Category: Big Mother (page 10 of 15)
Looking for peace and prosperity? Nothing gets good things done like a do-nothing federal government
This from my Arizona Republic real estate column:
The elections this past Tuesday were not a referendum on President Barrack Obama or his plans and policies. How do we know that? Because everyone associated with the Obama administration loudly insists that this cannot be so. They ought to know, right?
Senators and Representatives from states and districts that supported John McCain in the last election might have second thoughts, though, and this is very far from being a bad thing.
Americans insist to each other that they want a government that gets things done — except when they happen to be suffering under a government that is getting things done. If this election was not a referendum on Obama, it was a loud, angry shout about what the government has been doing lately.
The last time voters repudiated an over-ambitious president — the last six years of the Clinton administration — the nation experienced a period of tremendous growth and prosperity. The American people recoiled in horror from socialized medicine, and the resulting government — liberal president, conservative congress — was amazingly beneficial for the American people.
How? By getting nothing done, that’s how.
For free markets to work at their best, entrepreneurs need to be able to plan for the future. If they can surmise that prices and credit terms will not swing wildly over the next few years, they can plan their investments with a sense of security.
And if not? Not.
The Obama administration’s herky-jerky dance of currency inflation, stimulus programs, emergency bailouts and tax credits not only cannot stabilize the economy, they do exactly the opposite: They convince entrepreneurs that now is not a safe time to make plans for the future.
This goes for the real estate market, too. Buyers sit on the sidelines waiting for new tax credits. Sellers live in dread of future interest rate hikes. The Cap and Trade bill promises to complicate life for every homeowner.
So how might these elections have helped us all? It’s simple. If Senators and Representatives are afraid to act, nothing will change. And when nothing changes in Washington, everything changes, usually for the better, for everyone Read more
Fannie Mae announced today it’s implementation of the Deeds for Lease Program (which name, interestingly, they have trademarked). I cannot begin to count the problems with this latest attempt by the government to sober up an alcoholic nation by supplying enough booze to drown a water hippo.
You can read the press release and imagine the nightmare yourself so I’m not going to recount it here, but I will point out one of the less reported aspects of this program that has the potential to cause a whole lot of those pesky unintended consequences our political leaders are so loathe to anticipate:
… (the borrowers or tenants) lease back the house at a market rate… Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.
Interesting wording there at the end. It’s not clear at first glance, but what this means is that if the borrower – who has generally endured a financial hardship to begin with – doesn’t make enough money, they’re still eligible… the rent will just have to drop to below market. Well what could go wrong with a government/landlord artificially lowering rents throughout the nation… That shouldn’t bother anyone who works with real estate investors should it? Anyone here, reading BHB, work with real estate investors? I didn’t think so. Sorry to have brought it up. I’m sure the people who paid $70,000 for $30,000 trailers that are STILL housing people post Katrina know exactly what they’re doing.
Under the housing program, people seeking to own a home for the first time in three years would receive an $8,000 tax credit if they sign a contract by April 30 and close on it by June 30. Current homeowners who are buying a new primary residence would be eligible for a $6,500 tax credit starting Dec. 1 if they owned their home for five consecutive years in the previous eight.
The timing is more lenient for military families who have been deployed overseas for 90 days or more in 2008 or 2009. They would have until April 30, 2011 to sign a contract.
But the measure limits the purchase price of the home to $800,000. It also imposes income caps so that people who make more than $125,000 annually and couples who make more than $225,000 would not be eligible for a refund. Anyone who collects the tax credit but sells their home within three years of buying it must return the refund.
The program is estimated to cost $10.8 billion.
The passage of the tax credit provision was a huge win for the real estate industry, which has been lobbying aggressively to extend and expand the program. They say the tax credit has helped boost sales and clear out a glut of lower-priced homes, especially foreclosures, and that ending it would be a blow to the housing market’s recovery.
But critics of the program, including some economists, say the program is far too expensive. They say that most people who used it would have bought homes anyway. They attribute the uptick in home sales in recent months more to low prices and record low interest rates.
Questions for the lenders: The tax credit for move-ups doesn’t commence until 12/01/09. What about first-timers? Can they be under contract now, or do they need to wait until after the end of the month.
More: Do I read this right? Can you “move up” after having rented for the last three years?
I hate this, of course. The real estate market can’t shake out if we won’t let it. But as listers of higher-end homes… Thus does the Read more
Can’t pay the mortgage? You still might be able to stay in your home. Government-controlled mortgage company Fannie Mae is going to give borrowers on the verge of foreclosure the option of renting their homes for a year.
The change announced Thursday could give a temporary break to thousands of homeowners, but critics question whether it will only add to the mushrooming losses at the company, which has received billions in taxpayer money.
The new “Deed for Lease” program will allow homeowners to transfer title to Fannie Mae and sign a one-year lease, with potential month-to-month extensions after that. It also helps save money because the lender does not need to complete the often lengthy and time-consuming foreclosure process.
The program helps “eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities,” Jay Ryan, a Fannie Mae vice president, said in a statement.
It also does less harm to the borrower’s credit record.
“It shows that you put your best effort to work out a solution,” said Gabe Del Rio, director of homeownership at Community HousingWorks of San Diego.
However, Mike Himes, director of homeownership services at NeighborWorks Sacramento, said the industry should push harder to modify loans at lower monthly payments. “The preferred option is allowing people to retain ownership,” he said.
Fannie Mae executives said the rental program is designed to help delinquent homeowners who don’t qualify for a loan modification, but still want to stay in their homes.
To qualify, homeowners have to live in the home as the primary residence and prove that they can afford the market rent, which will be established by the management company running the program. Rents are based on current market rates.
The plan is expected to be particularly attractive in places like Phoenix or Orange County, Calif., where homeowners are stuck paying large mortgage bills on properties that are now worth far less than they originally paid. At the same time, rents have been falling in those areas and homeowners may find they are paying far less to live in their home.
In Orange County, Read more
I actually feel kind of bad for the should-have-known-better folks who voted for Obama. It was obvious to me last fall that he was a false-flag candidate, a stone liberal masquerading as a centrist. And I understand that, for true stone liberals, he’s actually been somewhat of a disappointment. But for people who can do math, their misplaced faith in Obama has to sting twice, once for having been so dreadfully wrong, and once again because snarky assholes like me just won’t let it slide.
But here’s the good news, from my point of view: Last night’s results may have the immediate impact of putting the brakes on all this tax-and-spend stupidity. The larger stupidities will endure, of course, but we just might have gotten ourselves shut of the home-buyer’s tax-credit last night. Surely this is an event worth celebrating.
This is Instanpundit.com’s Glenn Reynolds in today’s New York Post:
But [Obama] was right the first time about not being ready for the Oval Office. As president, he seems confused and a bit distant on the issues, leaving the details to congressional Democrats and an ever-growing number of “czars” while he golfs and launches attacks at Rush Limbaugh and Fox News.
With the economy tanking (unemployment is much worse after Obama’s deficit-swelling stimulus than Obama’s advisers predicted it would be with no stimulus at all), with the promised post-partisanship dissolving into witch-hunts against hostile media and the promised post-racial America devolving into the awkwardly staged “beer summit,” with the “necessary war” in Afghanistan the subject of endless dithering and the promised “smart diplomacy” materializing as a series of awkward missteps by Hillary Clinton, the froth has become a lot less frothy.
Republicans, who were prepared to give Obama the benefit of the doubt a year ago, now can’t stand him. Independents who voted for him are deserting in droves. And Democrats don’t seem that happy either.
The good news for Obama is that he doesn’t have to run for re-election for three more years, so he still has a chance to get his feet under him. But for Congress members facing elections in a year — including Read more
A few months back, as part of a Tin Foil Hat Production, I mentioned CIT’s desperate need for funds and the Fed’s decision not to bail them out. Why is this noteworthy? After all, I don’t believe the Fed should bail anybody out. I cheer wildly to see Ford record surprising profits while competing against the Frankenstein creation that is GM, just as I quietly root for GM’s justified demise. But here we are, with CIT declaring bankruptcy and the hypocrisy is just too much. Apparently, a company focused on financing small business (70% of the entire factoring business!) is not worth a bail out from the administration that claims to look for ways to spur Small Business. Color me cynical, but I think CIT’s main problem was a lack of Goldman-Sach’s alumni on its board…
This from my Arizona Republic real estate column:
As I write this, the entire real estate industry is on tenterhooks, waiting to see if the $8,000 first-time home-buyers tax credit is going to be extended.
It’s not really a tax credit, it’s a taxpayer-funded subsidy, a “gift” extracted by force from everyone who does not buy a house under the program. The money taken from taxpayers — either now or later by deficit spending — is money that cannot be spent or invested elsewhere.
And it’s not as though this were a zero-sum game. The actual marginal sales — the home sales that would not have happened without the subsidy — may have cost taxpayers from $40,000 to $75,000 each. And as huge as those numbers are, they ignore the interest cost of the borrowed money, the opportunity costs of mal-investment and the compound interest value of those opportunity costs.
Government action cannot create wealth. At best, it moves wealth around. At worst, government destroys wealth by taking it away from the very people who have new ideas and new technologies to invest in.
But as bad as this tax credit is, it’s only temporary. Someday it will end. The mortgage interest tax deduction — which almost no home-owners actually get — is forever. The government dominance of the secondary mortgage market — FannieMae, FreddieMac, GinnieMae, etc. — is forever.
And here’s the real kick in the head, given all we’ve been through in the real estate market over the last eight years: The National Association of Realtors reports that 59% of all new home loans this year were underwritten by the Federal Housing Authority, the Veterans Administration or the U.S. Department of Agriculture.
What this means is that a huge number of homes will have been sold this year with down-payments ranging from 3.5% to -5%. Six out of ten new mortgages are essentially nothing-down loans.
The U.S. government wants to buy your vote by making home-ownership easy. But the net effect of government intrusions in the real estate market is to create a standing wave of foreclosures amid steadily-declining home values.
Steal this book: I’ve written over 200 Read more
…today is probably the day to make contact with your state’s U.S. Senators.
(Incidentally, if you want for your political communications to have maximum force, you have to do more than write a check. You’ll get double the impact is you make a photocopy of your check — and then mail the photocopy to your candidate’s opponent. This should be very effective over the next two years in “purple” districts.)
From Politics Daily, the you-just-can’t-make-this-shit-up section:
Four-year-olds are adorable, trustworthy, and, having never owned a home before, fully eligible for the first-time homebuyer tax credit that Congress passed in 2008.
As a result of that loophole and numerous faulty reporting mechanisms, a House panel learned Thursday of tens of thousands of cases of fraud in the tax credit program, including more than 500 instances of people using their children — including a four-year-old — to apply for the credit to get around income caps and a requirement that the purchaser has never owned a home.
Together, fake or faulty claims for the $8,000 refundable tax credit may have cost the government up to half a billion dollars so far, investigators told the Ways and Means subcommittee.
Russell George, an inspector general with the Treasury Department, told the subcommittee about the most brazen instances of bogus claims that he had come across since the IRS created a filtering system last May to weed out suspicious applications.
George said he had found nearly 20,000 returns for people who may not have actually purchased homes; thousands for people who already owned homes; 3,200 taxpayers who could not prove they were in the country legally; and an unspecified number of IRS employees wrongly applying for the credit.
It is completely implausible to me that anyone could expect anything other than disaster from government-run anything. I like to say that governments are only good at one thing — killing people — but even that isn’t true of the U.S. government: The Army expends 20,000 rounds of ammunition for every confirmed kill. No worries, though:
This week Sens. Chris Dodd (D-Conn.) and Johnny Isakson (R-Ga.) began a push to expand the credit to all homebuyers and extend the deadline, now set for Nov. 30th, to July 2010.
Good plan…
Google chief executive Eric Schmidt favors net neutrality, but only to a point: While the tech player wants to make sure that telecommunications giants don’t steer Internet traffic in a way that would favor some devices or services over others, he also believes that it would be a terrible idea for the government to involve itself as a regulator of the broader Internet.
The impulse is to say, “What a schmuck!” But once they’ve screwed up the internet, that will be one more once-free aspect of American life that will be enslaved forevermore.
Here’s a little rule of thumb to head off objections: If an allegedly-valuable social objective cannot be effected without force, it’s crime.
In effort to stem public outcry the government today announced that they were limiting the salaries of the top 175 executives for companies that have received federal bailout money.
Will this be the event that causes the best and brightest our country has to stop being exactly what we need in this time of economic strife? Will the best and brightest stay with the companies that so need their talents for a fraction of what they could earn on the free market OR will they do what capitalists have done previously? Will they leave for bigger paydays and more options to earn what the market will bear? I am betting that the majority will follow the opportunities that present themselves in the form of job offers from companies that are in better financial shape and can offer a better financial package. Perhaps one without government run healthcare too. The companies that are in trouble will be forced to struggle with 2nd tier talent to help guide them through the upcoming months. I also predict that we might see a company fail as a direct result of this short sighted action.
This to me seems like the first step towards the very thing that Ayn Rand described in Atlas Shrugged. The thought that this might actually become something other than a work of fiction scares me. What will be next? Will I have to share my commissions with agents who are not working because I am making too much money (A guy can dream now right?) Will our countries talent be wooed by other countries that need our intellectual capital to continue to grow?
While it is disheartening to see reports that the bailout money was used on executive pay and bonuses it is even more troubling to see that our government has decided to step in and force businesses to act and think like government agencies.
Today is a very sad day for the cornerstone of America our capitalistic system.
From newgeography.com:
Among the media, academia and within planning circles, there’s a generally standing answer to the question of what cities are the best, the most progressive and best role models for small and mid-sized cities. The standard list includes Portland, Seattle, Austin, Minneapolis, and Denver. In particular, Portland is held up as a paradigm, with its urban growth boundary, extensive transit system, excellent cycling culture, and a pro-density policy. These cities are frequently contrasted with those of the Rust Belt and South, which are found wanting, often even by locals, as “cool” urban places.
But look closely at these exemplars and a curious fact emerges. If you take away the dominant Tier One cities like New York, Chicago and Los Angeles you will find that the “progressive” cities aren’t red or blue, but another color entirely: white.
In fact, not one of these “progressive” cities even reaches the national average for African American percentage population in its core county. Perhaps not progressiveness but whiteness is the defining characteristic of the group.
More:
This raises troubling questions about these cities. Why is it that progressivism in smaller metros is so often associated with low numbers of African Americans? Can you have a progressive city properly so-called with only a disproportionate handful of African Americans in it? In addition, why has no one called these cities on it?
As the college educated flock to these progressive El Dorados, many factors are cited as reasons: transit systems, density, bike lanes, walkable communities, robust art and cultural scenes. But another way to look at it is simply as White Flight writ large. Why move to the suburbs of your stodgy Midwest city to escape African Americans and get criticized for it when you can move to Portland and actually be praised as progressive, urban and hip? Many of the policies of Portland are not that dissimilar from those of upscale suburbs in their effects. Urban growth boundaries and other mechanisms raise land prices and render housing less affordable exactly the same as large lot zoning and building codes that mandate brick and other expensive materials do. They both contribute to Read more
A Ramblin’ Gamblin’ Willie story
Here’s what happened: I had to stop walking because I was sick. You may not know it, but on top of all the other scourges it entails, the state really has it in for itinerants. You may never have wanted to run off to Alabama with a banjo on your knee, but I’d bet you’re more than a bit dismayed to discover that you can’t. Got to have a fixed address, so they can inflict all their precious ‘benefits’ on you.
So I had to stop walking and I had to see a doctor, and of course I couldn’t. I’ve walked myself right out of society, and I have an inkling I may have walked myself right out of the human race. At least that’s the way Nurse Martinetti made me feel.
That’s really her name, but I think she must have married into it. She looked like American Gentry to me, which is to say John Bull white trash six generations from the last capital crime. Short, bottle-blonde with a cut that looks cute on smudged-nosed tomboys, thick through the ankle and the cortex. My guess is she became a nurse because she red-lined the psych profiles for meter-maid.
First, it’s not a doctor’s office, not anymore. It’s a ‘Health Services Cooperative’. We all know what a cooperative is: It’s a place where you go to not get whatever it is you came for. It would make too much sense to stay home, where you already don’t have it. In any case, Nurse Martinetti is charged with making sure that no one gets anything they came for, although they might get stuck (literally!) with quite a lot they’d have sooner done without. But I wasn’t even that (un)fortunate, because I don’t have a fixed address.
Nurse Martinetti gripped her clipboard and said, “What do you mean? How can you not have an address? Everyone has an address. Some people even have two!” She looked at me as if I were something a puppy accidently left on the carpet.
“…,” I said with a shrug.
“Are you homeless?”
“I wouldn’t say so. I sleep Read more
I was passed along an article today from the WSJ discussing the cost to extend the $8,000 tax credit and to open it to all people purchasing a home would cost $16.7 Billion according to congressional analysts.
The article goes on to state that this is less than expected and could help generate momentum to continue the credit and extend it until June 30th 2010. Wow! That’s only $78,773,585 dollar a day (give or take a million) for the 212 days the extension would be in place. Additionally this would extend the offer to anyone who wants to buy a home even if it is not their first home. Income limits would be raised to $150,000 for an individual and $300,000 for couples. The senators who are behind this are hoping to attach this to a bill for extending unemployment benefits.
I’m confused here. How on earth can we have a bill in place to extend both unemployment benefits AND a tax credit for anyone to buy a home?
I will admit that I was excited when Washington State was trying to work out a plan to loan the $8,000 tax credit to be used as a down payment. I rushed out and registered a domain name and had visions of more business than I could possibly handle. What happened though really has changed the way I look at the tax credit. First Washington State was not able to find a way to lend the money for use as a down payment. Second the people that found my site on the tax credit advance were not qualified to buy with or without a tax credit. AND they were upset that it was only $8,000 and had to be repaid. Not a single person I spoke with was in a position to buy a house. Every person was looking for a hand out not a hand up.
Since this awakening I have been slowly building more and more momentum to suggest to my fellow Realtors that the $8,000 tax credit should be allowed to end at midnight November 30th 2009. Any extension is so expensive that Read more