheless, because they were real estate articles, I could not fairly put them in this section.

A site named Make Money Easy Online submitted a post called Why Making Money Online is NOT so Easy. But he's not helping matters - in fact, his advice in this article would make it noticeably harder to make money online (seriously, advising someone it's okay to join Multi-Level Marketing schemes? The drug addicts in rehab know better than that!)

A site named Recession Thoughts submitted a post entitled Obama's Stimulus Plan Is A Complete Joke. Well, yes, and I'll even go one further and say the "stimulus" he signed was simply pork mislabelled - worse than a total waste. Nonetheless, it's completely inappropriate for this carnival.

For those who might object to the treatment their submission received, the relevant information has been in the guidelines since before submissions were being accepted for this carnival. Having been told to read the guidelines, you willingly submitted these posts. Live with it.

Consumer Focused Carnival of Real Estate will return in one month on March 30, 2009, here at Searchlight Crusade, unless someone else wants to host. Deadline for submissions will be Midnight March 28th.

Karl Rove:

President Barack Obama reveres Abraham Lincoln. But among the glaring differences between the two men is that Lincoln offered careful, rigorous, sustained arguments to advance his aims and, when disagreeing with political opponents, rarely relied on the lazy rhetorical device of "straw men." Mr. Obama, on the other hand, routinely ascribes to others views they don't espouse and says opposition to his policies is grounded in views no one really advocates.

It isn't just Obama, although as President he should be held to a higher standard. The straw man (and its close cousins, Red Herring, ad hominem, false bifurcation, et al) have become staples of political argument on all sides and points of the compass. In my experience, it has certainly been more common on the political left in these few decades, but we've all got to stop it.

It's easy to build a straw man and knock it down. It's even easier to slip in a Red Herring or attack your opponent personally. But doing so accomplishes nothing, is intellectually dishonest, and shows glaring weakness in your own ability to argue the merits of your case. Furthermore, it poisons the debate. For instance, Sarah Palin never said "You can see Russia from my house." That was Tina Fey satirizing her. Ms. Fey's reading of her script was exactly in line with what she was supposed to be doing - she's a comedian and an actress, and it was funny in context. But the thousands who picked it up and repeated it as a method of discrediting the political opposition should be subject to a public shaming. A recent slander on the right giving Barack Obama complete blame for the stock market slide between the election and inauguration is equally vile. Yes, part of it was no doubt due to the rhetoric of the incoming President-elect (and more to the point, his Congressional leadership), as businesspeople and investors got a "preview of coming attractions" as it were, but to let President Bush off the hook completely is intellectually dishonest. Yes, President Bush tried to fix the cause pre-emptively several times and was stymied by the Democrats in Congress. But he could have chosen to try harder.

Every time you use a dishonest trick like this, your opposition wonders why it bothers to build an honest case for their point of view. Every time you use a trick like this, your opposition wonders why it should not reciprocate in kind. Every time you use a trick like this, everyone - including your own supporters who aren't completely brain dead - wonder why you did not or will not build an honest argument on the merits of your own position. How long before they conclude that it is because you are incapable of doing so? How long before they conclude that there is no such argument?

Thank you, Mr. Rove.

Obama solution begets crises

All too true. The agenda is likely to reshape American capitalism, if that's what you want. But let me rain on this parade as it passes -- before The Music Man runs off with River City's most beautiful women. While he promises to deliver Americans from recession, financial crisis and the Wall St. Pool Hall, Mr. Obama's agenda actually threatens to plunge America into new crises, while extending the current crises.

Profoundly anti-market and anti-capitalist themes and tones run through Mr. Obama's speech. Nowhere in the world has a country risen to prosperity by blowing up markets (in energy, for example) and turning to massive state intervention (banking) to solve problems, especially problems that do not even exist (oil dependence).

Depressing how few people ask "What happens next?"

Obama's Threat to Charities and Universities: His Budget and Taxes

This is an attempt to channel money away from voluntary associations and direct it to the state. Some of that money, in turn, would be directed to public employee unions, and much if not most of that would be directed to the Democratic Party.

Now, let me ask: If the state is the only possible source for aid, who will help those that the state will not? Who will help those that the state chooses not to help?

And what happens if you qualify, but because someone in government doesn't like you, whether bureaucrat or politician?

War and Peace and Dissent in Islam

But why the contradiction in the first place? The standard view has been that, since in the early years of Islam, Muhammad and his community were far outnumbered by the infidels and idolaters, a message of peace and coexistence was in order (sound familiar?). However, after he migrated to Medina and grew in military strength and numbers, the violent and intolerant verses were "revealed," inciting Muslims to go on the offensive -- now that they were capable of doing so. According to this view, quite standard among the ulema, one can only conclude that the peaceful Meccan verses were ultimately a ruse to buy Islam time till it became sufficiently strong to implement its "true" verses which demand conquest. Or, as traditionally understood and implemented by Muslims themselves, when the latter are weak and in a minority position, they should preach and behave according to the Meccan verses (peace and tolerance); when strong, they should go on the offensive, according to the Medinan verses (war and conquest). The vicissitudes of Islamic history are a testimony to this dichotomy.

Read the whole thing

The Third Age of Money

So, it seems pretty hopeless, doesn't it? The financial world we've grown up with is collapsing under the sheer weight of looting. If governments can't do it, and a return to the gold standard can't do it, then where are we? At the edge of another dark age?

Not quite.

I foresee the rise of private money once again, and returning in such force as to negate the government's role in the economy. In fact, the pieces for creating the Third Age of Money are already there.

The issue with money is finding a way to prevent the looting of the system, and Mr. Franks has done a lot of thinking about it. I'd be very surprised if it shook out completely in accordance with his scenario, but he's definitely onto something.

More on the oncoming death of the system at Fabius Maximus

(Fabius Maximus was a Roman general who beat Hannibal after Hannibal's brilliant victories of his first year in Italy by delaying him while Rome rebuilt. another page: "To be turned from one's course by men's opinions, by blame, and by misrepresentation shows a man unfit to hold an office." Quintus Fabius Maximus, from Plutarch's Lives. Ring any recent history bells?)

The Coming Blue State Collapse

'Conscience' rule on abortions may be overturned

Taking another step into the abortion debate, the Obama administration today will move to rescind a controversial rule that allows healthcare workers to deny abortion counseling or other family planning services if doing so would violate their moral beliefs, according to administration officials.

Basically, the new rules from the Obama administration require medical professionals to commit what they may see as murder. Evidently, we don't have enough medical providers to kill all the unborn babies that people want to kill. Either that, or it's less of a violation of rights to force someone to commit what they see as murder rather than direct the requester elsewhere.

Ladies and gentlemen, if a given provider sees it as murder, you go to someone else, and that person makes the money for providing the service.

And if you can't find someone who doesn't see it as murder, maybe that should tell you something?

Quite frankly, if I were a medical provider, I'd consider quitting the profession or leaving the country rather than comply with the new rule. I imagine at least a few health care providers will do so, and quite a few who might have been doctors and nurses in the future will choose other professions. Aren't we already squawking about not having enough nurses and doctors?

Another question: How long before some doctor who feels that it is murder offers himself up as a test case and wins?

Movie Review: Media Malpractice

No matter. The sheer weight of the evidence John expertly documents, and the clever and telling juxtaposition of the widely varying treatment Obama and Joe Biden received from the media from Palin will have even the skeptics admitting that John has a point. In fact, John saves his best evidence for last, in two widely-remarked polls showing and confirming that Obama voters were significantly less knowledgeable about politics and the specifics of the election. That is John's entire point; the media served the nation poorly in one of its most important functions and left an electorate drowning in ignorance. John claims that he bears no ill will towards Barack Obama and hopes he succeeds, but that the media failed -- utterly.

How He Did It: A Diagrammatic Analysis of the Obama Campaign

Obama the Re-labeler: It's official: any combat forces in Iraq after August 2010 will be called something else:

A couple key points for the record: The Status of Forces Agreement (SOFA) and Strategic Framework Agreement (SFA) - the treaties detailing the ongoing drawdown in Iraq - have been disappeared from the White House web page. (Curously, President Obama's Iraq plan still says "Obama and Biden believe it is vital that a Status of Forces Agreement (SOFA) be reached so our troops have the legal protections and immunities they need. Any SOFA should be subject to Congressional review to ensure it has bipartisan support here at home.") The treaties are also not mentioned in current media coverage of President Obama's planned Iraq drawdown.

Then-candidate Barack Obama abandoned any pretense of withdrawing troops from Iraq on a rigid timeline in the summer of 2008. If this point was ever acknowledged by the media they've obviously since forgotten.

Payoffs to electoral supporters become a "stimulus". "Combat forces" are leaving Iraq, but we'll still have troops there, they'll still have weapons, and they'll still do what combat forces are doing today. Down is the new "up"

Should We Let California Go Bankrupt?

I don't think anyone has the resources for a "no" answer

There are a host of reasons why California has become toxic to business, ranging from the highest personal income tax rate in the country (small business owners are especially hard hit by PITs), to an environmental regulatory regime that has made electricity so expensive businesses simply can't compete in California. That is one reason why even California-based businesses are expanding elsewhere, from Google, which built a server farm in Oregon, to Intel, which opened a $3 billion factory for producing microprocessors outside of Phoenix.

California has been slowly killing all of the geese that lay the golden eggs for the last forty years, and we're coming to the end of the line. We can either change our tune before the last business leaves the state (and good luck luring them back!) or we can become a People's Republic completely. Even the People's Republics are moving away from that model. It doesn't work.

Working with a borrower all day today. Truly ugly situation because he doesn't have a long history of credit, and this is the major obstacle to getting the loan done. He actually makes the money, and has a sufficient history of making the money to justify the loan "full documentation". But: He only has one usable line of credit, and it is only 9 months old. Most lenders require a minimum of three tradelines, at least one of which must be open for 24 months.

On the other hand, there exists a method to help this person. What he is going to do is approach close relatives with long term stable, paid up lines of credit, and ask if he can be added to one of their revolving accounts as a co-user. He does not have to get a charge card, or actual access to the account, he just needs to be added to the account as a co-borrower, and he will get the benefit of however long the trade-line has been open. He doesn't even have to know the account number (and the credit report omits several digits, so he doesn't get it there, either).

This has two effects. First, he will get the benefit of the length of the trade lines, and second, he will get the benefit of the tradelines being paid promptly and on time for however long. Preferably, these are low limit and low to zero balance accounts, because he will be dinged for any necessary payments on his debt-to-income ratio. But it will likely raise his credit score significantly (I would guesstimate at least sixty points) by giving him a several year history of on-time payments, as well as giving him an adequate history of tradelines.

Nor is this fraudulent in any way, shape or form. This is being done in full consultation with the lender. The lender has been notified in writing and approved of this. It may seem like I'm always going off about fraud, but in this case something that may appear a little shady actually turns out to be something that both the bank and the regulators can live with. So if you're thinking that loans are always about NO NO NO, here's a very strong YES to go along with it.

Caveat Emptor

UPDATE: As articles like this illustrate, 'Piggybacking' Roils Credit Industry, this is starting to be seen as a problem. It certainly is not a silver bullet. Indeed, it's something to avoid if there are other alternatives. Two major drawbacks apply: First, the payments hit your debt to income ratio. Second, if your "benefactor" has a late payment, that hits your credit also. Since neither of these are under your control, this makes this trick something to avoid if there are better alternatives.

UPDATE: Fair Isaacsson, the modeler for FICO scores that lenders use to judge creditworthiness, has changed their method of scoring since this was originally written. Having gotten wise to the practice and realizing that this really doesn't make any difference to the borrower's creditworthiness, they no longer take accounts where you have this kind of access into account when modeling credit score. Just one more demonstration that the markets are always changing, and that lenders and those who serve them are not passive in the face of people trying to game the system. Sometimes, the response is grossly disproportionate, too.

Original here

Judging by the thinking I've seen coming out of Washington of late, this may not be as satirical as the author thinks: Obama to Use Inheritance Tax to Pay Off Bush Deficit

Me too: I miss Bush

Not in the sense of wanting him to have had a third term, but I miss having as president someone who actually worked for the good of the country, could tolerate criticism (even when it was way over the line) and cared more about the good of the country than he did rewarding the people who got him elected or about how he looked in the process.

You know, a competent executive.

The three little pigs and the housing rescue plan, a modern fable by Greg Swann

Once upon a time there were three little pigs, and, although they were brothers and looked a lot a like, they could not have been more different.

The first little pig was hard-working and thrifty. He spent very little of his income, saving and investing as much money as he could. He lived with his mother well into adulthood, helping her with her expenses. He finally bought a home of his own when he could afford to pay for it all in cash. As you might expect, the thrifty little pig's home wasn't flashy, but it was all his, free and clear.

The second little pig didn't save very much of his income, but he earned a lot of money as a rising executive, and he had an uncanny luck in the housing market. He bought a condominium on his 18th birthday, then traded up to his first single-family home before he was 21. By the time he was 30, the lucky little pig owned a very stately executive home -- and he had been able to make a whopping 50% down-payment.

The third little pig wasn't very good at working hard, and he had never kept a job long enough to get a raise. He wasn't at all good at saving money, but he could borrow and spend it better than any little pig anywhere. Like the lucky little pig, he moved away from home early, but he just kept moving -- from apartments to friends' couches to rental homes and then to one girlfriend's house after another.

Read the whole thing

I hear it and read it all the time - advice that says to pre-emptively reject the possibility of paying points. People that talk to me about loan rates that tell me they will not consider any loan that requires paying points.

What they're thinking is that they don't want to pay origination. They don't want to pay for the person who gets their loan approved, figuring that the interest rate is enough for the bank. Here's a cold hard fact: Nobody does loans for free. The interest you are paying does not go to the bank who does your loan. It goes to the actual investor who furnishes the money. And here's the fallacy that completely guts the advice: What has become the most common system of loan origination, where the originator is separate from the investor, has become the most common system because it is cheaper for the consumers.

Once upon a time, all residential mortgages were done by lenders who intended to hold them for the life of the loan. There was no origination. There was no discount. The Rate was The Rate, and they would give you whatever rate they were offering everybody else that week - if you qualified - as they wanted to make a certain comparatively high margin on the money. If you didn't qualify for The Rate, there were alternatives but none of them was advantageous. In any case, The Rate wasn't that great, but there weren't many alternatives at all, and all the banks charged about the same Rate, and there was pretty much always a prepayment penalty of some sort because they had to be certain they'd make enough money via interest to pay their employees for doing the loan.

This started changing a very long time ago, with the advent of Fannie Mae (and its younger sibling, Freddie Mac). Nonetheless, the two GSEs didn't work in a way that made their role obvious to the consumer until about thirty to forty years ago. The fact that they bought mortgages, allowing lenders to loan what was essentially the same money over and over again meant that rates went down, but also as part of the same phenomenon that lenders were no longer making money from the interest rate of holding those mortgages. The upshot was that consumers now had a choice: In order to get the cheaper rates made possible by the GSEs, they had a choice: They could pay origination, or they could accept a higher rate, such that the lender who did their loan received either a bond premium or yield spread premium, which amounts to a different piece of the same thing. The advice not to pay points for a mortgage actually dates from this period, as holdouts equivalent to today's portfolio lenders came up with what was an advertising slogan that made it look like dealing with agency lenders was actually costing you more, when in reality agency lenders were saving consumers money over the longer term, albeit with slightly higher upfront costs. But when it's saving you as much as two percent per year over the portfolio lenders of yesteryear (who began charging points themselves because they could), it doesn't take long to see that paying a point of origination, or one percent of loan amount upfront in order to get a rate two percent lower with the agency lender was a much better deal than the alternative.

Once started, the advice to not pay points took on a life of its own. After all, what's not to like about not paying for something? But origination points pays for a real service, and if it saves you money in your particular context, then it is worth paying. But if you reject in blanket fashion the possibility of paying points, then you never consider the very real possibility that it might save you money. Nor, in the modern world, is not paying origination a real possibility. I can make my money in the form of points, I can make it via an explicit dollar figure charge that amounts to the same figure, or I can jack up the rate and make the money when the secondary loan market pays me more than the face value of the bond because the interest rate is above that of similar mortgages. Note that there is no option that says "your lender doesn't make money for doing your loan." If your lender doesn't make money, they don't stay in business. I don't do free loans. Nobody does free loans. If I'm not going to make money anyway, I'd prefer to stay home and play with the dog and teach the girls about TANSTAFL, because plainly there are an awful lot of naive children somehow getting through the educational system without absorbing this critical concept. Pretty much everyone else in the loan industry needs to make a living also. Refuse to pay origination, and you're back in the old days of portfolio lenders - with a rate two percent or so above the agency lenders for the same loans.

Points actually come in two forms. As well as origination, there is discount. Origination is going to be paid on every loan. It can come from a figure in points you are being charged that amount to a certain number of dollars, it can come from an explicit number of dollars you are being charged (that amounts to the same number of dollars as the points do), or it can come from jacking the rate up so as to receive yield spread (which must be disclosed) or a secondary market bond premium (which does not). It literally does not matter to me how I make my money - it's still the same number of dollars - but it is going to be made or neither I nor anyone else is going to do your loan. Some companies charge more origination than others, but if they can deliver a loan that is likely to save you money overall, that higher origination is worth paying. Don't lose sight of the forest because you're obsessed with one particular tree, and origination is not the only way that loan providers make money. Not too long ago, I had someone bring me a HUD-1 form where the lender hid eight thousand dollars of profit in plain sight where the borrower couldn't recognize it, in addition to the $1500 they claimed was all they were making via origination. Nor do all forms of origination have to be disclosed. Direct lenders and correspondent brokers do not have to disclose what they make when they sell the loan to the final investor and so advice telling you not to pay points or not to pay origination allows them the ability to cut out other loan providers, at least with the gullible, which is most of the public. Evaluate the loan in terms of the bottom line to you.

I happen to think it's both fair and a good idea to charge origination in terms of points. When I guarantee the rate and cost of your loan, I'm risking more for a bigger loan - and working harder, too. If I make a mistake in pricing the loan, I have to pay a figure in points in order to make it good. If your credit score suffers a sudden drop, the difference isn't a flat fee - it's a charge in points. If you don't get me information I need promptly, or the lenders are just so snowed under that we need to extend the rate lock, that's a charge in points. The bigger the loan, the more work it is to get it accepted by the investor. Conforming loans are, by and large, the easiest. Super conforming get a little tougher. Non-conforming loan amounts these days are like pulling teeth without anesthesia and it gets worse from there. The points charge for origination may go down in steps for larger loans, but for everyone in the industry, you're going to find that the bigger the loan, they larger the number of absolute dollars the lender needs to make it worth their while. They can hide it, lie about it, or risk scaring children of legal age away by honestly disclosing it, but I promise you that you are going to pay it in the final analysis. If your loan provider won't guarantee both the total cost and rate for their quote, that should tell you everything you need to know about doing business with them right there, or in other words, don't.

Discount is an explicit charge for getting a lowered rate. This figure is always expressed in points. I can translate it into dollars for you, but the actual charge is a certain percentage of the final loan amount. Paying discount is pretty much optional, and the answer to the question of whether you should (and how much) changes with the type of loan, your situation, how long you're planning or likely to keep a particular loan, and the tradeoffs between rate and cost available at any given point in time. Discount points can be thought of as negative yield spread or bond premium, and yield spread or bond premium can be thought of as negative discount points. You cannot have discount points on a loan with yield spread or one where the loan officer says they will make what they need to on the secondary market. What you are paying in such cases is origination, not discount.

In neither case is cutting points out of a loan a matter of negotiating skill. Cutting points down is a matter of effectively shopping your loan and asking the right questions of prospective loan providers and nailing them down as to exactly what they are really offering and paying attention to the answers. You're probably not going to see huge differences of three points for the same rate or a full percent lower on the same loan for the same cost unless you're comparing yourself to someone who doesn't shop their loan effectively, but saving half a point on a $400,000 loan at the same rate is $2000, and saving an eighth of a percent for the same cost is $500 per year for as long as you keep the loan. I don't know about you, but that's more than enough to motivate me to spend the necessary time and effort to shop for a better loan.

In any case, evaluate loans in terms of the bottom line to you, not by how much the provider makes or has to disclose that they make. How much it's going to be in points and closing costs to get the loan done in the first place, versus what it is going to cost you in interest charges every month. They're not going to yield a single unequivocal answer, but rather breakeven points, or "How long do I have to keep this loan in order to get back my initial investment via lowered monthly cost of interest?" When you're refinancing, a zero cost loan is the only thing that can be ahead from day one, but even an ardent fan of zero cost loans like myself is finding them hard to justify in the current market, because the rate cost tradeoff is so shallow on that part of the tradeoff curve. In plain English, when you break even on increased costs in six or eight months due to lowered cost of interest, it's very hard for me not to recommend you pay those slightly higher costs, knowing that the median time people keep loans is about 28 months, and they'll get their money back four times over in that period, and keep getting it back all over again every six or eight months they keep the loan.

By the way, if someone won't guarantee their rates and costs, how are you going to get those figures that gives you the answer of which loan is most likely best for you? The lender knows, or should know, what they can really deliver. You don't, except for what they tell you. They should assume pricing risk. If you're not going to follow this model, you're in the same position as the woman who goes to the singles bar looking for Mr. Right. What she's going to find is Mr. Right Now, the sleaze ball who says anything to get her into bed with him and leaves her feeling dumped on and used. The parallels are exact. Nothing wrong with it if all you're looking for is a quick roll in the hay - but I've never heard of anybody who went loan shopping with the intention of getting screwed.

If you don't nail them down with a written guarantee, loan providers can and will lie, omit charges that you are going to pay, and just flat out pull promises out of their backside in order to get you to sign up for a loan. The new RESPA rules that don't go into effect until the end of 2009 will make it only a little more difficult, and it you don't sign up for their loan in the first place, there is no way they're going to get paid for doing that loan.

What I hope you take away from this article is simple: The idea that it may be to your benefit to pay points on a loan, and rejecting the possibility only encourages prospective loan providers to lie about what loan they are really going to deliver. Instead, nail them down as to exactly what they're willing to offer, whether they're willing to guarantee it, and what the limitations upon that guarantee are. Once you have this information, you have the information necessary to decide whether paying points is in your best interest - because it might very well be.

Caveat Emptor

Article UPDATED here

On a forum I frequent, someone posted this advice for prospective property purchasers: At closing, at the title office or bank, when signing the title, contract for sale or any transfer instrument (use a single obliterating line) mark out the word "tenant" and write above it "landlord" or "buyer".

Better yet, require a free simple title to transfer ownership without the buyer identified as a "tenant".

I do not understand this "advice" and am turning to you for clarification. Thanks!

I only work in California, but the only times the word "tenant" should appear on a title transfer deed is if it's a leasehold, or to describe the manner in which two or more grantees hold title amongst themselves.

It is possible that someone might contend that a title granted as "tenant" was a leasehold or rental interest of some nature. I can't see it working in the face of a purchase contract, though, unless there's a whole lot of scamming going on, and everybody involved would basically lose their license and their livelihood, and be liable to the purchaser for what they should have gotten, and didn't. Be advised, however, that I'm not a lawyer, so consult one. With that said, however, such words shouldn't appear unless there's a reason for it.

Here in California, the deeds typically read "(A) grants (B) (type of title or interest) in (legal description of property). It doesn't say seller, buyer, or anything else. It simply transfers title from one group of holders holder to another. There can be commonality between the first group and the second - say a parent granting the property from themselves to themselves and their child. Spouses usually automatically join title by action of law, but it can be beneficial to have them officially on title of record in some cases. They can also be used to remove a particular party to the deed, by omitting them from the list of parties the property is being granted to, as in from A, B, C and D to A, B and D.

There are two kinds of transfer deeds most people will see: A Grant Deed conveys any interest in the property, including interests that may accrue due to operation of law at a later time. A Quitclaim Deed conveys only what interests you many currently have. An actual purchase should use a Grant Deed, transfers within a given family most often use Quitclaims. There are others: Warranty Deeds and Special Warranty Deeds, the latter being mostly used in lender owned property. Both are insurable, marketable title, but there are differences and if you need to know, consult a licensed attorney. Sometimes people acquire title through court judgment, and the title being granted is as strong as anything else, if subject to appeal.

The holder or holders can be lots of different things. It can be a corporation, husband and wife, a single individual, a trust, an estate, a partnership, etcetera, or even a combination.

It also includes how the grantees are going to hold title: joint tenants, tenants in common, common property, etcetera. Each of these has legal implications, and those implications change from state to state. Consult a lawyer in your state for more. Joint tenants, also known as joint tenants with rights of survivorship (i.e. survivor gets the entire share of title), is the most common way for married couples to hold property, but there are many others. There can be layers of this - say a husband and wife hold their share of title as joint tenants, but they are only part owners in a tenancy in common. Any time there are two or more owners, the title deed has to say how they are going to hold title between them. Each of the possibilities has legal meanings and consequences. Single property owners can be and usually are described as "a single man/woman", "an unmarried man/woman" (not the same thing as single!), "a married man/woman as his/her sole and separate property" and many other things, but the word "tenant" does not appear in any of the possibilities I am aware of. Each of these implies things about the state of title as they hold it, but a full description is beyond the scope of this article and changes from state to state. Consult your attorney for details.

The interest being granted can be one of several things or a combination of interests. A "fee" is a piece of actual land. An "easement" is the right to use a particular piece of land in a particular way, but without the rights of ownership. The most common easement is access. The owner of parcel A gives the owner of parcel B the right to travel over a specified part of parcel A in order to get to their own parcel, or for other purposes. Utility easements are part and parcel of this, and the parcel owner granting an easement is giving up rights to do things with their property that conflict with that easement - for instance, building a garage or granny flat over the gas line. If conflict happens, the property owner is required to do what is necessary to give the easement owner their rights. Quite often, easements run with the ownership of a given property, in which case the title being granted is a fee and one or more easements. A leasehold is a time interest - for a specified period of time. Think of it as a rental interest to get the idea. Finally, there is a condominium interest, in which someone holds title to a share of an underlying property, which interest cannot be partitioned off, and usually comes with some rights of exclusive use to a portion of that property. In plain English, you own a defined share of the entire thing, and exclusive rights to your condominium unit, your assigned parking space, and anything else that may have gone with a particular unit under the Condominium Plan, but you have no rights to split yourself off from the common ownership interest. Just because you live in detached housing does not mean you don't live in property that is legally a Condominium. It irritates me no end to read "title being conveyed" in MLS being "fee simple" and then find below read that are homeowners association dues on the property. These two things never go together. If there are association dues on the property, it isn't a fee simple.

Whether the person signing a title transfer deed had a right to grant the ownership interest conveyed (or all of the ownership interest conveyed) is a different story. I can grant my interest in a property on the moon to anyone else, but if I don't have any interest in the property granted it is meaningless - a wasted piece of paper. This is the strongest of many reasons for title insurance. People granting interests that they may not own or control happens all the time. Usually, it is to clear up a cloud on title, but fraud is a real and significant factor, and sometimes people legitimately may believe that they are (or were) the owner, but it turns out they weren't due to some unforseeable factor. If someone sells you a property they don't own, and you don't have title insurance, you are out the money, still owe the money on any mortgage you may have taken out, and you don't own the property. Here is a not too untypical example: Owner A dies, and sibling apparently inherits. Sibling sells property to someone, who eventually sells it to you. But Owner A had a long forgotten marriage that was never dissolved, and that spouse had a child. Child discovers undissolved marriage, checks to see what property may have been left by Owner A, finds your property. Child sues for title and wins, as they've got the law on their side. It can happen to you, no matter your current situation. Fifteen or so years ago, an heir of Alonzo Horton (who laid out what is now downtown San Diego well over a century ago) got several million dollars out of an interest in land it turned out he had inherited but lots of people had been using the entire intervening time.

Words in title grants can be important. Unless I was buying a leasehold, I probably wouldn't accept a title deed granted to a "tenant" (unless it was "joint tenants" or "tenants in common" with any co-purchasers in the property), and I'd decline to pay the money until the seller furnished a correct deed. Why should I, when they haven't lived up to their end of the bargain? Why allow them to create a potential can of worms when you don't have to? Lenders, for their part, have also wisely instituted requirements to make the title deeds they are lending money upon conform to certain requirements before they will consummate the loan. They are in the business of making loans that are going to be repaid, not of repossessing property where the owners didn't, but they're not going to tolerate needless clouds on their title if they do need to take over the property. Bottom line: Be careful about wording on the title deed. Word order and even the presence or absence of commas can be important. If at all in doubt, consult your own lawyer.

Caveat Emptor

Article UPDATED here

Carnival of Real Estate

While New York Bleeds Washington Thrives

That's because the growth industry is government. Of course the Washington DC economy is growing - Barack Obama and the Democrats who control Congress just agreed to spend $1.2 Trillion dollars on the government. Before that, George W. Bush and the Democrats who controlled Congress then (some of whom were officially Republicans) had increased the size of the federal government by an amount unprecendented since, well, the early part of Bill Clinton's term.

It wouldn't be the first time that Washington benefited from a national crisis. Back in 1930 the District of Columbia was a quiet Southern town, scoffed at by New York sophisticates. But as the federal government ramped up to fight first the Great Depression and then World War II, its population grew 65% in two decades, vs. just 14% for New York City.

The trouble would be finding a time when Washington didn't benefit from a national crisis. Government has been a growth industry since the 1930s. Every time there's a problem, no matter how transient, the putative solution that has gotten implemented has been "more government, permanently." Washington is going to grow as long as government is a growth industry.

A reality check for our government: Our Battered American

Obama's Pentagon review: Gitmo meets the standards of the Geneva Conventions

When does the military's compliance with international law qualify as bad news? When you're a new president desperate for excuses to follow through on a dopey campaign promise that'll please your nutroots base and no one else.

and

Actually, insofar as this gives The One a handy alternative to expanding our renditions program, it does mean good news for him -- or rather, it would if the left still cared about renditions, which they haven't since January 20th. Exit question: With opposition to closing Gitmo already near majority levels, the media had better keep this as quiet as possible, huh?

Read the whole thing

In case you missed it:

Video: Santelli tears up Obama's mortgage plan and his inclusion in the new White House Enemies List

Santelli's Chicago Tea Party: The Quest for Our Nation's Soul

The Revolt of the Kulaks Has Begun

What happens when the government repeals Posse Comitatus so they can legally send the army?

Rapidly Collapsing U.S. Foreign Policy

Iran, Russia, Georgia, Kyrgyzstan, Uzbekistan, Afghanistan, Turkmenistan, Pakistan, Syria - all within one month of Obama's inauguration.

Do you think that just maybe Bush's foreign policy wasn't as bad as it was portrayed by his political enemies?

Why Bank Nationalization Is So Scary

He misses the most obvious: When all the lenders are run by the government, who gets (and keeps) credit becomes a matter of government policy. What happens when the government doesn't like a good idea? What happens when the government doesn't like a particular person? There will be no other alternatives. What happens when the politicians of the current government don't like a particular idea, because it threatens their world view or the constituency of a powerful politician? What happens when a particular powerful politician doesn't like you? What happens if you're already in hock to the only lender there is when that politician makes that decision? There won't be any other choices.

I'm intentionally omitting "what happens if they do like a bad idea?" That one is obvious, and they do it all the time. They just voted to spend 1.2 Trillion dollars on subsidizing their electoral supporters.

Love doesn't scale.

I think a lot of political confusion can be traced to the mistaken idea that love scales. It doesn't.

Beautifully succinct summation of a bad assumption and why it is bad.

See if you can find a copy of David Friedman's classic "Love Is Not Enough" I first found it in Jerry Pournelle's "The Survival of Freedom". I'm sure Amazon has copies, or a used book store near you. If anyone knows of an online source, let me know, as I tried it on two search engines and came up empty.

ACORN claims that they're helping an innocent victim reclaim her house.

Michelle Malkin has the real story, and documents to prove it.

I have no sympathy for this person, but loads of sympathy for the person who bought it in good faith whom she is making difficulty for.

Stuart Varney nukes ACORN and the Obama plan

Bobby Jindal explains what the stimulus should have done

The most common mistake in real estate (and every other aspect of financial planning, for that matter) is to assume the situation now is going to continue indefinitely. In the stock market, people chase last year's returns. They "wait for the market to bottom out". When things are going well, they assume that real estate is going to continue to gain twenty percent per year every year.

This is pernicious. Otherwise rational people just assume that whatever is going on right now is going to continue, and it can be extremely difficult to talk them out of it, as I can tell you from personal experience, having lost an awful lot of income trying unsuccessfully to persuade people to limit themselves to what they could actually afford, and missed out on just as much by trying to move people off the sidelines now that we're ready for a recovery in San Diego. But "Past Performance Does Not Guarantee Future Results" is not just a legal disclaimer. It amounts to natural law, just as strong as gravity or the Second Law of Thermodynamics.

People get caught up in mass psychology, doing things because everybody else is doing them. Mass psychology can move the market. In fact, the history of real estate is mass psychology moving the market. Masses of people believing that a property is worth $600,000, and therefore it is. They believe it's worth $600,000 today in part because they think it's going to be worth $650,000 tomorrow. Or $700,000, $800,000 do I hear $1,000,000? You get the idea.

This works even more strongly on the downslide. People are afraid that if they invest $400,000 in the property today, it'll only be worth $350,000 tomorrow. They don't want to lose money, even if it's only a temporary theoretical loss on paper. They want to wait until the market "bottoms out". Newsflash: Real Estate isn't liquid like stocks and bonds, and should not be purchased (or sold) as if it were, with all of the false conclusions that one assumption leads you to.

I'm now going to invoke one of the great and dirty non-secrets of investing: There is no predicting the top or the bottom. Why? Because it turns so strongly on mass psychology. Nobody can tell when mass psychology is going to change. Nobody can tell what it's going to grab onto, or completely ignore. Not Hollywood, not Madison Avenue, and certainly not your friendly neighborhood agent or loan officer. Mass psychology is the "noise" that disguises the true economic signal.

There is a real economic signal. Most things really do have some kind of intrinsic value to them. This value is determined by function, by supply and demand, and by ability to pay, as well as lesser factors. Real estate is no different than most other stuff in this regard. Shares of corporations have a value strictly determined by the value of future earnings per share. $1 per year of future earnings may be more valuable in a low inflation environment than it is in a high inflation environment. Longer potential earnings streams are more valuable than short term ones - $1 per year per share from a well-run insurance company is more valuable than the same earnings from a company with one technological trick that currently leads the market.

The noise often obscures the signal. A little history that leads to some useful concepts: Back in the first half of the second millennium, the assumption was that Earth was the center of the universe, and that planets (and the sun) traveled in circular orbits about Earth. This didn't fit the observed data (planets sometimes moved backwards against the celestial background), so astronomers postulated that planets moved in "epicycles", smaller circles about what was presumed to be the center path of their orbits, called the deferent. Before Copernicus and Keplerfinally brought the whole house of cards down, astronomers were postulating epicycles within epicycles within epicycles in an attempt to fit the observed data.

Unlike planets, economic variables are moved by more than just one force. The fact that planets and artificial satellites are moved by precisely one known force is why we can plot their orbits so precisely. But economics is a lot more complicated, and so the astronomical concepts of epicycles and deferents have some value in understanding them. Let's even use those terms. It's far more complicated than this, but if you think of mass psychology as the epicycle moving about the deferent of the underlying value, you may begin to get a useful picture of what's going on. The epicycles can be very large and last for years, but markets always move about the deferent in the end. That's where the restorative economic forces trend - and the further away from the deferent things get carried by epicycles, the stronger those restorative economic forces are. Right near the deferent they're not very strong, but the further from the deferent that mass psychology and other epicycle creators move perception of value, the stronger the restorative forces get. Think of a a large ball the size of the US economy rolling down a broad shallow valley where the sides get progressively steeper. Things can happen to the ball to move it out of the exact bottom of the valley quite easily, but at the moment it moves off the deferent, forces start acting upon it to move it back to the deferent. Small, almost unnoticed forces that build up, and build up more the further you get from the deferent.

Now what does all of this have to do with the price of tea in China, or more precisely, the price of real estate in your area? Everything. For over a decade, we had been pushing that ball up one side of the curve, as I detailed in Fear and Greed, or How Did The Housing Bubble Get So Big? (first published February 2006). We had mass psychology and political direction and the lenders competing for market share and profit with ever more aggressive loan products, and they all pushed the ball about as far off the deferent as it was possible to go. We had hundreds of millions of people pushing that ball just a little more uphill, assisted and wedged and leveraged and braced by all the machinery we could bring to bring to bear. We had it firmly in our minds that this was the "good" side of the valley, where we wanted the ball to be, and we wanted it as far up the "good" side of the valley as possible. We even started thinking of this so-called "good" side of the valley as the deferent, but the deferent pays no attention to what we think.

Now let me ask you: when that 14 trillion dollars per year ball finally breaks loose and starts rolling down the hillside, building up momentum all the while as the restorative forces add more and more to that momentum all the way down, and keep adding more and more momentum (although the amounts being added get smaller) all the way to the center, do you think it's going to suddenly and magically stop right on the deferent?

Not in this world or any other. It's got all the momentum that a 14 trillion dollar ball can build up, and guess what? It crosses right over that deferent like it wasn't even there and keeps on going. By this time it's got mass psychology behind it just as much as it ever did on the way up, pushing it ever harder as well. In an economic analog to the gravity assist (aka slingshot effect), it is very easy to push it much further to the "bad" side of the deferent than ever we had it to the "good" side, particularly as the government meddling intending to slow the ball's rolling is in fact making it worse and worse and worse and worse and worse, because the government is not paying attention to the Law of Unintended Consequences.

What's the practical upshot? Well, other than the fact that any disturbance from the deferent distorts the markets and makes for future oscillations, and that anything we can do to the market generates just as many losers as winners, what is the practical upshot for individuals? Nobody can directly control the market actions of others, so how can we as individuals best deal with all of this?

The way we deal with all of this is quite simple. First we have to get as true a picture of where the deferent really is as we possibly can, or at least where we are in relation to the deferent. What is the supply of housing like in your market, and how easy is it to add more? What is the demand for housing like in your market? Do people want to live there? Are we talking San Diego and Honolulu, or are we talking Detroit and Cleveland? Next, we have to ask "what is the ability to pay?" How much do people make relative to the basic necessities of living? How strong and how varied is the area economy? Is it a hub for multiple industries like San Diego and Boston, where if one industry tanks the market is likely to be supported by others, or is it a one industry (like Silicon Valley was twenty years ago) or one company town (like Seattle used to be)?

At any one point in time, the value of a particular property is a function of the value of comparable properties around it. If model matches are selling for $300,000 right now, the property is likely to be worth about $300,000 right now. The only way to tell for sure, of course, is to put it on the market and see if anyone buys it for that. The trend is a function of supply and demand - how many properties are for sale right now and how many people want to buy them - as well as mass psychology. Finding the deferent precisely is incredibly tough, but finding which side of it we're on is usually much easier, if you will ignore mass psychology and what is happening right now and look at the underlying economic factors of a particular housing market.

I performed such a study about six months ago; a study I stand by the results of (if anything, more strongly today than then). The study assumed an underlying interest rate of six and a half percent as that was what was available for about one point then; rates are much lower than that today. Mass psychology - a temporary phenomenon of millions of Chicken Littles screaming that the sky is falling - is obscuring the underlying basics as much as it ever did on the way up.

Obviously, the way to profit is different now than it was back when the market was going full gangbusters the other direction. Then, you could buy any damned property you like, pretend to fix it up a bit, and the rising tidal bore of the market would ensure you could make a profit. But the economics of relying upon flipping a property for quick profit are chancy; market sentiment can turn any time.

Longer term investing gives less spectacular results but more certain ones. The deferent for real estate values does rise over time, with population and economic prosperity and the fact that the amount of land available in an area is fixed, and the trend seems to be tying up more and more of that land in reserves of one sort or another: Open space, limited development zones, historical landmarks, etcetera, not to mention legal terrorism relating to property that may not be within a given reserve but that someone wants to prevent the development of. All of this makes property more valuable as time goes by, population rises, and that same population becomes more affluent. If there are 100,000 properties in your area and 150,000 families, the price will be whatever the top 100,000 bidders are willing and able to pay. If the 100,000th buyer is willing and able to pay $200,000 for a property, that becomes the price. Now suppose there are suddenly twice as many prospective buyers. Does the price go up or down? For the mentally challenged, the answer is "up". It's still the top 100,000 bidders who get the properties - but there are now 300,000 competitors. Bidders are going to have to do more in order to be successful buyers - and the ones who aren't willing or able to do more will go without, just like any other good. But housing isn't like concierge service or spa visits - The alternative is not to do without, but rather to do with a lesser substitute for what we really want. Even if it's underneath a bridge or in their car, people have got to have a place to live. This tends to make for more inelasticity rather than less in the demand curve, or to put it in everyday English, if the price of housing goes up, people tend more strongly to do without other things instead of cutting back on housing. Most people don't have a need for a six bedroom 3000 square foot home no matter how badly they want it - but most people would agree that the minimum acceptable substitute for a family is somewhere between a 2 bedroom rented apartment and a three bedroom1200 square foot PUD, rather than the inside of a drainage culvert. The strongly supported conclusion of all of this is that there is a level that housing values will trend back towards, and that deferent (at least in San Diego) is well above current values.

(Note to renters: The demand for rentals is increasing even more because of all the people who lost property and can't get a loan right now. The vacancy factor in San Diego is already a microscopic 2%. Nor can landlords skate on make-believe loans like so many of them were doing, planning to make money off a rising market. What do you think this is going to do to the rental price, particularly of non-apartment units? If you haven't shopped for a new rental lately, be prepared for a some sticker shock when you or your landlord terminate your current tenancy, and in the meantime be prepared for significantly increased rents as landlords discover they can get more)

So how to you make a profit in this sort of situation? First, put any thought of a quick flip out of your mind. The odds against it are so long as to equate to "Not gonna happen", at least not profitably. This is an investor's market. You buy with the idea that you're going to hold the property a minimum number of years. I would advise three at a minimum, and plan for at least five. Make sure you've got a loan that you're going to be happy with that entire time. It's a lot more expensive to refinance investment property than it is your primary residence, and the constraints on doing so are far more telling. If you're putting enough down, a commercial loan becomes a real possibility, simply because the qualifications are easier right now and the rates are competitive. You need a positive cash flow out of the property - which means most likely you're looking a larger down payment rather than a smaller.

Planning to rent the property out is always a winner. If you can get a positive cash flow out of renting it, the only viable economic model of ownership does not depend upon the location of your job in relation to the property. If you need to move hundreds of miles away and renting it out is not an option, you are at the mercy of the current market and whatever phase the mass psychology epicycle may be in. This is one thing that bit an awful lot of people in the last couple years. Just because renting it out is economically viable doesn't mean you can't choose to live in it yourself, but life throws curves. Having the ability to make your property into a viable rental is a pretty effective trump card for most risks of housing. Even if you can't live there because your new job is on the other side of the continent, someone will want to. Especially in San Diego.

Make it habitable, bring the maintenance up to date and keep it that way, but with that said, I would hesitate about upgrading a rental before the actual time comes to sell it. Renters can't ruin your new remodel if you haven't done it yet. Granite countertops, maple cabinets and travertine floors still need to be taken care of. Furthermore, they do got old and less attractive looking. When you go to sell, you want them to be brand spanking new to sucker in buyers without a good agent, one of those bits of detail that sells a property that has already appreciated for a noteworthy premium. Upgrading isn't what makes the property more valuable; the market has already done that. Just like most long term investors, you really made your money when you bought - you're just waiting for the market to formalize what you know is going to happen. You've already made a profit by buying when prices were cheap - you're just not sure when the check for the profit is going to get here. Warren Buffett (among many others) has made pretty much every one of his billions of dollars the same way.

There are precisely two times in the history of holding a property when the price counts: When you buy it and when you sell it. In between, the market value can be thirty-nine cents for all you care. If you don't sell it then, it's not important. If you know that market is going to revert to something higher in a few years, you know you've already made a profit, you're just waiting for the check to roll in. In the meantime, you're living in it (gaining the valuable benefit of shelter) or making a little money every month from the rental.

People think they're going to outsmart all of this by waiting for the market to "bottom out" or turn around, just like they think buying property when the market is rising is a "can't miss" proposition, and for precisely the same same fallacious reason. First, nobody can predict exactly when the market will turn. Second, when it does turn, it takes a while for it sink in to the public consciousness. Mass psychology, remember - it takes a lot for things to penetrate. Third, when it does manage to get people's attention, it's because you've already missed the best window. The way you figure out that the market is going up is by missing the first ten or twenty or fifty percent of increase, if not more. Fourth, mass psychology is fickle. It's difficult turn the market back around short of what I've been calling the deferent point, but it can happen, has happened, and will happen again. Fifth, as I have said previously, what I've been calling the deferent can be very hard to discern exactly. Suppose the market is already past that by the time you wake up and smell the coffee? That's how bubbles happen, and how people get caught up in them and metaphorically lose their shirts. How many bubbles of one sort or another have we had in the last ten years? Betting on making money because of another bubble like the one we just had anytime soon strikes me as a bad bet such that everybody that makes it is likely to lose. So don't make it. But the psychology of "waiting for the bottom" encourages precisely this kind of thinking.

You can always find a good investment if you've got the patience. But right now, properties that are going to make someone an awful lot of money when the market normalizes are so thick on the ground that you can't hardly avoid tripping on them. Furthermore, mortgage rates are near all time lows. The interest cost if you need a loan, or want one so that you can put leverage on your side, is even lower than the base cost in dollars. The time to make a bet that you're likely to win is when the odds are on your side - while the market is below long term trends. You know it's going to come back eventually, and as long as you can afford the property, you're just waiting for the check to arrive.

Caveat Emptor

Article UPDATED here

I love this story: Man steals burglars' car as they try to rob his home

>Rosario was greeted with high-fives from responding deputies

That's resourceful. Somebody needs to offer that man a job (he just got laid off). I'll bet he'll do well for you.

Obama warns mayors not to waste stimulus money

Invoking his own name-and-shame policy, President Barack Obama warned the nation's mayors on Friday that he will "call them out" if they waste the money from his massive economic stimulus plan.

Mr. President: Sixty percent of the nation told you your "stimulus" was wasted money before it passed. How much effect did it have upon you?

Obviously, not much

"If a federal agency proposes a project that will waste that money, I will not hesitate to call them out on it, and put a stop to it," he said. "I want everyone here to be on notice that if a local government does the same, I will call them out on it, and use the full power of my office and our administration to stop it."

Why should anyone else pay any more heed?

Activists 'shocked' at Clinton stance on China rights

Amnesty International and a pro-Tibet group voiced shock Friday after US Secretary of State Hillary Clinton vowed not to let human rights concerns hinder cooperation with China.

Why? Nothing has changed for Hillary Clinton or Barack Obama.

Eric Holder wants a conversation on race. Heather Macdonald gives him a real conversation on race

Not only do colleges, law schools, almost all of the nation's elite public and private high schools, and the mainstream media, among others, have "conversations about . . . racial matters"; they never stop talking about them. Any student who graduates from a moderately selective college without hearing that its black students are victims of institutional racism--notwithstanding the fact that the vast majority of black students there will have been deliberately admitted with radically lower SAT scores than their white and Asian comrades--has been in a coma throughout his time there.

Q and O adds some great commentary on the same subject. After correctly lambasting the New York Post for the chimp cartoon, (and others for defending it) he segues to why people don't talk about race

Well, we probably don't talk enough about race. We don't have those frank exchanges of racial views. Indeed, we don't even have humorous public statements about race, even tangentially. Because all it takes is for Dom Imus to say something on the radio like, "That's some nappy-headed hos right there," and he's done. Al Sharpton comes around with a group of lusty, gusty fellows to demand your firing, as soon as he hears about it. And you lose your livelihood, because he'll get it.

If you're white, there's no upside to having a talk about race. You run the risk of accidentally or unknowingly saying something insensitive, at which point the best thing that can happen to you is that you'll be publicly reviled as some sort of bigoted troll. Why take the risk?

Is that cowardice, or simply the result of a prudent calculation of risks and benefits?

No, the only time we talk about race, is when some buffoon like Sean Delonas makes a public faux pas that can't be ignored. And I don't see that changing any time soon.

Read the whole thing

Sane perspective on current events and the Depression from Victor Davis Hanson

FEC Investigation Confirms Obama Received Discount Mortgage

Judicial Watch, the public interest group that investigates and prosecutes government corruption, announced today that the Federal Election Commission (FEC) has "closed the file" on Judicial Watch's complaint against Senator Barack Obama for allegedly accepting a below market rate mortgage loan in 2005 not available to the general consumer. In its factual and legal analysis the FEC confirms Obama obtained a discounted loan but said no laws were violated.

Let me get this straight: Someone sitting on the Senate Finance Committee (overseeing mortgage lenders) gets a sweetheart deal and no laws were broken?

As Judicial Watch noted in its complaint, Northern Trust has supported Barack Obama's political campaigns for elected office since 1990. Moreover, Northern Trust Vice President John O'Connell essentially admitted the company provided Obama preferential loan terms because of his position in the U.S. Senate. "A person's occupation and salary are two factors; I would expect those are two things we would take into consideration," O'Connell told The Washington Post [emphasis added]. "This was a business proposition for us."

We have already established that they would not have treated someone else in the same manner. What is different except that Barack Obama is an elected official, evidently bought and paid for?

Must be nice to be able to order the case dropped from the White House.

Q and O on the assault on free speech.

One of the most defining phrases in the history of America free speech is "I may not agree with what you say, but I will defend to the death your right to say it."

It has never been "I don't like what you say and it sounds like "hate speech" to me so you should be silenced".

Hate Speech is really all about shutting down debate. And the irony is that those using it are guilty of more hate speech, more often and in worse ways, than the ones they are using the argument against.

The entire concept of Hate Speech needs to be the subject of a Supreme Court decision eliminating it as a criterion for censorship. Let the KKK talk - and we know exactly how subhuman they are, and how much their opinions are worth (which is to say, precisely zero if not some negative amount). I've read the Constitution several times, including the amendments, and I cannot find anything protecting someone from being offended, if for no other reason than you can always manufacture something to be offended about (something the Founders were quite well aware of). Since you can always manufacture offense, this becomes a movable goalpost and highly useful for shutting down the other side in a debate.

We can start using Hate Speech against the Hate Speech Police. But far more effective, and correct, would be to eliminate Hate Speech entirely.

Let's see how long before this is banned as offensive hate speech:

"Create or Save"

The expression "create or save," which has been used regularly by the President and his economic team, is an act of political genius. You can measure how many jobs are created between two points in time. But there is no way to measure how many jobs are saved. Even if things get much, much worse, the President can say that there would have been 4 million fewer jobs without the stimulus.

Not that anyone sane and rational would believe such a claim. But if he can tell people who want to believe in him that "Four million more of you still have jobs because of the stimulus" they'll all believe he's talking about their job.

(Some of) Our Critics & Their Imaginary Conservatives

As I often noted on this blog and elsewhere, "It's easier to be gay among conservatives than it is to be conservative among gays." Conservatives don't vilify me when I come out as gay, but when certain gay liberals learn of this blog, they're convinced I support a political party (and/or philosophy) made up mostly of people who hate me because of the nature of my .

Simply put, our actual experiences don't register to these people.

These guys seem to be living in a world which hasn't changed since Harvey Milk rose to prominence, a time when there were almost no openly gay elected officials and when coming out as gay could compromise your career. No wonder they're all so enamored with the film. And they accuse us of living in the past and having retrograde ideas.

It's a cherished illusion that makes them believe they're crusaders for Truth and Justice.

Lot of people on the political left think they don't know any conservatives, or any Republicans, which are not the same thing. For that matter, social conservatives are not the same thing as fiscal conservatives.

In reality, I have met many examples so hateful towards conservatives that the people they know who are conservative mostly keep quiet. About a year ago, I heard one person say something truly rude in a room of about eight or ten people they knew - but I knew that only one other person in that room was not a conservative. It's not like we have to wear some kind of scarlet letter (yet). Furthermore, I'm pretty certain that not one of the other people in the room acted in the way alleged.

The next time you're about to say something bad about conservatives, ask yourself if saying the same thing about Jews (or Black people or homosexuals or women) would make you uncomfortable. If the answer is "Yes", maybe you should reconsider.

For conservatives, maybe the time is here where we should start speaking up "I'm conservative, and I don't believe that."

Not that this will remove the guilty party's ability to rationalize it. "You're okay. But those other conservatives are all eeevil" (among other responses). Jews have been getting this treatment for roughly the last two thousand years. It's amazing how well people evade the central truth, which is that their internal picture about the accused group is wrong. But we can stop enabling it by our silence.

Instapundit:

FREE SPEECH IN THE AGE OF OBAMA: "An Oklahoma City police officer wrongly pulled over a man last week and confiscated an anti-President Barack Obama sign the man had on his vehicle." Plus this: ""When I was on my way there, the Secret Service called me and said they weren't going to ransack my house or anything ... they just wanted to (walk through the house) and make sure I wasn't a part of any hate groups." Since when do government officials search homes to ensure the absence of impure political thoughts?

If something like this had happened with Bush, it would have been proof that fascism was descending had descended upon America.

Congress Stymies Investigations With Hidden Provision

When Iowa Republican Sen. Charles Grassley, a longtime champion of inspectors general, read the words "conduct or refrain from conducting," alarm bells went off. The language means that the board -- whose chairman will be appointed by the president -- can reach deep inside a federal agency and tell an inspector general to lay off some particularly sensitive subject. Or, conversely, it can tell the inspector general to go after a tempting political target.

Manufacturing Guilt?

Reason recently obtained shocking video from another Hayne and West collaboration that may shed light on the question. In 1993, the two conducted an examination on a 23-month-old girl named Haley Oliveaux of West Monroe, Louisiana, who had drowned in her bathtub. The video shows bite marks mysteriously appearing on the toddler's face during the time she was in the custody of Hayne and West. It then shows West repeatedly and methodically pressing and scraping a dental mold of a man's teeth on the dead girl's skin. Forensic scientists who have viewed the footage say the video reveals not only medical malpractice, but criminal evidence tampering.

People that need to go to jail if not be sentenced to death.

Obama Stimulus Saves Microsoft Billionaire Hundreds Of Millions

As opposed to the $8 per week the working stiffs are getting.

It's starting to enter public consciousness that the real patrons of the Democratic Party are really big businesses who don't want smaller businesses to be able to compete with them.

Megan McArdle on Obama's proposed bailout

So the plan:

1. Forces the bloated and undercapitalized mortgage agencies to take on more debt without regard to creditworthiness

2. Cleans up only the least toxic loans

3. Will cost some unknowably huge amount of money

This is from a supporter.

My lunatic proposal for the day: why not make it easier to move homeowners out of homes they can't afford? Set up a streamlined foreclosure proceeding where a current or mildly delinquent homeowner can simply give the house to the bank and walk away. Do this with two legal provisos:

1. No tax on the forgiven loan

2. No black mark on the credit record. The bank marks the loan as fully satisfied.

The homeowner gets a fresh start, and the bank gets the house without the huge administrative costs that are normally associated with foreclosure. Everyone loses something, but no one loses a crippling amount, and there is no net transfer between two parties who are both in financial trouble.

I left a comment, but now let me expand on it.

We have always had Deed in Lieu of Foreclosure, which does precisely that, gets the borrower out now with only one (or one additional) black mark. However, it is not mandatory that lenders accept the offer. To give them some small amount of credit, lenders in aggregate are becoming more willing to do so. More of them are getting intelligent enough to do so. I would also strongly suggest making Deed In Lieu of Foreclosure much less of a black mark than it is. Someone who loses their job and promptly realizes the situation and takes steps to deal with it that do not result in a creditor losing money they don't have to is a responsible borrower. Someone who makes the lender go through the whole rigamarole of foreclosure is in an entirely different category. And someone who hires a lawyer to spin it out for 18 to 24 months extra while the lender keeps losing money needs to be placed in a special hell for the rest of their lives.

No tax of debt forgiveness was something we had from October 2007 through the end of 2008. I thought it was a good idea initially, but lender and market experience leads me to believe I was mistaken. It was what opened the door to more massive (temporary) increases in the available housing supply, massively lowering price equilibrium until we work through that inventory. My area (San Diego) being on the bleeding edge of this whole mess, had pretty much worked through previously existing problems and the market was ripe for a recovery and some of the data seems to suggest that one had started - and then people who were struggling got their "GET OUT OF DEBT AND TAXES FREE" card.

Complete tax forgiveness didn't work, but that doesn't mean a partial measure might not be an appropriate solution. I believe that a lessened tax rate (say 25% of normally due tax) but not complete forgiveness would be a measure worth trying, but the complete forgiveness motivated a lot of people who could have and should have seen it through to bail out, creating more problems for everyone else. By leaving a portion of the penalty intact, it motivates those who can afford their payments, but simply don't want to, to keep going. As I said in Why You Should Not Walk Away From Upside-Down Real Estate, the market is going to come back, it is only a question of when. What we need to do is have an honest dialog about what is an appropriate share of the normal tax. The idea is we don't want people bailing out if they don't have to, and we especially don't want to encourage anything like buy and bail, or "Bail and Buy" bailing out of one upside-down property so they can turn around and promptly buy another one that isn't.

Apropos of that, the second idea, no black mark on credit record, is inappropriate as well, as it encourages both "Buy and Bail" and "Bail and Buy" type planning. Even if the credit report were completely unmarked, several questions on form 1003 (The federally mandated mortgage application form) will bring it to light on any future loan applications these folks may submit. Furthermore, this amounts to deceiving the system, and will set the stage for further problems on down the line.

If, however, all the people who lost their homes due to this get the standard treatment, that's a lot of folks and a lot of potential customers that lenders are going to make up their mind that they want a year or so down the line. Just because things are paranoid now doesn't mean it's going to last forever. Lenders will create appropriate programs and demarcations and grades of treating the issue, thereby dealing with the problem and bringing these people back into the market. The ones who lose their home but otherwise take care of their credit will be fine. They may pay a slightly higher rate (or need a bit higher down payment) than people who didn't have a short sale, foreclosure, or deed in lieu, but the lenders will decide they want them as borrowers nonetheless. It's as inevitable as gravity. The ones who don't take care of their credit otherwise will suffer appropriate penalties. And once the folks who get another mortgage loan make a couple more years of on-time mortgage payments, I'll bet they get treated just the same as someone who never had a problem, and that's as it should be.

People have been trying to deal with this like it's a little problem, that we can easily solve in one fell swoop and get past, and that nobody needs to suffer any pain except maybe the lenders. None of that is true. None of that is possible. This is a major problem, but the end can be in sight if the government will allow the markets to act in their own best interests. What we need is a rational plan that doesn't repeat the causes of the problem we're trying to recover from, that enables and motivates as many people as practical to work through their problems so that the problem is no larger than it needs to be, that doesn't make the problem worse, but nonetheless encourages dealing with the problem and getting past it.

Once we do all of that, it's just a matter of time until we're back to a more normal market. If the government uses the remaining money from TARP to help stabilize the credit markets and otherwise stops trying to "help", I think that the markets will get it through the heads of the participants what they need to do in order to get out of this. Everybody knows already what they would have to do to get through it on their own, but they're putting off the reckoning because they're hoping the government will step in and save them from the bad consequences of their own bad decisions. Well, a certain amount of that is necessary simply due to politics, but the money the government spends has other ill effects, and it doesn't come out of some hyperspatial vortex. The time for the government to step back and tell people to work through things on their own has definitely arrived.

Caveat Emptor

Lots of properties have some kind of problem with them. Maybe you bought in full recognizance because of something else about the property, but probably not. Mostly it's directly a result of not spending the effort to find a good buyer's agent. But whatever the cause, you're stuck with the property, and you've decided to sell it, but just like everyone else you want to get the best possible price.

Welcome to Bigger Fool Real Estate. That property is your problem. You want it to become someone else's problem. I'm speaking now as a listing agent, responsible to get the best bargain for the sellers. Getting a good bargain for the buyers is not the listing agent's responsibility. I have to tell the truth, but my responsibility is to get the property sold on the best possible terms. If I was your buyer's agent, things would be different, but right now I am postulating that I am not. (I don't do dual agency. Ever.)

I'm going to write about property with problems, but this is equally true of the property that doesn't have upgrades that competing properties do. People don't understand that upgrades get old, the same as the rest of the house, and they are attracted to them and will often pay outrageous prices for them. You need to discuss ways to effectively compete for buyers with your listing agent. A good agent is the difference between making it happen for you on favorable terms and not at all, but you've got to be willing and able to help with the necessary steps.

The first thing is to know is that you're definitely going to have to disclose the issue, and where and when you have to disclose it. Plan for it. It's amazing how often handling the disclosure right can gloss right over what might otherwise be a deal killer. People won't spend the utterly trivial amount of effort to find the good buyer's agent who will save them because they don't understand it's important. This can work to your advantage. This is one of several reasons you need a sharp listing agent.

If you've got an issue that might drive off buyers, you need more prospective buyers than otherwise, because you're going to lose a larger than normal percentage of them. As any buyer's agent knows, people aren't looking for a reason to buy your property, they are looking for a reason not to buy your property. Every property loses a percentage of prospective buyers, and even if they can't put their finger on why, properties with issues lose more prospective buyers. The way to even this out is an asking price just enough lower to draw extra interest. Most buyers are silly about low asking prices, and the more people who view your property, the more chances you have to get a buyer who doesn't care, or who thinks the lower asking price is enough compensation. If you don't price the property thusly, it'll sit on the market and you'll end up getting even less for it, if it sells at all. If you do price appropriately lower, a good percentage of the time you're even going to get two or more prospective buyers bidding the price back up. A good agent can advise you on this - what is enough to work and what's too much. It is not a matter of cut and try - you've got to get it right in the first place if want optimum results. In the situation we're talking about, you want and need lots of people looking at your property.

Clean and declutter the property. Make it shine as much as you can otherwise. Visual appeal $ell$. The situation you're looking for is a buyer who doesn't realize the problem exists, and good visual appeal can distract them from reasons not to buy your property. Avoid turning them off when you don't have to. Equally important, make seeing the property as easy as you possibly can. This is always important, but in a situation like this, it's critical. Moving out is an especially good idea in this case, if you can afford to do so, particularly if you've got children or pets.

Take good pictures for MLS and the advertising. People, particularly ones with weak or no buyer's agent, are silly about attractive pictures. Even otherwise perfectly rational ones who are aware of trick photography and Photoshop. Sometimes, they'll make up their mind they want the property before they actually see it, just from the pictures. They'll still want to look, but they're not careful. Lots of turkeys get sold this way. I don't advise trick photography or Photoshop, by the way - people will realize you were attempting to play them. But picking your shots and vantage points carefully can show even awful properties to good advantage.

De-emphazine anything that may point out your undesirable features or call attention to them. Don't try to hide it, but you don't want to call attention to it, either. Most people have holes in their perceptive ability big enough to sail multiple ocean liners abreast, particularly when it comes to looking at property. If one buyer spots it, the next one or the one after won't. This is why you want more people looking at your property than the absolutely perfect property next door.

Make sure the property is advertised where it will draw attention. You need a quick sale. You don't want people wondering why it's got a large number of days on the market - then they go looking for reasons why nobody else bought. Lots of people aren't interested in anything that's been on the market over thirty days, as in they won't even look at the listing online. If you fool yourself about property value for even a short period of time, or aren't willing to do what is necessary to begin with, you can cost yourself literally thousands of dollars for every dollar you think you're saving.

Know what kind of buyer are you looking for - unrepresented ones without agents, or ones where their agent is just trying to crank a transaction. Make certain they're able to qualify for any necessary loan before accepting their offer, however, because a large percentage of these can't, meaning you are wasting your time. The competently advised buyer who is ready to deal with your issue is a distinct second choice, because they're not going to offer as much, and they're going to walk away if you try to insist they pay what the property isn't worth.

The worst of all possible worlds is someone who insists upon perfection who suddenly realizes the property isn't perfect partway through the transaction - because they're going to bail out, and you may not get any compensation for them wasting your time.

To the maximum extent possible, just ignore whatever problem issues your property may have. Don't lie, and if someone directly asks, don't pretend it isn't there, but don't bring anybody's attention to it, and don't act like it's important, and you'd be amazed how often prospective buyers will pay attention to your attitude rather than anything else. You would be amazed how often unrepresented buyers, and buyers whose agents are trying to crank a transaction, never notice something that should be a deal killer, or don't pay proper attention to it.

If you're in the position of needing to sell to a Bigger Fool, it's not an impossible task, but it is one where you've got to get it right the first time, and you need a sharp agent who knows what they're doing. A discounter or someone who just hangs out a sign in the yard is going to cost you more than you could possibly save over the more expensive agent who actually makes it happen on good terms.

If you're a buyer, none of these techniques are in any way a secret. They are in widespread use. If this bothers you, the best way to prevent it from happening to you is get someone who is going to point these issues out and compare them to other properties. In other words, Get yourself a good buyer's agent before you start looking. And if they won't point out these sort of issues, they're not a good buyer's agent and you should stop working with them and find another agent who will. These folks are trying to unload their problems, and you don't want to be their Bigger Fool.

Caveat Emptor

Article UPDATED here

Been a while since I posted this: In California, your property taxes are based upon your purchase price (plus no more than 2% per year, compounded). But if values fall, you can get your assessment lowered by appealing your assessment. It's really pretty easy - I appealed two years after I bought. One form and my assessment went down.

San Diego County Assessment Appeals Board has the forms necessary. If you're in some other county, use their form.

Flying pigs alert: Just when you're about to give up hope, bend over and kiss your backside goodbye, California State Senate Republicans do something intelligent and principled

The game of chicken in Sacramento just claimed its first victim, one that has to send a chill down Democratic spines. Republicans in the state Senate ousted their leader, the man who crafted a deal with Democrats to resolve the budget standoff with massive tax increases as part of the package. The GOP has apparently accelerated their car, and the Democrats will have to decide whether to swerve or crash:

I agree with Captain Ed:

The budget needs more than just $16 billion in cuts. California needs a real austerity program, one that sheds government workers and government programs. The Golden State also needs to stop borrowing money, which comes from the massive spending. How massive? The governor's office claims that they have kept spending level at $105 billion per year, but even at that rate, they spend more than 20 times what Minnesota does while only having about six times the population.

Trust your government: Obama poised to sign stimulus into law has absolutely nothing to do with Stocks drop on worries about economy, car makers

Yeah, and pigs are flying formation over the White House, too.

Gibbs told reporters traveling with Obama on Air Force One that he would not rule out the possibility of a second stimulus package. Yet he added that there are no plans for such a package at the moment

In other words, after wasting 1.2 Trillion dollars of your money, if the economy doesn't recover on its own despite the government sucking up all the investment capital, they'll go waste some more.

What the legislation is not expected to do is change the nation's economic fortunes quickly. So part of the White House's goal has been managing expectations.

If it's not going to work quickly, why do it? If the government just got out of the way, the economy would recover on its own. What makes you think the stimulus plan will work at all if it doesn't work quickly (like within 12 months) ? How is it "needed stimulus" if it doesn't happen when we need it?

Stocks tumbled Tuesday as investors grew more doubtful that the government can quickly turn around the still-weakening economy.

Has nothing to do with the fact that this is the first market session since the stimulus was approved by the Senate. Nothing to see here. Move along.

Nor is http://www.recovery.gov/ any kind of a neutral site, auditing where the money was actually spent. It's a White House run shill site telling you what the White House wants you to believe. The media doesn't have any problem pointing out this sort of thing when Republicans are in the White House.

And the financial press is writing things like this:
Fiscal Stimulus Is a Ruse Absent Fed Pixie Dust:

Advocates of fiscal stimulus would have us believe the government is Santa Claus, delivering gifts to those who are nice without extracting anything from those who are naughty. Economic modelers say with absolute certainty that every $1 spent by the government translates into $1.47 or $1.50 or $1.63 of gross domestic product. The specificity of these forecasts -- down to the last penny -- doesn't do much to convert the atheists among us. The same models that didn't see a recession until it was under way are now specialists in human psychology?

Besides, where's the proof that fiscal stimulus delivers?

"Empirically, nobody can point to a single Keynesian episode that worked," says Dan Mitchell, senior fellow at the Cato Institute, a libertarian think tank in Washington.

Read the whole thing

Obama is Big on Symbolism

As opposed to substance? What was your first clue?

At the battle of Asculum in 279 BC, the Greek king Pyrrhus defeated a Roman legion, but at frightful cost to his own troops. When sycophantic courtiers congratulated him on his "great victory," Pyrrhus responded: "one more such victory, and we shall be undone."

President Obama plans to celebrate his Asculum -- passage of the (at least) $787 billion "stimulus" bill -- with a signing ceremony in Denver Tuesday. Sycophantic liberal commentators hailed this as a great victory for the president, but it comes at the cost of the illusion Mr. Obama represents a change from the corrupt old ways of Washington.

He rammed through a bill crafted in secret, allowing Republicans (and most Democrats) absolutely no opportunity to proposed an alternative, and no hand in drafting the bill whatsoever, wheedled votes by asking "pretty please" but wasn't willing to compromise one whit on the biggest government spending bill ever, one with so many benefits set aside for so many Democratic interest groups that the entire thing could be most honestly entitled "The 2009 Election Spoils Bill". Not one Republican house member voted in favor, and only three senators. You own this one, Obama, and it's going to be a millstone about your neck. Yeah, you won passage of this bill. But it's going to sink you (along with the country's economy).

I would like for it to be otherwise. The only way to sink Obama involves sinking the country as well. I'd rather he did the right thing for the country. But he's not doing that.

California grinds to a halt

Republicans have almost no power in the state legislature apart from this supermajority requirement, so it's not surprising that they're reluctant to pass up a chance to use it to get spending cuts. Democrats heavily invested in nanny-state policies over the past few decades, though, and refuse to consider large-scale rollbacks of state government programs. Doing so would jeopardize their standing among key constituencies, especially public-sector unions like AFSCME and SEIU. Instead, they want to bulldoze Republicans into jacking up taxes even higher, making the state that much less competitive and forcing business relocation to increase.

and

Is that enough? If the Republicans refuse to budge, Democrats will likely play chicken and blame the layoffs of public employees on the GOP, especially given the concessions already made. Newt Gingrich lost that game in 1995 when he played it with Bill Clinton. Republicans had more strength in 1995, too, than they have had in California over the last decade.

No good deed goes unpunished, especially at the ballot box.

Today's assignment: Look up the real (economic) reason why Rome fell. Consider the parallels with the United States today.

Legislature adjourns with no budget; governor prepares to lay off 10,000

I have loads of sympathy for the individuals involved, but none for our bloated state budget.

Both parties exercise hypocrisy: Targeting the filibuster again

My position remains exactly as it was when the Republicans were in the majority: Keep the filibuster, but force those who want to filibuster a bill to actually stand up and filibuster. The current "virtual" filibuster is too cheap.

Bringing all senate business to a halt de-motivates the use, and gives an excellent strategy for peeling off senators who can tolerate a virtual filibuster, but would not be able to abide a real one.

The filibuster should only be used for the most important of things, and the need to defeat cloture means you have to have your support in line ahead of time.

Not to mention that anything that slows down the pace at which Congress rapes American taxpayers can't help but be a good thing.

Oh, and one more thing: In order to preclude recess appointments, Congress needs to have a quorum, not just one member of the majority party.

The Culture Of Corruption On Steriods

Why not? They were just as corrupt before, and got complete control of government. Obviously, the voters want more.

Here's your change: Going soft on the military dictatorship in Burma

So much for transparency

Remember Barack Obama's pledge to make this the Most Transparent Administration Evah? Josh Gerstein at Politico notices a few items that seem to have slipped by the national media, thanks to a lack of openness on the part of Obama's communications team. Obama issued three executive orders and a handful of regulations without ever announcing them:

"We didn't know because The One didn't tell us"? So much for hard hitting investigative reporting.

On the other hand, I have to remark on an impressive achievement for Obama: Four weeks in, and Jimmy Carter is starting to look good.

Today, the President announced "a plan" to theoretically aid homeowners. Unfortunately, judging from the information available, it looks more like a Wish List than a Plan.

People may be eligible to refinance if their loan to value ratio is 105% or less. Respectfully, Mr. President, that's not going to help a lot of people, who bought for zero down and have seen values slide thirty percent. You do the math: If values slid thirty percent, how much did they have to put down for this to help them?

While we're at it, what proportion of the homeowners at risk have mortgages through Fannie and Freddie? Very small. Even if they do have Fannie and Freddie first mortgages, what about the "piggyback" second loans with other lenders that enabled these folks to buy with zero or five or ten percent down?

They give three examples of refinancing, but are completely silent upon the likelihood of getting second mortgage holders to subordinate.

Second mortgage holders might be willing to subordinate if there are no costs added to the balance of the first mortgage. In other words, homeowner pays everything out of pocket. It is the rational thing to do. But second mortgage holders are not going to agree to go even more underwater than they are.

From the Q&A

Do I need to be behind on my mortgage payments to be eligible for a modification? No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

This is false. Imminent risk of default is defined as being within thirty days of default. In California, you've got to be 120 days late to be in default. Therefore, in California you have be be three months late on your mortgage in order to be at imminent risk of default.

How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan? In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.

Um, this is what those lenders doing now. And by the way, Fannie Mae and Freddie Mac standards are (and have been for many years) 45% back end debt to income ratio. If you have no debts when you get your mortgage, this means up to 45% of your income for housing.

7. I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe? The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender's discretion modifications may include upfront reductions of loan principal.

Note the words "at your lender's discretion". Lenders don't want to modify principal, for many excellent reasons I went into in Mortgage Loan Modification. Incentives for them to do this are going to cause them to be willing to write down principal on a dollar for dollar basis with those incentives. Basic microeconomics. Since the incentives seem to be in the range of $1000 per loan, that's what you can expect.

10. Is my lender required to modify my loan? No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.

Once again, this is different from what lenders are doing now in what way? Oh, I'm sure that $1000 government incentive is going to make the critical difference in how much they are cutting the rates to avoid losing their entire investment of several hundreds of times that amount.

14. My loan is scheduled for foreclosure soon. What should I do? Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower's eligibility. We support this effort.

The Fact sheet has one provision that is sure to be popular, but is also certain to completely destroy the mortgage market down the line,

From the bullet points on page two:

Allowing Judicial Modifications of Home Mortgages During Bankruptcy When A Borrower Has No Other Options

This is a taking of private property without appropriate compensation, which violates the Fifth Amendment to the Constitution. It's been on a wish list of socialists and trial lawyers for decades, but until now, the government has been smart enough to see what happens next.

1. People can now keep their homes by declaring bankruptcy.

2. Amazingly enough, people who are in danger of foreclosure declare bankruptcy

3. Courts modify the indebtedness. Lenders don't get money, are stuck with a non-performing loan, and don't have any benefit from the security interest (that is, the property) given in the mortgage.

4. Lenders start treating real estate loans in accordance with all other loans and indebtedness of similar quality - in other words, mortgage rates go into double digits at a minimum, probably into the twenties. Down payment requirements increase.

5. Keeping in mind that The Mortgage Loan Market Controls the Real Estate Market, real estate markets suffer a crash that makes everything that has happened to date look like a mild accidental scratch.

And if we have this much trouble with losing 30% of value, what do you think happens when we lose 90% of what's left? In a circumstance like that, I would consider walking away from my mortgage.

I see no criteria for qualification, other than the basic "conforming loan limit". It's not clear whether this includes "super conforming" loans in high cost areas like mine.

Two months ago, I wrote that the previous president's plan wasn't really going to help much in The Hope (Dashed) For Homeowners Program. Absent that one killer condition of judicially modifying mortgages through bankruptcy, this plan would be no better but no worse, except for spending $75 billion dollars of taxpayer money for things the lenders are already doing.

But if the "judicial modification" of mortgages item is still in whatever bill makes it through Congress, that will do more damage to our economy than anything else I can think of that our government might possibly do, and that includes the $1.2 Trillion Congress and the President just agreed to waste a few days ago.

From an email:

Our rate was locked (on our mortgage broker's recommendation) on December 4 at 5.375% for 30 days. On December 18 we finally received the rate lock form, which was dated December 17 (the prevailing rate was 4.75% on that date). No explanation was ever offered despite multiple queries. Another disclosure form said compensation would be anywhere from 0% to 5% at closing (on a 400K loan). Is the date on a rate lock form important? If the broker recommends the timing of the rate lock, should the broker be allowed to bet on declining rates? Would we have been protected had rates risen? We unwisely had asked the broker to lock us if the fabled two-hour exceptionally low rate (we were thinking 4%!) had occurred, but a few days later he locked our loan on a 1/8th point decline even though we were under no pressure to refi, the then-current rate was not particularly favorable, and all signs pointed lower (which promptly came to pass). We ended up going with our backup loan.

The date the loan is actually locked is critical, because that was the date your loan was actually locked, and the rates in effect when the loan was locked are what apply.

Many lenders tell clients the loan is locked, and bet they can earn some more money by letting the rate float. Actually, when they are doing this, they are letting the tradeoff between rate and cost float. Unless and until the loan is actually locked, any quote you may have is worthless. Available rates (and the costs to get them) change every day at an absolute minimum. Some days they go up, other days they go down. Nor is it just the bond market that influences prices. Back in August of 2003, lenders boosted rates by almost a percent and a half, just to allow their underwriting and funding backlogs the opportunity to clear out. The bond market rates didn't hardly change at all - but over a period of three weeks, the best available loan rate went from 5.125% without any points to 6.5% without any points.

They did this precisely to curb demand and give them a chance to get caught up. No collusion as far as I'm aware - but they'd been paying two hours of daily overtime for four or five months and requiring mandatory six day weeks and canceling all time off, they finally got to the point where they couldn't sustain it any more. When they caught up in October 2003, rates started dropping again, to the point where they got down to 5.25% without points again in December 2003 and January 2004, about where they should have been. But for those loans that weren't locked, they became stuck with the rates that existed in the meantime. You always have the opportunity to bail out of a loan, but if you've already spent money for an appraisal, put money out for a deposit on the loan, etcetera, you are just out of luck. The real purpose for charging a deposit on a loan is to give them leverage to get you to accept the loan if they don't deliver as good a loan as they talk about in order to get you to sign up.

There are two reasons why lenders (especially brokers, but lender branch office employees are guilty as well) tell you a loan is locked without actually locking it. Both are the result of them trying to make more money. Actually, there is a third but that's a completely different can of worms. The first two have to do with trying to scam more money from the same loan. First, a shorter lock is cheaper than a longer lock. If they tell you they locked it for thirty or forty five days, and they instead wait until they can do a fifteen day lock, that's an eighth to a quarter of a point on every loan, if the rates simply stay the same. They can also rationalize telling you about the fifteen day lock rate and cost. Second, if the rate/cost tradeoff goes down, they can deliver the same loan and make more money. Occasionally, they can even surprise a client with a marginally lower loan rate - something that is always the result of failing to lock when they should have. If rates go up, however, you're stuck - and if you think that lender or loan officer is going to eat the difference, say hello to Santa Claus and the Easter Bunny when you see them. The vast majority of all lenders try to pretend you're not going to pay hundreds to thousands of dollars in real costs on their loan quotes anyway.

(How can you tell loan quotes aren't lowballs? Ask them if they will Guarantee their loan quote, as in anything more than what's on the paper, they pay it. Very few will. Most will try to distract you by talking about how they honor their commitments, but none of the forms you get at the start of a loan are commitments in any way, shape or form. I just ate two appraisal fees for someone on their investment properties when Fannie and Freddie changed their standards to require appraisals on investment property, and still delivered the loan at the rate and cost initially agreed upon. That's a real guarantee. "We honor out commitments" is a dishonest red herring, and when it's used to answer a question about "Will you guarantee your quote?" a red flag as well that you should not do business with that lender)

The third major reason why lenders play games on loan locks is due to "pull through". Pull through is the percentage of loans a given loan officer locks that are eventually funded. Loan investors are trying to play hardball with pull through these days. There is a good reason for it, but the practical effect for the consumer is that loan officers don't want to lock loans that don't look rock solid. So quite often they don't. Until recently, some investors were giving incentives for good pull through, but at this point, the carrots have mostly gone away and it's pretty much straight penalty box for pull through ratios they're not happy enough with. Since loan standards have become quite difficult of late, many loan officers are failing to lock loans they should to prevent their pull through ratio from dropping. Some investors even want to charge the loan officer's personal credit card when we lock a loan, when the pull through ratio doesn't meet that investor's hopes.

There is nothing wrong with not locking a loan, providing the client is aware of it and concurs. If I have concrete reason to expect better rates to become available in the near future, and I persuade a client to "float" their rate, that is perfectly fine. However, until the loan is locked, the rates can also go up at any time. A loan rate that's not locked is not real until it is locked, and you certainly can't get any kind of loan quote guarantee. There is no assurance rates won't go up on unlocked loans. A rate lock is the only real assurance, and you don't have it, therefore assurance of pricing doesn't exist. With all of this in mind, I'm biased towards locking as soon as practical. The rate you want is available now, and at a price that makes it attractive. You can lock it in and know it will be there when the loan is fully approved, or take a risk of it vanishing more thoroughly than if it popped into another universe. Sometimes the risk can be something worth taking, but it's always a risk you can lose. If you lose it, you don't get the appraisal money or anything else you have spent back.

You shouldn't expect rates to make sudden major movements, where by locking in during a particular two hour window of opportunity you get a rate half a percent lower than you'd otherwise get for the same cost. That is quite rare, and I don't remember the last time I saw anything like that. More common are differences of a quarter point of discount for the same rate. An eighth point slide in the rate at the same cost is quite significant for an individual movement of rates. However, over the course of a week, rates can move much more than that. Nobody minds when they're moving down, but hoping they're going to move back when they're trending upwards is usually not going to be rewarded. Furthermore, rates tend to move down more slowly than they move up. If you've got to have a loan at a certain rate and cost target, locking in when it hits that target is recommended, and if you've missed an opportunity to lock at your target and rates are moving upwards, it's usually a good idea to make a decision whether to lock immediately or walk away from the loan. You can string hope along that rates will fall again for several weeks, but it's not likely to happen.

Caveat Emptor

I hear people complain that they've never had a good buyer's agent, that they can't find one, or that they one they had hosed them (Sometimes, they're wrong about that, by the way). I also regularly get email from people claiming they did fine without one, often despite evidence in their own email that says they didn't.

Finding a good buyer's agent is trivial. Literally as easy as moving your eyes and turning your head to look around. Open your phone book. Run a search engine. If you're in San Diego County, contact me. You get the idea. At last resort, stick your head out the window and yell. Seems you can't swing a dead cat without hitting a real estate agent.

The one thing to understand, and you need to understand it before you start looking, is that for every good buyer's agent out there, there's at least one not so good one. The best way to handle this is by giving every agent who wants one a chance to work with you. You have literally nothing to lose beyond a little bit of your time. But while you shouldn't give anyone an exclusive agreement, there is no reason whatsoever not to sign a non-exclusive representation agreement. A non-exclusive buyer's agency agreement is quite literally a bet that consumers cannot lose. And here's the rub: The agents who won't work without an exclusive contract are the ones that can't really compete. The agents who will work on a non-exclusive basis are the ones that know they're good. I don't care whether someone is working with just me, or has ten other agents on the line. I am willing to make the bet that in heads up competition, I can beat anyone else. If I'm wrong, then I get the important benefit of knowing I need to improve. And the agents who are not willing to make that bet are among the ones you should avoid at all costs. Nor does the mere fact you have an agreement mean you must continue to work with them. On the contrary, all of the good agents maintain something close to a "fire me at any time!" policy - it's implicitly part of the non-exclusive agreements I advocate.

There are only two reasons why you didn't get a good buyer's agent: ignorance and not trying. Ignorance as in you don't know that a listing agent is working to get the best deal for the seller. That is their contractual and fiduciary duty. A seller wants the highest price, quickest sale, with the fewest problems possible, and it is the listing agent's responsibility to see that they get it. If you bought when there was a better property cheaper, if the seller would have negotiated a better deal, if you don't understand that the disclosure they bury in the middle of 425 other pieces of paper is really important, that's not the listing agent's problem. Ignorance as in you don't know how critically important it is to get expert help in the biggest transaction of your life. Ignorance as in you didn't do the tiny bit of research that lets you know not to sign an exclusive agency agreement. Ignorance as in you don't know how much you don't know about putting all of the information in the proper context, whether something is trivial or whether it really is a deal killer - information you have no hope of knowing unless you make a habit of buying and selling real estate in this area. Ignorance as in you don't know that the number one set up for buyers who spend too much to buy properties they should not have considered purchasing at all is that they don't have an expert on their side.

Not trying explains itself. You just didn't try, whether because you thought it wasn't important (there's that ignorance factor again), or because you thought you could save yourself money by not having one (ignorance yet again). Go ahead and tell that to a roomful of agents sometime. Buyer's agents or listing agents or both, it makes no difference. The good ones will all laugh because no matter how often they hear it, they've learned enough that it's still funny, and we're always encountering examples. If it isn't the funniest thing I've ever heard, it's a real contender. When I try to explain what they did wrong to people who ask, they say something like, "You're blowing the tiny details way out of proportion!", usually in quite a defensive manner. Ladies and Gentlemen, real estate is all about the details - lots and lots of details. Details ad nauseum, and even small details can make a difference of tens of thousands of dollars in the value of a property. Furthermore, it is precisely those details upon which your agent will be judged. It doesn't do yourself any favors to pretend you didn't cost yourself four or five times or more what you saved. If your agent was yourself, look in the mirror for the person to blame. There is no one else. If the ego thing is more important to you than the money, that's fine, but you need to admit it to yourself at least. Otherwise, get a buyer's agent before you start looking. A good buyer's agent is far more important than a listing agent. There is no other factor that even compares for predicting how well you will do in real estate. Get more than one if you like. As long as you don't sign any exclusive agreements, you can always hire more and fire the bad ones you already have.

The big thing to evaluate agents on is not experience, but attitude. Not have they been doing transactions for eighty-three years, but are they going to tell you about the problems and issues they see with this property? I would work with a brand new agent with the ink still wet on their license who will bring your attention to issues over the most experienced agent in the world who won't. Heck, I'd advise still working with the newbie even if the more experienced agent also will. For that matter, in my personal experience, an agent who says "I've been doing real estate for (some number of) years!" is most likely about to tell you what they've been doing wrong for all those years. Experience doesn't make it right, particularly in the face of the complexity of real estate and the fact that most state regulators don't know any more than beginning consumers, and it can be almost impossible to prosecute for some of the worst abuses there are (e.g. buying listings)

It may take some cut and try for find a good agent, but firing a bad one takes no effort and shouldn't require a confrontation - if you signed the right agreement in the first place. If you sign an exclusive buyer's agency agreement, firing a bad one takes a formal release, and you can't force them to do it. It's bad business, but probably the majority of brokerages won't sign such a release. What they'll do is talk like they will to get you into the office, but if they can't get you calmed down or substitute another agent, they refuse to actually sign. If you sign a non-exclusive agency agreement, on the other hand, you just stop working with them. If there was something they showed you that you liked enough to buy, you would have already made an offer. Furthermore, you probably wouldn't want to fire them. Therefore, you just leave that agreement in place and stop working with them, and your problem is solved. Pretty neat, huh?

Caveat Emptor

Article UPDATED here

Carnival of Real Estate

Projected jobs numbers don't quite add up

A + B adds up to considerably more than A + B when certain politicians want it to. At least on the reports written by them and their subordinates.

Hot Air:

Clearly, the White House is using the time-honored mathematical method of pulling numbers out of one's rear end. They are so bad about it that no one at the White House apparently thought to reconcile the numbers to see whether they even came close to agreement before publishing them. If someone produced numbers like this in the private sector for a project, they'd be fired. In the public sector, they get to run things.

William M. Briggs, Statistician: Count 'em: The White House should not control the Census

We statisticians are lovely folk--we know some great jokes, and can integrate multidimensional integrals faster than you can crack open a peanut--but we cannot be trusted to not play with our own creations, especially when our bosses, eager for a certain result, are watching over our shoulders.

Obama puts attempts to use constituents to put pressure on Freshman Republican to vote for stimulus bill, instead by a margin of 1400 to zero, they want it stopped

Obama: Caterpillar will re-hire people if stimulus passes; Caterpillar CEO: No, we won't

Obama's new deal is the same old blunder

The Fiscal Trap of Hope

Rubin hits the nail on the head. The fiscal fantasies of Hope are about to slam head-on into the economic realities of the bond market. Economic reality is an unmovable object, and liberals are about to discover that Hope is not an irresistible force.

"Real and tangible progress for the American people" Not!

"Real and tangible progress for the American people." That's how the current President of the United States, in his weekly address yesterday, described the bloated $800 billion spending monstrosity that he just rammed down our throats. (Please don't called it a "stimulus" package: the only thing it stimulates is fiscal irresponsibility.) I wonder if the current President of the United States had a little smile on his lips when he said those words: "Real and tangible progress for the American people." Real and tangible progress for the governmental juggernaut is more like it. Did he snigger, just a little, when he went on to claim that throwing billions at every conceivable Democratic boondoggle would somehow "save or create more than 3.5 million jobs over the next two years"? Did he manage to keep a straight face when he said that opening the US Treasury to Democratic interest groups would "ignite spending by business and consumers alike"? I didn't actually hear the speech, but I wonder how he managed to get through the claim that putting the country in hock would "lay a new foundation for our lasting economic growth and prosperity."

The "war" on Barack Obama? Oh, please

Good faith? When exactly did the Democrats show good faith? This bill started out by locking Republicans out of its draft, as well as many Democrats through Nancy Pelosi's refusal to return to regular order in the House. This is the most expensive bill ever considered by the Congress, by far the most expensive project ever considered, and yet the Democrats have failed to allow any meaningful debate or access to amend the bill. In fact, they have yet to provide the bill to some members, but K Street already has its copies. Yet they want to force a vote today on a bill comprising 1500 pages of legisation, with an initial cost of $785 billion and a ten-year cost of over $3 trillion without giving people a chance to read it -- and the Republicans are acting in bad faith?

Eight years of slandering and libeling George Bush on every subject under the sun is ok. Eight years of calling for impeachment and criminal prosecution based upon policy differences is "patriotic". But disagreeing with Barack Obama on the biggest bill ever considered by our government is "war". This must be the most irregular verb ever.

The Anchoress pretty much has it covered in Obama & Dems: Put your dreams away

The Obama administration finds a bomb in Iran

So imagine my interest to see the Los Angeles Times report that the intelligence agencies have reversed themselves again; (bold emphasis added):

Little more than a year after U.S. spy agencies concluded that Iran had halted work on a nuclear weapon, the Obama administration has made it clear that it believes there is no question that Tehran is seeking the bomb.

In his news conference this week, President Obama went so far as to describe Iran's "development of a nuclear weapon" before correcting himself to refer to its "pursuit" of weapons capability.

Obama's nominee to serve as CIA director, Leon E. Panetta, left little doubt about his view last week when he testified on Capitol Hill. "From all the information I've seen" Panetta said, "I think there is no question that they are seeking that capability."

The language reflects the extent to which senior U.S. officials now discount a National Intelligence Estimate issued in November 2007 that was instrumental in derailing U.S. and European efforts to pressure Iran to shut down its nuclear program.

"Like a fire bell in the night"

Words then versus deeds now: Obama's words versus Obama's Deeds

An off-the-record speech at the National Press Club?

Obama's Broken Promises Were Entirely Predictable

President Obama seems to think that just because he wasn't vetted by the national media prior to his election, his administration doesn't have to vet its cabinet nominees. Individually, these missteps wouldn't be news. But the sum total of their parts leads one to believe there is a pattern -- just as there was in Chicago with Wright, Ayers, Rezko, Pfleger, Mansour, etc. -- and if it weren't our country, it'd almost be comical. Hardly anyone today, and certainly nobody a year from now, will be able to listen to President Obama's campaign pledges about transparency, ethics, and change and keep a straight face.

Justice Dept. Lawyers in Contempt for Withholding Stevens Documents

Last month, Sullivan told the Justice Department to turn over all its internal communications regarding a whistleblower complaint against the FBI agent leading the investigation into the former Alaska senator. The agent, Chad Joy, complained about some Justice Department tactics during the trial, including not turning over evidence, and an "inappropriate relationship" between another agent working the case and the prosecution's star witness.

Stevens was convicted in October of lying on Senate disclosure documents about hundreds of thousands of dollars in gifts and home renovations from an Alaska businessman. In November, the Republican lost his bid for reelection to the Senate seat he had held since 1968.

This was known in October (well before the election) yet both the justice system and the media sat on the news until after the election, no so coincidentally contributing to Stevens (a Republican) narrowly losing his Senate seat to a Democrat.

The entire stimulus bill came within one vote of failing on a procedural vote in the Senate.

Mis-remembering

You see, he meant to tell the committee that Robert Blagojevich, the governor's brother had asked him to do some, uh, fund-raising to the tune of $10,000, on three separate occasions, but he just wasn't given a chance to testify to all these things fully. So, it's really the committee's fault, with their slipshod procedures and what not. That's why he told the committee that he had not been asked for any fund-raising at all.

Yes, but with him being another Democrat in the Senate, I'd rate the chance of anything being done to remove him to be somewhere below "pigs flying."

Burris covered up solicitation

There is no possibility that Burris simply "forgot" about such a demand. In the first place, that's exactly what the House was investigating, a pay-for-play arrangement for the open Senate seat. In fact, one has to question why Burris himself didn't report such a blatantly corrupt demand to state or federal authorities. He never paid the money, but the demand itself is explicitly illegal, and as a state lawmaker Burris had a higher responsibility than most to report the attempt.

We Are All Illiterates Now

Mexico: A Western Somalia?

Oldie but Goodie: The Road to Serfdom

What chapter do you think we're on?

Happy Birthday to Abraham Lincoln and Charles Darwin, both born 200 years ago today.

The title of this article is "Our Clever President" but a better title would be, "Our Intellectually Corrupt President and the Sycophantic Press That Loves Him"

President Barack Obama's first presidential news conference was performed feebly by the once-ferocious White House press corps and shrewdly -- if deceptively -- by the president. In the six years I did communications on former President Ronald Reagan's White House staff, I don't recall a single news conference in which there were no follow-up questions, no challenges to anything the president had said recently, no assertions of fact that the president was challenged to deal with. In fact, I don't remember former President Bill Clinton, either, ever getting a full 45-minute prime-time news conference pass.

More on the politicization of the US Census: Let Statisticians, Not White House, Conduct the 2010 Census

Unfortunately, it is now clear that a new agency is not what the White House officials have in mind and that, indeed, having the Census Director report to someone on the president's West Wing staff is exactly what that they have in mind. (Note what the White House press secretary says)

and

First of all, the White House and its Congressional allies are wrong in asserting that the Census in the past has reported directly to the president through his staff. Directors of the Bureau often brief presidents and their staffs, but, as a former director (under President Reagan), I don't know of any cases where the conduct of the Bureau was directly under White House supervision. That includes Clinton in 2000, Bush 41 in 1990 and Carter in 1980.

They also are dead wrong about the feasibility of using sampling and computer models to make adjustment a credible way to improve the accuracy of the population count for purposes of reapportionment and redistricting.

I am in favor of counting every single warm body. In fact, I demand it. But I want to actually count the ones there are, not risk creating others out of thin air. If some people are worried that some people will somehow slip through the cracks, get them out to be counted. And if they're in the country illegally, and therefore aren't counted because they worry they might be deported, I don't see that as a problem. Anything other than counting actual warm bodies is both wrong and a violation of the Constitution, which does not say "every ten years we'll take a guess at how many people there are" or "every ten years we shall estimate how many people there are." It says, "The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years".

Enumerate:

e·nu·mer·ate (-nm-rt, -ny-)
tr.v. e·nu·mer·at·ed, e·nu·mer·at·ing, e·nu·mer·ates
1. To count off or name one by one; list: A spokesperson enumerated the strikers' demands.
2. To determine the number of; count.

In short, we've got to count actually people in order for them to count. If you think there are more people hiding out in some places, you've got to find them in order to count them. Question: Why do you think it is that in some congressional districts, all supposedly of approximately equal population, 60,000 votes is enough to win election, while in others it takes three times that? Could at least part of it be traceable to creating imaginary people out of thin air?

Remember This Catchphrase: "Maybe Too Little, Always Too Late"

The eight previous recessions and when stimulus was passed by the government. In all but one case, the recession had already abated, but we couldn't see it until later.

Stimulus Plan Caters to the Privileged Public Sector

So what's not to like? Well, nothing - if the Roman Empire or China's Qing Dynasty is your idea of a historical role model. Those regimes epitomize what happens when most of a nation's wealth goes to support an ever-expanding bureaucracy and associated private-sector rent-seekers at the expense of both private commerce and public infrastructure. Look in the dictionary under the word decline.

We can already see its early signs. Across the country, cities are being forced to choose between maintaining their basic infrastructure and honoring the medical, retirement and other pension obligations owed to retired public workers. The head of the Atlanta Fire Fighters' Pension fund described groups like his as "the 800-pound gorilla in the room." This primate has the power to stomp on the ability of states, cities and counties to put money into improving much of anything or even considering lowering taxes.

Stimulus Bill Abolishes Welfare Reform and Adds New Welfare Spending

A major public policy success, welfare reform in the mid-1990s led to a dramatic reduction in welfare dependency and child poverty. This successful reform, however is now in jeopardy: Little-noted provisions in the U.S. House of Representatives and U.S. Senate stimulus bills actually abolish this historic reform. In addition, the stimulus bills will add nearly $800 billion in new means-tested welfare spending over the next decade. This new spending amounts to around $22,500 for every poor person in the U.S. The cost of the new welfare spending amounts, on average, to over $10,000 for each family paying income tax.

Economic suicide. As I said last week, do some research into why the Roman Empire fell. The real reasons are all economic in nature, and we are replicating every single one of them.

Testing Economic Hypotheses

The differences between residential and commercial real estate provide the means to test the hypothesis that government intervention or the lack thereof caused the housing bubble and subsequent collapse of the financial system. We can compare the two markets because the same institutions ultimately make residential and commercial loans. They make loans in the same communities and regions. Changes in the economy affect both types of real estate at the same time and to the same rough degree. The only major difference between the two markets lies in the degree of government intervention

When you compare and contrast the system with larger amounts of regulation (residential loans) with system with smaller amounts of regulation (commercial) it is plain to see that lack of regulation did not cause this meltdown. Government created distortions of the market did.

Hat tip: Q and O

Who will investigate the Obama administration?

Rep. Darrell Issa is not working from a position of strength. As the ranking Republican on the House Oversight and Government Reform Committee, Issa wants to exercise some, well, oversight when it comes to the Obama administration's controversial decision to transfer control of the Census Bureau from professionals at the Commerce Department to political aides in the White House. But as a member of the minority party on Capitol Hill, Issa doesn't have the power to compel the administration to do anything.

The press won't - they're too busy getting tingles up their leg because 90% plus are Democratic partisans. The Republicans can't - they'll be defeated on party line votes. Nobody else has the resources.

This is what the next two years are going to look like, folks. It's not like this should be any news to anyone who watched Congress in 2007 and 2008. But nothing can defeat the awesome power of blind wishful thinking at the ballot box. The congressional elections of 2010 will be our next chance to see some accountability in government. Let's hope the mechanisms for accountability aren't completely dismantled or circumvented by then.

The last few years, real estate agents and brokerages have begun charging a transaction coordination fee in addition to whatever their share of the sales commission was. The purpose of this is to pay a transaction coordinator, so your agent doesn't have to do work you've already paid them to do, and can go earn more in commissions.

Is this a racket or what? Imagine if you paid an appliance repair service, and they did part of the job, then hired someone to come and do the rest. Someone who isn't a qualified appliance repair person, who doesn't necessarily understand the repairs that went into the job. Suppose the repair service billed you a "service fee" on top of their ordinary rates to pay for this other worker. Would that make you all warm and fuzzy inside? But real estate agents and brokerages get away with it because they bury it inside the accounting of one of the most complicated transactions most people will ever do.

The work that a transaction coordinator does is all included in the work required by a standard listing contract or buyer's agency agreement. That work doesn't get done, the agency or brokerage hasn't really earned that commission check. So they peel off the agent and substitute the transaction coordinator. So far, all is well and good - assuming the transaction coordinator knows at least as much as they need to. But if the agent wants you to pay for the transaction coordinator on top of their fee, which includes agreeing to do the work the transaction coordinator does, I think you should refuse.

In my opinion, it's better to find an agency where the agent doesn't vanish as soon as there is a purchase contract (and in some cases, before). The company may required me to use a transaction coordinator to ensure compliance, but I make it plain that coordinator is not permitted to contact my clients. They need something from my clients, they ask me. This (among other steps) keeps me involved in the full transaction, whether I'm doing the loan or not. It also encourages repeat and referral business. The clients keep talking to me, not some office worker they don't know or call center employee three states away who may be completely clueless about California. There is no doubt in the client's mind that I'm still in control of the transaction. There is no specter of doubt that maybe the transaction isn't important, that maybe I don't really care. And because it's all work that the contract requires me to do anyway, I never charge a client a transaction coordinator fee.

Agent disengagement is also another way in which perfectly good transactions get screwed up - because transaction coordinators who don't know any better do something that messes it up. I've worked with some transaction coordinators who were a lot sharper than the agents, and saved the theoretically more qualified agent from incredible screw-ups. But I've also worked with ones who were, to be charitable, completely adrift upon the sea of regulation and what obligations there were in the contract and the law for that agent and their principal. I don't mean missing a required signature on a document - that happens to everyone, is easily fixable, and is no big deal in most cases unless clueless people make it into one. Stuff like that is something transaction coordinators are good for. I mean basic obligations, like safety and habitability and things that were agreed to in the contract, and little details like whether the laws are adhered to.

Transaction coordinators are to relieve the agent of some of the routine work of the transaction - so that agent can go out and make more money. How is it not a violation of good business ethics to charge a consumer again for what we've already agreed to do, so that we can go out and earn more commission money and charge another transaction coordinator fee? The only justification I can see for charging a transaction coordinator fee is pure unbridled greed, and a client who doesn't know any better. Except that's not a justification - it's a rationalization. An "I can get away with it!", not "It's the right thing to do." It isn't the right thing to do.

Transaction coordinator fees are relatively small on the scale of agent commissions - $450 is about the cheapest I've seen recently, and I've seen them as high as $750 of late, but that's a fraction of the agency commission on even a cheap condo around here. Sometimes it's used it to give a nice bonus to someone who works for the brokerage, sometimes to pay a third party fee for the service, and sometimes they just use it to pay the transaction coordinator's regular hourly wages. Whichever it is, I have no objection to that person earning that money. But it shouldn't be a separate charge to the consumer - it needs to be paid out of what the agents and brokerages make. It's work we're required to do, that we have agreed to do in the contract, be it listing or buyer's agency. How is it good business to make clients pay again for the same work we've already agreed to do, for the money they've agreed to pay us?

For consumers, a transaction coordination fee is probably not the difference between being able to afford the property and not. If you end up paying it, however, you are effectively paying twice for the same service, and generally less competently performed and with more chances of a screw up, either because of communication issues or because the transaction coordinator may not understand everything the agent did. Most so-called "junk" fees aren't, but paying for a transaction coordinator is a junk fee. There isn't a good reason why consumers should pay for the same thing twice. So ask prospective agents right up front whether they charge a separate transaction coordination fee or not. A good agent who doesn't won't have any problems saying that they don't, and even putting it in writing that their agency commission is the gross amount their company makes, and any fees to a transaction coordinator come out of what they're already being paid. And ask, also, if the agent is always going to be involved in the transaction or not, and what steps to insure their involvement they take. If they're planning to disappear as soon as there's a fully negotiated purchase contract, they're not really going to be involved in the whole transaction, are they? And you'd be amazed how often things go preventably wrong in the later stages of a sale or purchase, because the agent who should understand the entire contract from start to finish doesn't, or they disappeared with the work they agreed to do unfinished, leaving it to a transaction coordinator who has no choice but to do exactly the same thing every time, because that's what they've been instructed to do.

Caveat Emptor

Article UPDATED here

Cato Institute: Economists against the "stimulus"

Senate passes Obama's economic recovery plan

President Barack Obama's economic recovery plan has passed the Senate and is on its way to difficult House-Senate negotiations. Just three Republicans helped pass the plan on a 61-37 vote and they're already signaling they'll play hardball to preserve more than $108 billion in spending cuts made last week in Senate dealmaking. Obama wants to restore cuts in funds for school construction jobs and help for cash-starved states

and

Even so, in the hours before Monday's vote, Republican opponents attacked it as too costly and unlikely to have the desired effect on the economy. "This is a spending bill, not a stimulus bill," said Sen. Lamar Alexander, R-Tenn.

All 36 votes in opposition were cast by Republicans.

Were the Republicans right? It appears so
Stocks plunge as government unveils bailout plan

"The good news is they are going to spend a trillion dollars, the bad news is they don't know how," said James Cox, managing partner at Harris Financial Group.

"They built this up as being a panacea," he said. "There was so much hope pinned on them to do a good job. The expectations have been so high. It's hard to live up to."

Investors also questioned whether this plan, which followed previous efforts in the final months of 2008, would work. Some selling was to be expected, however, as stocks rose sharply last week ahead of the announcement

Were stocks rising last week because the plan looked likely, or because it looked like the Republicans might actually hang together enough to stop it in the senate (possibly with the aid of a few not completely insane Democrats, such as California's Dianne Feinstein, who were making noises about being unhappy with it).

It spends over a trillion dollars, and there really isn't a Plan in it to revive the economy - except the same kind of throwing money around that was discredited back in the seventies.

Geithner's speech "basically puts a spotlight on the fact that the government has no idea how to fix the problem," said Jeff Buetow, senior portfolio manager at Portfolio Management Consultants. "People bought on rumor and hope, and now they're selling on reality."

That trillion dollars has to come from somewhere. It's a trillion dollars that taxpayers aren't going to have for other things.

Did I say a trillion? What's a factor of three among friends? $3 trillion! _ Senate, Fed, Treasury attack crisis

"It's gone deep. It's gotten worse," President Barack Obama said of the recession at a campaign-style appearance in Ft. Myers, Fla., where unemployment has reached double digits. "The situation we face could not be more serious."

If any more emphasis were needed, Wall Street investors sent stocks plunging, objecting that new rescue details from the government were too sparse despite the huge numbers. The Dow Jones industrials dropped 382 points.

If Obama and the Democrats were trying something that had a track record of success (like tax cuts), or even something that has never been tried before where there's a good reason why it should work, this would not be the case. But instead of solving the problem, they're trying to do a political payoff to all of their special interests and call it an economic stimulus. I could call what comes out of a horse's backside an economic stimulus. That doesn't make it one. The financial markets know the difference, even if most of the electorate does not.

You know, I may have voted for John McCain, but I really did not expect Barack Obama to be this bad. I was hoping that with the experiences and the economics we have learned since the last round of economic failures of anything like this magnitude (back in the seventies). I thought he might be smart enough to respond to issues like this in an intelligent manner. I thought he might be able to bypass political payoffs as long as they would hurt the country this badly. Looks like I was wrong on both counts. Thus far, he has failed every test of his competency he has faced. No, that's too weak. He has aggressively done exactly the wrong thing.

Keynesianism is failure. My first macro course taught Keynesian techniques. The math unambiguously and inescapably led to what mathematicians call a monotonically deteriorating situation - continuing outward shifts in the tradeoffs between unemployment and inflation, where trying to keep them reasonably balanced (the so-called "misery index") generates more of both. When I called the prof (a well known full professor of economics) on this, and asked him in what way this was not merely a lesson in how to lose more slowly, he responded by asking, "Why do you think they call it the dismal science?" Well, excuse me, but if Keynesian economics was a complete and valid picture of the world, we wouldn't ever get the good situation we started with in the first place. It may be what they taught when Obama and I started college, but that doesn't make it right or accurate. Arthur Laffer and other improvements in then-prevailing economic theory have done quite a lot to improve our understanding. The crisis of the seventies lingered and got worse until Ronald Reagan applied the new theories and that was what caused our decade long meltdown to stop.

Why has Obama chosen a Keynesian response given this improved understanding? The best hypothesis I can come up with - the simplest theory that explains the observed facts and is not contradicted by them - is that if you apply Keynesian theory to the current crisis, the response it dictates is what Obama wanted to do. In other words, he started with the answer he wanted, and looked for a way to justify it.

If he continues like this, Barack Obama is going to make Jimmy Carter look good. At least Mr. Jimmy inherited the bulk of his insane economic policy from his predecessors, and at that time it was the best fully accepted theory we had. Barack Obama is trying to change the few things George W. Bush got right about the economy.

FACT CHECK: Examining Obama's job, pork claims

President Barack Obama had it both ways when he promoted his stimulus plan in Indiana and later at a prime-time news conference. He bragged in Indiana about getting Congress to produce a package with no pork, yet boasted it will do good things for a Hoosier highway and a downtown overpass, just the kind of local projects lawmakers lard into big spending bills.

Telling us, "There's no pork in this bill!" while using that pork to "sell" the bill. I knew Obama was a politician, but I didn't know he was this good at talking out of both sides of his mouth at the same time!

Why Obama Wants Control of the Census

President Obama said in his inaugural address that he planned to "restore science to its rightful place" in government. That's a worthy goal. But statisticians at the Commerce Department didn't think it would mean having the director of next year's Census report directly to the White House rather than to the Commerce secretary, as is customary. "There's only one reason to have that high level of White House involvement," a career professional at the Census Bureau tells me. "And it's called politics, not science."

Elbridge Gerry had nothing on Barack Obama.

Social Security Crisis Nearer Than Common Wisdom Holds

In theory, Social Security is supposed to continue paying benefits after 2017 by drawing on the Social Security Trust Fund.

Furthermore, the trust fund is supposed to provide sufficient funds to continue paying full benefits until 2041, after which it will be exhausted. At that point, by law, Social Security benefits will have to be cut by approximately 27 percent.

However, in reality, the Social Security Trust Fund is not an asset that can be used to pay benefits. Any Social Security surpluses accumulated to date have been spent, leaving a trust fund that consists only of government bonds (IOUs) that will eventually have to be repaid by taxpayers.

2017. That's the year the current presidential term ends. What happens when Congress has a choice of continuing to spend as it has and drastically cutting long promised social security benefits, or cutting all the wasteful spending they have committed themselves to in order not to cut social security benefits? They could also do a mixture of the two, but my money is bet upon them increasing taxes, incidentally resulting in even less money collected (cf Laffer Curve)

Leaving behind "politics as usual"? Here's one instance. Since Richard Nixon resigned, opposition research has been done by employees of the political parties or campaign workers. Obama has broken with that "business as usual", and hired an opposition research person at the White House.

Great antecedent there. He appears to be trying for the Johnson-Nixon-Carter trifecta - the worst of all possible worlds.

One of the things that has constricted the most with the current paranoid lending environment is the ability to use rental income to qualify for a mortgage. It seems that lenders are seizing upon any excuse to deny income from rental property. Since the denial of rental income usually means that debt to income ratio is too high to qualify for a new loan, this means that if all of the ts are not crossed or if any i is left undotted, you don't qualify for the loan you're applying for.

The lenders do not have an unreasonable concern. Due to bad advice telling people to walk away from upside-down real estate (Seriously, don't walk away from upside down real estate if you can avoid it), and the phenomenon of "buy and bail" the lenders are losing money. It is not unreasonable of them not to want to lose money, and if you're planning to stiff your current lender, that is quite rightly something they should expect you to disclose and they are within their rights to guard against. It is a reasonable position to take that someone who stiffs one lender is more likely to stiff a second. Indeed, the entire credit model currently used is based off this well-documented fact. If you're planning to stiff someone, even though you haven't yet, that's something a reasonable person would agree should be grounds for rejecting your loan.

However, loan standards have gone completely overboard. One phenomenon that was (barely) tolerable when it was just a requirement for government loans was the requirement for appraisals on all property a loan applicant might own. Even if there's a stable, fixed rate loan in place with a positive cash flow, since last summer FHA loans and VA loans have both required exterior appraisals on other property the loan applicant might own. Furthermore, they want a minimum of 30% current equity! As you can imagine in the current market, even if someone bought six or seven years ago, this can be hard in a lot of cases. Someone with an 800 credit score and thirty year fixed rate loan on their investment property, and 28% equity cannot get credit for rental payments, no matter how positive the cash flow! Is that brain dead or what? These people have taken care of their credit rating their whole life, invested frugally, managed their money well, have no late payments, have a positive cash flow every month on the investment property, have eighty or a hundred thousand dollars net equity even in a severely trashed market (as in that's what they'd get if they sold their $400,000 property), and the situation is even completely sustainable because the loan they have now is never going to adjust. Nonetheless, because they are being tarred with a broad brush of general market trouble, these folks cannot afford to buy a new property in the area their employer moved them to, thousands of miles away. If you know of a set of circumstances more likely to encourage people to do something shady, I'd like to hear about it.

At a cost of $300 per rental property appraisal, that's a not inconsiderable additional cost, either, especially since it has to be paid before the new loan funds in most cases. However, due to limits built into government loan programs, this didn't strike all that often when it was just official government loans. Now that the feds have their fingers into Fannie Mae and Freddie Mac, however, it's been expanded to include the entire A paper loan market, as even non-conforming loans tend to copy the standards expressed by Fannie and Freddie in all particulars except loan amount. The only exceptions currently being made are in portfolio loans, with all of their disadvantages, chief of which is a higher interest rate. We should all send Chris Dodd, Barney Frank, and other unindicted co-conspirators (including Barack Obama) a note of heavily sarcastic thanks for preventing the overhaul of Fannie and Freddie long enough so the government could take them over after ruining them. Maybe if all the guilty parties would take the campaign contributions made to encourage them to do this and use it to ameliorate the fallout, it might amount to a tenth of a percent of the damage they did, and are continuing to do.

In short, getting credit for rental income on an investment property has now become incredibly difficult when you're applying for a loan. This has the effect of artificially constricting the real estate market, because the mortgage market controls the real estate market, and it also constrains the start of any recovery. People in good solid situations cannot qualify to buy investment property, and the loan standards are making it harder for them to qualify for buy a new primary residence if their employer has transferred them or they've had to move to get a new job. The alternative of selling the previous property has a lot of reasons against it right now (off the top of my head, adding to supply in an oversupplied market, turning temporary losses on paper into hard losses with permanent consequences, and having to give up extra equity in order to compete with other properties on the market). Lest you misunderstand the socioeconomic consequences of this, it isn't the rich folks with mansions in La Jolla, Rancho Santa Fe, or up on Mt. Helix who are getting toasted by this. The people getting hurt are the middle class folk in the corporate trenches who work hard, save their money, and have to go where their job is.

Once upon a time, this was a legitimate use for stated income loans (and "no ratio" or NINA loans as well). The lenders would (and will) only allow a 75% credit for rental income, despite vacancy ratios consistently in the 2-3 percent range in markets like San Diego and New York. It is very possible to be making money hand over fist, even showing such on your taxes, and still have the accounting lenders use in loan qualification show you as losing what was left of your shirt and undershorts every month. Unfortunately, once people figured out the illegitimate uses to which stated income could be put, it was only a matter of time until lenders stopped accepting stated income loans and regulators started regulating it out of existence. There are a few portfolio lenders who will still accept stated income loans, albeit at higher rates, and under restrictions that would make people accustomed to the Era of Make Believe Loans blanch, but it does still exist as of this writing. It's anybody's guess as to how much longer that is going to last.

If you're in this situation, what can you do? Well, most people can't really create thirty percent equity while at the same time coming up with a down payment. Even if they've got the cash for one, they don't have the cash for both. For those in such situations, there are some serious decisions that need to be made: whether to sell their former residence so they can buy now, rent for a while until they do have the required thirty percent equity, or pay higher rates for portfolio loans. A general knowledge of phenomena like leverage and the fact that Buyer's Markets Are A Great Time For Moving Up (but a lousy time for moving down) gives me general ideas of what's likely to be best, but every situation needs to be evaluated individually, and there is no such thing as a risk free move. Anything options you might have - including to do nothing - all have their downside risks.

If you can meet the basic qualification (30% equity on all investment properties), you can prevent something stupid from disqualifying you. All monies received on rental properties need to have a paper trail leading back to the renter - especially deposit checks. Do not accept cash if you can avoid it. If you can't avoid it, create a receipt and make a copy of everything, and have the tenant sign everything, including that receipt for money they are paying you. Include a clause about cooperating with any mortgage applications you may submit in your rental agreements. Lenders are requiring a canceled deposit check, and the only way to get that may be from the tenant. All leases should be for at least a one year period. I hate to say it, but it may be worth paying a management company to manage your property in order to have third party verification of the accounting, even though lenders are increasingly skeptical of any third party attestations. There have been too many attestations that did not tell "the truth, the whole truth, and nothing but the truth."

It isn't impossible to get credit for rental income, but due to the current environment, most lenders are making it far more difficult than it should be. Take action ahead of time, and be aware that having a rental property can severely impact your budget for buying a new primary residence, particularly if you don't have the required equity. Better to limit yourself in the first place to something you will be able to afford per current underwriting guidelines, because otherwise you are risking the deposit and any money you spend investigating that property. If the lender won't give you credit for rental income, a property that you thought you had good reason to believe within your reach can be completely beyond the realm of possibility.

Caveat Emptor

Article UPDATED here

Carnival of Personal Finance

Carnival of Real Estate

Barely Bipartisan But a Senate Stimulus Deal is Done

votes in the Senate but several spending provisions that would not have kicked in until after 2011 drew fire from both sides of the aisle. Collins and Senator Ben Nelson, a Nebraska Democrat, spent most of the week closeted with 18 centrists, including six Republicans, hammering out the deal reached late Friday. In the end only Collins, her fellow senator from Maine, Olympia Snowe, and Arlen Specter of Pennsylvania signed on. Collins said she will continue to lobby her G.O.P. colleagues.

Hope they don't think they're any kind of hero cutting the waste from $890 billion to $780 billion, particularly as the bill would have died completely if they didn't sign on. Seven-eighths of the waste going to Democratic political patronage is still both counterproductive and money we should not spend.

More history of "stimulus" packages here: Once More, With Feeling

If you know Washington, you shouldn't be surprised that the real cost figure is much higher

$780 B (for base deal) $46.5 B (for amendments added during debate) $348 B (for debt service)

Total equals $1.175 Trillion

To put that in perspective, the total cost of House bill is $1.168 trillion ($820 billion for bill and $348 billion for debt service)

The non-partisan Congressional Budget Office says Obama stimulus harmful over long haul.

CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.

Sometimes the CBO should be taken with much salt, like when it encourages things that the majority party in Congress likes. When it says things that the majority party doesn't like, however, it's always worth paying attention to.

There just isn't any benefit to passing this stimulus bill - unless you're one of those hoping for a payoff for supporting the Democrats in the election.

Top 10 Reasons to Oppose the Stimulus

In fact, there is no way to effectively monitor the "stimulus" for waste, fraud, and abuse

The stimulus plan presents a stark choice: The government can spend unprecedented amounts of money quickly in an effort to jump-start the economy or it can move more deliberately to thwart the cost overruns common to federal contracts in recent years.

"You can't have both," said Eileen Norcross, a senior research fellow at George Mason University's Mercatus Center who studied crisis spending in the aftermath of Hurricane Katrina. "There is no way to get around having to make a choice."

For all the time I've spend bashing Democrats in the last couple of weeks though, here's one where I have to admit they did the right thing:

Democrats defeat GOP plan on mortgage rates

The plan by Nevada Republican John Ensign would have encouraged banks to issue mortgages with interest rates of 4 to 4.5 percent. The government-controlled mortgage giants Fannie Mae and Freddie Mac would have bought the mortgages on the secondary market. Jumbo loans would have been ineligible.

This plan might have sounded good for the country - until you thought about it. I'd certainly enjoy the money from refinancing everyone in my book of business, but it remains a bad idea. Exactly where is the money to do all of this going to come from? It's going to come from distortions of economic rewards and risks, and the taxpayers are going to foot the bill. Why should renters in Arkansas foot the bill so someone in California or New York City can have a $500,000 tax subsidized mortgage? Why should a renter in Montana foot the bill for (re) over-inflating prices in high demand areas? The conforming loan limits for the areas in California where everyone lives are significantly higher than the basic $417,000 limit for conforming loans.

The best thing the government can do is force businesses to tell the truth about their products, then get out of the way (I can also see forcing equal treatment regardless of race, sex, etcetera, but businesses that do not treat everyone equally suffer their own economic penalties - usually severe enough to put them out of business.). A significant portion of the blame for the current crisis falls to government policy that mandated lenders approve loan applications that otherwise would not have made the cut, and it should come as no surprise to anyone that the results were a larger number of foreclosures. It's not like there was any kind of grand conspiracy on the part of lenders to limit the number of people who would be allowed to get home loans. Lender's realize that The Mortgage Loan Market Controls the Real Estate Market, and the more people who are eligible for home loans, the more money they will lend out, and the greater the demand for it, which equates to price. The government's purpose was noble and good, but the damage would not have been nearly as bad without the government's poorly thought through good intentions. We all know what's paved with those.

Here's a direct payoff to the Unions that supported Obama: Gateway Pundit: Obama signs Executive Order preventing non-union companies from bidding on government construction

Associated Builders and Contractors (ABC) today denounced an Executive Order signed by President Obama that repeals Executive Order 13202, that prohibited federal agencies and recipients of federal funding from requiring contractors to sign union-only project labor agreements (PLAs) as a condition of performing work on federal and federally funded construction projects.

I'm with RNC Chair Michael Steele on this one:

"President Obama's executive order will drive up the cost of government at a time when we should be doing everything possible to save taxpayer dollars. Federal contracts should go to the businesses that can offer taxpayers the best value - not just the unions who supported the Democrats' campaigns last year. Quietly signing executive orders to payback campaign backers undermines Obama promise to change Washington. It is a disappointment for Americans hoping for more transparency and less politics as usual in Washington."

Obama never promised his change would be for the better. Details count.

This is pure political opportunism:
Obama Puts Census Under Rahm Emanuel's Control

Now, why would Rahm Emanuel want the Census under his control in the White House? Huh? Why might that be? "The census is used to allocate federal aid to states and draw electoral districts," the New York Times editorial board wrote in order to REMIND PRESIDENT OBAMA that he might not want a REPUBLICAN in charge of drawing "electoral districts." Good god almighty. So now Obama's administration has decided that they'll do the census themselves.

Making the census a political tool? All animals are equal, but some animals are more equal than others

Suppose the Bush Administration had put Karl Rove in charge of the census

Where's The Film About Our Real Superheroes?

We cannot escape but we still haven't developed the guts to tell stories about what's really going on. We're afraid to call the evil to account and we're afraid to call our own sons and daughters the real heroes.

Michael Totten: A Dispatch from the Border with Gaza

Cure for the Obama hangover

I don't drink, but I am reliably informed by medical practitioners and those who do drink that in order for any hangover cure to be effective, you've got to stop consuming alcohol long enough for it to work.

Unfortunately, we're now on steady Obama feed that's going to last nearly four more years.

A couple years ago, underwriting standards were way too loose. Lenders were competing for loans, and the presumption was that with real estate having continued to gain in value, it was difficult to actually lose money on real estate. Needless to say, that presumption has now changed. Lenders are stuck on the horns of a dilemma. They have had massive losses on real estate loans, yet real estate loans offer a very large profit center. Furthermore, because The Mortgage Loan Market Controls the Real Estate Market, the more they constrict lending policy, the more they lose on those people who have no choice but to sell. It's a tragedy of the commons type situation, though, as any given lender loosening their loan policy exposes themselves to the risk of a bad loan, while only reaping a fraction of the benefit on their existing loans.

Therefore, the individually rational decision for them is to be very careful that the loans they do make are going to be repaid. And boy are they. Underwriting standards have become completely paranoid. Things that were not an issue at any time in the last ten years are becoming "Loanbusters." There have been quite a few additions to that category of late.

To give an example, I just spent three full days arguing about a rental property my client had 2000 miles away. Because the client had accepted a cash deposit as opposed to a check, they did not want to give my client credit for the monthly rental, despite the fact that the property had been rented for several months. With the rental income, my client was able to satisfy debt to income ratio requirements and the new loan was no risk at all. Without the rental income, debt to income ratio was too high. The client had everything else - bona fide transfer from employer, plenty of income documentation, time in line of work, etcetera, and remember that the property had been rented for several months. But because the basic underwriting standard is to demonstrate payment of a deposit via a canceled check in order to credit rental income, I had to argue the case - along with the reasons for the underwriting standards - up four levels in the process before I got to someone with the authority and understanding of the reasons for the underwriting standards to agree to an alternative standard my client could meet.

You can help yourself in advance of applying for a loan. Have a paper trail for all money - especially anything having to do with any rental property you might own. Document all of your income, especially on your taxes. Pretty much every single loan done right now is requiring IRS form 4506T. The only exceptions I'm aware of are portfolio lenders. Be careful moving your money around, and be certain there is a paper trail sourcing all money that appears on any of your bank statements. Where did the money come from? Also be aware that just because you made $X this month does not mean lenders will necessarily accept your income as being $X per month. In general, income is averaged over the previous two years, so if you've had a big raise you were counting upon for loan qualification, you might not get full credit for it. In case of doubt or dispute, the numbers on your tax form - that you reported to the IRS and paid taxes on - becomes the ultimate fall back.

It has become more expensive to get a loan, and more problematical. Investment properties, in particular, are creating many problems. Since last summer, government loans have required exterior appraisals on investment property (at a cost of about $300 each) and they want to see 30% equity - difficult in the current market. Fortunately, people with investment property have always been comparatively rare on VA and FHA loans due to limits built into those programs. In the last two weeks, however, these standards have spread to conventional Fannie Mae and Freddie Mac loans, a much bigger problem. Once again, portfolio lenders may be the only alternative. Since portfolio lenders tend to have significantly higher rates, not having 30% equity on an investment property can mean you can't get a loan that makes it worthwhile to refinance, and it might mean you can't qualify to buy a property, even if the investment property is thousands of miles away from your current job. Is this brain damaged, or what? However, it's the way things are right now - and I guarantee your loan officer isn't any happier about it than you are.

Rates are great right now - so much so that it's easy for most people to find better loans than the one they've got. Actually qualifying for that loan is much more problematical, and by "qualifying" I mean meeting all of the underwriting and funding standards so that you actually get that loan (the best loan quote in the world isn't going to do any good if the loan can't be funded). My processor is telling me stories of other loan officers she works with that are losing sixty to seventy five percent of the loans they work with. If you don't think that's having an effect on the prices they have to charge and the margin they need on successful loans, you'd better think again. They can only work on so many loans at once!

The importance of this is much greater for purchases than it is for refinances. On a refinance, you still have your existing loan. If the new loan doesn't get funded, it's usually not such a big deal. You still have the property, you still have the existing loan, and you can try again. On a purchase, you've got a good faith deposit at risk on a ticking clock. One loan getting rejected can mean you lose the deposit, the property, and anything you've spent investigating it.

Given this, what advice do I have to give? Underwriting standards and flexibility vary from lender to lender. Because one lender is not willing to compromise on an issue doesn't mean that nobody is. However, for the average person applying with a direct lender, it's a matter of cut and try. If the loan fails, you have to start all over, and that includes paying for a new appraisal. A new inspection, too, if you have to find a new property because the seller got tired of waiting and sold to someone else. All of this is wasteful of money, not to mention your time and patience.

Brokers, however, have already had experience with what lenders are being hardcore and unreasonable about what issues, and which are acting in a matter closer to sane. Furthermore, if you're the one where they find out with a problem at a particular lender, they can resubmit the loan package elsewhere, and because the appraisal is done in their name, they don't need a new appraisal, and brokers can usually use exactly the same loan package except for one piece of paper.

You also want to choose a loan officer who has the time to argue your case with a particular lender, and motivation to do so. If you're one of fifty loans that month, the loan officer doesn't have the three days I spent arguing with underwriters so that you can get the great rate you have locked in - not to mention losing time on a purchase contract if you have to resubmit to a new lender. If your buyer's agent does loans themselves, it might be worth considering for this reason alone. I would like to think I would have argued just as hard anyway, but I wasn't just arguing about a loan that meant a standard commission to me. I was arguing over a loan that meant not only that, but an agency paycheck as well, and the house my new friends had their heart set on, the months of work we spent picking it out and negotiating the sale, and their deposit. I had all the motivation I could possibly want. My processor was floored that I argued it up as far as I did, and that it worked. Most of the loan officers she works with were letting arguments drop a lot earlier than that. Quite a few are basically just wringing their hands in despair. That seems to be consistent with the stories I'm hearing from consumers elsewhere.

Caveat Emptor

Article UPDATED here

Obama Should Channel Harding, Not FDR

Nah. That would make too much sense.

As a result, the recession that started in 1920 ended before 1923. Lower taxes and reduced regulation helped America's economy quickly adjust after the war as entrepreneurs and capital were freed to create jobs and push the economy to recover. Harding's free market policies lead to the Roaring Twenties, known for technological advances, women's rights, the explosion of the middle class, and some of the most rapid economic growth in American history.

Daniel Pearl and the Normalization of Evil

Neither he, nor the millions who were shocked by his murder, could have possibly predicted that seven years later his abductor, Omar Saeed Sheikh, according to several South Asian reports, would be planning terror acts from the safety of a Pakistani jail. Or that his murderer, Khalid Sheikh Mohammed, now in Guantanamo, would proudly boast of his murder in a military tribunal in March 2007 to the cheers of sympathetic jihadi supporters. Or that this ideology of barbarism would be celebrated in European and American universities, fueling rally after rally for Hamas, Hezbollah and other heroes of "the resistance." Or that another kidnapped young man, Israeli Gilad Shalit, would spend his 950th day of captivity with no Red Cross visitation while world leaders seriously debate whether his kidnappers deserve international recognition.

Encourage terror by treating with it, by responding positively to it, and you will get more terror. The Gods of the Copybook Headings strike again.

This is what a hellhole looks like: Yemeni Central Security Forces' Outright Theft of Land Without Compensation

The state comes, knocks down your house and sells your land for a park, and there's nothing to do about it because the authorities you would appeal to are the ones driving the backhoe.

A list of some of the pork in Obama's "stimulus" bill at Michelle Malkin

The Hollywood Stimulus

Oh, wow!

For 3 years you YouTubers have been ripping us off, taking tens of thousands of our videos and putting them on YouTube. Now the tables are turned. It's time for us to take matters into our own hands.

We know who you are, we know where you live and we could come after you in ways too horrible to tell. But being the extraordinarily nice chaps we are, we've figured a better way to get our own back: We've launched our own Monty Python channel on YouTube.

No more of those crap quality videos you've been posting. We're giving you the real thing - HQ videos delivered straight from our vault.

What's more, we're taking our most viewed clips and uploading brand new HQ versions. And what's even more, we're letting you see absolutely everything for free. So there!

But we want something in return.

None of your driveling, mindless comments. Instead, we want you to click on the links, buy our movies & TV shows and soften our pain and disgust at being ripped off all these years.

I've got them. So should you. Monty Python is funniest in the original context. The Bridge of Fate is nowhere near as funny without the earlier Coconuts sequence. Ditto Robin's Minstrels, "Not being seen", and many others. If you don't understand what I'm talking about, that proves my point.

Without further adieu, I present The Monty Python Channel

And if you watch, for crying out loud, order their DVDs! It's a fair bargain to keep some of the greatest material known to man in front of the eyes of another generation or two! You wouldn't want to impoverish future generations, would you?

A Lobbyist A Day

Torture is still torture. Rendition is still rendition

Liberals condemned rendition during the Bush administration because it lacked judicial oversight, did not afford individuals access to counsel, and because it often subjected persons to torture and longterm detention. Because Obama has ordered governmental interrogators not to engage in torture and has ordered the CIA to close its longterm detention centers, liberals now say that rendition does not raise any problems. Apparently, snatching people without a court order, not giving them a lawyer, and then placing them in a remote country were never too much of a problem after all.

government distortions of sanity, part infinity plus one

Yes, I'm aware of the mathematics of the aleph null set. My point is this: Does anyone want to argue with me that the sane thing to do is fire these nitwits for cause, after which they should never work in the industry again? Instead of "We're going to let you have a salary of up to ten times the national median", which is extremely likely to make it far more difficult to attract competent replacements?

The idiotic politics of class jealousy strike again.

Which do you think would end up better for everyone except the idiots who ran the banks into the ground? Their salaries are limited to $500k per year, or they get fired for cause and are essentially unemployable in the industry forevermore? That would have been the situation before Roosevelt got the government so thoroughly involved. Do you think this new situation, where their jobs are saved despite malfeasance, inadequate oversight, policy failures and manipulating company results for their own benefit?

Of course, Obama's new Treasury Secretary feels sorry for them. After all, he was one of them a month ago.

Rape as a recruitment tool for jihad

Toxic Gases Caused World's Worst Extinction

An ancient killer is hiding in the remote forests of Siberia. Walled off from western eyes during the Soviet era and forgotten among the endless expanse of wilderness, scientists are starting to uncover the remnants of a supervolcano that rained Hell on Earth 250 million years ago and killed 90 percent of all life.

One of the things that is really helping military families afford good properties is the military housing allowance and the way that lenders treat it, making it much easier for them to qualify with regards to debt to income ratio, while the magic bullet of VA loans makes loan to value ratio essentially a non-issue. Between these benefits, the military is sitting pretty for being able to afford housing.

I should mention that this math helps non-military getting a housing allowance just as much, but there are relatively few people outside of the military receiving a housing allowance.

Receiving a housing allowance actually works out far more advantageously for purposes of loan qualification than if they just paid them the extra money. $X basic salary plus $Y housing allowance is demonstrably more money than a salary of $X+Y. Here's how it works.

To start with, the housing allowance is generally non-taxable. I'm sure you know that's not the case with your basic salary. The $Y extra you get in allowance really is $Y, not the much lesser amount that you would get to keep.

On top of that, the housing allowance is "soaked off" against the expenses of housing on a dollar for dollar basis. In other words, compute your cost of housing - principal and interest on the loan, taxes, insurance, Homeowner's Association dues, Mello-Roos, etcetera. Add them all up. From this, subtract housing allowance. If the housing allowance is more than actual cost of housing, we're all done. You made it, at least on the basis of debt to income ratio. If the costs are more than the allowance, all is not lost. At this point, you have to add in other debt service to whatever is left, but then so long as you are less than the normally allowed debt to income ratio as compared to your regular salary, you still qualify. Is this a great country, or what?

Here's a concrete example of how it all works: Let's say you make $3000 per month salary from the military. In addition to that, you get a $2000 housing allowance. You have other monthly debts of $250, and you want to buy a property where the monthly expenses of owning it (principal and interest on sustainable loan, taxes, and insurance, or PITI) are $2500. If you made that $5000 per month as a regular working schmoe, you would be told you aren't likely to qualify. Your "front end" ratio would be 50%, and adding the other monthly debt service makes 55%. Normal guidelines are 45% "back end" (housing plus all other debt service) for conforming loans, and you're way over that on the front end alone. Maybe in some circumstances such as disability or retirement income with a "walks on water" credit score, that might be accepted by one of the automated loan underwriting systems, but under manual underwriting rules you are dead in the water.

As the beneficiary of that housing allowance, however, things are quite different. The $2000 housing allowance draws off housing expense dollar for dollar, not at the 45% ratio of the rest of your salary. Instead of $1 enabling you to have forty-five cents of housing expense, it enables your to have $1. So subtract $2000 housing allowance from $2500 housing expense, and you have $500 left over.

If housing allowance was $2500 against that $2500 housing expense, or to use the general case, if housing expense was less than or equal to housing allowance, we'd be done, at least on the grounds of debt to income ratio. We're not done yet in this case, but the remaining $500 of housing expense plus $250 of other debt service equals $750, which divided by $3000 regular income yields a 25% back end ratio. Since this is less than 45%, bing! Debt to Income ratio works - by which I mean that you are over the most important hurdle in loan qualification.

So there you have an example where somebody making exactly the same number of dollars does not qualify where someone getting part of their salary via a housing allowance does. Since the military is pretty much the only folks that get paid that way (I can't remember the last time I had anyone not in the military with a housing allowance) , advantage: military.

A couple of caveats need to be mentioned and emphasized right now. As should be obvious to the mathematically inclined, Comparatively small amounts of difference make much larger differences to debt to income ratio. Change the PITI payment to $3000, and your debt to income ratio stands at 40 percent, getting close to the ultimate edge of qualification.

You should also be careful that you really can make the payment on the loan. Foreclosure is no fun, as millions can attest right now. Make certain you really can make the payment, considering your family's lifestyle and other bills that may not be monthly debt but would be difficult to eliminate. I have written multiple times warning Never Choose A Loan (or a Property) Based Upon Payment.

Because I am normally careful to quote in terms of purchase price and loan amount and interest rate, I want to say why I did it this way, quoting in terms of payment, in this case. It's a complex subject, and the math gets hairy very quickly, and varies constantly and from market to market and time to time as interest rates and home prices change. Judging by my traffic, people are going to be reading this article months from now, if not years. I wanted a concrete, easily understood example of the subject that's not going to be completely out of line six months from now when the rates have changed and some housing markets are recovering strongly while others are still in the process of crashing.

I also should observe that companies looking to help their employees while conserving costs can do this every bit as much as the military does by carving off a portion of the salary and paying it in the form of housing allowance - but in order to do that, they'd have to admit these people were employees. Pay the social security taxes lots of companies are manipulating the law to avoid, give them all the rights contractors don't have in employment. Of course, the reason why that happens is due to government action. Every time the legislature or some judge adds another cost to having employees or makes it more difficult to terminate those who need to be terminated, they give corporations another reason to avoid hiring them in the first place.

Caveat Emptor

Article UPDATED here

Carnival of Personal Finance

Carnival of Real Estate

Before spending $1.2 trillion dollars on a stimulus, Maybe we should consider the effects "stimulus" packages have had in the past. Which is to say, they exacerbated the problem and delayed a recovery.

More here: How Government Prolonged the Depression

So what stopped a blockbuster recovery from ever starting? The New Deal. Some New Deal policies certainly benefited the economy by establishing a basic social safety net through Social Security and unemployment benefits, and by stabilizing the financial system through deposit insurance and the Securities Exchange Commission. But others violated the most basic economic principles by suppressing competition, and setting prices and wages in many sectors well above their normal levels. All told, these antimarket policies choked off powerful recovery forces that would have plausibly returned the economy back to trend by the mid-1930s.

What's that definition of insanity again?

Now consider that this "stimulus" package looks a lot more like all the Democratic pet projects tied up in one bill they're trying to politically cover by telling people it's to help the economy.

What was that our new President said about transparency and accountability again?

Does it sound like he's taking it seriously? Not to me either.

Related Trivia tidbit: Lobbying up 25% since Democrats retook Congress at the end of 2006

This is rich: Guantanamo Judge Denies Obama's Request for Delay

The administration, which expected military judges to agree to its motions seeking suspension, was taken aback by yesterday's decision. Judges in other cases, including one involving five Sept. 11 defendants, had quickly agreed to the government's request.

Guess the judiciary isn't all set to sing Kumbaya with the new administration either.

What did the Democrats learn from the HillaryCare debacle? That most folks don't want government to control health? Nope. The lesson they learned was to try not to get noticed.

The Return of One-Party Rule

Palestinian Myth Machine

The list of things the Palestinians lie about is extensive. Actually, it's about infinitely easier to compile the list of things they don't lie about. Here it is:

Would you like to see it again?

I just had what seems an awful lot like a phishing phone call. Supposedly from my health care provider, some information. Then they want me to enter my medical number with them and birthdate. Sorry, but you folks called me. I only do that when I initiate the call, so that I know who's on the other end of the line. Hung up and called the provider via the usual number. They do have such a system, but no message for me.

Watch yourself out there.

Transparency or not:

White House bars Google caching

The White House has silently tripled the number of Web pages that it forbids Google and other search engines from accessing.

Can't have our new president held responsible for what he said yesterday, can we?

Still more on the "most transparent administration ever":

Obama panders to unions by cutting off information to workers

President Obama plans Friday to reverse an executive order allowing unionized companies to post signs alerting employees that they are allowed to leave unions.

Can't have the workers knowing that they have the right not to be in a union, can we?

Are there any Democratic politicians that actually pay their taxes?

Daschle apologizes for failing to pay taxes

Or is actually paying taxes for the little chumps (like you and me) whose money they spend?

Rangel. Geithner. Dodd. Jefferson. The list goes on and on.

More at Scrappleface. Let's hope you can laugh at it, because these folks are our national jokes for the next couple of years.

Speaking of Dodd:

Sen. Dodd says he'll refinance Countrywide loans

Dodd has acknowledged receiving mortgages in 2003 through a VIP program at Countrywide, which was sold to Bank of America Corp. earlier this year and has been the focus of allegations that it gave favorable loan terms to lawmakers.

Chairman of Senate Finance Committee: You caught me selling my influence for cheap mortgage money, so I'll do it again with someone else, and that will make it all better!

Shameful

New York's Charles Rangel and five other Democratic members of the House enjoyed a trip to the Caribbean sponsored in part by Citigroup (see above) in November - after Congress had approved the $700 bailout for financial firms (including Citigroup).

The members no doubt will object to the terms "junket," but that shoe fits. The National Legal and Policy Center, a watchdog group, has asked Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP) to investigate the Nov. 6-9 excursion to the island of St. Maarten.

HT: Q and O

More: Government of Helmsleys

There are a lot more where Geithner, Rangel, and Daschle came from. While I have David Boaz to thank for a clever title for this article, I am sure that he joins me in wishing that it never had to be written. Alas, the Obama Administration and its allies seem to have a serious problem when it comes to paying taxes. Or, as House Republican Whip Eric Cantor puts it, "It's easy for the other side to advocate for higher taxes because you know what? They don't pay 'em."

Holder confirmed as AG

My and what sterling qualifications, too. Arrange a pardon for fugitives from justice, become Attorney General.

"Most ethical administration ever'? I do not think that means what Obama thinks it means.

Private Papers: Time to Beam Down to Earth

Lawyering The War on Terror

Above are two prime examples of how the policy switch advantages the enemy at the expense of the citizens. In the first, the folly of fighting terrorism through the courts could not be clearer. It is nearly impossible to build a public case based on state secrets. In the law enforcement model, the prosecution is not allowed to have secrets, and defendants are entitled to see the evidence against them as well as to confront all witnesses. That is because our nation is founded on the principle that the people, from whom the government derives its power, should enjoy the benefit of presumptions and the government should be required to make its case. When trying to confront our nation's enemies, however, we do not want to allow them the same benefit. By engaging them in courtroom battles rather than in military/intelligence ones, we do just that.

I can just see DOJ lawyers trying to arrest Al-Qaeda operatives.

So what's the over/under of civilian deaths before the Obama administration admits that Bush was right?

Cramer on Obama's Anti-Wall Street Comments: 'We Heard Lenin'

And you wonder why Wall Street is crashing and the economy is in the tank?

Indian Media: Doing the job American media won't do.

Change you can believe in: Dictatorship on the rise.

If you think they're not related, welcome to planet Earth and I hope we can be friends.

Rednecks Die, no one cries.

In the wake of the news slowly filtering out of Kentucky and the Appalachian/Ozark region of our nation that is suffering from the worst ice storm in memory, perhaps it's appropriate to ask the whereabouts of our own Savior. Turns out he's in Washington DC, basking in a toasty-warm Oval Office, serving the finest in gourmet food to the Democrat leadership, and preparing a deluxe Superbowl party for tonight.

A million people without power in killing cold. Over twice as many people as were in the City of New Orleans prior to Katrina. At least 42 dead. Why no outcry that Obama hates rednecks and wants them to die? Why no reporting in the media so that people will help on their own?

Kentucky freezes; Obama dines on $100 a pound steak

Kentucky: No Power, No FEMA - UPDATED

In fairness to President Obama, it is not really the job of the president to personally go in and rescue people after a natural disaster. The province in emergencies is still - as it was with Katrina - local, then state government, then federal intervention with funding and FEMA, etc. But the press and the Democrats didn't want to hear it with Katrina, where the staggering failures of the local and state governments were ignored so that the Bush-beating could commence. But it seems to me if Bush was crucified for "eating cake" with John McCain and not sending FEMA "fast enough" and not running down to NOLA to get in the way of rescuers for the photo-op, then there is certainly some room to criticize President Obama, who supposedly is having a black-tie dinner tonight with members of the press in the warm, cozy White House while hundreds of thousands have evacuated or are still not even being checked on.

Many pleading for faster response

Anchoress updates

That would also be a terrible thing to say, and I think playing the racism card is stupid, but the point is, when Katrina hit, the press pulled out every stop they possibly could - including the racism canard - to identify that disaster with a "Bush epic fail." They ignored his early pleadings to Ray Nagin and Kathleen Blanco to evacuate. They ignored his declaring NOLA and surrounding areas as Disaster Areas even before Katrina hit, so the fed could immediately get to work. They ignored the proper jurisdiction of emergencies (local, then state, then fed) and the extreme incompetence of the Louisiana leadership and made Katrina all about "what Bush did or didn't do." By contrast, the press seems to be going out of its way to insure that Obama is not associated with this week-long drama at all.

and

President Obama has not done that. 7 days into the mess, he has not asked Americans to donate to the Red Cross or other disaster-relief agencies. He has not flown over the area to see the extent of the disaster. He has not gotten onto the ground to meet with anyone. This is the first thing that Obama can rightly be criticized for - he should now, finally, make an appearance. The rest of it, the steak-eating, the cocktails, the ballgame - it is brought up only to illustrate the difference between what was unreasonably demanded of one president, and what is (reasonably) excused in another.

Who is the "They" now in California?

Anyone with capital who wants to start business X, knows that he can be put out of business by one supposed sexual harassment suit, a racial discrimination complaint, trying to fathom 500 pages of state EPA applications, a 10% income tax rate, and now a 9% sales tax to come. In California we hunt out the misdemeanor and ignore the felonies. Drive down my avenue, drop five trash bags of wet garbage on the side of the road, and the chances are great you will never be held accountable (even if your receipts are found in the trash and turned over to the sheriff), but please don't wire an outdoor light in the barnyard without a permit. You see, anyone who nods and obeys the law and pays, we hound; anyone who simply won't or can't, or causes too much trouble, we the state employee simply ignore.

Obama supporter? Then you are now officially pro-torture.

There's an awful lot of nonsense out there that advises people to do without an agent. Quite often, first time buyers of real estate get seduced into not having an agent by this stuff before they get into the market, let along before they understand what's really going on. After all, it's pretty easy to get seduced by an advertising come on that says, "Save money!" when there's an explicit cash reason to do so, and there is no corresponding line on a HUD 1 that details everything it cost you. I get emails and even occasional comments from people who are convinced they did "just fine" without an agent, often despite evidence right in their own email that they did not.

By the time of their second real estate transaction, most people have figured out that while an agent is an expense, they are a financial lifesaver as well. For most people, however, the second transaction is a sale as opposed to a purchase, and a buyer's agent makes a lot more difference to your result than a listing agent

The first thing you have to understand is that just because you don't have an agent does not mean there isn't an agent involved. Furthermore, the agent that isn't yours is working for the person on the other side of the transaction, not for you. If you think of agents as some sort of tollbooth, it makes sense to try to bypass them. It's very possible to do so. In no state that I am aware of is there any requirement whatsoever to have an agent. However, agency is not a tollbooth, no matter how many "do it yourself!" hucksters and crummy real estate agents make it out to be. There are real opportunities to make a positive difference at every stage of the transaction, and if these is no agent, chances are that not only will things not be made better, but that the other side will make them worse.

For buyers, the very first thing to understand about a listing agent is that they have a contractual and fiduciary responsibility to get the best terms possible for the seller. Highest price, quickest sale, fewest problems. When I take a listing, I am trying to sell that property. When a prospective buyer calls me wanting me to show my listing, and I am going to do my best to sell you that property. Nothing so crass as a high pressure sales pitch, but I'm going to get the job done a lot more often than you'd think. Whereas I might look at 100 houses or more for my buyer clients and show them only the ones where I see some value, my sales ratio is a lot higher than 1 in 100 or even 1 in 10 when I've got one listing I'm trying to sell to people who call me out of the blue to see one of my listings. The specific numbers might change, but you'll find that's pretty much the way of things with listing agents. Not the best property for the buyer? Better properties available more cheaply in the same neighborhood? You could get a lower price for the same property if you had a better negotiator? None of these is a problem from the listing agent's point of view. The listing agent's job is to get the best possible terms for the seller, and every one of these situations is indicative of a listing agent who has done their job.

Now if I'm the buyer's agent, my responsibilities are entirely different. The vast majority of the time, that listing agent doesn't so much as get to talk to my clients. That agent has my contact information, not my client's, and I may not care which property my clients buy, I'm not going to let them get pressured to buy something that doesn't suit them, and even if the listing agent does (due to showing restrictions) get to talk to my client, I'm going to keep the conversation where I think it belongs. I've put listing agent's noses out of joint quite effectively by bringing client attention to defects or any number of other tactics, including the old "talk to the hand" standby where necessary. These people have designated me their agent, therefore, you talk to me, Mr. Listing Agent. It's my responsibility to pass it to the clients - along with anything I believe is getting left out. A good buyer's agent is not looking to sell you this property, they are looking to find the best bargain for your needs and make that happen. A buyer's agent has no responsibility to the owner of the property - our responsibility is to our clients, the prospective buyer.

Any time you are looking to buy real estate, you are in a situation of asymmetric information. The seller knows more about the property than you do. A good buyer's agent is going to remove most of that gap in information. I know the area, or I wouldn't agree to work there. Simply by practice, I've become much better at spotting issues that buyers need to become aware of before they make an offer. Quite often, the buyer was aware of something I point out, but hadn't considered it in this particular context. It's a rare property where I don't get a look from my client that all buyer's agents should recognize, because it means the clients hadn't thought of that. Often, it's something that means I've just talked them out of a property they would have been miserable in.

It's not just in spotting defects, either. A lot of what I bring up has to do with long term livability of the property or relative value. I've saved clients from so many misplaced improvements that you probably wouldn't believe me if I gave you a number. Saving people from spending money they don't have to (along with the interest on the bigger loan that goes with it) happens multiple times with most clients. Beautiful is nice - but it's also seductive and usually over-priced.

Then there are negotiations. A buyer's agent has seen what's sold in the area recently. Unless you've had a long and unfruitful search, chances are that you have not - and they're not going to let you in now. A buyer's agent knows how this property compares to what has sold lately in the area. It's disgusting how often I find listings where the agent literally has no clue about the antecedents or the current competition. Often it's because that agent bought a listing - promised to get an unrealistic price in order to secure the listing contract. They're not going to get that price - except from people who think they're being "smart" by not having a buyer's agent. Far and away the largest reason for overpriced sales is people trying to "save" a little money by not having a buyer's agent.

Furthermore, quite often once you do get into negotiations, you discover that the other side has decided not to be reasonable, and there is a tension between whether it's a good enough bargain to stay in the transaction, or whether the attitude of the seller and their agent has crossed over a line into territory where you are better off bailing out. Just because you have started negotiations doesn't mean you are under any obligation to continue. Sometimes, even if you have a purchase contract, the best way to respond to a given situation is to decide you don't want the property that badly. If the owner is not going to fix problems they should, the purchase contract needs to be re-evaluated in terms of the rest of the market. This property might not be the bargain you thought it was. Better to discover that before there is an offer, of course, but before the transaction is consummated is better than afterward. That owner is stuck with that problem. Whatever it is, you don't want to take it off their hands unless you're getting something out of the situation that compensates you in your own mind. Then there are costs associated with the transaction, and who pays for them. Your agent should know what is and is not customary in your area, and why, not to mention the basic law behind everything.

Everywhere in the United States that I am aware of, the listing contract calls for the listing agent to get a set percentage of the sales price, and split that percentage in some wise with the buyer's agent, if there is one. If there isn't, the listing agent gets to keep the difference. There are reasons why the seller effectively pays the buyer's agent, despite the questionable nature of it - and consider too, that the only one bringing any actual money to the table is the buyer. Without the buyer's money, nobody gets anything, so everybody is being paid by the buyer. Nonetheless, trying to save money by doing without a buyer's agent won't get you any actual money, and you will end up paying all sorts of extras that don't show up on any official paperwork but are no less real, because you didn't know what a good buyer's agent knows, and therefore bought the wrong property for too much money and spent extra for stuff that really should have been the seller's expenses.

Caveat Emptor

Article UPDATED here