I Pinch.
It has been 4 months since my last post. Whew, I’ve been busy…but have accomplished remarkably little.
From a CNN.com article on Bernie Madoff: “Thus far, federal investigators have identified 1,341 investors in Madoff’s firm, with losses exceeding $13 billion.” Hmm… $13B between 1341 people. That’s $969,000+ each. Ouch.
CNN.com had an article about who would and would not be bailed out by Obama’s give-away to people disinclined to pay their mortgages. In the piece Joe Martinez, who is part of what is wrong with our country at the moment, proclaims that “there’s just no point to stay here,” because the value of his home is “never going to come back.” Prior to that point in the story it is explained that the $600,000 house that Martinez bought 2 years ago had fallen in value to about $450,000. Martinez has a fixed rate mortgage and can still afford the payment but stopped paying a couple of months ago in hopes of being able to have the balance of his loan reduced by the Hope for Homeowners program (this is a program that should be scrapped if he is successful). I posted something about some people in a similar position last march.
After only two years he’s certain that he will never recoup the money he put into the house. Joe, I hope that the bank sues you for the money that you should have been paying on your mortgage and that someone gives you the kick in the balls that you deserve.
Chuck Schumer says that Americans don’t care if the government wastes money as long as they get their cut. He’s right, but that’s probably because forty-something percent don’t pay any taxes so they don’t have any skin in the game.
“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.”
President Obama spoke tonight about how the spending bill currently circling the bowl in the Senate would save us all from certain doom. He repeatedly claimed that the bill would “save or create” 4 million jobs. As it turns out there is no need to spend $800 billion.
Just today I saved 100,000 peoples’ jobs. That’s right, and according to estimates that I made on my lunch hour, I may be able to double that number tomorrow. Of course because it is impossible to determine exactly how many jobs were saved, my estimates are impossible to disprove. When you go to work tomorrow, remember all of the trouble I went to. You’re welcome.
When I was in graduate school at the University of Illinois, I worked in a lab with three other guys — one Israeli, one Chinese, and one Korean. The gentleman from Korea, “Sam”, was a terrible driver; in the 18 months or so that we worked together he wrecked his car three times and received multiple tickets additionally. Every time something would happen, the Israeli guy would half seriously, half jokingly proclaim that all Koreans were terrible drivers.
Sam often spent weekends visiting friends who lived within a couple hours’ drive of Champaign (I don’t know for sure, but I think he was just about the only one in his circle of friends who had a car). Among the most regularly visited friends was a young lady who was a grad student at Indiana University; she, as it happens, was also Korean. After a couple months of feeling stranded in the big town of Bloomington, IN she decided it was time to become a licensed driver herself and Sam volunteered his car for the test. After two attempts at the driving portion of the test, the young woman had had no luck and at that point was required to wait three months before trying again.
Being two reasonably bright folks who also happened to share the same last name, Sam put her name on a couple of his accounts to indicate her residence in the state of Illinois (is that considered mail fraud?). After a couple of weeks, utility bills in hand, the young lady was finally able to pass the test in the state of Illinois. Of course obtaining a license in the state of Indiana would then only require a written test which she passed with flying colors. After relaying the entire tail to us one morning and enduring some additional teasing, Sam admitted that driving was quite a challenge for most Koreans. I remembered that story this week when I saw a report of the South Korean woman who failed 771 driving tests.
Peter Schiff says that the result of the “stimulus” being debated by the Senate will be an “Unmitigated Disaster”. I’d say that just about sums it up.
Today I found a NY Times article from 1988 extolling the virtues of the secondary mortgage market and how it allows banks to lend more money with less risk.
Another good one from the WSJ in 2000 about government mandated lending in China — you only need to read the first paragraphs before it starts sounding familiar. Interesting in light of the Fed’s sudden interest in bank lending activity.
So if you have to put together a government stimulus plan (and there really never is a good reason to), how would you do it? The president elect has indicated that he is interested in providing a payroll tax reduction of something like $40 every two weeks for taxpayers with incomes of less that $200,000 (and many people who don’t pay any taxes). Again, if the government is going to try to stimulate the economy by redistributing large quantities of money, this is a much better way to go about it than what Bush & Company came up with last year.
For one thing, it’s really easy to waste an extra $80 a month, and the whole point is to get everyone to spend the money instead of saving or paying down bills like they did with the Bush checks (for the record, I put that money down on a new house). Also, you cut out two expensive chunks last springs stimulus plan: (1) the self-congratulatory letter that the IRS sent out prior to the checks being issued, and (2) the actual costs associated with printing and distributing the checks themselves. Note that those who, like me, had their refunds from the year before electronically deposited, did not actually receive a paper check thus reducing costs somewhat. The estimated cost of the first letter was in the neighborhood of $42 million while the printing, distribution, and administration of the remainder of the program was estimated to be between $300 million and $1 billion.
This is rare praise for the Obama administration, they may have been able to trim a billion dollars out of an $800 billion plan. So I guess the moral of the story is that if you’re going to go ahead and spend the money — and I don’t think that anything is going to stop that train — save on the extras.
Fannie Mae is holding up the sale of IndyMac, demanding that they pay $1billion for bad loans they sold Fannie. Interesting considering that they are both run by the feds. I’d personally like IndyMac to be sold, but that’s mostly because I bought several shares this summer at a price I thought was pretty cheap — just not as cheap as it is now. Its up about 400% since last Friday in anticipation of the sale.
Drew Peterson is alleged to be engaged to be married to another 23 year old woman. She is a roommate to OJ Simpson’s girlfriend in a cave where there is no news from the outside world.
