Too hot to sleep inside, so it’s the porch for me. Neo is out doing his thing, and he chased a grasshopper onto the porch. He actually ate the thing! It was a very dramatic nature moment. Hopefully the roming mountain lion doesn’t want to snack on me tonight!
I’ll be penciling in Ron Paul when the presidential election rolls around. He’s the only Republican I’m aware of that is both intelligent and is looking after the long term interests of the country.
From SFGate.
This event and the recent suit by the San Diego city attorney to halt foreclosures was enough to make me post again on the incompetence and hilarity that pours out of California.
If the Governator goes through with his promise, I will applaud it! The legislators have the responsibility to close a 17 to 20 BILLION shortfall and time appears to be running out to increase revenue, decrease expenses, or both. This is really the biggest job for the legislature and it seems they are still too stuck over ideological differences to do their job.
Democrats want to raise taxes, Republicans want to slash services. So, meet in the middle and pass the dang budget! With a 20 billion dollar shortfall, not everyone is going to be pleased. In fact, everyone is probably going to be unhappy. So what. The responsibility here is to maintain for the solvency of the state government.
Perhaps the mass screwing of 200,000 people is drastic, but it would effectively improve the cash flow of the state while impressing on the legislators the very real need to get their act in order and perhaps to think about someone other than themselves.
In reality, this is a pretty symbolic gesture because it’s a bluff that the legislature won’t dare call. Still, it’s interesting to think about what would happen. California is a state where minimum wage means that you rent a bedroom and own a car, or rent an aparment and go without a car. Perhaps some people would start questioning the viability of living in such an environment.
I know Bank of America might start questioning the viability of lending in San Diego since they are getting sued. The San Diego attorney has no business getting involved in the business dealings between the lender and the borrower. The long term public good is served by allowing poor decision makers to suffer and allow others their shot. The long term public good is served by lowering the cost of living in the city so that the standard of living may rise. The long term public good is served by massive amounts of foreclosures flooding the market because they allow cheaper housing alternatives to buyers. The long term public good is served by recognizing that there are dowsides to a free market economy, namely the downside of the business cycle. Purchasing a house at any time after 2003 was a risk if people knew it or not. Risky behavior has it’s consequences. Remove those consequences and you get a situation where it becomes rational for people to engage in greater risks. Eventually then entity which attempts to gurantee against the downside becomes insolvent and an entire system collapses. Reality is a bitch. Sadly, this is what appears to be happening with Fannie Mae, Freddie Mac, and perhaps the entire U.S. government.
I suppose while I’m at it, I might as well comment more about Fannie, Freddie, and the new bailout that just passed the House. It just goes to show the obsurdity of our system.
Fannie and Freddie purhase home loans, and sell them as bond. They gurantee these bonds against loss. In a similar way that banks need cash to pay people when they withdraw their money, Fannie and Freddie need cash on hand in case loans go bad, so they can pay the bond holders. This cash is called capital and Fannie and Freddie are required by their regulator to have a certain amount of capital. The problem in Fannie’s case is that for every dollar in capital they have, they own or gurarantee 65 dollars. A similar scenario is when you put a 3 percent down payment on a house. Your ‘capital’ on a $100,000 house was $3,000. Say the value of that house drops by 10 percent and you need to move. Well, your capital just went bye bye and now you owe the bank 7,000. When Fannie needs to come up with that cash, they typically issue more stock.
The bailout that just passed gives the government the authority to purchase stock in Fannie and Freddie so that they can pay off the bold holders. The catch is that investors have been fleeing the stocks of these two companies because it’s clear that they are headed toward insolvency. So, when Fannie and Freddie start to have problems, the goverment will start purchasing ownership in those companies. More trouble for Fannie and Freddie means more government ownership. This even worse than nationalization of the mortgage market because there are some highly paid executives who are getting paid much more than even the president of the United States to fuck things up. I’m going to substitute the term government with taxpayer. The taxpayer(renters included) are directly paying for the losses on homes. This is unusual because the privitization of gains and the socialization of losses has been happening for a while now. The difference in this case is that a few homeowners were able to cash out and get tax-free gains on their real estate investments, while the rest of the taxpayers are covering for the suckers who made that possible. Finance is a 0 sum game where gains in one place are offset by loosers in another place. The looser is often called the ‘bag holder’ because the ‘bag’ gets passed around and it’s often not certain who will end up with it. Well, now we know. It wasn’t the sucker who purchased the over priced house who is taking the loss, and it’s not the bond holders who purchased bonds backed by risky assets, it’s the stockholders of Fannie and Freddie and a very large future stockholder known as joe taxpayer. It wasn’t those responsible for the disaster who are taking the loss, and this is a problem.
I’m not entirely against the bailout of Fannie and Freddie, I’m against the future inaction. This future action that probably won’t happen is the reform of the financial system in such a way that eliminates entities that are too big to fail and put the entire system at risk. There should NOT be a single entity or a collection of entities whose practices give us either the choice of a public subsidy or systemic collapse.
Neo is up to 4 confirmed kills, two birds and two mice.
I’ve been leaving him outside at night lately as he has left me with only a few choices. His persistent begging to be let outside keeps me up at night so it’s either I let him out, put him in a closet for the night, or wear ear protection to bed. Normally he shows up at my door at 5:00 in the morning wanting to be let back in so that he can have breakfast. He has been pretty consistent about this. Last night I slept outside on the porch, and he showed up right on time. Only this time he didn’t sit around crying to be let back inside, he just poked around a few seconds and disappeared again. ??? Has he been messing with me all this time?
My first summer Colorado Springs was a LOT wetter than this year. I wondered just how much wet. The two maps show the departure from normal precipitation from about February to July. The first map is from 2006 and the second map is the current conditions. Green/Blue/Purple is the pregression from wet to wetter while Yellow/Orange/Red is the progression from dry to drier.
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