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Archive for August, 2005

Charities

I will still participate in Instapundit’s effort to link to worthy charities that can make a difference to the hurricane victims in New Orleans and surrounding areas. My suggestion was Catholic Charities. Given the enormous Catholic population of Louisiana they are a wise choice. Professor Reynolds listed them, several times as a matter of fact, but gave credit to select other blogs instead. C’est la vie. After seeing the utter devastation on Dateline tonight, if my biggest problem is not getting thrown a bone by Glenn Reynolds, I am a lucky guy.

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American Tsunami

I lived in New Orleans in 1993-94. I have always loved the place. Right now, New Orleans and other gulf points are underwater as I type and watch the news. Entire neighborhoods, wards of the city, & zip codes are submerged. This is more problematic for New Orleans than any other metropolitan center. Sewers are exposed and cemeteries are above ground. There is no place for the water to drain. People are punching holes in their roofs to escape the water. My friend called to tell me that between 5am and 7am local time the French Quarter flooded. As I watched the news, all I could do was hope that it wasn’t as bad as it looked, but the reality is that it looks far better than the truth. The septic mess, the loss of precious lives and homes, and the utter devastation is unfathomable.

This building is in the French Quarter.

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Not long ago, Maureen Dowd, that sweet, compassionate, open minded liberal columnist for the NY Times, wrote that Cindy Sheehan had "absolute moral authority" to speak out on Iraq because she lost her son in the war. My friend Andrew Clem emailed me the following links that show someone else with absolute moral authority answering back in an interview with Chris Wallace of FOX News.

As you probably know, Fox News Sunday with Chris Wallace had as guests two Gold Star Mothers yesterday, one of whom happens to be from my community, Rhonda Winfield. Her son Marine Lance Cpl. Jason Redifer died in Iraq on Jan. 31, and she spoke very forcefully and movingly at a "support the troops" rally here in Staunton, VA on Saturday. I made a nine-minute video of the event, and posted it on my blog:

See http://andrewclem.com/Archives/Post.php?2005/08/28wa.html

I also posted three still photos of the event in an earlier blog piece:

See http://andrewclem.com/Archives/Post.php?2005/08/27wa.html

The media loves to amplify the anti Bush sentiments of 9/11 families to the virtual exclusion of those who support the administration. The same goes for families who have lost sons and daughters who have died for our country. You won’t see this on CNN or the Times.

To see Andrew’s video directly, click here.

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If you live in a place where your home is periodically in danger of being destroyed by the weather, move.

Kt

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거품

According to Yahoo! Translation tools, the title of the post is "bubble." My wife is asleep, so I have no way of verifying. But you get the point. According to the Times of London, Greenspan is predicting a crash in housing prices. No new news there. After 9/11 rates were slashed, money was cheaper, the number of qualified buyers grew, and the ripple effect has had prices spiking. I personally have misgivings about a violent burst of the bubble occurring. I think prices will flatten, but barring a stock market crash, an S & L crisis or another calamity on the periphery I can’t see it happening suddenly. This is because, for one thing, the spike has more to do with supply and demand than cheap money. Manhattan is an island. To the east is an island. To the west is a wide river and then another state. There is only so much land in Metro New York, so scarcity will indicate higher value.

Here is the reason for my unusual title: Korea is undergoing a housing value spike as well. Their spike is also accompanied by talk of a crash, although the time frame is quite ambiguous.

Though the report points out that 30 percent of the apartment prices in Seoul are unreasonably overpriced on average, it forecasts the housing market bubble will not be eliminated for the next three to five years.

The last time I looked, Seoul wasn’t getting their mortgages backed by the US Federal Reserve. Is it a coincidence that they are experiencing a bubble too? Here is the problem with predictions: Eventually, everything happens. Korea, like the US, has a finite amount of land and a highly developed economy. Scarcity equals value. If the higher values are more due to that than simply cheap money, then it speaks of a far more stable environment than a bubble enabled by the Fed to offset the recession. Just my humble opinion.

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Bankruptcy & The NY Times

In their never ending quest to undermine any legislative initiative of the administration, earlier this week the Times ran a piece entitled "Debtors in Rush to Bankruptcy as Change Nears" which focused heavily on people who have sad stories to tell. The crux of the story is that with bankruptcy laws changing soon, there is a spike in bankruptcies because some fear that if they wait they may have a tougher time having their debts discharged. One of the captions under a photo says

Delores Hawks, 56, of Ontario, Ore., went into debt to learn new skills.

Given that I am in the credit business, I take issue with the tone of the article. My experience with people who have declared bankruptcy is that the overwhelming majority were due to a lack of self control rather than calamity. I might add that lack of self control invites calamity. It should be hard to declare bankruptcy if the nature of the debts are consumer spending. Forcing people to restructure their debt instead of forgiving it does not seem unreasonable to me, and no amount of anecdotal sob stories is likely to change my mind. The only people I know that are critical of this new law are bankruptcy attorneys and knee jerk contrarians. I would think that more than proves the wisdom of the change in and of itself.

What is so unreasonable about paying back money you borrowed?

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This week is the annual Best Colleges issue for US News and World Report. We love to read it, perhaps out of vanity. One of the ads reads:

BANKS LEND 17 TIMES MORE MONEY FOR CARS THAN STUDENTS.

The company, My Rich Uncle, makes student loans. Money, like soap, cars, roofing nails and fabric, is a product that is sold. Idealistic thoughts aside, its availability is determined by market forces. Simply put, most student loans are a bad bet. Car loans are a good bet. Student loans are unsecured loans with no collateral. Car loans, like mortgages and chattel loans, are secured and backed by collateral.

I am in a business where I need my clients/customers to have good credit (unlike bankruptcy attorneys, who need people to have credit problems). More than half the time when I have a borrower with a credit issue it involves student loans they defaulted on. More than 50% of the time. There are stretches when it seems like every credit issue for weeks is either credit cards or student loans they failed to pay back. Worse yet they seldom have a degree to show for the money they borrowed.

So, when private industry passes on the economics of the thing, you and I get fleeced with government sponsored programs with interest rates that are the inverse of the risk factors. We get caught holding the bag. Loans get approved, checks are mailed, students quit school quietly, and stereos fly off the shelves. There isn’t nearly enough accountability in the industry. Until there are more checks and balances of student loan programs, the money will continue to flow toward the surer bets and the government will manadate that we subsidize the difference.

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