Give me a break

The story is all over the news tonight.  Here’s the Washington Posts’ take.  A few choice quotes:

“But he (McCain)declined to embrace the kind of government intervention for individuals and institutions favored by Clinton and Obama, arguing that “it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.”

It’s about time someone said that the government shouldn’t bail out stupid people.  However, I don’t agree with McCain on who is deserving of being bailed out.  McCain also said “We have a responsibility to take action to help those among them who are deserving homeowners.”

Many (probably most) of those facing foreclosure were never “deserving homeowners”, they were idiots who lived beyond their means, they took out interest only or adjustable rate loans, and they somehow act surprised when the bill for their overspending comes due.  See my post earlier tonight for a prime example of this.

So obviously I disagree with McCain on the details, but at least he’s saying that not everyone should be bailed out.  On the other hand, Obama and Clinton seem to be in a contest to see who can give away more taxpayer money.

The same story attributes this to Clinton: “McCain’s plan, she said, does virtually nothing to ease the credit or housing crisis. “It seems like if the phone were ringing, he would just let it ring and ring and ring,” she said.”

Cool – the less the government does to “ease” the credit and housing “crisis” the better I feel about it.

And – in what has to be one of the most futile efforts ever – Obama today “outlined what he called a second stimulus package that would cost about $30 billion and include assistance to individuals and areas hard hit by the housing crisis.”

Idiot. The Fed loaned $38 billion today, and is approaching $500 billion in new money give aways since September.  That much money hasn’t headed off the current credit and housing problems – and the $160 billion stimulus package coming soon to a mailbox near you won’t make a dent in it either – so why would Obama think $30 billion will have any impact?

Let’s put it this way:  All three major candidates are wrong on these issues.  The only consolation is that McCain is less wrong than Obama and Clinton.  But none of them have a clue, and I don’t see any hope that they’ll get smarter before election day.

gk

Another one bites the dust

Here’s another case of someone buying more house than they could afford and now they’re whining.  According to the story “She has had to take extreme measures to pay for her interest-only mortgage of $2,500 a month.”

Let’s take a second and do the math on this.  Which is something Patricia Guerrero should have done before she bought the house.

According to the article, she made $70,000 per year – great money!  I’m assuming that was her gross pay, so let’s deduct 8% for SSI and Medicare taxes, another 15% for Federal taxes, and 9.3% (!) for California income tax according to BankRate.com.

$70,000 x 8% = $5,600 in SSI and Medicare taxes.  $70,000 x 15% = 10,500 in Federal income tax, and (assuming CA allows you to deduct Federal taxes) her CA taxable income was $53,900 x 9.3% state tax = $5,012.

Add it all up, and she had about $49,000 per year in take home pay – assuming she wasn’t putting anything into a 401K or company stock, health insurance, etc.  In other words, that’s about the most she could take home under any circumstances.

$49,000 per year is $4,083 per month.  I don’t know about you, that’s pretty good money where I come from!  But anyway, the standard rule of thumb is that your house payment should be no more than 25% of your gross pay, or no more than 33% of your take home pay.  A $2500/month house payment is way above that – it’s 43% of her gross and a whopping 61% of her take home pay!

When you factor in utility bills, a car payment or two, insurance, property taxes, etc, she couldn’t afford that house when she had a job!  Although the article doesn’t mention other bills, she almost had to be ringing up credit card debt each month just to stay afloat – kinda like banks borrowing from the Fed to stay afloat, but that’s a different topic….

To top it off, she has an interest only loan, so she wasn’t making any progress in paying down her mortgage.   But I guess we’re supposed to feel sorry for her, because now she’s broke.  To be honest, she was broke before – she was simply refusing to recognize what was staring her in the face.

Sorry, I have no pity for Patricia.  She spent more than she made for too long, and now she has to face the music.  She wasn’t a home owner, she was a squatter, and that home will be auctioned off when it goes into foreclosure.  Why should we (taxpayers) pay to bail her out of her self-made mess?

gk

$53 trillion asteriod

Decent post by Glenn Beck on CNN today, although to be honest, I said most of it yesterday.

gk

Fitna

The film “Fitna” was released on the web today.  It’s here if you want to view it.  A story about it (and the controversy around it) is here on FoxNews. 

Here’s another link to the movie.

Personally, I think way to many people are way too uptight about religion in general.  God speaks to too many people – and He seems to say something different to each one.  I wish He’d get his story straight so we could stop killing each other because He said different things to different people.  🙂

Ok, that’s the polite way of saying it – here’s another way: All you people who are listening to voices in your head that you think are messages from God/Jesus and/or Allah/Muhammad – get a medical checkup before you blow up someone else.

gk

Who's going to answer the phone?

Reading this story on FoxNewsreminded me to post my thoughts on the growing cries for more government regulation of the mortgage and brokerage industries.  Basically, I think we need to stop the Fed interventions and roll back the regulations we have now.

That comes with a caveat though – no regulation and no intervention also implies no bailouts.  That means that Bear Stearns would have shut their doors last week. That means that Citi and JP Morgan wouldn’t be able to dip their hands into the Fed’s cookie jar to stay afloat.  That means that more home owners would be in foreclosure.  But I happen to think that those are all good things.

The trillions of dollars of CDO’s, CDS’s, and derivatives that are based on bad mortgages (and that are being propped up by the Fed’s intervention) need to reflect the losses they’re actually sustaining at some point.  You can’t carry a bad mortgage on the books as an asset at full face value forever, and the longer they delay writing off the losses, the longer it will take to sort through this mess.

Get it out there, get it over with, and move on. 

gk

Oh Ye of Little Faith

Here’s a story on FoxNews that just ticks me off.  The headline reads: “Wisconsin Parents Didn’t Expect Daughter to Die During Prayer.”  Duh.

It’s a story about an 11 year old girl (I have two girls ages 10 and 11, so I can relate to the the parents) who hasn’t seen a doctor since she was 3.  She had a treatable form of diabetes, but the parents “did not know her daughter was terminally ill as she prayed for her to get better.”

Here are a few other quotes from the story – and my comments. 

Her mother, Leilani Neumann, told The Associated Press that she never expected her daughter, whom she called Kara, to die. The family believes in the Bible, and it says healing comes from God, but they are not crazy, religious people, she said.

Ah, that makes it all ok – her parents never expected her to die, because they beleive in the power of the Bible, and that God would take care of them.   Somehow they think that qualifies them as “not crazy religious people.”  Ok, I’ll bite – what does that qualify them for?  They’re certainly not rational, intelligent people.   Read this entry from the mother for proof.

Every time I hear about someone who believes that God will take care of them, I’m reminded of a joke I read in Readers Digest years ago.  It went something like:

Heavy rains came and the flood waters started rising around a house.  The police drove down the street in a boat and urged the family to evacuate, but they said they weren’t leaving, because “God will take care of us.”  The flood waters kept rising….  Soon the waters were up to the 2nd story of the house. 

Another boat came by and urged the family to climb in and get away from the danger.  Again they refused to evacuate, saying “God will take care of us.”  But the waters kept rising….

The family had to move to the roof of the house to stay above the raging waters.  A helicopter came by to rescue them, but again they refused to leave, saying “God will take care of us.”   A few minutes later the flood waters washed the family away and they all drowned. 

When they stood before God at the pearly gates they were upset.  They complained that even though they had great faith, God let them die in the flood.  They asked why God didn’t take care of them.

God replied “I sent you two boats and a helicopter – what more do you want?”

Of course the moral of the story is that God helps those who help themselves, and that we should use our God-given abilities as best we can. 

Humans are the only species on earth that NEED to make things to survive.  We survive by using our minds, our ability to reason, our ability to make the things we need to live. 

How did the family eat?  Where did they live?  What did they wear for clothing?  God didn’t give them any of those things – why would any sane person believe that God would cure their sick child?  If you believe in God, why would you not think that he gave us the ability to make medicines in order to cure disease?  (Of course that begs the question of why God would create diseases that needed to be cured, but that’s a topic for another day.)

Another quote from the story: “Officers went to the home after a relative in California asked police to check on the girl.”  A relative a thousand miles away knew something was wrong, but the parents were too stupid to know what was happening.  I’m sorry, but they need to be charged with murder, and their other kids need to be taken away from them immediately.

“Our lives are in God’s hands and whatever we go through we are just going to trust him,” she said. “We need healing. We are going through the healing process.”

No, your lives are in the hands of the courts now, and you’ve demonstrated that you aren’t able to make rational decisions.  We (as a society) will not allow you to withhold treatment (and the example of rational thought) from your other children, so you can’t keep them any longer.

Now I hate to say the above, because I absolutely despise government intervention in private lives, but children are considered children because they have not yet reached the age of reason.  They can’t decide things for themselves yet, so parents need to protect and teach them until they can make important decisions on their own. 

If you’re over 18, you can do whatever you want to yourself.  Don’t go to the doctor, go ahead and shoot up heroin, smoke crack, snort cocaine, starve yourself to death, drink too much, smoke all the cigarettes you want, or whatever else you want to do – as far as I’m concerned that’s your right.  But you can’t do that to others.

By the way, one of my favorite “more accurate than the dictionary” definitions is the definition of the word “believe.”  I don’t remember where I read it, but it goes something like “believe: to have confidence in the existence or truth of something despite any evidence to support the conclusion.” 

gk

Why Ron Paul Scares the GOP

Excellent writeup in TIME Magazine (of all places!) last week regarding Ron Paul and what he stands for.   Too bad more Americans weren’t exposed to him during the campaign, and I personally don’t think the idea of returning to a sound currency is “wacky.”

Here’s a quote from the story: “But he is an extremist — partly in the Barry Goldwater extremism-in-defense-of-liberty-is-no-vice sense of the word, but also in the wacky let’s-relitigate-the-currency-debates-of-the-1820s sense of the word. The late William F. Buckley wanted conservatives to stand athwart history yelling stop; Paul seems to want to slam history into reverse. The guy genuinely wants to abolish the Federal Reserve and start circulating gold again. ”

For those of you not familiar with Ron Paul, I encourage you to read the story and check out his website.

gk

Taxes, Deficits, Inflation – Oh My!

Read this.  Please.  It’s the annual report from the Social Security and Medicare trustees, and it has bad news for anyone who doesn’t already have one foot in the grave.

If you pay taxes, you will be paying more – a lot more – sometime soon.  The annual report contains all the numbers in black and white, and all that money has to come from somewhere. 

Medicare will pay out more than it brings in starting this year.  For 2008, Medicare is only projected to be $8 billion in the red, but that translates to a $16 billion increase in the deficit.  Why?  I’m glad you asked!

For years the government has been taking the “excess” revenues from Social Security and Medicare and “investing” them “in special non-marketable securities of the U.S. Government on which a market rate of interest is credited.” 

In other words, the government takes the money, writes an IOU (promising to pay it back with interest) to Social Security and Medicare, and spends it as part of general revenue.

That’s your trust fund.  There’s no money in a bank account drawing interest, there’s no gold in a vault, there’s no stock certificates.  There’s just a huge pile of government bonds (IOU’s) in the administration building.

Maybe that doesn’t make it clear so let me try explaining it this way….  You deposit $500 into an account (let’s call it a trust fund just for the hell of it) then – promising to pay yourself back – you transfer it to another account and spend it. 

You could even print out your IOU to yourself and stick it in a pretty box.  You do the same thing the next month.  And the next.  And the next….

After a year, how much money is in your trust fund?  Exactly nadda, nothing, zip, zilch, squat. 

You can’t take money out of one pocket, put it into the other pocket, and spend it.  Well, technically you can, but you haven’t saved anything.  And there’s no money left (you spent it on other things) to put back into the first pocket.

I hope that clears up the mystery of the Social Security and Medicare trust funds.  To put it bluntly, there’s no money in them.  Zip.

But the government stills owes that money to itself – or more accurately, they owe it to the designated recipients who have paid into the “trust fund.”  That’s you and me.

So where do they have to go to get the money they’ve promised to pay?  There are only three ways for the government to get money; taxes, borrowing, or printing more money – or a combination of these. 

Which one should they use?  Let’s take a quick look at the choices:

1) Taxes.  The government can raise taxes to cover their expenses.  Since we’ve run a deficit for years, I don’t think they’ll do this – which is actually the option which would cause the least pain for all. 

2) Borrow: This simply means they sell more bonds to foreigners.  We get to use their money and simply make payments on our national interest only loan.  Hey, it’s working out great for homeowners!  Right?

3)  Print more money:  Sounds, good – after all, the government makes a profit on each dollar they print.  It costs less than a cent to print a dollar bill, and it’s worth $1 – before inflation anyway.

See, there’s this little thing called supply and demand that refuses to go away.   When you make more of something without a corresponding rise in demand, each one of them is worth less.  Make too many, and each one is worthless.

That’s why we have inflation – we print dollars with nothing standing behind them.  The money supply (the supply part) rises faster than the economy grows – the demand side.   Rising prices for “real” stuff like oil, gold, wheat, and milk don’t cause inflation – they’re caused by inflation.

Read that paragraph again, it’s important.  Most people (even bankers and some of the fed board) don’t “get” this basic fact of life.

Anyway, the government will need to get the money to pay Social Security and Medicare benefits from somewhere, so my bet is that taxes, deficits, and inflation will all be a big part of the years to come. 

And if you think the deficit is big now, you ain’t seen nothing yet.  You can ignore those “pull the numbers out my ass” deficit projections from the government – because they actually assume that the money from the Social Security and Medicare trust funds are there!

I don’t know what “real” stuff will be worth in a week or a month, but gold, oil and silver will be a lot higher 10 years from now.  That’s where my money is.

gk

WMD's Found!

Ok, so the headline is fake.  Sue me.  But I guarantee that there is nothing that would make King George happier. 

Unfortunately, after 5 years and 4000 American lives lost in Iraq, we can’t even find any spoiled camel piss.   Hillary is bitching that she was suckered into voting for the war, while refusing to admit that she made a mistake.  Cheney basically says “tough shit – they volunteered.”

Meanwhile, Bin Laden (anyone remember him?) is still out walking around, dragging a dialysis machine behind him while sending messages saying that we suck.  He’s never even been to Iraq, but that doesn’t seem to matter.  GW had to settle a family feud with Saddam, so we invaded Iraq.

Just think about how far along – and how much public support Bush would have today – we’d be in Afghanistan if Bush wouldn’t have lied about Iraq.  Think about how many freedoms we’ve lost because of Bush’s paranoia.  Anyone remember when you could fly somewhere faster than driving?  Ahh, the good old days….

Those were the days when you could go through security without undressing – when you had more than one security agent actually working at a time while 6 others stood around and did absolutely nothing like the average hour long security line today.

I don’t really have a point here, reading Cheney’s interview just me ticked off and I needed to vent.  I really need to take the time to revisit just how bad a job Bush has done, but it won’t be tonight.

gk

Arthur C. Clarke

“Absolutely no religious rites of any kind, relating to any religious faith, should be associated with my funeral.”  

 There are a lot of posts today about Arthur C. Clarke, but take a look at what I think is one of the best. 

I only have one other thought to add: for some reason whenever I watch the movie “Contact” I think the charactor of the evil industrialist Hadden was based on Arthur C. Clarke.  His manner of speaking, his genius, his wide knowledge, and the lack of religious rites when he died, all make me think of Clarke.

Arther C. Clarke, Robert Heinlein, Ray Bradbury, and Isaac Asimov were the giants of science fiction.  Pretty much everyone who has written any science fiction in the last 50 years has stolen part of it from one of them. 

I need to write a post sometime about the influence each of them has had on me, but it would take a long time to write, as all of them were originals, and all had a part – for better or worse – in making me who I am today.

Arther C. Clarke was the last of this group of titans to leave us.   The thinkers of this world will long remember him.

gk