Saturday, 12 January 2013

Foreclosures

If you have a chance to get the Wall Street Journal from this weekend....on page A4....there's a great story on the economy and foreclosures filings.  I always advocate reading the WSJ because it's fairly independent news piece and graphics tend to tell various stories, which they don't explain in detail.

There's a map there on foreclosures in the 2009-2012 period....county-by-county.  Course, there are eight hot regions that you might expect: southern Florida, all of Atlanta, Phoenix and Tucson together, Las Vegas, Chicago, Detroit, almost all of California, and some areas around DC.

So you move over to view Alabama.  The foreclosure rate?  Extremely low.....same for Tennessee and Mississippi.  In fact, if you get to the heartland (North Dakota, South Dakota, Nebraska, Kansas, central Texas)....there's almost no foreclosures listed in various counties there for the three-year period.

The peak?  Yeah....since 2010....it's generally been going down each year.  But we are still around 1.5 foreclosures per year....for the nation, which is fairly high when you consider that our old average was around a half-million per year on average.

The last part of this story?  If you did have cash and wanted to find some investment chances....there's a couple of areas with hot listings and folks very desperate to sell or banks looking for just about anyone to buy a property.  Course, would you want to live in hurricane territory in southern Florida, or in 115-degree territory in Vegas?

Ten Simple Truths

First, I work in an organization with 250-odd people.  I'd basically hand an assault rifle and lots of ammo to each person, and have absolute trust in each one of the 250 folks.  The sad truth is that we'd all feel generally the same way.  It's this one nut out of one thousand....who is paranoid, on some meds, gaming forty hours a week....that we each sit and worry about on the way to work, shopping at Target, or riding the bus to work with.

Second, generally....any political figure that says he's out to help us....is the first guy to cross off your list as being really helpful.

Third, generally....any church that gets a notion to approve first class travel for its minister and deacons....probably has an accountability problem, and some budget issues on the horizon.

Fourth, if you borrowed $60k to go off to a fancy college in Ohio, and upon graduation....the only real job offered was a $25k shift management job at a car rental shop at the air port...there's something wrong. And you probably will never be able to pay the $60k back.  And you probably will be lucky to own a house at age forty.

Fifth, if you know more than five people permanently on Vicodin or OxyContin....on your friends list....then you probably walk in a fairly unstable circle, with a bit of danger in your life.

Sixth, so far, no research grant or project has ever proven buttermilk to be bad for you....unlike sodas, coffee, water, beer, or whiskey.

Seventh, no one has yet to ask VP Joe Biden if he owns any guns himself.  The simple truth might shock folks if he answered that question.

Eighth, if you required an exam of every law enforcement individual from your state....in order to wear a badge....over seventy percent would fail (my humble opinion).  It's best not to ask why.

Ninth, it's pretty serious business when you need a background check to buy a weapon....but not to register to vote.  The same database would establish if you were a citizen....in case you were wondering.

Tenth, if you had a choice of watching an old episode of Three's Company or CNN's Piers Morgan Show....the majority of folks would at least try to watch Three's Company.  It'd help if it was the later episodes with Don Knotts.

The Basics of a Balanced Budget

After a while, you get the impression that no one really grasps what a balanced budget is or why it must be implemented....so this should set you in the right direction.

Karl is twelve and has an allowance set to six simple tasks each week.  By Sunday night....Karl is paid his twelve bucks pocket money for the week.

After a few months, Karl has developed several habits and is starting to run out of money by Friday evening.  After another week or two, he's out of money by Thursday evening, and things are getting serious now because Dad won't hand him anymore money.

So he runs into this Johnny Paul Wung kid, who will loan his two dollars to get him through to Sunday. But Johnny Paul Wung wants $2.25 back on Monday morning.

So for several weeks....Karl is progressing with this scheme of making it till Thursday and then borrowing two bucks, then paying it back to his friend.

But Karl's habits progress.  So he's typically out of money by Wednesday morning now (from $12), and Johnny Paul Wung is now making 75-cents each week on his loans.

After a year or two.....Karl is paid his money on Sunday night but early on Monday....he's paying all of the twelve bucks to Johnny Paul Wung, then asking for another twelve bucks with a dollar fee attached to the loan for each week.

The Wung kid is making four bucks each month profit now off Karl.  It's kind of a one-side deal now because no other kid in the class will dare loan twelve bucks on a Monday to Karl....except Johnny Paul Wung.  Several of the kids will point out to Karl that his spending habits are out of whack.

Across the United States....up until the 1970s....it was traditional habits of controlling your budget, paying in cash, and maintaining some type of small savings to tide you over through emergencies.  Sometimes a family member needed some cash for a major issue, and loaned them the money with no interest attached.  It was the right thing to do.

As you progress into the eighties....these odd things start to pop up.  First, credit cards suddenly become a free deal.  Before then....if you wanted a card, you paid a yearly fee of roughly $100, which was a fair sum in those days.  So now, you could get a Master Card with no fee.  They were even nice enough to card limit of $5k on it to start.  Ten years later....you noticed that your limit was stretched out to $15k.  Card companies were so nice that you could collect five or six of these....even ten.

As time went by, you started to max several out, and eventually owed $60k in credit card debt, at 19-percent interest.  You can figure that a thousand bucks a month went to maintain the card, but you'd never climb out unless you could up that to two thousand a month.

Car companies?  They began to run their own interest deals.  So they'd invite you in and push you toward a car that was eight thousand more than you were willing to pay.  You'd accept that deal, and pay an entire extra year on car payments.

A new house?  Well....thanks to Fannie Mae....you could now buy a $150k a house with only a couple of thousand as down-payment (not the traditional twenty percent).  No one said much about the thousand dollars a month on the house payment.

A new TV?  Some companies even started a payment plan where a thousand-dollar TV was sold and the total cost via interest payments over two years was almost two thousand dollars.

So credit has become a national urge.  It's balanced with government benefits which also expanded over the past fifty years.

The Karl's of America are killing the economy.  The Karl's end up working as city, county, state and federal officials....spending money in the same fashion.  And those Johnny Paul Wungs?  Man, they are making a killing off the Karls of America.

There is some cliff out there, that you will walk blindly along in the dark, and will eventually fall off that cliff.  It won't be this year, or even possibly the next ten years.  But, there is a cliff somewhere.