I often wonder why an industrial superpower like the United States has such a difficult time having a fair election while a third-world country with over a billion people, like India, can get by with purple ink on people's fingers.
Actually I wonder a lot about our elections. Every voting district has their own election board which may have a different set of rules and protocols for how elections are run. There is little consistency between these election boards.
The Supervisor of Elections is an elected member of one of the parties. How can that be? It's easy to infer that there would be bias because of that.
The Secretary of State for each state is also an elected member of one of the major political parties. They step in, just as Katherine Harris did in Florida in 2000, when there are discrepancies or a recount has to be done.
There are obvious conflicts of interest with having party-people running elections.
The goal of free elections is to have it be fair and have the process be as transparent as possible so that there can be no doubt in the minds of the voters that the integrity of the election was maintained.
To me the only way that can be done is to have a third-party come in and certify that the 'election process' is fair and stable.
Here in Florida the lottery process has to be signed off on by a major auditing firm. They determine the tests needed to make sure that each drawing is random and fair with no bias. Why can't we have the election process certified?
It actually makes life for the Supervisor of Elections easier. All they have to do is execute the process and troubleshoot the anomolies that happen during the election.
If the public doesn't trust that the elections are being carried out with the highest un-biased integrity then they lose faith in Democracy in general.
If Americans lose faith in Democracy then what are the peoples of the world that we're pushing this form of government on going to think?
Monday, April 23, 2007
Saturday, April 21, 2007
Subprime Mortgages
The Subprime mortgage market is imploding. Just checkout mortgageimplode.com.
What does that mean to the average Joe? Not much
The mortgage industry is one of the most regulated industries in the US with regard to disclosures to their customers. Borrowers must receive a Truth-in-Lending (TIL) statement and Good Faith Estimate (GFE) of charges within 72 hours of application. The TIL states what the Annual Percentage Rate (APR) is. Generally speaking, the lower the APR the better the loan. The GFE details the charges that will be incurred because of the loan. Any charges that are paid to the Lender for non-descript fees (aka Junk Fees) are included in the APR and those that are paid directly to a third party (aka Appraisal & Credit Report) are not.
Subprime simply means that the borrowers don't qualify for the best loan terms. They have credit issues, bankruptcies, foreclosures, etc in their past. To make up for the added risk Lenders charge more fees and/or a higher interest rate.
Everything so far is above-board and the risk to the investor who buys the mortgage from the Lender is fairly easy to calculate.
With the growth of the Subprime market came the advent of new products. Chief among them were the Interest Only and the Pay-Option Arm programs.
Both programs are Adjustable Rate (ARM) programs where your interest rate is reset at set intervals based on an index such as the 1 yr Treasury Rate. Hence, interest rates go up, so will your mortgage payment.
The Interest Only is just as it implies. It's usually something like 10 yrs of paying only the interest portion of the loan and the other 20 years paying down the principal and interest. This allows the borrower to get the interest & tax payment incentives and also, hopefully, getting appreciation on their property value over ten years which gives them a REAL stake in the property.
The Pay Option ARM is a completely different animal entirely. It allows the borrower to pay the fully amortized payment which reduces the principal balance with each payment, or they can pay just the interest, or they can pay a reduced payment which actually INCREASES their principal loan balance. This is called Negative Amortization.
Another aspect of the Subprime market was that they were allowing higher and higher Loan-to-Value (LTV) loans. For instance, if someone was buying a $200,000 home they could get a loan for $200,000 and they would only have to pay closing costs. That's considers a 100% LTV.
The Risk with high LTV loans is that the Borrower could walk away from the property with little skin in the game.
So how did we get to where we are now? It's a common element of all capitalist societies, it's called Greed. Borrower's want the benefits of homeownership even though they don't really qualify, and investors in those mortgages want the higher returns even though they know there is significantly higher risk.
It's definitely not the worst-case-scenario but what happened was that there was an increase in interest rates, a stagnation in home prices, and also stagnation in wages. After a year people's home payments went up but their pay didn't. Their properties also didn't increase in value. If they had a Pay Option they might have opted for the lowest payment possible which increased the Principal Balance on their loans. If they still couldn't pay after their payments went up with the interest rate increase then their lenders foreclosed on a loan that may have been more than the property value. Obviously a lose-lose for everyone involved.
The Borrower has a lot to lose but ultimately the investor loses the most because they bought loans that are non-performing and have assets (the property) that don't come close to covering the costs of forclosure through selling of that property.
What happens is what we are seeing now. The investors don't want to buy any more of those loans so the whole subprime market is drying up.
People always try to assign blame but in this case I don't think that there is any. Ultimately the people that suffer are the Borrower who was trying to get the American Dream even though they were marginal, at best, and the Investors in those loans who wrote the guidelines and are going to take the financial burden of the defaults that happen.
What does that mean to the average Joe? Not much
The mortgage industry is one of the most regulated industries in the US with regard to disclosures to their customers. Borrowers must receive a Truth-in-Lending (TIL) statement and Good Faith Estimate (GFE) of charges within 72 hours of application. The TIL states what the Annual Percentage Rate (APR) is. Generally speaking, the lower the APR the better the loan. The GFE details the charges that will be incurred because of the loan. Any charges that are paid to the Lender for non-descript fees (aka Junk Fees) are included in the APR and those that are paid directly to a third party (aka Appraisal & Credit Report) are not.
Subprime simply means that the borrowers don't qualify for the best loan terms. They have credit issues, bankruptcies, foreclosures, etc in their past. To make up for the added risk Lenders charge more fees and/or a higher interest rate.
Everything so far is above-board and the risk to the investor who buys the mortgage from the Lender is fairly easy to calculate.
With the growth of the Subprime market came the advent of new products. Chief among them were the Interest Only and the Pay-Option Arm programs.
Both programs are Adjustable Rate (ARM) programs where your interest rate is reset at set intervals based on an index such as the 1 yr Treasury Rate. Hence, interest rates go up, so will your mortgage payment.
The Interest Only is just as it implies. It's usually something like 10 yrs of paying only the interest portion of the loan and the other 20 years paying down the principal and interest. This allows the borrower to get the interest & tax payment incentives and also, hopefully, getting appreciation on their property value over ten years which gives them a REAL stake in the property.
The Pay Option ARM is a completely different animal entirely. It allows the borrower to pay the fully amortized payment which reduces the principal balance with each payment, or they can pay just the interest, or they can pay a reduced payment which actually INCREASES their principal loan balance. This is called Negative Amortization.
Another aspect of the Subprime market was that they were allowing higher and higher Loan-to-Value (LTV) loans. For instance, if someone was buying a $200,000 home they could get a loan for $200,000 and they would only have to pay closing costs. That's considers a 100% LTV.
The Risk with high LTV loans is that the Borrower could walk away from the property with little skin in the game.
So how did we get to where we are now? It's a common element of all capitalist societies, it's called Greed. Borrower's want the benefits of homeownership even though they don't really qualify, and investors in those mortgages want the higher returns even though they know there is significantly higher risk.
It's definitely not the worst-case-scenario but what happened was that there was an increase in interest rates, a stagnation in home prices, and also stagnation in wages. After a year people's home payments went up but their pay didn't. Their properties also didn't increase in value. If they had a Pay Option they might have opted for the lowest payment possible which increased the Principal Balance on their loans. If they still couldn't pay after their payments went up with the interest rate increase then their lenders foreclosed on a loan that may have been more than the property value. Obviously a lose-lose for everyone involved.
The Borrower has a lot to lose but ultimately the investor loses the most because they bought loans that are non-performing and have assets (the property) that don't come close to covering the costs of forclosure through selling of that property.
What happens is what we are seeing now. The investors don't want to buy any more of those loans so the whole subprime market is drying up.
People always try to assign blame but in this case I don't think that there is any. Ultimately the people that suffer are the Borrower who was trying to get the American Dream even though they were marginal, at best, and the Investors in those loans who wrote the guidelines and are going to take the financial burden of the defaults that happen.
Friday, April 20, 2007
Thursday, April 19, 2007
Cell Phones while Driving
I get so mad at these idiots on cell phones while they're driving that I want to throw my beer bottle at them.
Wednesday, April 18, 2007
American Culture of Violence
As predicted the airwaves were full of talk today about the VT shootings. There was a lot of ranting & raving about how folks wish that he were still alive so that they could really make him suffer. Not much less than a radio lynch mob.
I don't know why folks act like that. They don't know the shooter or any of the victems but they feel that they should somehow get involved in the form of retribution. Most wanted to dish out some vengeance of some sort.
Basically it comes down to our national mentality of wanting to address violence with additional, and perhaps ramped-up, violence. An eye for an eye, right.
In the south we call them rednecks. They have thick southern accents, maybe a confederate flag on their car and are the brother, with a mean streak, of a good ol' boy. They are agressively ignorant of American justice structures and due process. They don't know and they don't want to know.
The irony is that rednecks display the same anti-social behavior that they claim should have triggered the authorities to stop the shooter before the event.
Our justice system is established to treat even the most heinous of criminal humanely. Even though they may spend the rest of their lives in prison or even be put to death, they will follow an established process that involves fairness and even putting the burden of proof on the prosecuter. A criminal need not be worried about torture or extreme measures to coerce confessions out of them.
This humanity in our justice system is what sets us apart from countries with kangaroo courts. American's should emulate this system or at least respect that it's not perfect but it works better than any other system.
Most Americans need to take a page from the Amish and the Buddhists that peace, love, compassion and forgiveness are better traits to have than hate, vengeance, and violence.
I don't know why folks act like that. They don't know the shooter or any of the victems but they feel that they should somehow get involved in the form of retribution. Most wanted to dish out some vengeance of some sort.
Basically it comes down to our national mentality of wanting to address violence with additional, and perhaps ramped-up, violence. An eye for an eye, right.
In the south we call them rednecks. They have thick southern accents, maybe a confederate flag on their car and are the brother, with a mean streak, of a good ol' boy. They are agressively ignorant of American justice structures and due process. They don't know and they don't want to know.
The irony is that rednecks display the same anti-social behavior that they claim should have triggered the authorities to stop the shooter before the event.
Our justice system is established to treat even the most heinous of criminal humanely. Even though they may spend the rest of their lives in prison or even be put to death, they will follow an established process that involves fairness and even putting the burden of proof on the prosecuter. A criminal need not be worried about torture or extreme measures to coerce confessions out of them.
This humanity in our justice system is what sets us apart from countries with kangaroo courts. American's should emulate this system or at least respect that it's not perfect but it works better than any other system.
Most Americans need to take a page from the Amish and the Buddhists that peace, love, compassion and forgiveness are better traits to have than hate, vengeance, and violence.
Tuesday, April 17, 2007
2006 Mid-term election
I think there is a real misconception by the news media about what the 2006 midterm elections actually implied.
I have heard over-and-over that the elections were a statement by the American people of their disatisfaction with the way that the War in Iraq and the GWOT (Global War on Terror) was being prosecuted. I think that is completely inaccurate.
People will stick behind a losing team forever as long as they feel that the team is giving their all and everything's on the up-and-up. Look at Cub's fans. What unravelled before the elections is that the American people found out that they had been intentionally misled and lied to so that our government, in our names, could invade another soveriegn nation under completely false pretexts.
I remember a poll taken at least a couple years after the invasion of Iraq that showed that a full 70% of Americans believed there was a direct link between Hussein and the 9/11 disaster. This was not by mistake. This was a carefully orchestrated fraud on the American People, Congress, the UN, and the World.
When W finally had to come clean and say that there was no link there was an almost audible, "What??" out of the American People. Then he comes out and says, "I've never been 'stay the course'". Again, another big, "What???".
By the time the elections rolled around even the semi-informed couldn't believe a word out of anyone in this administration. If they said it was raining, I would stick my head out the window to double-check.
BushCo has lost ALL of their credibility. They cannot be believed by anyone, foreign or domestic.
I get no joy out of watching this death spiral because it's really the American people that have to pay for this lunacy.
Unless the unbelievable happens there will be no impeachment, which Congress is obligated to do whether they like it or not. Impeachment would set a precedent so that no other President would take such liberties with the constitution and our foreign treaties.
Just beware anytime someone in government says that we should do something because it'll show our 'National Unity'. It's BS. We as Americans need to think for ourselves and become more educated in the future.
So the next time you hear that the 2006 elections were a statement about how the War in Iraq was going think about whether it was that or the fact that you just don't trust George W. Bush, or anyone in his administration anymore.
I have heard over-and-over that the elections were a statement by the American people of their disatisfaction with the way that the War in Iraq and the GWOT (Global War on Terror) was being prosecuted. I think that is completely inaccurate.
People will stick behind a losing team forever as long as they feel that the team is giving their all and everything's on the up-and-up. Look at Cub's fans. What unravelled before the elections is that the American people found out that they had been intentionally misled and lied to so that our government, in our names, could invade another soveriegn nation under completely false pretexts.
I remember a poll taken at least a couple years after the invasion of Iraq that showed that a full 70% of Americans believed there was a direct link between Hussein and the 9/11 disaster. This was not by mistake. This was a carefully orchestrated fraud on the American People, Congress, the UN, and the World.
When W finally had to come clean and say that there was no link there was an almost audible, "What??" out of the American People. Then he comes out and says, "I've never been 'stay the course'". Again, another big, "What???".
By the time the elections rolled around even the semi-informed couldn't believe a word out of anyone in this administration. If they said it was raining, I would stick my head out the window to double-check.
BushCo has lost ALL of their credibility. They cannot be believed by anyone, foreign or domestic.
I get no joy out of watching this death spiral because it's really the American people that have to pay for this lunacy.
Unless the unbelievable happens there will be no impeachment, which Congress is obligated to do whether they like it or not. Impeachment would set a precedent so that no other President would take such liberties with the constitution and our foreign treaties.
Just beware anytime someone in government says that we should do something because it'll show our 'National Unity'. It's BS. We as Americans need to think for ourselves and become more educated in the future.
So the next time you hear that the 2006 elections were a statement about how the War in Iraq was going think about whether it was that or the fact that you just don't trust George W. Bush, or anyone in his administration anymore.
First Post
It's the day after the massacre at Virginia Tech and all the politicos have taken the opportunity to express their horror or such an unthinkable act.
I'm surprised that anything is unthinkable to them anymore. I'm sure to most of them its just a fine photo-op and a way to get their name out associated with this event.
Maybe I'm just a hard-ass but I get a little P.O.'d when people start saying things like "we're a nation that's greiving". Can't we be a little more stoic like the British, or even the Amish after the schoolhouse shooting.
Maybe some folks have an over-developed sense of empathy, but to me that isn't news. It's stirring the emotional pot of people who like to believe that there is evil all around us and ready to pounce at any time.
Next comes the blame game. "What could we have done to prevent this from happening?". Nothing. Again, it's not news, it's speculation and hindsight.
The timing of this event was pretty bad for Don Imus. If it happened a week earlier he probably would still have a job.
I'm surprised that anything is unthinkable to them anymore. I'm sure to most of them its just a fine photo-op and a way to get their name out associated with this event.
Maybe I'm just a hard-ass but I get a little P.O.'d when people start saying things like "we're a nation that's greiving". Can't we be a little more stoic like the British, or even the Amish after the schoolhouse shooting.
Maybe some folks have an over-developed sense of empathy, but to me that isn't news. It's stirring the emotional pot of people who like to believe that there is evil all around us and ready to pounce at any time.
Next comes the blame game. "What could we have done to prevent this from happening?". Nothing. Again, it's not news, it's speculation and hindsight.
The timing of this event was pretty bad for Don Imus. If it happened a week earlier he probably would still have a job.
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