a worrisome concurrence

I get worried when I find myself in agreement with President Bush who I consider the worst president in the last hundred years and would be in the running for worst of time if not the abomination that was the Presidency of Andrew Johnson. Nonetheless, I agree with Bush that there should be no bailout for those facing foreclosure.

Bush also claimed the economy is in for a soft landing which I'm skeptical of. However, I've been thinking for years now that risk on residential mortgages is underpriced considering the unsustainable run up in property values and lax underwriting practices. Looks like other investors have come to agree with me and nobody wants to lend driving jumbo rates up.

It's really not possible to prevent this foreclosure wave without the government distributing 10s of billions if not 100s of billions of dollars to irresponsible people who borrowed more than can afford. A bailout of this scale would create moral hazard has borrows will not incentive to be responsible.

trolling for suckers

A story relayed to me today from from Mrs. Monkey In Chief (Mrs. MiC):

A woman rings the doorbell and introduces herself and invites Mrs. MiC to seminar for first home buyers. Mrs MiC says Mr MiC has run the numbers and we are better off renting to which the realtor replies, "well, if you are satisfied with that." Mrs MiC does like the realtor's snotty retort and proceeds to tell her that encouraging people to buy overpriced houses when they already have a decent place to live is not a very nice thing to do. To which, the realtor replays, "It's better than when I was lending industry." At this point, I'm laughing out loud.

This realtor almost certainly was a loan broker who sold tons of buyers on toxic loans. The buyers are responsible for looking out for themselves but nonetheless selling toxic loans is not professional for upstanding people. I'm guessing she lost that loan gig in the lender implosion so now she's recast herself as a realtor and roaming the neighborhoods trolling for suckers so she make a commission selling them a home just as prices begin their long slide.

Mrs MiC also noted that realtors trolling for suckers is what exactly what happened in the early 90's housing bust in Southern California. Lots of desperate realtors going door to door to try to find people dumb enough to buy before prices have bottomed out.

The housing bubble is bursting and its going to be bad ride for people who took on more debt than they can afford.

Money always runs away

When an asset class starts showing big loses, money ALWAYS runs away from it. And money is running from residential mortgages. LA is reporting that interest rates on jumbo loans have spiked with big lenders charging 8%.

Some this reaction is probably irrational as jumbos from borrowers with good credit and 20% down payments probably don't deserve such a high spread over conforming. But when money heads for the exits, it tends to be irrational. Investors don't make fine distinctions between sub-prime, Alt-A, and high grade jumbos when fear takes over. They just bolt. After the sub-prime / alt-A implosion is over, I suspect the risk premiums on all mortgages will be elevated for years.

The spike in the cost of jumbos is one more sign the housing bubble is bursting.

rewarding irresponsibility

Hillary Clinton wants to bail out irresponsible borrowers with taxpayer money. She's proposing a billion dollars for state programs to bail out borrowers. Home owners get every advantage under the sun from tax deductible interest to capital gains exemptions but apparently that's not enough. Now Clinton is telling us people who bit off more than they can chew are supposed to get bailed out.

I have little sympathy for people who took adjustable teaser rate mortgages and can't pay them as they adjust. There's one sob story after another in the media about f*cked borrowers who claim to not have understood their mortgages. If people can not be bothered to read and understand the documents relating to the biggest transaction of their lives, it's going to go badly for them.

If the issue is that borrowers are not competent to understand loans, and if the government really wants to do something useful about that problem, mandate borrowers take a test before then can get a loan. I don't see anyway to protect borrows who can't pass a simple test about how loans works so perhaps they ought not to have one. The test I'm envisioning would be easy for 6th grader who can handle decimals. I do what percentage of the population would pass.

Clinton's plan to eliminate prepayment penalties is pointless. Many of those loans with pre-pay penalties have extremely low teaser rate or negative amortization. Teaser loans will just move to negative amortization which is no better for the borrower.

The only reform I see as valuable is standardized disclosure for basic mortgage term similar to credit cards. A nice little table outlining the terms. Even with this reform borrowers should still read everything but it will be more efficient world if one can see a mortgage is crap glancing at the first page.

Deborah Bowen on Forum

Deborah Bowen did a fantastic job on KQED's Forum this morning explaining her decision to decertify insecure voting machines. I was extremely impressed with Secretary of State Bowen especially as she had to deal with a whiney Stephen Weir, Contra Costra County Clerk, who kept making lame arguments about how these touch screen machines hadn't been hacked yet.

Of course, there is no way of knowing whether a machine has been hack which is why these touch screen machines are so dangerous. This so called public servant Weir seemed much more concerned about how much work he'd have to do to switch to more secure systems than whether the integrity of an election could be compromised.

I hope Bowen has a long future ahead of her in California politics as this state desperately needs all the smart, competent and articulate people it can get in government. I can see Bowen making a great governor. Certainly better than Newsom or Villaraigosa who likely be running for the job in 2010.

jtard at NYT outs fake steve

Fake Steve has been outed buy a New York Time Reporter. FSJ sums up the impact:

Now you've ruined the mystery of Fake Steve, robbing thousands of people around the world of their sense of childlike wonder.

I'm left wondering if FSJ will be as funny now that his identity is known. Will he mock Goatberg or Beastmaster Bill with same gusto now that he isn't anonymous. CNet is already after FSJ claiming FSJ has gone easy on Forbes. The jtards are all jealous of FSJ wit and following will work to bring him down to the boring level of American journalism.

Why this jtard named Brad Stone had nothing better to do I don't know. The NYT has plenty to make up for after that Judy Miller Iraq coverage. Stone should be investigating whose body is in Cheney's man size safe or exposing so of Abu Gonzales' lies. Instead, he's outted fake steve. Maybe Murdoch can buy the NYT next. It would at least put to rest the outdated notion that there any good newspapers left in this country.

Private equity, taxes, and NPR

Morning Edition ran a piece this morning on tax rates on private equity carry interest. For this not familiar with the term, carry interest is the percentage of investment profits the firms partners keep, typically 20%.

While I'm a fan on NPR, sometimes even NPR falls into the trap of letting the people they are talking prattle on fact free without challenging them. Morning Edition let Representative Eric Cantor prattle on about how the attempt to close this tax loop hole is the first to raising the capital gains tax. Rep Cantor had zero evidence for this claim.

My objection to the taxation of the carry as a capital gain is that the partners of these have zero capital at risk. Modifying the tax code to restrict the capital gains rate to situations where the party claiming rate has capital at risk is an both fair and sensible. I don't support the efforts for a special private equity tax. Private equity managers should be taxed like everyone else.

The point was also made that firms would try to avoid paying tax on the carry as regular income by giving managers shares of stock in the companies they acquire. Fine with me. If the managers don't pay full market value on the stock at acquisition, that's a taxable event at regular income rates. They may do well both from a tax efficiency and an investment point of view with this strategy but they now have capital risk since they would be outright owners of shares.

Another Bush Press Conference

Our idiot presidnet had another press conference today. He surprised by giving the first question to Helen Thomas but then proceeded to answer with same tired talking point he'd been using in his prepared statement. Bush doesn't even appear to have the mental capacity to realize Iraq has descended into sectarian strife and there's nothing that we can do to end it.

According to Bush Al Queda has the attention span of my cat and since we are distracting them in Iraq, the equivalent of a shink object to my cat, they can't possibly launch attacks in the US.

Best question though was whether Bush was "disappoiinted" in the advisor who had leaked Plame's name. He essentially said no and blamed the prosecutor which was a non-sequitor in relation to the questiion. I likled this question because it got to the heart of matter. Bush believed the leak was acceptable conduct. In Bush's world anything that furthers his agenda is acceptable.
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Why I can't stand the right

Salon's Blog Report gives me more exposure than I need to right wing blogs. Every once in awhile a post there catches my eye. Today the Blog Report had
a really sorry rationalization for why Senator David Vitter hiring hookers is ok:

The right typically preaches about the goodness of leading a moral life - they don’t claim to be immune to the temptations of immorality, just that your life is more fulfilling pesonally, professionally, and spiritually if you don’t succumb to them.

This quote embodies everything I can't stand about the right. In the fantasy land of the right, what somebody says is much more important than what they do. Vitter claiming to upload family values is much more significant than his activities with prostitutes. Morality is about saying the right things and condemning others who don't verbally endorse the correct positions.

What I despise about people like Vitter is that their mission in life is to use the coercive power of the government to control how other people live. Vitter is a very vocal supporter of amending the Constitution to ban gay marriage. Apparently, he doesn't believe in respecting laws since hiring prostitutes is illegal outside of Nevada but using the most important legal document in the land to enshrine discrimination against gays and lesbians is the number issue facing America according to Vitter.

I personally do not even care this lowlife was illegally hiring prostitutes as the laws against prostitution are unacceptable abridgment of personal liberty to me. However, his cheating on his wife makes him a lowlife. What makes him absolute scum is his lying about it. In his campaign for the Senate, he repeatably emphasized he'd upload of Louisiana values. Every statement to this effect was a bald face lie as last time I looked nobody claimed cavorting with hookers were Louisiana's values.

This is the key difference between the right-wing and sane, reality based people. In reality, talk is cheap. On the right, talk is everything. In the bizzaro right-wing land, lying, cheating and whoring are ok if you claim to endorse a certain brand of morality without ever walking the walk.

A rebellion against wedding insanity

Lavish and ridiculously expensive weddings have become common place. Couples routinely spend on an reckless amount of money in comparison to their income and resources on trying to pretend they are royalty for a day. Thus I read with interest, Salon's article on wedding dress destruction.

A bride destroying her dress while being photographed looks to me like a backlash against the Cinderella wedding. While it seems like a wasteful thing to do, "preserving" a wedding gown really is not more useful. Of course, it would have been less wasteful to have simperer less lavish wedding to begin with but the culture isn't there yet.

Crime Pays

One sad truth of life in America, particularly California, is that property crime pays for criminals. They rarely get caught and when they do they get paltry punishment and go right back to their lying, cheating and stealing ways. A story in the SF Chronicle this morning tells of how a victim of identity theft chased down the criminal who stolen from her.

The story is a compelling narrative but ending is enough to make one sick. The criminal had eight prior fraud convictions. Even though the vicitm's bank has videotape of the criminal illegally and fraudulently withdrawing money from the victims bank account, this scum-bag thief ended up with almost no punishment:

On June 6, she pleaded guilty to one felony count of using another person's identification fraudulently. She was sentenced by Superior Court Judge Harold Kahn to the 44 days she had already served in county jail and three years' probation.

The probation part of the sentence is a joke since the thief was already on probation when she committed her new crimes. I'm starting to think Paris Hilton is getting unfair treatment since a felony violation of probation nets common criminal time served and more probation.

One of the basic parts of the social contract is that the government is obligated to protect citizens from crime. In California and probably other states as well, we have a revolving door justice system that puts criminals right back on the street to commit more crimes. I bet this thief is already back stealing from other people. The government failure to protect the citizens is abrogation of its most basic responsibilities.

One of the principle causes from this soft of crime disaster is the drug war. Our prisons and jails are full of drug offenders. Mother Jones has a great report on our exploding incarceration which is driven by drug crimes. The drug prohibition makes all of us less safe since the resources we would have used to fight real crime are diverted to this pointless waste.

Anti-drug zealots like to claim drug use drives crime but this is only true because the illegal drugs are expensive. If drugs were to be legalized, prices would fall dramatically. The police and the prison system could then go back to fighting real crime.

The failure of CA government to protect its citizens is my biggest area of disagreement with the Democratic party. I hate to repeat any Republican talking point but Democrats really are too lenient on crime. Republicans are not much better since their obsession with the War of Drugs won't leave enough resources fight crime that actually harms upstanding citizens. I can only hope my fellow citizens will wake up and realize the drug war is hurting them every day. Even if you are not ripped off by criminals who should be in jail, you are paying higher insurance rates.

An honor for me

The Beltway Blogroll at the National Journal lists me in the same post, titled Let The Online Voter Manipulation Begin, as Markos Moulitsas and Chris Bowers. The post itself is complaining about suggested tactics for the 2008 campaign. My suggestion over at MyDD was to start the Google Bombing early.

I'm quite pleased to see that I'm mentioned in the same post as two influential member of the blogosphere.

Disgusting Coal Subsidies

The coal industries attempt to give massive subsidies for liquid coal technology is just sickening.

Watch Al Gore call this boondongle a "Horrible Mistake":



I've been really pleased to see Gore on various programs promoting his new book, "The Assult on Reason" I haven't had time to read the book yet due to my rather heavy reading load but seeing him call the Bush adminstration to task has been great.

I was quite dismayed to see Senator Barack Obama co-sponsering this disaster of a bill. I haven't been much of an Obama fan and have been leaning towards Edwards for a while now. However, that any top-tier Democratic Presidential candidate is co-sponsoring a bill that will be a carbon disaster is a disappointment. I don't believe this sequestering fairy tale either. Sequestering technology doesn't exsist and wishing it did doesn't make it so.

I hope Gore runs in 2008. While I'm confident Edwards would be an outstanding president, Gore is best person to both fix the global warmining mess and restore America to sanity after 8 disasterous years of Bush Jr. That Bush beat got close enough to steal the election in 2000 from Gore still boggles my mind. We had the oppurtunity to elect a great a leader and we got an incompetitent fool whose running the country like King Lear.

The Gold Standard

Ron Paul is getting a lot of attention since he's the only Republican presidential candidate who is for ending the war in Iraq. After hearing him in the first Republican debate, I decided to do some checkin up on Ron Paul. While I agree with him on leaving Iraq, turns out he's got some nutty positions. Paul is a strong advocate of returning to the gold standard.

That anyone wanted to return to the gold standard was a shock to me much less a member of political establishment who is taken seriously. For those who don't know, the gold standard requires backing the currency with a fixed amount of gold. Prior to 1971, it was $35 an ounce. The gold standard has the major problem that money supply is no longer on the control of the government but rather subject to how much gold is mined and then turned over to the government in exchange for dollars. A gold standard almost implies fixed foreign exchange rates since if the gold to dollar exchange rate is too low, those who poses gold will sell their gold for British Pounds, Euros, Japanese Yen or whatever currency can be traded for more dollars than the official gold rate.

To fix this problem requires either re-valuations which would be most devaluations or restricting covertablity. That gold was officially $35/ounce in 1971 and is over $650/ounce today tells you something about the devaluations that would have had to occur to stay on the gold standard. Some would argue that inflation is the problem but go look up the GDP deflator and for 1971-2007 and it's anywhere near 20x.

Since the early 1980's the federal reserve system has done as stellar job manging the money supply. Returning to gold would destroy the ability of the fed to manage the money supply. There's a strong arguement advanced by Milton Friedman that insufficient liquidity due to the money supply delflation from people taking their cash out of banks was what made the great depression so severe.

The link above links to a speech of Ron Paul where he goes on to say that the free floating dollar is essentially backed by oil rather gold because oil is priced in dollars and preserving this link is part of the movitivation for the Iraq war. His position is without merit. Yes, the US is running massive trade deficits but borrowing, mostly from foreigners, $2 billion a week to pay for war is not going to improve the dollar's position as a reserve currency. It is possible that by foreign central banks to splitting their official reserve assets between the dollar and euro will hamper the US's ability to continue to run such large balance of payments deficits. Switching to gold is not the answer since it would abruptly force the trade decifit down leading to economic havoc here and abroad. Gold would flow rapidly out of the country since the dollars leaving today would become gold. The money supply would shrink and ugly deflatiohn would result. If you have any debt, including a mortage, you are not going to like deflation.

While I'm happy that Paul is bringing attention to ending the war, if our media was competitent, the issue of Paul's support the anachoristic gold standard should have been brought forward and it has not been.

A War Without End?

With Congressional Democrats apparently capitulating to Bush over the war funding bill, there appears to be no end in sight to the Iraq war occupation. Unless Bush decides to start drawing down next year, I don't see how Bush's "win" today doesn't hand the White House to the Democrats in 2008. It's going to be next to impossible for any Republican to win in 2008 with 100,000 or more troops still on the ground considering all their candidates with the exception of Ron Paul have delcared their unconditional support of the war.

Perhaps the Republican politcos will twist Bush's arm into a temporary reduction in troop levels before the election. Bush could then declare "Mission Accomplished" a second time but I doubt this trick will work. If the Republicans do pull a rabbit of a hat, the war won't end until 2012 at least.

The real reason tech companies don't the like immigration bill

The H1-B system is boon to tech companies. It's the modern indentured servitude since if H1-B holders quit their jobs and they get deported. Oracle and its bethren are whining about the proposed point system claiming it won't get them the workers they need but their real objection is that they won't get captive workers.

There's an easy and economically sound way to test the hypothesis that H1-B's have extra value because they chain workers to their jobs: auction all the H1-Bs. A treasure-style modified dutch auction would not only raise government revenue but also give us the true value of this visas to employers. If such a plan were proposed I suspect US industry would whine even more than European celluar providers did over the spectrum auctions. Business doesn't really want government to run like a business since they would start having to pay market price for all the favors government now provides them.

Press Conference Wakeup

Woke up to Bush's press conference this morning. I hate press conference mornings since my alarm is just turning on NPR and I'm half wake listening that fool Bush talking. I'm probably on about equal intellectual footing with Bush for the first 5 minutes as I wake up.

My summary is of the press conference is Bush claimed "Do what I say about Iraq or you and your children are going to die" Specifically talking about the reporters childern dying at the hands of terrorists was in particularly poor taste. All Bush has left is some ludicrious claim that pulling out of Iraq in going to lead deaths here. Unfortunately no one asks him why he assumes Al Queda is like a moth to the flame of Iraq and it couldn't both launch attacks in Iraq and here simultaneously. Or better yet reporters ought to ask Bush why he has so little confidence in his own "Home Security" measures that he believe the US can't stop terrorist plots here. Guess the TSA taking away my water bottle really hasn't made anyone safer.

Odius Pundit of the Day

I felt sick after read reading this Jonah Goldberg's awful drivel about how unfair Scooter Libby's conviction is and how the Wilsons have benefited from the scandal. Mia Culpa has a good point that the LA Times is just much a "wanker" for publishing this crap.

Goldberg clearly thinks the federal laws that make it crime to lie to the FBI and Grand Juries are unfair. He really should be true to his convictions and call for repeal those laws so everybody gets to the tell the FBI whatever lie is conveinent for them. Or perhaps what he really wants is a blanket exception to the law for members of Republican administrations. Of course, Goldberg thought purjury was a serious offense during the Clinton administration. But in Goldberg's twisted mind, there are different laws for Democrats and Republicans.

On free speech (a response to Roundhead)

I was surprised to see that a fellow Salon.com reads came over to my blog and posted a response to my comments on Salon in response to Amanda Marcotte article Why I had to quit the John Edwards campaign. In my comments, I took exception to claim that other reader's offense to Marcotte's comments about the Holy Spirit were justification for the threats of violence she received.

I had been laboring under the delusion that the crowd that reads Salon were uniformly smart enough to get their facts straight. The key fact in this incidient is that Marcotte was NOT fired by the Edwards campaign. She quit the campaign both because she felt she was becoming a distraction to the Edwards campaign AND the threats made against her. Those who thought she got what she deserved uniformly overlooked the fact that Marcotte quite the campaign and were either implictly or explictly condoning the actions of the right wing virtual lynch mob.

Now we come to Roundhead's comments:

With regard to their free speech rights, they haven’t been violated. One of them is free to publish in Salon, and I wonder if that’s a liberty granted to her opponents?

The threats of the violence directed at Marcotte were certainly intended to discourage her from expressing herself. I'm glad these abominal actions did not discourage Marcotte from publishing in Salon. Her opponents are free to publish to anywhere that will have them and I most strongly condemn anyone who would threaten them. It is unfortunate they are enough to cause Marcotte to leave the Edward's campaign.

Roundhound goes on to ask me:

But since you are so enraged by about what you call “religious bigots”, I’m sure you were at the forefront of the campaign to ensure that certain cartoonists in Denmark to have the freedom to, as you put it, offend anyone they wish to?

I fully support the right of the Danish publication to publish those cartoons. In a society with freedom of expression, there is guarantee that someone will say something that offends you. Cheney constantly offends me with both with deceipt and his underhanded slanders against Democrats. People who claim I'm going the hell for not believing in the right God(s) really offend me. Even worse, are the intolerant bigots like Jerry Falwell and Pat Roberson who claimed 9/11 was God's retribution for America's tolerlance of gays. I happily accept that having to tolerate this odious speech is the price I pay for freedom of expression. Those who think certain types of speech offensive to them merits a special response either by the government or by lynch mobs, virtual or otherwise, are unpatriotic because they are undermining the ideals of this country.

Goodbye TurboTax

After using TurboTax for 10 years, I've had enough. This year's version is terrible. I tried to start my taxes this morning and had nothing but trouble:

• The automatic updates failed. Had to download the manual updater. Reviews on Amazon indicate this a common problem.
  
• When I tried to import some information from a brokerage, I got a "not available right now, try again later" message. I tried again and it worked. I think I mistyped my password the first time. The error messages should tell you the real problem.
  

• The basis calculation for mutual fund sales is completely broken. I had to enter it 3 different ways to get Turbo Tax to recognize the basis is not zero. The "Assist Me" option seemed like the easy one but it does not let you enter the data in the form you get it from brokerage. It insists on a date for each purchase lot which is a nightmare with reinvestments then it wants the average cost basis per share. My statement has average cost for the entire sale. It's easy to convert but I shouldn't have to when I plunked down $75 bucks for the program.

  Even after conversion, the actual tax form still showed 0 for the basis. I noticed this problem since TurboTax's mistake was causing the tax bill indicator to be way to large. It's disturbing that if the amount in question had been smaller, I might not have noticed and paid too much tax. So I tried enter it myself and if you tell TurboTax the shares were purchased on "multiple dates" and enter the information for costs, it still marks the basis as zero. I finally got it take the basis if said one date purchase datawhich would mean I was submitting bogus tax information. What's even more infuriating is that entering "various" for the dates doesn't work even though my understanding is that the IRS is fine with grouping multiple purchases into one sale if you respect the long term / short term boundary.
  

After all this I've lost confidence in TurboTax and am switching to TaxCut. The last think is I need is audit because I used piece of tax software that is very buggy. The good news is that TaxCut is much cheaper and I don't have spend half hour trying figure out which the zillion different additions I need like I do with TurboTax. I very glad TaxCut released a Mac version this year.