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Thursday, August 30, 2007

Two Years Later

Yesterday, as I was driving to and between jobs, I got to listen to all the hoopla on the radio about the 2 year anniversary of Hurricane Katrina.

There are of course, lots of problems still in New Orleans, and the rest of the Gulf Coast area. There are also huge contrasts between the recovery in Louisiana and Mississippi.

The contrasts are startling, to say the least. In Mississippi only 25% of the people originally put up in FEMA trailers still live in them, in Louisiana that number is over 60%. Mississippi has concentrated on infrastructure and businesses, Louisiana has worked hodge podge, not really concentrating on anything.

While New Orleans gets the attention because of it's size, people forget that Bay St. Louis and Pass Christian were literally wiped off the map, over 90% of the towns destroyed, not just flooded. Yet both, along with Gulfport and Biloxi are operating, though still struggling. New Orleans has basically fixed the airport and French Quarter, and not much else.

The differences highlight the failure of local leadership in Louisiana and the success of it in Mississippi in their efforts to recover from the storm.

While the fed's could have done more in the last two years, the truth is, they've done what they do best, shoveled a boat load of money into a big pot for the area, and told the states and locals to apply for what they need for their projects.

When I say a boat load, it's not a small boat, 114 billion (with a "B") dollars. That's enough money to fund the Departments of Commerce, Energy, Education and HHS for over a year. That doesn't include the money spent on repairing 200 miles of levees in Louisiana.

New Orleans City Council Member Shelley Midura, complaining about the federal effort, and George Bush specifically:

"He has basically handed New Orleans a modest chest of recovery gold that is sealed shut under an elaborate system of locks that help keep his administration's promise of rebuilding from becoming reality."

I'll disagree with her on two levels. First, 114 billion is far from "a modest chest of recovery gold". Secondly, if the money is so hard to get, how come Mississippi has been able to come so much farther than New Orleans, using the same rules, and dealing with the same red tape?

I'll give it my spin, the difference is the mentality of the two states. Mississippi seems to have the "we can do it" mentality, while Louisiana has adopted the "why haven't you done it" mantra. Add to that Louisiana's famous (and very evident in the recovery process) culture of political corruption and cronyism.

Charlie Sykes posted a video on his weblog yesterday that kind of sums up the New Orleans mentality in the last 2 years. You have to watch it to completely get it, and laugh your butt off, but in summary, it's two people screaming for help because they are stuck on a broken escalator. To me, it sums up the Louisiana response to the storm.

Technorati Tags: New Orleans, Katrina, FEMA, Mississippi, Biloxi, Government, Leadership
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Sunday, August 26, 2007

Subprime Hypocrisy?

Is there some new found hypocrisy in Congress's reaction to the sub prime mortgage market? Steve Chapman at the Chicago Tribune thinks so, and I'm inclined to believe him.

He points this out early in his most recent piece "Illusions of Home Ownership; Subpar remedies for subprime loans".

In the old days, financial institutions that refused to lend to people with low incomes or imperfect credit were accused of victimizing the needy. Today, financial institutions that make many loans to those same people are found guilty of the same crime.
A little history lesson is in order. Sub prime, or "D" Loans didn't just appear recently, they've always been there. The truth is that until the last four or five years, they were too costly to get written for homes.

Folks have been paying 16-20% on car loans for years because of credit "dings" that kept them from getting the advertised 1.9% for 60 months. In the housing market those same loans (without as big a spread) were there also, but because of the loan amount, were too expensive for the lower income, poor credit folks they normally were designed for.

For instance, in 2001, when I got an "A" VA loan at 7.5% a sub prime loan for the same house would have been around 12.5% interest. On my house, with 3% down (FHA requirement) that would mean a $1,160 per month payment, not including mortgage insurance and tax escrow.

In 2004, that same spread would have made the sub prime loan come in at about 9.5%, and lowered the payment by over $240 per month. Suddenly folks who couldn't qualify for even a "bad loan" for years became eligible using the same standards as before. I put "bad loan" in italics because in 1998 a friend refinanced his home at 9% and was ecstatic that the rate was so LOW.

Congress would now like to find a way to "fix" the sub prime market, being lead by Chuck Schumer, so that we don't have the foreclosure problems in the future that it has now. However, fix will probably mean that the vast majority of the sub prime borrowers, 86%, who make their payments every month would end up shut out of the market to prevent the other 14% from being stupid when they buy a house.

Looking at mortgage data, I also wonder if Congress, Chapman, and many pundits aren't actually lumping sub prime loans and ARMS (adjustable rate mortgages) that were written to good borrowers into the same category.

While there certainly were more creative ARMS written in the past five years, many of them are now seeing the "balloon payments" that have always been part of an ARM type loan.

I say this because one of Schumer's "fixes" is to qualify loans not on the current payment, but on the "highest expected payment during the loan". A standard loan written for 30 years (or even 40 now) will have the same payment through it's life, with adjustments for escrowed taxes and PMI (private mortgage insurance) rates. Only ARMS, as far as I've seen, have a payment that changes over time, based on interest rates.

Using Schumer's fix would probably get a lot of folks who have proven to be good credit risks out of the market, because of the lack of flexibility of lenders with loans. There are many good risk folks who take ARMS because they know that in the 3-7 year period before it starts adjusting they'll see a change in their income that allows them to refinance to a fixed rate loan. Couples with young kids nearing school age are a prime example. When the kids go to school full time Mom plans to go back to work, increasing the household income high enough to refinance on a "normal" loan.

Congress has to find a "crisis" in just about everything. In sub prime, while there have been some problems, there really isn't a crisis. People who had less than stellar credit got loans because interest rates got low enough to write them. And, surprise, some of them are defaulting on those loans. That's not a crisis, it's common sense. As interest rates rise less sub primes are being written because, surprise, the folks they are normally targeted at can't qualify because of payment size. Again, not a surprise, it's how markets work. The biggest crisis from the sub prime market may actually come after Congress decides to try and fix it.

And, as is usual, the very folks that Congress for years complained were shut out of the housing market will once again get shut out of the housing market. Maybe Schumer's new mantra for the 86% of sub prime borrowers who pay should be "Let them pay rent" (in his best Marie Antoinette voice).

Technorati Tags: Sub Prime, Mortgage, Loans, Congress, Schumer, Steve Chapman, Markets
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Wednesday, August 22, 2007

What To Do With Michael Vick

Wow, how a few months change things. When evidence of illegal dog fighting first turned up at the farm owned by Atlanta Falcons quarterback Mike Vick he told us all, including the league and his team owner, that it was family and friends, not him involved. Now, in a few short days, Mr. Vick will show up in court to plead guilty to federal charges related to the venture known as "Bad Newz Kennelz".

There is no shortage of opinions of what should happen to Vick, from "slap his wrists and let him go" to "electrocute him, and then beat him while he's on the ground." The prosecutors have (supposedly) agreed to ask for 12-18 months in prison for him, though the judge has reminded them that a deal between them and Vick doesn't mean he has to agree to what they came up with.

What do I think should happen to him? I'd like to see some prison time, more than a year preferably, and a large fine. As for the NFL, that depends on what he stipulates to at his hearing.

If in his paperwork he states he funded the gambling aspect of the operation, as all three of his co-defendants have claimed, then he should be banned for life under the personal conduct policy. Anything short of that would look like the policy has no teeth, and be a nightmare for the league when other players screw up. If he doesn't stipulate to the gambling aspect, unless Virginia tries him and finds him guilty of such a charge, the league will have to allow him to come back. That doesn't mean any team has to sign him, just that he'd be allowed to play. I'm not sure any team will want his baggage around when the animal rights folks show up to protest. I also think Arthur Blank, the owner of the Falcons should try and get as much of his signing bonus and other money back from him as he can. I'm sure his actions violated at least a few personal conduct clauses in his contract.

As for the dog fighting itself, I think it's a sick "sport" (as Stephon Marbury calls it). It's not like hunting, as Marbury and R.L. White of the NAACP seem to think. White seems to think (at least in the AP article) that what Vick did was only a crime because it was dogs, but he's wrong. There is a distinct difference between hunting for an animal, and training one to fight, then killing it when it fails to win. The end result may be the same, but that doesn't justify the actions leading to them in the case of Vick.

Sally Jenkins of the Washington Post has a great commentary today about why the outrage against Vick isn't misplaced, I'd suggest R.L. White and Stephon Marbury give it a read.

Technorati Tags: Michael Vick, Dog Fighting, Bad Newz, Atlanta Falcons, NAACP, Stephon Marbury, NFL
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Saturday, August 18, 2007

What a day

What a Saturday. I usually don't work on weekends, however my boss called yesterday and said a company that has done a TON of business with us in the last year had an emergency, and wanted to have someone show up today to fix their problem. Considering my overtime rate, it was kind of hard to pass up.
The only problem was I'd promised the lovely wife I'd go out with her tonight to support a friend of hers who is competing in a statewide competition. Six hours of driving, and a few hours of work, then having to go out and be a supportive husband is going to make for along day.

Since this is her friend, I guess I'll have to go...

I mean, I'd hate to disappoint the wife, and all, you know.

A friend did ask today "Your WIFE asked you to go to the Hawaiian Tropic finals? Does she want a new car or something?"

Hell, even if she does (and even with the overtime) I can't afford one right now, so who cares!

Technorati Tags: Mz.Heather, Bikini Contest, Wife, Overtime
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Wednesday, August 15, 2007

"The Evil One" Resigns

Yeah, I'm a couple of days late with this, get over it, it's a busy week. But I know how many Democrats are rejoicing this week over the resignation of Karl "Dr. Evil" Rove as Deputy Chief of Staff for President Bush. They are also sad, because Karl didn't leave in handcuffs, but they'll eventually get over it.

The funny thing about it is that they are rejoicing as if Bush is running next year, and this gives them a chance to beat him, finally. The truth of course, is that as a lame duck, Bush doesn't need Rove around as much for political reasons. And getting Congress into line on legislation isn't a big priority, since the Democrats control congress, and can't seem to get anything done on their own. I mean, when our Congress has passed less legislation than the Iraqi Parliment since January, you know they aren't every effective. (Unless you count Post Office dedications, which they have 3 dozen of).

Rove was a lot of things to Bush, but probably not an "evil genius" as many on the left think of him. What he was is a political genius, who knows how to use demographics, polls, and contact with voters to get the vote out. He also worked at an advantage, that I think Democrats fail to grasp. The GOP doesn't have as many interest groups under it's tent as the Democrats do, so Rove was able, for not only 2 presidential elections, but the 2002 and 2004 Congressional elections, to get GOP voters focused more narrowly. Democrats have to keep many more interst groups happy, which hampers their ability to get that kind of focus.

You'll see more of that in 2008, the GOP will likely; without Rove concentrate on the mantra of Democrats trying to expand government, and their inability to be consistent on national security issues. The Democrats, like in 2004 will have to try and find issues to keep unions, gays, minorities, and others happy, without alienating any of them.

But a look at this year show's why it's tough. Blue Dog Democrats have worked to try and restrain spending on concentrate on security. The more liberal "coasties" have worked to try and expand government programs. Both have worked against each other on many of those issues, showing a fracture that's hard to fill.

Rove wasn't evil, he was smart enough to find issues that he knew the Democrats weren't 100% behind, and use them as the wedge to get independent voters, and middle of the road Dem's to cross party lines. The Democrats don't have that ability because so many issues they could use to gain GOP voters would alienate one of their many interst groups.

Technorati Tags: Karl Rove, GOP, Democrats, Elections
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Sunday, August 12, 2007


No, the title doesn't refer to the new Hyundai commercials, but instead to the "revelation" that Hillary Clinton at the top of the Democratic ticket next year could hurt the bottom of the ticket.

Since the ludicrously long campaign season began last year folks like me have all but told the Democratic party that Hillary is the wrong choice for the top of the ticket. While Joe Biden or Dennis Kucinich would be obvious losers for the top, Hillary might have a chance of winning, but costing the party seats in Congress.
(From the AP) A Democratic congressman from the West, locked in a close re-election fight, said Clinton is the Democratic candidate most likely to cost him his seat.

The chairman of a Midwest state party called Clinton a nightmare for congressional and state legislative candidates.

Everyone in charge of campaigns for the Democrats, it seems, worries about having Hillary's coat tails to ride on next year. Of all of the candidates, as the AP points out, she's got the highest negatives to overcome (47% on many polls), and they usually go up, not down after the primary season is over.

She's also the person most likely to get lethargic, ticked off conservatives to come out and vote for GOP candidates, just so they can vote against Hillary.

While Hillary's folks are busy doing damage control on her low numbers with the base, the GOP will use her as the drum to beat for getting out the vote of their own base. Considering the two have about equal numbers, but the GOP in presidential elections has always done better at getting out the vote, that will hurt.

Another thing that could cost Democrats is the same sense of "entitlement" that hurt the GOP in 2006. While Democrats seem to think they can't lose in 2008, and that George Bush's missteps will give them the White House and Congress, that type of thinking can keep your own voters at home.

Congress's approval rating, around 15%, may also hurt them if they can't find a way to get it higher by this time next year. Having Hillary's high negative numbers, and a Congress the public doesn't seem to think "get's it" isn't exactly a winning formula.

Technorati Tags: Hillary Clinton, 2008, Elections, Congress
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Sunday, August 05, 2007

Cereal Killers

As I was in the kitchen mixing myself a stiff on this evening (a little coke, a touch of lime, a bunch of bourbon), I noticed the box of Crunch Berries on the counter, and felt sorry for the Captain.

You see Captain Crunch, along with Tony the Tiger, Tucan Sam, and many of our favorite cereal box characters are probably on their way out, killed by their own success, and parents lack of will power.

You see, advocacy groups "for the children" are horrified that these characters appeal to children, who then want their parents to buy the cereal for them. Evidently, in today's society, it is the children who make the shopping list, and the parents who must comply.

Growing up the only time "The Captain" got into the house was when one of the four boys living there earned enough money shoveling snow or mowing lawns to buy it. Mom never bought it that I can remember. Same with Cocoa Puffs or Sugar Smacks (even though Dad like them). She knew they were junk food, and when we asked for them we were told "NO". Wheaties, Corn Flakes and Raisin Bran, along with oatmeal were just fine.

For today's parents, NO is a word that can be found in the dictionary, and you can use it with your children. Growing up, I heard that word a lot. "No, you may not leave the table, you didn't eat your vegetables", "No, you may not go outside, you didn't finish the dishes", "No, I'm not buying you that sugary crap cereal". And, amazingly, I've lived into my mid-40's and not died from hearing that word.

Even more amazing to some of today's parents might be the fact that I still adore my parents, and thank them regularly for using that horrible word so often. I've used it many times with my own children, who still talk to me, on a daily basis, and they are both grown ups now.

Tony the Tiger doesn't need to be put to rest for kids to be safe from sugary cereals with cool cartoon characters. No, instead, parents need to take back the control of their shopping lists, and homes in general, and get the back bone to use the word NO once in a while. If that word alone doesn't work, try "NO, not in this life time", "Not only no, but HELL NO!", or in extreme cases, "No fucking way, Junior!"

Now, how did my mother (who will be sainted for putting up with me) deal with 4 boys on grocery day? Well it was a family outing, kind of. When we were too young to stay at home Dad would drive to the store (Mom doesn't drive) and sit in the car with the four of us while she shopped.

On the rare occasion one of us did go into the store with Mom we were reminded quite early on that a fit "like that brat over there is throwing" would mean that once we go home we'd be hard pressed to sit for about a week. We never tested the theory, we knew she wasn't kidding.

When we were old enough to not have to go along on shopping day, we waited at home, and didn't complain when Tony the Tiger wasn't in the grocery bags we unloaded. We understood that there were two options when it came to what was served; eat what was on the table or "no one has ever died from missing one meal". Meal time wasn't a negotiation, it was a directive, something many of today's parents obviously need to relearn.

So, all of you weak willed, cave into your children parents, who think it's not cool to be in charge; I'd like you to kiss my ass for trying to take away a part of my childhood because you are too weak to control your own children. Grow a friggin' backbone, and tell the kid NO! for once, you might find out that they actually like the idea of you being the grown up and setting some boundries.

Technorati Tags: Captain Crunch, Tony The Tiger, Cocoa Puffs, Cereal, parents, NO
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We must be a busy lot, eh? On vacation?

The title is a comment from one of my favorite readers. The text message from my daughter was "you need a new post".

Okay, it's been just over 3 weeks, and I've been lazy, at least about blogging. Since my last post on July 12th I've put just over 5,000 miles on my truck, and managed 30 hours per week at customer sites (on top of driving). I attended a wedding reception for a nephew, a birthday party for a cousin and his son, and got to spend a weekend with my wife. Other than that, yeah, I've been on vacation :)

I've been to Lincoln and Omaha, Ne; Warsaw, Syracuse, and Elkhart, In; Peoria, Bloomington and Rock Island Illinois, and Iowa City, and various points closer to me. I've planned and cancelled a trip to Arkansas and Oklahoma, and rewritten my work schedule more times than I care to think about. Bad test equipment ruined my planned 3 day weekend, and customer issues have lengthened a few too many days. Yup, it's been a vacation.

But don't worry, I am around, and as soon as I catch up with my sleep, I plan on writing something full of profound wisdom. First though, I'm going to catch up on my sleep, when I get home later this week from another road trip.

Technorati Tags: Work, Travel, Blogging, Iowa, Illinois, Indiana, Wisconsin, Nebraska
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