What Does 4 in 10 Mean?

ABC News performed a poll and found that 42% of the US population believes that President Obama has the country headed in the right direction. They even made this sound like a good thing, knowing that the lemmings who read the news with a closed mind will not do the math and realize that this means 6 in 10, a majority for those of you who can't do the math, do not think we're headed in the right direction. I guess this is what you get when you call 52% of the popular vote a mandate.

You wanted it? You got it, along with Pelosi, Reid, Dodd, Waters and Frank.

Land of the Free to Whine

And home of the over entitled. So, our President, in his entire web enabled glory, invited us, his loyal subjects to the White House website to submit questions on a variety of subjects. Obviously the one that most interests and concerns us, was his housing forum. The range of the questions was pretty narrow and most questions came in a few different forms, but the overall theme of the questions was sadly narrow.

Krysty from Corsicana, TX asks

Instead of bailing out banks, why can't we pay off the mortgages in foreclosure so banks would still get the $$ AND people can keep their homes? If we can give away $$ to huge corporations, why can't we give it to the American people who pay for it?

Well, Krysty with an extra 'y', its like this. You’re proposing a massive welfare state, which this country just isn't quite ready for, in spite of the socialist leanings of our President. Besides, how long will it be before someone like you is whining that someone down the street or around the corner got their bigger house paid for by this magical program you’re suggesting? I think it will take less than 5 minutes. Corporate welfare isn't optimal, but far more people depend on the big banks and the infrastructure they provide, than depend on the individuals staying in their over priced ill financed homes. This problem is far bigger than many people truely comprehend. Then there is this fool...

Jenn from Honolulu, Hawaii states

My husband and I work FOUR jobs to stay current on our mortgage. I was forced into an ARM and am afraid of my mortgage adjusting. No one will refinance our loan and I would need to default for loan modification. What options are available?

Well Jenn, I admire your aggressive effort and willingness to work FOUR jobs, but nobody forced anyone into an ARM, most people ran head long into an ARM, as they irrationally pursued homeownership with all the trimmings. The only option that should be available is foreclosure and a market correction to more normal pricing. The American Dream, as the cliché of homeownership has become is really a privilege, not a right. Same goes for refinancing.

Alan McVickers from Hagerstown, MD, not far from our nations capitol seems to think otherwise

We pay our house on time (bought in 2007), have great FICO but can't refinance due to housing loan to value issues (economy based). What plan is there for people like us to get a lower rate without points, more cash down and no mortgage insurance?

Sorry Alan, if you couldn't afford it, you shouldn't have bought it.

I appologise Alan, it was incorrect of me to assume you couldn't afford the home.

What I should have said is that a refi is simply not a right guaranteed to everyone. Yes, if you could refi along with millions of other home owners, you would have money to put into the economy, however, based on your comments for this posting, you haven't read any of my blog. If you had, you would understand that a correction, of epic proportions is absolutly necessary for our ecomomy to begin functioning normally again. Forestalling that correction only prevents a natural recovery, which at this point is our only option. We've over spent for 2 decades, our credit is maxed out. Furthermore, I think you over estimate the impact of the resulting spending if everyone were able to refi.

Then there are the people who will be most shafted by any bailout of our nations irresponsible borrowers.

Keesha from Valley, AL asks the real question, which I doubt our President will answer.

Is there are way to stop holding up home ownership as a banner for the American dream? Do you have a plan to give renters the same attention and opportunities for tax credits that homeowners get?

In fact, I will send an apology to the White House and post it here, if President Obama goes on national TV an answers this question or one in the same vein, in forth coming and believable manor. I'll be even more shocked if they answer my question.

Mr. President, I get the impression that your plans are essentially using my tax dollars against me, by using public funds to put a floor under troubled home owners. Whats in this for me, besides paying the freight on the death of my American dream?

The question length was limited, or I would have added that the feeble tax credits that put forward as part of this bailout, for first time buyers are a drop in the ocean, considering current price levels.

UPDATE:
The President didn't take any tough questions. Mostly, he appeared to take questions which allowed him to further present his favorite issues and agenda. You can read the recap here. Like a good lawyer, he didn't allow any questions to be asked which he wasn't prepared to answer. Disappointing, eventually we'll see the emperor isn't wearing any clothes.

Stop Pouring Money Down the Drain

Look at this chart. All this money down the drain in a vain effort to stem the tide of mortgage failures. As I have said so often on this blog, you can only hold the tides back for so long. Eventually nature runs its course and frequently, its a far more angry course when we have meddled with its processes.

Interesting Video

Politicians & AIG

Since it looks like Congress has taken square aim at a few dozen AIG employees, perhaps it time we all took the same aim at our elected officials. The Center for Responsive Politics, which tracks campaign finance reports that the donations continued after AIG received the first cash infusion of $85 million in September of 2008.

The top 10 recipients of cash contributions from AIG in 2008

1. Sen. Chris Dodd, D-Conn., $103,100
2. Sen. Barack Obama, D-Ill., $101,332
3. Sen. John McCain, R-Ariz., $59,499
4. Sen. Hillary Clinton, D-N.Y., $35,965
5. Sen. Max Baucus, D-Mont., $24,750
6. Former Gov. Mitt Romney, (R) Pres $20,850
7. Sen. Joe Biden, D-Del., $19,975
8. Rep. John Larson, D-Conn, $19,750
9. Sen. John Sununu, R-N.H., $18,500
10. Former Mayor Rudolph Giuliani (R) Pres $13,200

It’s high time our Congress stops feigning indignation and has a look in the mirror, because they are only fooling themselves, if they think that they are doing their, already low approval ratings any favors at the moment. In another move that screams quid pro quo; Chris Dodd was the biggest recipient of our tax dollars which were funneled back to him by AIG in 2008. He was also responsible for allowing the AIG bonuses to occur at all.

It’s a shame that Iowa Senator Chuck Grassley didn't include Senator Dodd, along with the AIG execs when he implored them to follow the Japanese model. After all, he was their biggest enabler in crafting the bill which allowed AIG to give these bonuses.

Bubble Stages

A little humor, in this dark time.

NAR Continues to Amaze

Or perhaps I should say, the NAR continues to deceive?

NAR stooge, Walter Molony said,

"You are looking at the best affordability conditions since we have measurement back in 1970"

Am I missing something? Did prices drop 40% last night? Last time I looked, at best prices were in the 2004 neighborhood. Is there some even more unbelievable loan type out there that makes pay option ARMs look expensive?

Oh wait, read a little further, he picks one of the most deflated and over supplied markets in the country to apply his hyperbole to. Someone once told me that there were three kind of lies ... lies, damn lies and statistics.

Once again, we see the NAR behaving in an unscrupulous manor. Basically, they will put someone out there as an expert and have them say something positive about a market that is 90% lousy. They will say anything to help one more fool buy a house at an inflated price.

Based on the Mr. Molony's comments, I have to wonder why the NAR president, Charles McMillan is upset about potential changes to the mortgage interest deduction proposed by President Obama. In fact, I have to wonder why, if these homes are sooooooo affordable, why they aren't flying off the market. Please note, my tongue is placed firmly in my cheek. Perhaps we don't need Congress and the President to be bailing out foolishly over extended homeowners.

Once again, the NAR proves itself to be less trustworthy than my dog when I leave a hamburger unattended on the table.

Thanks Investor's Business Daily

Conservative writer, Thomas Sowell, wrote this piece for the IBD. It should sound fimilar, I have been singing this tune for a year now on this blog.

Now that the federal government has decided to bail out homeowners in trouble, with mortgage loans up to $729,000, that raises some questions that ought to be asked but are seldom being asked.

Since the average American never took out a mortgage loan as big as seven hundred grand — for the very good reason that he could not afford it — why should he be forced as a taxpayer to subsidize someone else who apparently couldn't afford it either but who got in over his head anyway?

Why should taxpayers who live in apartments, perhaps because they did not feel that they could afford to buy a house, be forced to subsidize other people who could not afford to buy a house but who went ahead and bought one anyway?

We hear a lot of talk in some quarters about how any one of us could be in the same financial trouble that many homeowners are in if we lost our job or had some other misfortune. The pat phrase is that we are all just a few paydays away from being in the same predicament.

Another way of saying the same thing is that some people live high enough on the hog that any of the common misfortunes of life can ruin them.

Who hasn't been out of work at some time or other, or had an illness or accident that created unexpected expenses? The old and trite notion of "saving for a rainy day" is old and trite precisely because this has been a common experience for a very long time.

What is new is the current notion of indulging people who refused to save for a rainy day or to live within their means. In politics, it is called "compassion" — which comes in both the standard liberal version and "compassionate conservatism."

The one person toward whom there is no compassion is the taxpayer.

The current political stampede to stop mortgage foreclosures proceeds as if foreclosures are just something that strikes people like a bolt of lightning from the blue — and as if the people facing foreclosures are the only people that matter.

What if the foreclosures are not stopped?

Will millions of homes just sit empty? Or will new people move into those homes, now selling for lower prices — prices perhaps more within the means of the new occupants?

The same politicians who have been talking about a need for "affordable housing" for years are now suddenly alarmed that home prices are falling. How can housing become more affordable unless prices fall?

The political meaning of "affordable housing" is housing that is made more affordable by politicians intervening to create government subsidies, rent control or other gimmicks for which politicians can take credit.

Affordable housing produced by market forces provides no benefit to politicians and has no attraction for them.

Study after study, not only here but in other countries, shows that the most affordable housing is where there has been the least government interference with the market — contrary to rhetoric.

When new occupants of foreclosed housing find it more affordable, will the previous occupants all become homeless? Or are they more likely to move into homes or apartments that they can afford?

They will of course be sadder — but perhaps wiser as well.

The old and trite phrase "sadder but wiser" is old and trite for the same reason that "saving for a rainy day" is old and trite. It reflects an all-too-common human experience.

Even in an era of much-ballyhooed "change," the government cannot eliminate sadness. What it can do is transfer that sadness from those who made risky and unwise decisions to the taxpayers who had nothing to do with their decisions.

Worse, the subsidizing of bad decisions destroys one of the most effective sources of better decisions — namely, paying the consequences of bad decisions.

In the wake of the housing debacle in California, more people are buying less-expensive homes, making bigger down payments and staying away from "creative" and risky financing. It is amazing how fast people learn when they are not insulated from the consequences of their decisions.

No Sign of a Bottom

The stock market is in free fall. The housing markets are delusional. With no end in site, we are all bystanders as our government plunges head long into economic poliy which will take the US down the same route as Japan following the end of their real estate bubble. Our economic course is going to take our stock market close to if not beyond historic lows. Our housing market is stuck on emotion as a significant portion of sellers are comfortable letting the property languish well about current values and vastly above true values. Our President is comfortable submarining our markets with an indecisive set of policies and at best weak leadership. President Obama might have been the best campaigner we have ever seen, but so far, his first 50 days can only inspire the delusional and unobjective.

If you aren't worried about the markets, you don't have a dog in the fight and by dog in the fight, I mean a retirement savings.Heck, things are so bad, even Jon Stewart found a way to be relevant for once. Perhaps some day he will find humor too.

Don't Believe Me?

How about Robert Shiller. This chart clearly shows that home prices need to get back to a curve which parallels personal income growth.And then there is this chart from the US Census, which indicates just how far from the the pre-boom levels we are. A return to pre-boom, adjusted for inflation, levels would put us back on or near a point on the line which parallels personal income.

Look at the Left Hand, Pay No Attention to the Right Hand

It’s an old sleight of hand trick. Distract your subject by doing something with one hand while the real "magic" occurs in the other hand. At the end of the act, the subject is amazed that something seemingly occurred right before their eyes, yet they didn't see it.

In one breath President Obama chastises us like this, “Short-term gains were prized over long-term prosperity… we failed to look beyond the next payment, the next quarter, or the next election… difficult decisions were put off for some other time on some other day,”. Yet actions speak louder than words, provided you can take your eyes off the distraction. The President still intends to bailout irresponsible homeowners who got them selves over extended with a loan they didn't even bother to read the terms on.

The President even said “people bought homes they knew they couldn't afford”, yet he still intended to help those people out, at the expense of people who were smart and avoided the bad gamble.

The President went easy on Iran, North Korea and China, but not once did he mention that his plan was going to take tax dollars from tens of millions of Americans who don't own their home and use those tax dollars against them by propping up unsustainably high home prices. I guess it’s smart to not alienate our biggest creditor and our 2 biggest protagonists whom we lack the stomach to coerce. Not only will that action forsake much of the current and future generation to salvage a relatively small minority, it will prolong the economic malaise which grips this country.

She Was Right

I've read the stimulus package and I have come to the conclusion that this woman is right and we're all a bunch of chumps and suckers.

The White House Press Secretary Gets Pwned

Pay particular attention to Mr. Denninger's closing remarks in the video from 9:20 though 9:30.

The Chicago Tea Party

Rick Santelli from the floor of the CBOT yesterday morning.

Rep. Maxine Watters : Complete Moron

I base the title of this posting on my observations from her interview with Newsweek.

The first question asked will TARP be enough to provide relief to consumers. Her reply was, "Yes, it will. But I'm worried that it won't be enough". She's concerned that not enough will be done help consumers. Well duh! The goal of TARP is to keep banks sufficiently capitalized.

The next question posed was, "What else can you do"? Representative Watters thinks Congress needs to regulate lending to weed out predatory lending. Lets keep in mind, this is the same Maxine Watters who appeared in this video and was against regulating Fannie Mae & Freddie Mac any further, when her good buddy Frankin Raines was running things into the ground. Without the GSEs buying up these bad mortgages, sub-prime never gets off the ground.

Honestly, what ever happened to the idea that the best and brightest are the ones who ascend to the leadership roles? The glow from Washington DC is almost out and there is nothing convincing me that the new crop of leaders who were sworn into office last month are going to be markedly better than those who were ushered out the door.

Bill Clinton : Revisionist Historian

On Monday's Today Show, Ann Curry did a softball interview with Bill Clinton. She asked him about his appearance on Time Magazine's list of 25 People to Blame for the real estate bubble. Like the good politician who has enjoyed ample top cover from the media, he hit the softball out of the park.

President Clinton said, "oh no", and went on to say, "My question to them is: Do any of them seriously believe if I had been president, and my economic team had been in place the last eight years, that this would be happening today? I think they know the answer to that: No."

That’s a really tough question to answer, since he wasn't the decision maker as this bubble began to burst, he also wasn't out there calling for changes in policy for dealing with the real estate bubble's collapse. Where was President Clinton, when his good ideas could have been heard and possibly helped influence policy? He was busy collecting donations from foreign governments for his foundation.

Now I blame Ms. Curry for not following up with a tough and obvious question. I would have asked him something like this ... "Mr. President, how do you explain that in 1998, the home price appreciation curve began climbing away from the personal income growth & inflation curves"? However she either wasn't ready to give this interview or she agreed to give a softball interview. Either circumstance is unacceptable and unprofessional. There were only 2 possible answers to her original question, "yes I belonged on that list" or "no I didn't belong on that list", Ms. Curry should have been prepared for either. I don't know what her follow up question would have been had he agreed with the piece in Time, but she fell down like the lady in the I've fallen and I can't get up commercials, when she failed to follow up with any kind of challenging, pointed question.

Lets also not forget that the tech bubble began on Bill Clinton's watch and was left to blow up on George W. Bush's plate. President Clinton was the beneficiary of the prosperity the tech bubble's expansion and President Bush's legacy took the lumps for cleaning it up, the real estate bubble is no different. I don't agree with the way in which the Bush admninistration dealt with some of the bailouts, particularly AIG & Bear Stears, but he certainly should not shoulder all the blame. In fact, were this a corporate scandal, Bill Clinton, as the chief executive, would potentially be on the hook under Sarbanes/Oxley, which ironically is part of President Bush's legacy in cleaning up another debacle which began forming on President Clinton's watch. Bill Clinton handled himself about as well in this interview as Alex Rodriguez did yesterday. There has been talk of claw backs on bonuses paid to financial executives for their performance prior to the bubble bursting, mostly at the behest of Democratic Senators and Congressmen. If bank executives are subject to revisionist compensation, than so should a Presidents legacy, but Ann Curry let President Clinton off the hook.

If someone else can explain away Bill Clinton's culpability on this matter, the comment box is below. I look forward to seeing the defense argument on Bill Clinton's behalf.

A Letter to the President

Dear Mr. President,

I see where you are considering a housing plan that would allow homeowners to stay in their over priced, ill financed homes, by allowing them to rent the home from the bank and hopefully buy the home back from the bank at some point in the future. I can certainly see and respect the motivations of your plan.

However, I am troubled by any plan which keeps homes off the market and delays or worse yet, forestalls any amelioration in home prices. As I am sure you have been told by your economic advisors, the disparity between personal incomes and home prices are at or near all time highs. So is the disparity between costs of renting and home ownership. Home price appreciation is vastly ahead of historical trends. I believe that it is essential to a healthy economy for these costs and prices to adhere to historical trends and be in relative equilibrium with respect to affordability. Past housing booms have been ended by a return to pre-boom pricing levels, adjusted for inflation. If these homes are not returned to the market there will be no end to the bubble and I, along with millions of others who did not make the mistake of taking a bad loan on an over priced home will forever be denied the American dream.

All of that said, I believe that your intentions are altruistic and I would understand if you felt it was essential to forsake the American dream of millions of savers who did not buy an over priced home with flim flam style loan, in order to save millions of people who made a bad investment on a home during the latter part of the bubble cycle. The only things I would ask for are these … First, an acknowledgement that renters like myself are being told to take one for the team. Second, since I watched you on TV, take an oath to uphold the Constitution, I would like an explanation as to why someone else’s pursuit of happiness is worth more to you than mine and that of other renters in this country.

Sincerely,

A Taxpayer

A Prime Piece of Pork

Here is $30 million for the Speaker of House's home district. To preserve wetlands and an obscure mouse breed which Speaker Nancy Pelosi has championed before. Once again, the President's word is devalued, after shouting from the highest hill top in Washington that there WAS NO PORK in this bill. This was a read my lips sort of moment for President Obama.

Oh yea, don't forget to spend that $13 a week in one place. You voted these bafoons into office, they are yours, I am just a concerned bystander at this point. For the first time in my life, there isn't a single sitting politician that I voted for.

The Audacity of Pork

First it was a promise of doing things differently. A more ethical White House, but that dream flew out the window with Turbo Tax Timmy, Tom Daschle and some woman who didn't stick around long enough for anyone to remember her name as a nominee for some made up office. George Bush may have made up words, but President Obama is making up 6 figure jobs, one at a time. In truth, President Obama should be in charge of collections at the IRS. Nobody gets people to pay their delinquent taxes any better than he does with his nominations.

Later it would be a $1.1 trillion dollar stimulus package that had something for everyone. And the best part was that Congressional Democrats would take the rap for all that pork. Senator Max Baucus got $26 billion for private equity firms. Senator Robert Byrd got 4.6 billion for his constituents and clean coal, which Obama contends is a fallacy. Even under the guise of green education, there was $100 million for children to learn green construction. Seriously? Children can learn green construction on the job after they drop out of high school, they don't need $100 million for it in elementary school. Don't forget, this is a do as I say, not a do as I do White House.

However, while Nancy Pelosi, Harry Reid and the rest of the Dems on the Hill loaded up the stimulus with pork barrel spending, the President was still watching out for his friends. There was $4 billion, give or take, for community action groups like ACORN.

Now with the door of public opinion getting slammed on the fingers of hill Democrats, they revised the bill down, from $1.1 trillion, to $827 billion. They cut the bill by about a third, but does anyone believe that the pork is all gone? I sure don't. You can rest assured that there is plenty of extraneous spending in this bill and that there will be plenty of favors returned. Eight and quarter billion dollars to be spent at break neck speed leaves a lot of room for fudging and not much time to catch the pork spending.

One last thing to consider... when a Senator or Congressman attaches a piece of pork to a piece of spending, he or she is doing what they need to do, to keep their constituents happy and get themselves reelected, but are they really acting in the best interests of their constituents? Not very often. That’s the inherent conflict of interest in Capitol Hill politics. All to often, the players are busy trying to get reelected as opposed to fulfilling their oath of office to best serve the people.

Entire US Population Growing & Unemployed

According to the mathematically challenged Speaker of the House, Nancy Pelosi, the United States suddenly added 200,000,000 citizens to go on the unemployement & welfare rolls along with the currently verified 300,000,000 US citizens who will all be unemployed tomorrow. There is no word on whether or not they will continue paying their mortgages.

Daschle Gives Up

Once, unmasked, like the villan in a Scooby Doo cartoon, former US Senator and nominee for Secretary of Health & Human Services, Tom Daschle withdrew his name from consideration. I suspect he said something like this, "Curses! I would have gotten the job if it wasn't for you meddling bloggers".

Speaking of Irony Mr. Daschle...

We all know that former health care industry lobbyist, Tom Daschle, owes a ton of money to the IRS. If you’re a pro athlete, $128,000 is not a lot of money, but for the average American, that is about 3 years worth of a wages. And know the irony bug is rearing its ugly head.

Sen. Tom Daschle, Congressional Record, May 7, 1998, p. S4507.

“Make no mistake, tax cheaters cheat us all, and the IRS should enforce our laws to the letter. ”

If Christopher Dodd is Delighted ...

We are all in deep kaka. When the chairman of the Senate Banking Committee is happy with a policy decision at the Fed, I immediately reach for my wallet, to make sure its still there. Sort of like when I am in a crowd and someone bumps into me.

The Fed decision to take action against foreclosures can only turn out poorly. For 2 decades Washington and the economists they have employed, have meddled with and held back economic tides which were not meant to be messed with. Preventing foreclosures should not be the goal of the Fed, the Treasury or the Senate Banking Committee. They should be concerned with guiding the US economy out of the wilderness and back to an equilibrium which we can use as a starting point for new growth. Preventing foreclosures is like holding back the tides. It can't work for long and its likely to cause stiffer consequences. If anything has been evident over the last couple of years, its exactly that. Our financial policy makers need to take their hands off of things which they can't really control and allow our economy to reset itself to a normal and sustainable level.

Instead we have a feltcher like Christopher Dodd influencing financial policies about which he knows nothing and is not qualified to be meddling with. There were no economics courses at the Mr. Potatohead State law school Christopher Dodd went to. Seriously, read this part ...

The school fails to make an appearance on any of USNews’ specialty rankings lists, and is not well known outside of its own region.

Christopher Dodd, went to Louisville, after growing up and living his entire life in Connecticut, which means he couldn't get in anywhere close to home and he obviously didn't get in there any place desireable.

Don't Believe Me?

How about CNBC? Cram downs are just an out and out bad idea that will only extend the housing downturn.

What is the President's Word Worth?

Less and less, every day.

I seem to recall a point in time, when Senator Barack Hussein Obama was running for the presidency, when he was being very critical of the spending programs of George W Bush while trying to tie Senator John McCain to those programs. That’s fine, that’s the business of electoral politics.

Even as Senator Barack Hussein Obama promised that he would not tolerate special interests or the Washington old guard to reign supreme in his vision of Washington, something sounded too good to be true. Slowly, but surely, President-elect Barack Hussein Obama began laying out his policies and appointees. Surprise, surprise, the self-anointed candidate for change is already straying from his promises, by appointing long time Washington insiders to key and glamorous roles in his administration and going against campaign & pre-inauguration promises. He appointed a derisive Congressman and former Clinton advisor from his home state as Chief of Staff. Long time Senator Tom Daschle was appointed Secretary of Health and Human Services. Another long time Clintonista, Susan Elizabeth Rice is the nominee for ambassador to the United Nations. And then there is Hillary Clinton, as big an insider as there ever was.

Today, the New York Post is reporting President Barack Hussein Obama, as part of his "stimulus" package has included a $4.19 billion line item for groups like ACORN. Keep in mind, as President-elect, Barack Hussein Obama promised a line by line review of wasteful programs. Let’s not forget that the Ohio state electoral board called 12% of the voter registrations turned in by ACORN questionable. At least with Hillary Clinton or John McCain, you knew what you were getting.

By the way, where is the NY Times, cnn, MSNBC coverage of this story?