Why do emergency rooms have to provide free care to injured people, but grocery stores don't have to provide free vegetables to starving people? How much would groceries cost if stores had to take care of the indigent? Why do we, as a society, say that emergency health care is such an essential need that it must be given away sometimes, while food and shelter remain commercial products that are only given away voluntarily?
Should a person who is bleeding to death wait for care while the hospital confirms insurance coverage? Certainly not. But why does the government put the burden of care on hospitals without providing a mechanism for funding that mandatory care?
Thursday, December 27, 2007
The crux of the problem with health insurance
Bloomberg.com: Exclusive: A woman who carried private health insurance (her employer didn't offer insurance) "She had bought medical coverage through a subsidiary of Assurant Inc. for consecutive six-month terms without interruption since December 2003.
Her insurance company, John Alden Life Insurance, rejected her claim for lymphoma treatment, saying she had the cancer symptoms before signing her then current six-month policy and should have sought diagnosis or treatment earlier."
The insurance company was arguing that the insured's good health at the time she first bought insurance from them, in 2003, was not at issue. At issue was the state of her health at the time she renewed the policy most recently. They claimed she should have known then, at renewal that she had cancer. The fact that she was healthy all the years she paid them premiums was irrelevant - all that mattered was that she might have been unhealthy when she renewed the policy.
This is why American voters are ticked off about health insurance. High costs stink, employers not offering insurance stinks, but living in fear that a properly purchased insurance policy won't pay is terrifying. If legislators and insurers want to stop the train wreck of socialized medicine, this is the problem they need to solve now. There is no excuse for allowing insurers to pull this kind of B.S. stunt on honest citizens.
The story has a sort of happy ending. The hospital appealed to the insurance commissioner, and the insurance commissioner refused to help. The hospital then involved the state's attorney general, who did intervene. The insurance commissioner was sacked, the patient's care was covered, and the insurance company is now being investigated by the new, apparently more honest, insurance commissioner. The patient survived, although the cancer has recurred twice. Hard to heal when you're fighting your insurance company.
Her insurance company, John Alden Life Insurance, rejected her claim for lymphoma treatment, saying she had the cancer symptoms before signing her then current six-month policy and should have sought diagnosis or treatment earlier."
The insurance company was arguing that the insured's good health at the time she first bought insurance from them, in 2003, was not at issue. At issue was the state of her health at the time she renewed the policy most recently. They claimed she should have known then, at renewal that she had cancer. The fact that she was healthy all the years she paid them premiums was irrelevant - all that mattered was that she might have been unhealthy when she renewed the policy.
This is why American voters are ticked off about health insurance. High costs stink, employers not offering insurance stinks, but living in fear that a properly purchased insurance policy won't pay is terrifying. If legislators and insurers want to stop the train wreck of socialized medicine, this is the problem they need to solve now. There is no excuse for allowing insurers to pull this kind of B.S. stunt on honest citizens.
The story has a sort of happy ending. The hospital appealed to the insurance commissioner, and the insurance commissioner refused to help. The hospital then involved the state's attorney general, who did intervene. The insurance commissioner was sacked, the patient's care was covered, and the insurance company is now being investigated by the new, apparently more honest, insurance commissioner. The patient survived, although the cancer has recurred twice. Hard to heal when you're fighting your insurance company.
Cigna Corp. in liver-transplant-coverage controversy - MarketWatch
Cigna Corp. in liver-transplant-coverage controversy - MarketWatch: "Cigna stands by liver-transplant-coverage decision
Insurer initially denied funding, then reversed itself, but patient, 17, died"
This being a MarketWatch article, the reader comments are a bit more pertinent than you typically get on a story of this type.
One interesting comment notes that we pay routine car maintenance out of our regular budget, and car insurance is used only for catstrophic damages. This is how insurance normally works - maintenance is an operating cost to be borne by the user, and unexpected major expenses are covered by the insurance companies. We have perverted the idea of "insurance" in health insurance by putting routine maintenance costs into the bucket, then expecting to have enough left for catastrophic costs.
Insurer initially denied funding, then reversed itself, but patient, 17, died"
This being a MarketWatch article, the reader comments are a bit more pertinent than you typically get on a story of this type.
One interesting comment notes that we pay routine car maintenance out of our regular budget, and car insurance is used only for catstrophic damages. This is how insurance normally works - maintenance is an operating cost to be borne by the user, and unexpected major expenses are covered by the insurance companies. We have perverted the idea of "insurance" in health insurance by putting routine maintenance costs into the bucket, then expecting to have enough left for catastrophic costs.
Thursday, December 20, 2007
The scope of defaults
Ben Stein says in Feeling the Crunch on Yahoo Finance: "No one, and I mean no one, knows how large the losses have been as the buyers of the mortgage pools have seen their investment dry up and blow away. By my rough calculation, with help from the president's Council of Economic Advisers, about 6 trillion dollars of new mortgages were issued between 2005 and mid-2007. Of this, about 20 percent might have been subprime. That makes $1.2 trillion.
Of that, about a third might default (many more from the last period of the lending binge, when standards simply vanished), which would indicate losses of about $380 billion. Of that, about 60 percent will be recovered when the houses are seized in foreclosure and, after the legal fees are paid, sold to shrewd buyers. That leads to a net loss to pension funds, municipalities, labor unions, hedge funds, and wealthy foreigners of about $150 billion, as a very rough number.
That number may be even greater when upwards of $40 billion in losses on mortgages call Alt-A's -- where the borrowers didn't have poor credit, but the interest rates reset too high for them to afford -- are added. "
I don't agree with his conclusions - subprime and ALT-As aren't the only problems, and I don't think he's fully accounting for the new variables - but it's a starting point. The new variables include a different cultural perspective on foreclosure - after a major housing boom where flipping houses for profit became big business, foreclosure is less of a stigma and more of a business failure - and the new credit reality where people pay their credit cards instead of their mortgages. People are more willing to walk away from their mortgage than I ever expected. People see their homes lose value, and they wonder why they are paying far, far more than rent to hold onto a depreciating asset. It is foolish in this environment to assume that the foreclosures will be neatly confined to subprime and Alt-A.
Of that, about a third might default (many more from the last period of the lending binge, when standards simply vanished), which would indicate losses of about $380 billion. Of that, about 60 percent will be recovered when the houses are seized in foreclosure and, after the legal fees are paid, sold to shrewd buyers. That leads to a net loss to pension funds, municipalities, labor unions, hedge funds, and wealthy foreigners of about $150 billion, as a very rough number.
That number may be even greater when upwards of $40 billion in losses on mortgages call Alt-A's -- where the borrowers didn't have poor credit, but the interest rates reset too high for them to afford -- are added. "
I don't agree with his conclusions - subprime and ALT-As aren't the only problems, and I don't think he's fully accounting for the new variables - but it's a starting point. The new variables include a different cultural perspective on foreclosure - after a major housing boom where flipping houses for profit became big business, foreclosure is less of a stigma and more of a business failure - and the new credit reality where people pay their credit cards instead of their mortgages. People are more willing to walk away from their mortgage than I ever expected. People see their homes lose value, and they wonder why they are paying far, far more than rent to hold onto a depreciating asset. It is foolish in this environment to assume that the foreclosures will be neatly confined to subprime and Alt-A.
Wednesday, December 19, 2007
Retirement Planning: Taxes
Some data sources for taxes by state.
Retirement Living Center lists Taxes by State: "A total of 41 states impose income taxes. New Hampshire and Tennessee apply it only to income from interest and dividends. Seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming) do not tax personal income."
Which states give retirees the best deal? - MSN Money: "We discovered that when you look at the big picture, it might be cheaper to stay put in New York or Illinois than to move to one of the no-tax 'havens.' For retirees who are really retired -- that is, who haven't taken on jobs in retirement -- income taxes are often the least of their worries." This is an article from Kiplinger.com, and it's a good survey but it's out of date. I don't see a date stamp on the article, but the last time you could buy a house in Sacramento for $165k was several years ago.
Bankrate.com weighs in with State retirement income tax breaks: "When you're searching for a place to retire, a location's taxes are certainly an important consideration, because they could take a big bite out of your retirement resources. To varying degrees, many states offer breaks for older or retired residents."
Bankrate has another article: Finding the perfect U.S. retirement tax haven: "It seems like it would be easy to find a tax-friendly place to while away your golden years. Nine states don't have an income tax. Five don't levy any sales tax. By this measure, a perfect state to retire to is Alaska, since it falls into both groups. There's just that minor issue of the weather."
The Tax Foundation Provides State-by-State comparisons of taxes in general: Tax Research Areas > State Tax Policy and Data: "The goal of the Tax Foundation's State Tax Policy and Data section is to provide a comprehensive resource for information on tax and spending policy in the 50 U.S. states. For information on your state, click on the map below or select from the drop-down menu."
Retirement Living Center lists Taxes by State: "A total of 41 states impose income taxes. New Hampshire and Tennessee apply it only to income from interest and dividends. Seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming) do not tax personal income."
Which states give retirees the best deal? - MSN Money: "We discovered that when you look at the big picture, it might be cheaper to stay put in New York or Illinois than to move to one of the no-tax 'havens.' For retirees who are really retired -- that is, who haven't taken on jobs in retirement -- income taxes are often the least of their worries." This is an article from Kiplinger.com, and it's a good survey but it's out of date. I don't see a date stamp on the article, but the last time you could buy a house in Sacramento for $165k was several years ago.
Bankrate.com weighs in with State retirement income tax breaks: "When you're searching for a place to retire, a location's taxes are certainly an important consideration, because they could take a big bite out of your retirement resources. To varying degrees, many states offer breaks for older or retired residents."
Bankrate has another article: Finding the perfect U.S. retirement tax haven: "It seems like it would be easy to find a tax-friendly place to while away your golden years. Nine states don't have an income tax. Five don't levy any sales tax. By this measure, a perfect state to retire to is Alaska, since it falls into both groups. There's just that minor issue of the weather."
The Tax Foundation Provides State-by-State comparisons of taxes in general: Tax Research Areas > State Tax Policy and Data: "The goal of the Tax Foundation's State Tax Policy and Data section is to provide a comprehensive resource for information on tax and spending policy in the 50 U.S. states. For information on your state, click on the map below or select from the drop-down menu."
Saturday, December 15, 2007
Philiadelphia prosecutes business owner for signs "This is AMERICA: WHEN ORDERING PLEASE 'SPEAK ENGLISH"
The Associated Press: Pa. Shop Owner Backs English-Only Policy: "A small sign that asked customers to order in English at a famous cheesesteak shop was never meant to be offensive, the shop's owner testified Friday at a hearing to decide whether the policy was discriminatory.
Joe Vento, the owner of Geno's Steaks, defended his policy before the Philadelphia Commission on Human Relations, which filed the discrimination complaint."
Added in another article, Vento was trying to keep the lines moving in his busy store. For the record, when ordering a cheesesteak in Little Italy, if you cannot clearly communicate your order in 30 seconds or less, they'll shuffle you aside to keep the line moving. Think Soup Nazi.
If you believe that a private shop owner has a right to express a preference for using the English language in America, perhaps you would take a moment to drop the Human Relations folks a note in regards to Joe Vento, Geno's Steaks, at:
The Philadelphia Fair Housing Commission
The Curtis Center
601 Walnut Street, Suite 300 South
Philadelphia, PA 19106
Tel: 215-686-4670
TTY: 215-686-3238
Fax: 215-686-4684
E-mail: faqpchr@phila.gov
Joe Vento, the owner of Geno's Steaks, defended his policy before the Philadelphia Commission on Human Relations, which filed the discrimination complaint."
Added in another article, Vento was trying to keep the lines moving in his busy store. For the record, when ordering a cheesesteak in Little Italy, if you cannot clearly communicate your order in 30 seconds or less, they'll shuffle you aside to keep the line moving. Think Soup Nazi.
If you believe that a private shop owner has a right to express a preference for using the English language in America, perhaps you would take a moment to drop the Human Relations folks a note in regards to Joe Vento, Geno's Steaks, at:
The Philadelphia Fair Housing Commission
The Curtis Center
601 Walnut Street, Suite 300 South
Philadelphia, PA 19106
Tel: 215-686-4670
TTY: 215-686-3238
Fax: 215-686-4684
E-mail: faqpchr@phila.gov
Wednesday, December 12, 2007
Retirement savings: Hedge against poverty today AND in retirement
Large IRA's not fully protected from bankruptcy or lawsuit seizure?: "Under federal ERISA law, assets held in most employer-based retirement plans such as 401(k)s, pension plans, 403(b)s, and profit-sharing plans have generally been beyond the reach of creditors. " (The IRS, however, can seize pretty much anything they want.)
The linked article goes on to explain that IRAs don't enjoy quite the same protections, but they are also protected.
Think about this - if someone sued you, they could potentially seize your house, car, and savings to satisfy a judgement, but they couldn't touch your 401k. If someone did seize all of your assets and you were broke as a result, however, you could withdraw from your 401kto pay some bills.
There are limits to how much you can put into a retirement account each year. If you are young and dumb and can barely pay your student loans, it can be really tempting to skip the 401k for now. When you're eventually rich and famous, you won't be able to make up those missed contributions, and you'll probably hit the contribution ceiling when you're old enough and successful enough to really start planning for retirement. So make whatever contributions you can, and avoid withdrawing retirement funds. If you have to tap your retirement account, try to take a loan against it instead of a withdrawal. You'll not only bulk up your retirement accounts, but you'll build assets that can survive bankruptcy, foreclosure, or losing a lawsuit.
Note: This is not intended as legal, tax, or financial advice, but merely a topic of interest to spark further investigation. Please speak with your tax, legal, and/or financial advisor to determine the full details of the law and how/whether it can apply to your personal situation.
The linked article goes on to explain that IRAs don't enjoy quite the same protections, but they are also protected.
Think about this - if someone sued you, they could potentially seize your house, car, and savings to satisfy a judgement, but they couldn't touch your 401k. If someone did seize all of your assets and you were broke as a result, however, you could withdraw from your 401kto pay some bills.
There are limits to how much you can put into a retirement account each year. If you are young and dumb and can barely pay your student loans, it can be really tempting to skip the 401k for now. When you're eventually rich and famous, you won't be able to make up those missed contributions, and you'll probably hit the contribution ceiling when you're old enough and successful enough to really start planning for retirement. So make whatever contributions you can, and avoid withdrawing retirement funds. If you have to tap your retirement account, try to take a loan against it instead of a withdrawal. You'll not only bulk up your retirement accounts, but you'll build assets that can survive bankruptcy, foreclosure, or losing a lawsuit.
Note: This is not intended as legal, tax, or financial advice, but merely a topic of interest to spark further investigation. Please speak with your tax, legal, and/or financial advisor to determine the full details of the law and how/whether it can apply to your personal situation.
Tuesday, December 11, 2007
Calculating net worth realistically
Usually, when you calculate your net worth, you add up your stocks, house, and maybe newer cars, subtract mortgage and debt, and say "this is my net worth." That's great if you're trying to impress someone or qualify for a loan, but it doesn't really tell you what you could spend or invest with no other cash input. Why? Taxes and transaction costs.
Here's the traditional method:
Assets: $300k+100k+100k+20k+5k = $525k
Liabilities: $100k-5k-10k = $115k
Net worth: $410k
But there's more to it than that.
It looks like the house is worth $500,000 free and clear, right? Not quite. If you sold that house for $600k and paid off the $100k mortgage, you won't walk away from the closing with a check for half a million dollars. The real estate agent will expect a check for 6%, or $18k. Other little garbage fees traditionally paid by the seller (which varies in different locales) can add another 2% or more. And that doesn't count the other little costs of selling a house - buyer concessions, a fresh paint job, bringing in a handyman for a day of minor repairs, cleaning carpets, putting half your "stuff" in storage, etc.
The stock and retirement account look healthy, too, right? Well, if you needed to tap the retirement account in a crisis, you'll pay regular income taxes plus a penalty (if you're under 59 1/2 years old). Even if you're in a state with no income tax and have such low income that you don't pay Federal taxes, the most you can spend from that retirement account is $90k ($100k balance minus 10% early withdrawal penalty). A California taxpayer earning enough to afford the median house would pay 53% in taxes and penalties on that retirement withdrawal.
The traditional method of calculating net worth really gives you "gross worth". It's quick and easy, but it excludes too many of the expenses that whittle away at the net.
Here's a more realistic assessment:
Liabilities: -$24k-12k-12k-45k-100k-5k-10k = -$208k
Net net worth: $317k
If we're tracking our progress, superficial net worth calculations can mislead us. Which is better? 10 half million dollar houses with $100k equity each, or a million dollars in stocks? The superficial net worth calculation says they're both equal. A liquidated or net net worth calculation reminds us that we'll pay ~8% transaction costs to sell those houses, leaving them worth $60k free and clear (each) if we sold them. In fact, housing can be the least profitable investment because you pay sales costs on the entire value, not just your equity and appreciation.
Here's the traditional method:
- House: $600k
- Stocks: $100k
- 401k: $100k
- Newer car: $20k
- Cash: $5k
- Mortgage (no prepayment penalty): - $100k
- Credit card: - $5k
- Student loan: - $10k
Assets: $300k+100k+100k+20k+5k = $525k
Liabilities: $100k-5k-10k = $115k
Net worth: $410k
But there's more to it than that.
It looks like the house is worth $500,000 free and clear, right? Not quite. If you sold that house for $600k and paid off the $100k mortgage, you won't walk away from the closing with a check for half a million dollars. The real estate agent will expect a check for 6%, or $18k. Other little garbage fees traditionally paid by the seller (which varies in different locales) can add another 2% or more. And that doesn't count the other little costs of selling a house - buyer concessions, a fresh paint job, bringing in a handyman for a day of minor repairs, cleaning carpets, putting half your "stuff" in storage, etc.
The stock and retirement account look healthy, too, right? Well, if you needed to tap the retirement account in a crisis, you'll pay regular income taxes plus a penalty (if you're under 59 1/2 years old). Even if you're in a state with no income tax and have such low income that you don't pay Federal taxes, the most you can spend from that retirement account is $90k ($100k balance minus 10% early withdrawal penalty). A California taxpayer earning enough to afford the median house would pay 53% in taxes and penalties on that retirement withdrawal.
The traditional method of calculating net worth really gives you "gross worth". It's quick and easy, but it excludes too many of the expenses that whittle away at the net.
Here's a more realistic assessment:
- House: $300k
- Transaction costs to sell house (8%): - $24k
- Tax on capital gains on house* ($300k-$250k exclusion= $50k taxable, 15% Fed, 10% state): $12k
- Stocks: $100k (Basis: $50k)
- Tax on Capital gains (15% Fed, 10% state): - $12k
- 401k: $100k
- Taxes on 401k withdrawals (25% Fed, 10% state, + 10% penalty): - $45k
- Newer car: $20k
- Cash: $5k
- Mortgage: - $100k
- Credit card: - $5k
- Student loan: - $10k
---------------------
Liabilities: -$24k-12k-12k-45k-100k-5k-10k = -$208k
Net net worth: $317k
That's a difference of $93,000 in net worth. The first scenario overstates net assets by nearly 30%.
Tracking Net worth can help us track our progress towards financial independence. It can also help us figure out how much we can invest in a new business or a home. And it can give us peace of mind, knowing that we have sufficient assets to weather a crisis. Calculating it inaccurately, however, can lead to mistakes.If we're tracking our progress, superficial net worth calculations can mislead us. Which is better? 10 half million dollar houses with $100k equity each, or a million dollars in stocks? The superficial net worth calculation says they're both equal. A liquidated or net net worth calculation reminds us that we'll pay ~8% transaction costs to sell those houses, leaving them worth $60k free and clear (each) if we sold them. In fact, housing can be the least profitable investment because you pay sales costs on the entire value, not just your equity and appreciation.
If we fund our retirement account without building a liquid asset account, the traditional net worth calculation will say that we're doing great. We think to ourselves "well, worse comes to worst, I have a hundred thousand in retirement." The truth is, withdrawing $100k from a retirement account can push you into the top tax brackets and Alternative Minimum Tax range, so more than half of the withdrawal would be lost to taxes and penalties. Perhaps thinking of it as a $100k balance worth $47k after expenses will help us keep an equal emphasis on funding a more liquid savings program, too.
Recognizing the liquidated or spendable value of investments can help us plan for retirement. A big, buff 401k balance is a beautiful sight to behold. But in retirement, it will be taxed as regular income. On the other hand, we could liquidate up to about $60k in capital gains every year (with no other income) and pay $0 in federal income taxes. Since you have a cost basis in stocks, $60k in gains could represent hundreds of thousands of dollars in actual sale proceeds. What a nice way to supplement your retirement without a big tax hit or losing social security benefits. Personally, I prefer a blend of tax-deferred retirement accounts and taxable savings and investments. This gives greater flexibility, hedges against rising taxes, and allows you to withdraw some savings penalty-free in a pinch. (Tomorrow I'll touch on legal protections for tax-deferred retirement accounts - you definitely want a blend of both.)
* Capital gains exclusion for single taxpayer is $250k on their primary residence. For a married taxpayer, the entire gain in this scenario would be tax-free. Still, taxes are only about half as much as the transaction costs.
Tis the season for charity
One of the most joyous traditions I celebrate this time of year is shopping for charity. I fill a shopping cart with things my local shelter needs and haul a trunk full of goodies to them. It is the most meaningful trek of my holiday season. But it's tax inefficient, which means I have less to give; this year, I am reconsidering whether donating goods is the best way to support my local shelter.
If you are donating money this year, and you own appreciated stock, remember that you can donate stock instead of cash, and save on your taxes.
If you sold stock to free up cash for giving, you would pay taxes on any capital gains. But if you donate the stock directly, you don't have to pay tax on the capital gains - and you get to write off the full value of the stock.
Consider: You want to donate $1,000 to your local foodbank. You sell $1,000 in stocks to free up the cash. In April, you'll owe 15-20% of your gains to the IRS, plus whatever your state charges. In California, that's another 10%. For me, I'd owe 30%. Then you write off the donation, which would save you your regular tax rate (35% Fed, 10% state).
Donation: $1,000 cash
Tax on sale of stock: $300
Tax savings on donation: $450
Net cost: $850
Donation: $1,000 in stock, all capital gains
No Tax on sale of stock
Tax savings on donation: $450
Net cost: $550
Now, what if you like the stocks you own? Or, what if you were not going to liquidate stock to donate? Donate stock anyway - and then replace it with the same number of shares. This will allow you to do something you were going to do anyway (donate to charity), but to reset the cost basis on your stock holdings.
To get the most bang for the buck, donate the stock with the highest taxable gains.
Note: This is not financial advice. Please speak with your tax advisor to obtain details of the tax rule and determine how it applies to your situation.
If you are donating money this year, and you own appreciated stock, remember that you can donate stock instead of cash, and save on your taxes.
If you sold stock to free up cash for giving, you would pay taxes on any capital gains. But if you donate the stock directly, you don't have to pay tax on the capital gains - and you get to write off the full value of the stock.
Consider: You want to donate $1,000 to your local foodbank. You sell $1,000 in stocks to free up the cash. In April, you'll owe 15-20% of your gains to the IRS, plus whatever your state charges. In California, that's another 10%. For me, I'd owe 30%. Then you write off the donation, which would save you your regular tax rate (35% Fed, 10% state).
Donation: $1,000 cash
Tax on sale of stock: $300
Tax savings on donation: $450
Net cost: $850
Donation: $1,000 in stock, all capital gains
No Tax on sale of stock
Tax savings on donation: $450
Net cost: $550
Now, what if you like the stocks you own? Or, what if you were not going to liquidate stock to donate? Donate stock anyway - and then replace it with the same number of shares. This will allow you to do something you were going to do anyway (donate to charity), but to reset the cost basis on your stock holdings.
To get the most bang for the buck, donate the stock with the highest taxable gains.
Note: This is not financial advice. Please speak with your tax advisor to obtain details of the tax rule and determine how it applies to your situation.
Monday, December 10, 2007
Herb Greenberg » Blog Archive » Straight Talk on the Mortgage Mess from an Insider
If you're reading housing/financial blogs, you've probably already seen this one. If not, it's well worth a read. I found two of the reader comments especially interesting:
Herb Greenberg » Blog Archive » Straight Talk on the Mortgage Mess from an Insider: Josh says "As a debtor on a 30 year fixed rate mortgage on a home that my income can support (25% income to payment), I’d like to thank all the mortgage industry participants for the 20%-40% haircut on my home’s value that I will probably realize over the next 2-3 years. The toxic waste that these corporate schills marketed to an uninformed (and at times intentionally misled public) should have been criminalized from the beginning. As the author admitted (having shorted mortgage industry stocks), at least a few people on the lending side understood the consequences of marketing this Ponzi scheme. It is especially thrilling that they are making money not once but twice on the financial destruction of the middle class of this country.
This is only one aspect of the Corporate Socialism running rampant in this country where profits are privatized and losses are socialized, but this one directly effects me (even though I have made relatively sound financial decisions). Thanks to the author for blowing the whistle after the train of sweeping middle class net worth destruction has left the station. As a voter, I would support any politician (regardless of party affiliation) that would pass crushing regulation on these corporate criminals. It is hard to fathom that the author has the audacity to crow about profiting twice in this fiasco and be seen as the readers of this blog (at least based on the comments) as glimmer of light in the darkness."
And Jim David said: "I own a small mortgage company in Wyoming and agree with you 100%. Fortunately, my company does not expect any losses because of our tight lending standards but it has been frustrating to compete with all the teaser rate programs etc. over the last few years, especially Countrywide’s aggressive marketing. Question: I do not believe Mozillo has properly written down his loan portfolio and the bail out plans won’t help in the end. What do you think will happen to Countrywide? What are the chances of bankruptcy? Thanks JIM"
Jim says he did the right thing, but when everyone else is doing the popular thing, it's hard to make an honest buck. David says the guys who did wrong should be punished. Anytime the public and the powers-that-be let the bad guys get away with being bad guys, the good guys have to go along with the bad guys or yield the profits to the bad guys.
A side note on Josh's comment - his house value is not dropping 20-40% from where it should have been, it is dropping that much from where it should not have been, but was. The bubble that is crushing home values today blew them to the stratosphere in recent years, far beyond where they should have been. Dropping home values are the least of our worries.
Herb Greenberg » Blog Archive » Straight Talk on the Mortgage Mess from an Insider: Josh says "As a debtor on a 30 year fixed rate mortgage on a home that my income can support (25% income to payment), I’d like to thank all the mortgage industry participants for the 20%-40% haircut on my home’s value that I will probably realize over the next 2-3 years. The toxic waste that these corporate schills marketed to an uninformed (and at times intentionally misled public) should have been criminalized from the beginning. As the author admitted (having shorted mortgage industry stocks), at least a few people on the lending side understood the consequences of marketing this Ponzi scheme. It is especially thrilling that they are making money not once but twice on the financial destruction of the middle class of this country.
This is only one aspect of the Corporate Socialism running rampant in this country where profits are privatized and losses are socialized, but this one directly effects me (even though I have made relatively sound financial decisions). Thanks to the author for blowing the whistle after the train of sweeping middle class net worth destruction has left the station. As a voter, I would support any politician (regardless of party affiliation) that would pass crushing regulation on these corporate criminals. It is hard to fathom that the author has the audacity to crow about profiting twice in this fiasco and be seen as the readers of this blog (at least based on the comments) as glimmer of light in the darkness."
And Jim David said: "I own a small mortgage company in Wyoming and agree with you 100%. Fortunately, my company does not expect any losses because of our tight lending standards but it has been frustrating to compete with all the teaser rate programs etc. over the last few years, especially Countrywide’s aggressive marketing. Question: I do not believe Mozillo has properly written down his loan portfolio and the bail out plans won’t help in the end. What do you think will happen to Countrywide? What are the chances of bankruptcy? Thanks JIM"
Jim says he did the right thing, but when everyone else is doing the popular thing, it's hard to make an honest buck. David says the guys who did wrong should be punished. Anytime the public and the powers-that-be let the bad guys get away with being bad guys, the good guys have to go along with the bad guys or yield the profits to the bad guys.
A side note on Josh's comment - his house value is not dropping 20-40% from where it should have been, it is dropping that much from where it should not have been, but was. The bubble that is crushing home values today blew them to the stratosphere in recent years, far beyond where they should have been. Dropping home values are the least of our worries.
Saturday, December 08, 2007
Subprime Fiasco Fed by Mortgage Fraud
Okay, so I saw the headline and thought "wow, are these guys behind on the news," but there is some new info in the article - the fraud we knew about, but some hard numbers and studies confirming it.
Subprime Fiasco Fed by Mortgage Fraud: "Fraud committed both by shady loan brokers and by devious borrowers, combined with poor underwriting, may account for up to 25 percent of subprime mortgage defaults made last year, reports Fitch Ratings, which analyzed a sampling of defaults."
Is this why we need a bailout? Because the banks have so many loans that cannot possibly be saved on the books?
Subprime Fiasco Fed by Mortgage Fraud: "Fraud committed both by shady loan brokers and by devious borrowers, combined with poor underwriting, may account for up to 25 percent of subprime mortgage defaults made last year, reports Fitch Ratings, which analyzed a sampling of defaults."
Is this why we need a bailout? Because the banks have so many loans that cannot possibly be saved on the books?
Tuesday, December 04, 2007
Spendable dollars, taxes, and borrowing
In a roundup of candidate's positions on fixing Social Security, CNNMoney via Yahoo reports "Huckabee: In conjunction with his desire to move toward a consumption tax system in which you would pay taxes on your purchases but not on your income or investments, Huckabee would favor eliminating Social Security taxes. And it's been reported that he supports the idea of workers using individual investment accounts, although no details are offered about how they would be funded."
This is an interesting thought, and it raises the issue of how spendable dollars affect borrowing.
In California, for instance, taxpayers can pay as much as 62%*, ** of income in income taxes alone. That means that one dollar of income equals 28 cents of spendable money. Put another way, $1 of property tax, sales tax, vehicle registration tax or the like, or $1 of general spending will require a taxpayer to earn almost $4 in income.
(* 74% if one of the universal healthcare proposals pass, ** 11% state + 35% federal + 16% social security/medicare/self-employment tax=62%)
A lower-wage taxpayer might pay 5% state, 25% federal, and 8% Social Security income taxes, for a total of 38% off the top. That would leave the taxpayer with 62 spendable cents per dollar earned, requiring roughly $1.60 in income per dollar of rent, sales tax, or whatever the taxpayer wants or needs to pay.
To update the old saying, a penny saved is anywhere from 1 1/2 cents to 4 cents earned.
Now, if a taxpayer borrows $1 from a credit card, he gets one full spendable dollar. He'll have to earn at least $1.60 to pay that dollar back, more if he owes interest charges. This is a big part of the reason that people get into trouble with credit cards. They are easier to spend than wage income, because they go so much further, but they are much, much harder to repay than we realize, because earned income doesn't go very far at all. And when a borrower erases debts under bankruptcy, the earned equivalent value is often more than twice the actual dollar value.
Taxes do have an impact on behavior. One of the very large and very ignored factors contributing to the real estate runup was the change in tax law regarding capital gains on housing. If a house could earn you $40k in a year, that is more money than most people could earn in a full year of full-time employment, but it also provided $26k spendable dollars after 10% state income tax and 15% federal long-term capital gains tax (after holding the property for a year). A middle-class employee in California would have paid 10% state, 35% federal, and 8% Social Security tax on equivalent wage income, or 28% more taxes than the house flipper owed. $40k in housing appreciation would replace the equivalent net spendable dollars as $55k in wage income. Two houses at $80k profits would replace $110k in wage income - suddenly the risks look less, well, risky. If the flipper holds the house for two years to qualify for 0% Federal taxes, he reduces his tax burden by 38% compared to earning wages - and note that it rarely takes 52 weeks of 40 hour days to flip a house. I haven't sold a house since the tax law change, but I am under the impression that the appreciation is excluded from income - so it would not affect the tax rate on other earnings. You can't do that with a second job, investment income, or any other income stream available to the average taxpayer.
The net result of all that house-flipping is just now hitting front-page news, and we all know it's ugly. Many of us have been reading the financial news and realize that Americans are spending more than they earn - a negative savings rate. The result of that particular tidbit is increasing American debt (both personal and government debt) and devestation to the value of the dollar (from $1.35 Euros in 2002, to .67 Euros today, almost half its value of 5 years ago). The same way that capital gains exclusions from real estate wrought havoc on the housing market, high income tax rates incentivize increased borrowing.
So if Huckabee's plan passed, the tax burden would hit at the point of consumption, rather than when the money is earned. This may sound strange, because it is so far outside our current experience. But ignore, for a moment, whether his proposal is a good idea or not. Just think about what behavior it rewards and what behavior it penalizes - the polar opposite of today's situation.
Under a consumption tax, earning, investing, and saving would be tax neutral. These are all activities that contribute to the long-term well-being of our nation. Spending would be penalized - and borrowing would be penalized as a result. While consumer spending has fueled recent economic growth, we are begining to see that it was a house of cards that could destroy our economy. Consumer spending has resulted in an enormous trade imbalance with China and other foreign nations, enormous mountains of trash from buying poorly-made products as well as from impulse purchases that ended up being unwanted. Our savings rate has gone from positive to negative, leaving the majority of individual consumers - as well as the government - without adequate reserves to weather a crisis. Jobs have been created, but those jobs are now being terminated as the spending machine slows.
Spending without consideration creates unstable growth. When every dollar is dear, consumers spend more thoughtfully, more slowly. We have a crime situation where middle-class and poor teenagers steal to keep up with their peers - many of whom are enjoying the fruits of their parents' slow descent into bankruptcy. Savers have been penalized over the past 5 years by an erosion of the value of their savings ($1 saved 5 years ago would buy $1.35 Euros worth of gasoline, but today that dollar has earned 28 cents in interest, for a total of $1.28 which will buy .87 Euros worth of gasoline). Workers are being penalized as their jobs are outsourced and terminated. Companies are being penalized for investing in additional capacity, because tightening in the credit markets is bringing consumption to a crawl. Surging bankruptcies can't be far behind, as surging foreclosures are already swooning the economy.
Slow, thoughtful spending creates sustainable growth. Savings provides a cushion for continued consumption in an economic downturn, fueling a recovery. Buying as much house, or car, or stuff, as one can afford means less displacement in individual lives and less displacement in the overall economy. Living within one's means is the opposite of having a spending orgy for 5 years and then cutting back drastically just to pay the mortgage.
Since taxes incentivize behavior, high income taxes contribute to the problem. They will not contribute to the solution.
This is an interesting thought, and it raises the issue of how spendable dollars affect borrowing.
In California, for instance, taxpayers can pay as much as 62%*, ** of income in income taxes alone. That means that one dollar of income equals 28 cents of spendable money. Put another way, $1 of property tax, sales tax, vehicle registration tax or the like, or $1 of general spending will require a taxpayer to earn almost $4 in income.
(* 74% if one of the universal healthcare proposals pass, ** 11% state + 35% federal + 16% social security/medicare/self-employment tax=62%)
A lower-wage taxpayer might pay 5% state, 25% federal, and 8% Social Security income taxes, for a total of 38% off the top. That would leave the taxpayer with 62 spendable cents per dollar earned, requiring roughly $1.60 in income per dollar of rent, sales tax, or whatever the taxpayer wants or needs to pay.
To update the old saying, a penny saved is anywhere from 1 1/2 cents to 4 cents earned.
Now, if a taxpayer borrows $1 from a credit card, he gets one full spendable dollar. He'll have to earn at least $1.60 to pay that dollar back, more if he owes interest charges. This is a big part of the reason that people get into trouble with credit cards. They are easier to spend than wage income, because they go so much further, but they are much, much harder to repay than we realize, because earned income doesn't go very far at all. And when a borrower erases debts under bankruptcy, the earned equivalent value is often more than twice the actual dollar value.
Taxes do have an impact on behavior. One of the very large and very ignored factors contributing to the real estate runup was the change in tax law regarding capital gains on housing. If a house could earn you $40k in a year, that is more money than most people could earn in a full year of full-time employment, but it also provided $26k spendable dollars after 10% state income tax and 15% federal long-term capital gains tax (after holding the property for a year). A middle-class employee in California would have paid 10% state, 35% federal, and 8% Social Security tax on equivalent wage income, or 28% more taxes than the house flipper owed. $40k in housing appreciation would replace the equivalent net spendable dollars as $55k in wage income. Two houses at $80k profits would replace $110k in wage income - suddenly the risks look less, well, risky. If the flipper holds the house for two years to qualify for 0% Federal taxes, he reduces his tax burden by 38% compared to earning wages - and note that it rarely takes 52 weeks of 40 hour days to flip a house. I haven't sold a house since the tax law change, but I am under the impression that the appreciation is excluded from income - so it would not affect the tax rate on other earnings. You can't do that with a second job, investment income, or any other income stream available to the average taxpayer.
The net result of all that house-flipping is just now hitting front-page news, and we all know it's ugly. Many of us have been reading the financial news and realize that Americans are spending more than they earn - a negative savings rate. The result of that particular tidbit is increasing American debt (both personal and government debt) and devestation to the value of the dollar (from $1.35 Euros in 2002, to .67 Euros today, almost half its value of 5 years ago). The same way that capital gains exclusions from real estate wrought havoc on the housing market, high income tax rates incentivize increased borrowing.
So if Huckabee's plan passed, the tax burden would hit at the point of consumption, rather than when the money is earned. This may sound strange, because it is so far outside our current experience. But ignore, for a moment, whether his proposal is a good idea or not. Just think about what behavior it rewards and what behavior it penalizes - the polar opposite of today's situation.
Under a consumption tax, earning, investing, and saving would be tax neutral. These are all activities that contribute to the long-term well-being of our nation. Spending would be penalized - and borrowing would be penalized as a result. While consumer spending has fueled recent economic growth, we are begining to see that it was a house of cards that could destroy our economy. Consumer spending has resulted in an enormous trade imbalance with China and other foreign nations, enormous mountains of trash from buying poorly-made products as well as from impulse purchases that ended up being unwanted. Our savings rate has gone from positive to negative, leaving the majority of individual consumers - as well as the government - without adequate reserves to weather a crisis. Jobs have been created, but those jobs are now being terminated as the spending machine slows.
Spending without consideration creates unstable growth. When every dollar is dear, consumers spend more thoughtfully, more slowly. We have a crime situation where middle-class and poor teenagers steal to keep up with their peers - many of whom are enjoying the fruits of their parents' slow descent into bankruptcy. Savers have been penalized over the past 5 years by an erosion of the value of their savings ($1 saved 5 years ago would buy $1.35 Euros worth of gasoline, but today that dollar has earned 28 cents in interest, for a total of $1.28 which will buy .87 Euros worth of gasoline). Workers are being penalized as their jobs are outsourced and terminated. Companies are being penalized for investing in additional capacity, because tightening in the credit markets is bringing consumption to a crawl. Surging bankruptcies can't be far behind, as surging foreclosures are already swooning the economy.
Slow, thoughtful spending creates sustainable growth. Savings provides a cushion for continued consumption in an economic downturn, fueling a recovery. Buying as much house, or car, or stuff, as one can afford means less displacement in individual lives and less displacement in the overall economy. Living within one's means is the opposite of having a spending orgy for 5 years and then cutting back drastically just to pay the mortgage.
Since taxes incentivize behavior, high income taxes contribute to the problem. They will not contribute to the solution.
Wednesday, November 28, 2007
Proposed: Random Act of Kindness Day
Driver's quick thinking prevents head-on crash on GG Bridge: "Beatty drove up along side the car, saw the woman slumped over the wheel and acted quickly. He maneuvered his Ford F350 pickup in front of her vehicle to block it from moving into the oncoming cars. 'I let her hit me,' Beatty said. Then - with the Jeep still moving - Beatty used his truck to guide it across two lanes of traffic to the right hand curb as other cars passed, he said. "
Did you know there is a Random Act of Kindness Organization? What a nice reminder of the real meaning of the holiday season.
Did you know there is a Random Act of Kindness Organization? What a nice reminder of the real meaning of the holiday season.
The Oreo Movie
Why does our government need to feed the world's hungry? If feeding the world's hungry is important to Americans, why can't they donate voluntarily?
Why does the government need to pay for middle class children's health care? Again, why can't that be done through voluntary charity?
Why do liberals feel so strongly that they must forcibly take money from taxpayers to do good deed? Why are liberals more willing to lobby the government to fund programs than to go out and raise funds for charitable foundations that use money more efficiently? Why are they afraid of the oversight and contributor involvement of charitable foundations?
Why does anyone think the $500 hammer guys are the best ones to manage charity?
Below is a button for a liberal video, and I don't particularly agree with the impulse to spend taxpayer dollars on, for instance, feeding the world's hungry. I would rather see charity dollars do that good deed. One of the problems I have with all this "but we're the richest nation in the world, we can afford everything" mentality is that these programs get passed in bumper years, and then we still have to pay them in lean years.
However, that said, the video is well done. It is voiced by Ben of Ben & Jerry's, and he uses Oreo cookies to explain the Federal budget. It is a perfect simplification of the budget items he needs to make his point, and it is accessible even for people who don't understand all that figurin'. No real math here - just cookies to visually explain the budget. I don't endorse the recommendations, but I do endorse this as "anything that gets people thinking and talking about the government's budget is good."
Why does the government need to pay for middle class children's health care? Again, why can't that be done through voluntary charity?
Why do liberals feel so strongly that they must forcibly take money from taxpayers to do good deed? Why are liberals more willing to lobby the government to fund programs than to go out and raise funds for charitable foundations that use money more efficiently? Why are they afraid of the oversight and contributor involvement of charitable foundations?
Why does anyone think the $500 hammer guys are the best ones to manage charity?
Below is a button for a liberal video, and I don't particularly agree with the impulse to spend taxpayer dollars on, for instance, feeding the world's hungry. I would rather see charity dollars do that good deed. One of the problems I have with all this "but we're the richest nation in the world, we can afford everything" mentality is that these programs get passed in bumper years, and then we still have to pay them in lean years.
However, that said, the video is well done. It is voiced by Ben of Ben & Jerry's, and he uses Oreo cookies to explain the Federal budget. It is a perfect simplification of the budget items he needs to make his point, and it is accessible even for people who don't understand all that figurin'. No real math here - just cookies to visually explain the budget. I don't endorse the recommendations, but I do endorse this as "anything that gets people thinking and talking about the government's budget is good."
Monday, November 19, 2007
Brazil, the New Oil Superpower
Brazil recently announced the discovery of between 5 billion and 8 billion barrels of oil in a deep offshore oilfiled. Brazil, the New Oil Superpower: "Contrary to the price-hawk position of Venezuelan President Chávez, who recently said oil-producing countries should try to 'stabilize' oil prices near $100 a barrel, Lula said he hopes Brazil's new oil will someday help to bring global oil prices down from their current levels, allowing poor countries to buy more of it. 'Brazilians are right to be euphoric,' says Peter Hakim, president of Washington-based think tank Inter-American Dialogue. Because Brazil has discovered its new oil after the country's economy has been largely diversified and industrialized, 'Brazil can avoid the oil curse, the dependency on one resource that dominates countries like Nigeria and Venezuela.' "
According to the CIA World Factbook, as of 2004 the United States was using 20.73 million barrels a day, of which 13.15 million barrels/day are imported. If the United States 1) held usage/imports steady at 13.15 million barrels/day; 2) bought all of the oil produced from the Tupi field (and let's assume it's 8 billion barrels); and 3) only bought from that field until the field ran dry; Brazil's huge new find would supply enough oil to keep America running for 608 days, or 1.66 years. Now, granted, the U.S. will continue buying oil from the Middle East and all other viable suppliers, and Brazil has other oilfields and will continue looking for more. On the other hand, China and India are growing consumers of oil.
If we crunch the numbers a little differently - if the find is only 5 billion barrels, it would supply the United States total daily consumption (as of 2004) for just 241 days or a bit shy of 8 months. A new oilfield discovery of more than 1 billion barrels is so large that the industry calls it an "elephant".
"Geologist Roberto Fainstein, whose seismic imaging work at oil-field services company Schlumberger helped Brazil to discover its massive new reserves, says the subsalt find will "lead to a rush in this kind of drilling worldwide." Brazil's discovery may quicken subsalt drilling in the Gulf of Mexico by oil majors and Mexico's state-run oil giant Pemex. A salt layer offshore West African countries including Angola, Gabon, and Equatorial Guinea is "virtually identical to Brazil's," Fainstein says, "so companies will race to begin drilling it."
Subsea salt layers are present in all three of the world's biggest offshore oil areas: the Gulf of Mexico, West Africa, and Brazil. So far, subsalt oil production has been executed only in the Gulf of Mexico, near the Texas and Louisiana coast where companies including BP, Shell, ExxonMobil, Chevron, and Anadarko Petroleum (APC) have all made significant discoveries."
More oil will be discovered. New technologies will be developed to provide power. No matter how much we find, though, it is a finite resource. Let's hope we figure it all out while there's still plenty of petrol left for producing silicon chips, creating pacemakers, and doing all the other things that can only be done with petroleum today.
According to the CIA World Factbook, as of 2004 the United States was using 20.73 million barrels a day, of which 13.15 million barrels/day are imported. If the United States 1) held usage/imports steady at 13.15 million barrels/day; 2) bought all of the oil produced from the Tupi field (and let's assume it's 8 billion barrels); and 3) only bought from that field until the field ran dry; Brazil's huge new find would supply enough oil to keep America running for 608 days, or 1.66 years. Now, granted, the U.S. will continue buying oil from the Middle East and all other viable suppliers, and Brazil has other oilfields and will continue looking for more. On the other hand, China and India are growing consumers of oil.
If we crunch the numbers a little differently - if the find is only 5 billion barrels, it would supply the United States total daily consumption (as of 2004) for just 241 days or a bit shy of 8 months. A new oilfield discovery of more than 1 billion barrels is so large that the industry calls it an "elephant".
"Geologist Roberto Fainstein, whose seismic imaging work at oil-field services company Schlumberger helped Brazil to discover its massive new reserves, says the subsalt find will "lead to a rush in this kind of drilling worldwide." Brazil's discovery may quicken subsalt drilling in the Gulf of Mexico by oil majors and Mexico's state-run oil giant Pemex. A salt layer offshore West African countries including Angola, Gabon, and Equatorial Guinea is "virtually identical to Brazil's," Fainstein says, "so companies will race to begin drilling it."
Subsea salt layers are present in all three of the world's biggest offshore oil areas: the Gulf of Mexico, West Africa, and Brazil. So far, subsalt oil production has been executed only in the Gulf of Mexico, near the Texas and Louisiana coast where companies including BP, Shell, ExxonMobil, Chevron, and Anadarko Petroleum (APC) have all made significant discoveries."
More oil will be discovered. New technologies will be developed to provide power. No matter how much we find, though, it is a finite resource. Let's hope we figure it all out while there's still plenty of petrol left for producing silicon chips, creating pacemakers, and doing all the other things that can only be done with petroleum today.
Interesting twist on illegal immigration
Leave it to Texas to put a stop to executive overreaching. - By Dahlia Lithwick - Slate Magazine: "Jose Ernesto Medellin is a living argument for the death penalty. In 1993, as part of a gang initiation, he and some friends sodomized and gang-raped two teenage girls in Houston, strangling them with their shoelaces. One victim's Goofy watch was stolen as a prize. Medellin confessed to the crime and was sentenced to death by a jury, a sentence affirmed in the appeals courts. Only later did Medellin learn that, because he is a Mexican citizen, the Vienna Convention of 1963 entitled him to consult with Mexican consular authorities—who might have helped him at his trial. "
Because the guy didn't bother to become a U.S. Citizen, he has a right to help from the Mexican government. Because the police and prosecution didn't tell him he had a right to help from the Mexican government, his sentence can be overturned and the victims' families can be put through hell again.
Yep, illegal immigration is a victimless crime.
A foreigner's right to help from their consulate is kinda predicated on the notion that a foreigner would be visiting a country, not living there. As a visitor, a foreigner might not fully understand the laws of the nation he or she is visiting. He or she might chew gum in a country where that's illegal, or might expect due process in a country where lawyers can be jailed for appealing for a stronger sentence against rapists. I don't think we have any business applying visitor logic to someone who lives here. It's unfair to American criminals, it's unfair to American victims, it's unfair to our taxpayers, it's just plain unfair. Visitors - true visitors who come for two weeks, hire a lorry, rent a flat, complain about the price of petrol, visit a Mosque and go on home - aren't usually a crime problem. Illegal occupiers (undocumented aliens to those of you who have been reading too much of the mainstream media) are a crime problem.
In California, the State can tax my income from out of state if I spend more than a couple months in state; I am presumed to be a citizen for legal (and/or tax) purposes, even if I am technically, personally, physically, and spiritually a citizen of another state. Why are American citizens held to higher standards than illegal immigrants? Why do illegal immigrants get the dual benefit of America's free public defender plus rights to use Mexico's consular help? And why is it our government's responsibility to notify the guy that he has that right? Geneva Convention rights to contact one's consulate are predicated upon the idea that person is in-country temporarily - there has to be some standard for a presumption of having given up that right, like, oh, I don't know, availing oneself of America's public education, welfare, medical care, etc.
Oh, but an illegal immigrant is only a resident of this country until it becomes more convenient to be a citizen of another country, like when he/she wants to appeal a conviction for a brutal and incredibly senseless rape/murder that was committed just to prove that he's a good little gang member. Just doing the jobs that Americans won't do, right?
Because the guy didn't bother to become a U.S. Citizen, he has a right to help from the Mexican government. Because the police and prosecution didn't tell him he had a right to help from the Mexican government, his sentence can be overturned and the victims' families can be put through hell again.
Yep, illegal immigration is a victimless crime.
A foreigner's right to help from their consulate is kinda predicated on the notion that a foreigner would be visiting a country, not living there. As a visitor, a foreigner might not fully understand the laws of the nation he or she is visiting. He or she might chew gum in a country where that's illegal, or might expect due process in a country where lawyers can be jailed for appealing for a stronger sentence against rapists. I don't think we have any business applying visitor logic to someone who lives here. It's unfair to American criminals, it's unfair to American victims, it's unfair to our taxpayers, it's just plain unfair. Visitors - true visitors who come for two weeks, hire a lorry, rent a flat, complain about the price of petrol, visit a Mosque and go on home - aren't usually a crime problem. Illegal occupiers (undocumented aliens to those of you who have been reading too much of the mainstream media) are a crime problem.
In California, the State can tax my income from out of state if I spend more than a couple months in state; I am presumed to be a citizen for legal (and/or tax) purposes, even if I am technically, personally, physically, and spiritually a citizen of another state. Why are American citizens held to higher standards than illegal immigrants? Why do illegal immigrants get the dual benefit of America's free public defender plus rights to use Mexico's consular help? And why is it our government's responsibility to notify the guy that he has that right? Geneva Convention rights to contact one's consulate are predicated upon the idea that person is in-country temporarily - there has to be some standard for a presumption of having given up that right, like, oh, I don't know, availing oneself of America's public education, welfare, medical care, etc.
Oh, but an illegal immigrant is only a resident of this country until it becomes more convenient to be a citizen of another country, like when he/she wants to appeal a conviction for a brutal and incredibly senseless rape/murder that was committed just to prove that he's a good little gang member. Just doing the jobs that Americans won't do, right?
Federalist No 46: The right to keep and bear Arms
The Avalon Project : Federalist No 46: "Besides the advantage of being armed, which the Americans possess over the people of almost every other nation, the existence of subordinate governments, to which the people are attached, and by which the militia officers are appointed, forms a barrier against the enterprises of ambition, more insurmountable than any which a simple government of any form can admit of. Notwithstanding the military establishments in the several kingdoms of Europe, which are carried as far as the public resources will bear, the governments are afraid to trust the people with arms." James Madison
Ah, grade school history, so long ago.
Federalist Papers: "The Federalist Papers were written and published during the years 1787 and 1788 in several New York State newspapers to persuade New York voters to ratify the proposed constitution. In total, the Federalist Papers consist of 85 essays outlining how this new government would operate and why this type of government was the best choice for the United States of America."
James Madison, if you recall, was the 4th President of the United States, and called the "Father of the Constitution."
Ah, grade school history, so long ago.
Federalist Papers: "The Federalist Papers were written and published during the years 1787 and 1788 in several New York State newspapers to persuade New York voters to ratify the proposed constitution. In total, the Federalist Papers consist of 85 essays outlining how this new government would operate and why this type of government was the best choice for the United States of America."
James Madison, if you recall, was the 4th President of the United States, and called the "Father of the Constitution."
Starting Tuesday, plastic bags illegal at big S.F. grocery stores
Starting Tuesday, plastic bags illegal at big San Francisco grocery stores: "Starting Tuesday, large grocery stores in the city can no longer use the traditional plastic bags that are a staple of the supermarket checkout line, as a city ordinance passed earlier this year to ban the bags takes effect."
Am I the only person thinking that the socialists should move to existing socialist countries, instead of trying to destroy democracy? I'm all in favor of using cloth bags (and I request paper bags at grocery stores that offer them - if I don't bring my own bags), but why is the government making that choice for consumers?
Our local "upscale" grocer offers a 5 cent discount per reused bag, whether cloth or plastic. The amazing thing about it is that they are really good about actually providing the discount, even in self-checkout, even if the customer doesn't ask for the discount. And I see customers bringing in bags to reuse. Heck, I buy dog treats at the pet store's bulk snack bar, and I reuse the same bag over and over again. Our bathroom trash can is simply a hanger for reusing grocery bags. I prefer paper bags for bagging our paper, plastic, and glass recycling. Our curbside pickup trash can is almost never full - if there is no food waste (that could become stinky), we don't bother putting the bin out, because it would waste the truck's gas stopping to pickup a 3/4 empty bin. My point being: I am not anti-environment, and I do more for the environment than a lot of these enviro-socialists do. But I am a democrat.
Folks, if you don't like what a store is doing, tell them so - talk to a manager, write to corporate headquarters, stop giving them your money. Good citizenship is more than election day; it's the accumulated results of all of your actions, every day, from how you allocate your charitable giving to how you shop. If you don't want to see plastic bags at checkout, shop someplace that doesn't use them.
Note to the San Francisco supervisors: If your problem with grocery bags is litter, then tax the bags at an appropriate level to cover the costs of cleaning them up, and enforce litter laws. If your problem is simply that you don't like your constituents' retail choices, then use your position to encourage different choices or just bugger off; "the ultimate authority, wherever the derivative may be found, resides in the people alone" (Federalist Paper number 46, Madison).
Am I the only person thinking that the socialists should move to existing socialist countries, instead of trying to destroy democracy? I'm all in favor of using cloth bags (and I request paper bags at grocery stores that offer them - if I don't bring my own bags), but why is the government making that choice for consumers?
Our local "upscale" grocer offers a 5 cent discount per reused bag, whether cloth or plastic. The amazing thing about it is that they are really good about actually providing the discount, even in self-checkout, even if the customer doesn't ask for the discount. And I see customers bringing in bags to reuse. Heck, I buy dog treats at the pet store's bulk snack bar, and I reuse the same bag over and over again. Our bathroom trash can is simply a hanger for reusing grocery bags. I prefer paper bags for bagging our paper, plastic, and glass recycling. Our curbside pickup trash can is almost never full - if there is no food waste (that could become stinky), we don't bother putting the bin out, because it would waste the truck's gas stopping to pickup a 3/4 empty bin. My point being: I am not anti-environment, and I do more for the environment than a lot of these enviro-socialists do. But I am a democrat.
dem·o·crat /ˈdɛməˌkræt/ –noun
1. an advocate of democracy.
Folks, if you don't like what a store is doing, tell them so - talk to a manager, write to corporate headquarters, stop giving them your money. Good citizenship is more than election day; it's the accumulated results of all of your actions, every day, from how you allocate your charitable giving to how you shop. If you don't want to see plastic bags at checkout, shop someplace that doesn't use them.
More from the SF Gate article:
"While the absence of plastic bags may be a radical change in many parts of the city, the Rainbow Grocery Cooperative on Folsom Street has not offered customers plastic bags since it opened in 1975, said Dennis Wagner, one of the store's seven directors.
The store encourages customers to bring their own bags, as well as using their own containers for produce or bulk foods."
Note to the San Francisco supervisors: If your problem with grocery bags is litter, then tax the bags at an appropriate level to cover the costs of cleaning them up, and enforce litter laws. If your problem is simply that you don't like your constituents' retail choices, then use your position to encourage different choices or just bugger off; "the ultimate authority, wherever the derivative may be found, resides in the people alone" (Federalist Paper number 46, Madison).
Thursday, November 01, 2007
Theodore Roosevelt on Immigration, Reform
Why we should study Theodore Roosevelt - TIME: "TR was President during a period of enormous stress over immigration and the meaning of being an American. He was unequivocally for control of immigration and for encouraging immigrants who wanted to be American while opposing those who would radically change America. As TR put it, 'In the first place we should insist that if the immigrant who comes here in good faith becomes an American and assimilates himself to us, he shall be treated on an exact equality with everyone else, for it is an outrage to discriminate against any such man because of creed, or birthplace, or origin. But this is predicated upon the man's becoming in very fact an American, and nothing but an American. . . . There can be no divided allegiance here.' "
The article is a quick, easy read and interesting in reference to both reform and middle ground between conservative and liberal approaches.
With my recent posts about problems with illegal immigration, it might seem as though I oppose immigration or immigrants. Let me set the record straight. We are all immigrants or descendants of immigrants. My great-great grandmother was a native American, and even she was a descendant of immigrants who crossed the great landbridge from Asia a long, long time ago. I love immigrants.
I believe that illegal immigrants are migrants, though. To my mind, an immigrant is someone who wishes to be American, and wouldn't jeopardize that lofty goal by breaking the immigration laws of the nation he wishes to make his own. A migrant plans to move on; an immigrant plans to stay. A migrant keeps his own flag, language, and citizenship; an immigrant takes on the flag, language, and citizenship of his new home country with great pride.
My grandfather immigrated to this country early in the last century. He was almost 80 when I was born, and by then, he spoke English as a native, without a trace of accent. He loved this country. When my father, aunts, and uncles were growing up, they visited family in the old country, and there was a language barrier. The ancestors spoke French; the new generation spoke only English. It was an honor for my grandparents' children to serve in the Armed Forces; it was about as American as you could get, risking your own life in support of the nation. My grandfather came here without an education, but with a formidable work ethic and a drive to learn American ways. He labored - he helped build the Taft School in Connecticut, hauling and lifting boulders that you wouldn't think could be hefted with a team of men. They say he was so strong, he could balance a wheelbarrow on his chin. He worked his way up, gladly learning new technologies as they developed (and many developed in his day - he drove horse carts and then motorized wagons called trucks; by the time he died, we had put a man on the moon and begun putting computers in every home). He was the old school immigrant, without advanced degrees or lots of money. He just had a drive to be an American in every aspect.
I have friends who are immigrants, and they love this country and its freedoms with a vigor that can only come from knowing the alternative. They take deep personal offense when they believe the country is being harmed, and they take great pride when they believe the country has done right. They typically speak English better than American-born citizens, having taken great pains to learn to speak it correctly in both pronounciation and grammar. One friend gets very angry with me when I jokingly speak like a hick, in the broken English of the uneducated South; he is afraid that wrong usage will stick, since English - though his first language in usage, is his second language in learning. Most of my immigrant friends even think in English. Legally, they are immigrants, but I think of them more as Americans born in the wrong country. I'm glad they've come home.
The article is a quick, easy read and interesting in reference to both reform and middle ground between conservative and liberal approaches.
With my recent posts about problems with illegal immigration, it might seem as though I oppose immigration or immigrants. Let me set the record straight. We are all immigrants or descendants of immigrants. My great-great grandmother was a native American, and even she was a descendant of immigrants who crossed the great landbridge from Asia a long, long time ago. I love immigrants.
I believe that illegal immigrants are migrants, though. To my mind, an immigrant is someone who wishes to be American, and wouldn't jeopardize that lofty goal by breaking the immigration laws of the nation he wishes to make his own. A migrant plans to move on; an immigrant plans to stay. A migrant keeps his own flag, language, and citizenship; an immigrant takes on the flag, language, and citizenship of his new home country with great pride.
My grandfather immigrated to this country early in the last century. He was almost 80 when I was born, and by then, he spoke English as a native, without a trace of accent. He loved this country. When my father, aunts, and uncles were growing up, they visited family in the old country, and there was a language barrier. The ancestors spoke French; the new generation spoke only English. It was an honor for my grandparents' children to serve in the Armed Forces; it was about as American as you could get, risking your own life in support of the nation. My grandfather came here without an education, but with a formidable work ethic and a drive to learn American ways. He labored - he helped build the Taft School in Connecticut, hauling and lifting boulders that you wouldn't think could be hefted with a team of men. They say he was so strong, he could balance a wheelbarrow on his chin. He worked his way up, gladly learning new technologies as they developed (and many developed in his day - he drove horse carts and then motorized wagons called trucks; by the time he died, we had put a man on the moon and begun putting computers in every home). He was the old school immigrant, without advanced degrees or lots of money. He just had a drive to be an American in every aspect.
I have friends who are immigrants, and they love this country and its freedoms with a vigor that can only come from knowing the alternative. They take deep personal offense when they believe the country is being harmed, and they take great pride when they believe the country has done right. They typically speak English better than American-born citizens, having taken great pains to learn to speak it correctly in both pronounciation and grammar. One friend gets very angry with me when I jokingly speak like a hick, in the broken English of the uneducated South; he is afraid that wrong usage will stick, since English - though his first language in usage, is his second language in learning. Most of my immigrant friends even think in English. Legally, they are immigrants, but I think of them more as Americans born in the wrong country. I'm glad they've come home.
Wednesday, October 31, 2007
What does homeownership really mean when mineral rights are severed?
FWWeekly: Feature: Wednesday, October 31, 2007: "In neighborhoods all over Fort Worth and in rural and suburban Tarrant County, the story is being repeated. People watch their quality of life being eroded by the same Barnett Shale gas boom that is filling city coffers and putting money in the pockets of developers, gas well drillers, the mayor, and plenty of regular citizens. "
Yesterday, I read about people in Pennsylvania who bought rural property without acquiring the mineral rights. They thought "hey, there's only coal out here, and any coal that's worth mining has already been mined." And then, as fuel prices shot up, it became economically viable to extract fuels from previously worthless mineral estates. In the Pennsylvania case, coal seam gas - a methane that can be used as natural gas - became valuable enough to mine. In Texas, oil shale is becoming viable to mine. People who never had cause to think about mineral rights before, are suddenly "gettin' schooled."
Based on my own experiences in the home-buying process, I would guess that the majority of homebuyers who ask about mineral rights get a standard answer that "if it's not in the contract, it's included." And the reality is, if it's not in the contract, you can't count on it. (This will certainly differ in different jurisdictions.)
Why do people buy homes? In a minority of cases, people buy homes because it's cheaper than renting. In most real estate markets, though, owning carries a price premium over the cost of renting, even after tax benefits are factored in. In those markets, people buy to build equity, and to control their residence. It's worth something to be able to paint your walls purple if you want to, to know what your housing cost will be in 10 years, to be able to plant a garden right there and put a shed right here. When someone else owns the mineral rights, though, you can lose a degree of control over your home.
My husband will not, under any condition, consider a condo. He cannot stand the idea of someone else being able to noise-pollute our home. To him, it's akin to living in an aparment, where the only control you have is the ability to pester the landlord to evict a difficult wall-sharing neighbor. I don't think my husband would take too kindly to having a noisy well 600 feet outside our bedroom.
Yet sellers often fail to mention mineral rights in home-for-sale ads, and many Texas sellers want to keep all or a portion of mineral rights (and I'm sure that's true in other areas, but I've personally observed it in Texas real estate ads). As a homebuyer, I would not even consider a home that had mineral rights completely severed from the surface estate, and I would only consider a home with a mineral lease after reading the mineral lease contract myself. If I don't control my home and property, why should I take on the legal and financial risk of owning it?
We have become a migrant nation, with people moving to wherever their employer or career needs dictate. One consequence of that mobility is exposure to real estate markets that are vastly different from where we grow up. In Hawaii, for instance, real estate is sold as fee simple or leasehold. Fee simple real estate includes ownership of the house and land; leasehold real estate provides ownership of the structures, and rights to the long-term land lease. I left Hawaii over a decade ago, but some of the land leases were approaching maturity then. Why anyone would take out a 30-year mortgage on a property whose lease would be renegotiated in 10, I cannot imagine. Severing mineral rights from the surface rights is another real estate oddity that people from other states may not even know to ask about. It certainly changes the meaning of homeownership for folks who only own the surface estate.
Yesterday, I read about people in Pennsylvania who bought rural property without acquiring the mineral rights. They thought "hey, there's only coal out here, and any coal that's worth mining has already been mined." And then, as fuel prices shot up, it became economically viable to extract fuels from previously worthless mineral estates. In the Pennsylvania case, coal seam gas - a methane that can be used as natural gas - became valuable enough to mine. In Texas, oil shale is becoming viable to mine. People who never had cause to think about mineral rights before, are suddenly "gettin' schooled."
"Generally, Fambrough and others said, if sale documents don’t otherwise
specify, the rule is that a sale of property includes the mineral rights — so
you might own them even though your deed says nothing about them. But did the
guy who sold you the property own them in the first place, so he could pass them
on to you? In many cases, answering that question requires hiring a “landman” to
go down to the courthouse and research the records."
Based on my own experiences in the home-buying process, I would guess that the majority of homebuyers who ask about mineral rights get a standard answer that "if it's not in the contract, it's included." And the reality is, if it's not in the contract, you can't count on it. (This will certainly differ in different jurisdictions.)
Why do people buy homes? In a minority of cases, people buy homes because it's cheaper than renting. In most real estate markets, though, owning carries a price premium over the cost of renting, even after tax benefits are factored in. In those markets, people buy to build equity, and to control their residence. It's worth something to be able to paint your walls purple if you want to, to know what your housing cost will be in 10 years, to be able to plant a garden right there and put a shed right here. When someone else owns the mineral rights, though, you can lose a degree of control over your home.
My husband will not, under any condition, consider a condo. He cannot stand the idea of someone else being able to noise-pollute our home. To him, it's akin to living in an aparment, where the only control you have is the ability to pester the landlord to evict a difficult wall-sharing neighbor. I don't think my husband would take too kindly to having a noisy well 600 feet outside our bedroom.
Yet sellers often fail to mention mineral rights in home-for-sale ads, and many Texas sellers want to keep all or a portion of mineral rights (and I'm sure that's true in other areas, but I've personally observed it in Texas real estate ads). As a homebuyer, I would not even consider a home that had mineral rights completely severed from the surface estate, and I would only consider a home with a mineral lease after reading the mineral lease contract myself. If I don't control my home and property, why should I take on the legal and financial risk of owning it?
We have become a migrant nation, with people moving to wherever their employer or career needs dictate. One consequence of that mobility is exposure to real estate markets that are vastly different from where we grow up. In Hawaii, for instance, real estate is sold as fee simple or leasehold. Fee simple real estate includes ownership of the house and land; leasehold real estate provides ownership of the structures, and rights to the long-term land lease. I left Hawaii over a decade ago, but some of the land leases were approaching maturity then. Why anyone would take out a 30-year mortgage on a property whose lease would be renegotiated in 10, I cannot imagine. Severing mineral rights from the surface rights is another real estate oddity that people from other states may not even know to ask about. It certainly changes the meaning of homeownership for folks who only own the surface estate.
Tuesday, October 30, 2007
Driver ticketed for using biofuel
newsobserver.com Driver ticketed for using biofuel: "So last fall the Charlotte musician and guitar instructor spent $1,200 to convert his 1981 diesel Mercedes to run on vegetable oil. He bought soybean oil in 5-gallon jugs at Costco, spending about 30 percent more than diesel would cost. His reward, from a state that heavily promotes alternative fuels: a $1,000 fine last month for not paying motor fuel taxes. He has been told to expect another $1,000 fine from the federal government."
Like computer technology a decade ago, energy independence technology is changing faster than the laws that aim to regulate it.
I am surprised to say the least. If you threw the words "illegal fuel" at me, I'd think you were talking about automotive racing. In fact, the story has a racing link:
"Teixeira's story began near Lowe's Motor Speedway on May 14. As recreational vehicles streamed in for race week, revenue investigators were checking fuel tanks of diesel RVs for illegal fuel."
And in February, Michael Waltrip was caught using illegal fuel in a NASCAR race. But that was a different kind of illegal fuel.
Vegetable Oil Fuel is Illegal: "According the Environmental Protection Agency (the EPA) operating a vehicle with a non-approved fuel delivery system is a violation of Federal regulations. Although the EPA has never prosecuted anyone for operating a vehicle powered by vegetable oil, the regulations in 40CFR state that alternative fuel systems must be approved by the EPA in passenger cars and light trucks before they can be used on-road."
Like computer technology a decade ago, energy independence technology is changing faster than the laws that aim to regulate it.
I am surprised to say the least. If you threw the words "illegal fuel" at me, I'd think you were talking about automotive racing. In fact, the story has a racing link:
"Teixeira's story began near Lowe's Motor Speedway on May 14. As recreational vehicles streamed in for race week, revenue investigators were checking fuel tanks of diesel RVs for illegal fuel."
And in February, Michael Waltrip was caught using illegal fuel in a NASCAR race. But that was a different kind of illegal fuel.
Vegetable Oil Fuel is Illegal: "According the Environmental Protection Agency (the EPA) operating a vehicle with a non-approved fuel delivery system is a violation of Federal regulations. Although the EPA has never prosecuted anyone for operating a vehicle powered by vegetable oil, the regulations in 40CFR state that alternative fuel systems must be approved by the EPA in passenger cars and light trucks before they can be used on-road."
The NAFTA SuperHighway - who pays for insurance?
GovTrack: H. Con. Res. 40: Text of Legislation:
"...Whereas the economic and physical security of the United States is impaired by the potential loss of control of its borders attendant to the full operation of NAFTA and the SPP;
Whereas the regulatory and border security changes implemented and proposed by the SPP violate and threaten United States sovereignty;
Whereas a NAFTA Superhighway System from the west coast of Mexico through the United States and into Canada has been suggested as part of a North American Union to facilitate trade between the SPP countries;
Whereas the State of Texas has already begun planning of the Trans-Texas Corridor, a major multi-modal transportation project beginning at the United States-Mexico border, which would serve as an initial section of a NAFTA Superhighway System;
Whereas it could be particularly difficult for Americans to collect insurance from Mexican companies which employ Mexican drivers involved in accidents in the United States, which would likely increase the insurance rates for American drivers;
Whereas future unrestricted foreign trucking into the United States can pose a safety hazard due to inadequate maintenance and inspection, and can act collaterally as a conduit for the entry into the United States of illegal drugs, illegal human smuggling, and terrorist activities; and
Whereas a NAFTA Superhighway System would likely include funds from foreign consortiums and be controlled by foreign management, which threatens the sovereignty of the United States..."
Status: Introduced
These are all highly relevant risks associated with the NAFTA Superhighway, also known as Interstate 69. Prior to visiting Texas, I had no idea SPP, the NAFTA Superhighway, or the Trans-Texas Corridor even existed. Now we know.
"...Whereas the economic and physical security of the United States is impaired by the potential loss of control of its borders attendant to the full operation of NAFTA and the SPP;
Whereas the regulatory and border security changes implemented and proposed by the SPP violate and threaten United States sovereignty;
Whereas a NAFTA Superhighway System from the west coast of Mexico through the United States and into Canada has been suggested as part of a North American Union to facilitate trade between the SPP countries;
Whereas the State of Texas has already begun planning of the Trans-Texas Corridor, a major multi-modal transportation project beginning at the United States-Mexico border, which would serve as an initial section of a NAFTA Superhighway System;
Whereas it could be particularly difficult for Americans to collect insurance from Mexican companies which employ Mexican drivers involved in accidents in the United States, which would likely increase the insurance rates for American drivers;
Whereas future unrestricted foreign trucking into the United States can pose a safety hazard due to inadequate maintenance and inspection, and can act collaterally as a conduit for the entry into the United States of illegal drugs, illegal human smuggling, and terrorist activities; and
Whereas a NAFTA Superhighway System would likely include funds from foreign consortiums and be controlled by foreign management, which threatens the sovereignty of the United States..."
Status: Introduced
These are all highly relevant risks associated with the NAFTA Superhighway, also known as Interstate 69. Prior to visiting Texas, I had no idea SPP, the NAFTA Superhighway, or the Trans-Texas Corridor even existed. Now we know.
Larry King Transcript - Vicente Fox and the North American Union
CNN.com - Transcripts of Vicente Fox's appearance on Larry King Live:
"KING: E-mail from Mrs. Gonzalez in Elizabeth, New Jersey. 'Mr. Fox, I would like to know how you feel about the possibility of having a Latin America united with one currency?'
FOX: Long term, very long term. What we propose together, President Bush and myself, it's ALCA*, which is a trade union for all of the Americas. And everything was running fluently until Hugo Chavez came. He decided to isolate himself. He decided to combat the idea and destroy the idea...
KING: It's going to be like the euro dollar, you mean?
FOX: Well, that would be long, long term. I think the processes to go, first step into is trading agreement. And then further on, a new vision, like we are trying to do with NAFTA. "
* ALCA is the Área de Libre Comercio de las Américas - Free Trade Area of the Americas - FTAA.
Presidente Fox seems to be a bit confused, as per the White House:
"The White House this morning categorically denied that President Bush is considering or has ever considered agreeing to a common currency for the U.S., Mexico and Canada to rival the Euro.
'I can assure you that President Bush is not, and has not, given consideration to any other currency for the United States. Period,' said White House spokesman Tony Fratto in an e-mail.
The Washington Times first questioned White House press secretary Dana Perino about this yesterday, after watching a YouTube clip of former Mexico President Vicente Fox's comments on the Larry King Show Monday night.
Mrs. Perino said she had not heard anything about a common currency, but did not eliminate the possibility that Mr. Bush and Mr. Fox might have discussed such an idea in the past.
'I don't think that that's something we're actively considering,' she said"
Why would Vicente Fox be putting words in our President's mouth?
"KING: E-mail from Mrs. Gonzalez in Elizabeth, New Jersey. 'Mr. Fox, I would like to know how you feel about the possibility of having a Latin America united with one currency?'
FOX: Long term, very long term. What we propose together, President Bush and myself, it's ALCA*, which is a trade union for all of the Americas. And everything was running fluently until Hugo Chavez came. He decided to isolate himself. He decided to combat the idea and destroy the idea...
KING: It's going to be like the euro dollar, you mean?
FOX: Well, that would be long, long term. I think the processes to go, first step into is trading agreement. And then further on, a new vision, like we are trying to do with NAFTA. "
* ALCA is the Área de Libre Comercio de las Américas - Free Trade Area of the Americas - FTAA.
Presidente Fox seems to be a bit confused, as per the White House:
"The White House this morning categorically denied that President Bush is considering or has ever considered agreeing to a common currency for the U.S., Mexico and Canada to rival the Euro.
'I can assure you that President Bush is not, and has not, given consideration to any other currency for the United States. Period,' said White House spokesman Tony Fratto in an e-mail.
The Washington Times first questioned White House press secretary Dana Perino about this yesterday, after watching a YouTube clip of former Mexico President Vicente Fox's comments on the Larry King Show Monday night.
Mrs. Perino said she had not heard anything about a common currency, but did not eliminate the possibility that Mr. Bush and Mr. Fox might have discussed such an idea in the past.
'I don't think that that's something we're actively considering,' she said"
Why would Vicente Fox be putting words in our President's mouth?
Understanding illegal immigration
Referring to "flows" of illegal Mexicans into the US, the Pew Hispanic Center said in Unauthorized Migrants: Numbers and Characteristics "The flows respond to economic conditions in the U.S. and abroad. For Mexico and many other countries, conditions in the U.S. are almost always better than abroad so that worsening conditions in Mexico and elsewhere lead to increased migration to the United States."
The report is a fairly easy read because it's mostly charts and bullet points. Highly recommended. An interesting tidbit is the fact that 10% of people born in Mexico live in the United States. Wow.
The report is a fairly easy read because it's mostly charts and bullet points. Highly recommended. An interesting tidbit is the fact that 10% of people born in Mexico live in the United States. Wow.
Monday, October 29, 2007
Impacts of Illegal Immigration: Obeying the law
Impacts of Illegal Immigration: Traffic Accidents: "A review of State Police auto accident reports for 2002 through 2004 for that area of the Eastern Shore also revealed that of the 179 accidents involving Hispanic laborers: 75% of the drivers had no auto insurance. Nearly all of the vehicles driven by migrants were registered to other drivers. 93% of the vehicles had false out-of-state tags. "
The United States has rules and policies that govern how a citizen of another country may enter this country, how and how long they can stay, whether they can work, and whether and how they can become citizens. Those are the rules of the land, and they are as essential to our security and the peaceful enjoyment of our national home, as locks are to our individual houses.
Tell me something. If you came home or awoke in the night to find an unexpected, uninvited, unkown person in your home, would you make him a sandwich or fill him with buckshot? We know instinctively that a person who violates the sanctity of your home, unbidden, is up to no good. Why do we think that people who break into our country ("but the door wasn't locked!") came here, without exception, to be model citizens?
Does it come as any surprise that many (though not most) people who violate and disrespect immigration rules, also violate and disrespect other laws and social conventions? The truth is, there is less incentive for an illegal alien to obey our laws. They are more likely to be deported than jailed. They already live in the shadows. They already have a hard time finding good jobs. They are already pariahs in our society. A black mark on their record means little when their records only exist in the shadows.
Their identities are fungible, since they have not been through any official procedure to validate identity. If an employer knowingly hires illegals, how likely is it for the employer to check references or in any way determine that today's identity is not the same as yesterday's identity? If an illegal is "just a fruit picker", does it matter to the employer that he is Juan Carlos today, Carlos Juan yesterday? The article I linked to yesterday quoted the police chief as saying ""We get calls from all over the country from people saying: 'I've never worked at a chicken plant and I've never been to Delaware, and the IRS tells me I owe taxes for working there.'" If an illegal immigrant puts a black mark on one stolen identity, how much harder is it to steal a new identity? The immigrant simply moves on, changes his name, gets a new apartment, and blends back into the shadows.
It is tremendously unfair to American citizens to have illegal aliens able to circumvent laws and procedures that we have to obey. Allowing illegal aliens to violate numerous laws - immigration laws, driver licensing, insurance, taxes, etc. - is the ultimate insult to legal citizens. Amnesty could help prevent the identity shifting, provided that strong controls are used to validate a single identity, but it won't change the mindset of ignoring and disrespecting our laws that brought a person into a country illegally in the first place. Yes, most illegal immigrants are honest, upstanding citizens, but the moment they decided to stay in this country illegally, they drew their line in the sand just a little bit past the "I always obey the law" mark. And the criminals who moved here illegally - and send back home for their family and friends - do you imagine they've come to "the richest country in the world" to retire from crime, or to enjoy a richer harvest?
The United States has rules and policies that govern how a citizen of another country may enter this country, how and how long they can stay, whether they can work, and whether and how they can become citizens. Those are the rules of the land, and they are as essential to our security and the peaceful enjoyment of our national home, as locks are to our individual houses.
Tell me something. If you came home or awoke in the night to find an unexpected, uninvited, unkown person in your home, would you make him a sandwich or fill him with buckshot? We know instinctively that a person who violates the sanctity of your home, unbidden, is up to no good. Why do we think that people who break into our country ("but the door wasn't locked!") came here, without exception, to be model citizens?
Does it come as any surprise that many (though not most) people who violate and disrespect immigration rules, also violate and disrespect other laws and social conventions? The truth is, there is less incentive for an illegal alien to obey our laws. They are more likely to be deported than jailed. They already live in the shadows. They already have a hard time finding good jobs. They are already pariahs in our society. A black mark on their record means little when their records only exist in the shadows.
Their identities are fungible, since they have not been through any official procedure to validate identity. If an employer knowingly hires illegals, how likely is it for the employer to check references or in any way determine that today's identity is not the same as yesterday's identity? If an illegal is "just a fruit picker", does it matter to the employer that he is Juan Carlos today, Carlos Juan yesterday? The article I linked to yesterday quoted the police chief as saying ""We get calls from all over the country from people saying: 'I've never worked at a chicken plant and I've never been to Delaware, and the IRS tells me I owe taxes for working there.'" If an illegal immigrant puts a black mark on one stolen identity, how much harder is it to steal a new identity? The immigrant simply moves on, changes his name, gets a new apartment, and blends back into the shadows.
It is tremendously unfair to American citizens to have illegal aliens able to circumvent laws and procedures that we have to obey. Allowing illegal aliens to violate numerous laws - immigration laws, driver licensing, insurance, taxes, etc. - is the ultimate insult to legal citizens. Amnesty could help prevent the identity shifting, provided that strong controls are used to validate a single identity, but it won't change the mindset of ignoring and disrespecting our laws that brought a person into a country illegally in the first place. Yes, most illegal immigrants are honest, upstanding citizens, but the moment they decided to stay in this country illegally, they drew their line in the sand just a little bit past the "I always obey the law" mark. And the criminals who moved here illegally - and send back home for their family and friends - do you imagine they've come to "the richest country in the world" to retire from crime, or to enjoy a richer harvest?
Illegal immigration and crime: Jobs Americans Don't Want to Do
A Line in the Sand: Confronting the Threat at the Southwest Border
"While many illegal aliens cross the border searching for employment, not all illegal aliens are crossing into the United States to find work. Law enforcement has stated that some individuals come across the border because they have been forced to leave their home countries due to their criminal activity. These dangerous criminals are fleeing the law in other countries and seeking refuge in the United States."
"While many illegal aliens cross the border searching for employment, not all illegal aliens are crossing into the United States to find work. Law enforcement has stated that some individuals come across the border because they have been forced to leave their home countries due to their criminal activity. These dangerous criminals are fleeing the law in other countries and seeking refuge in the United States."
Friday, October 26, 2007
HOLA Delaware: How Latinos came to dominate chicken processing in Delaware
HOLA Delaware Latino population article about Georgetown and Sussex County Delaware Jody Hudson; Cutting Edge Realtor in Rehoboth Beach.: "The problem for poultry processors has been retention. Today, the companies have 3 percent monthly turnover in their workforce. This is a sea change. Two decades ago, a plant would lose 10 to 15 percent of its workers per month--that is, at any given moment, most of the workers in a plant would have been hired in the past four or five months. This is how immigrants wound up dominating the poultry industry. It is not that corporations sought to unload their local workers wholesale and replace them with cheaper and harder-working ones. It is that every time a local worker quit, he was replaced by a Guatemalan who didn't, and the job changed from a stopgap into the lifeline for a family."
I haven't been in America all that long - I was born here, but only a few decades ago. So my grasp on history may not be 100%, and I'll welcome correction from you old-timers who know better....
A long, long time ago, entire families performed the bulk of labor necessary to keep a family in food, shelter, and tools. A limited amount of barter provided the balance. Then job specialization came along and eventually morphed into an industrial revolution. Poor women, children, and the elderly worked in jobs that were considered "easy enough" for their limited strength and skills, and men worked the jobs that required "a real man". Wealthy men worked in jobs requiring education (which only the wealthy had) and capital to invest (which only the wealthy had). Wealthy women lived lives of comparable leisure, supervising servants, rearing children, and running the social scene. Eventually, a middle class developed in which non-wealthy men acquired sufficient education to perform "professional" work, and non-wealthy women could specialize in running a home (albeit without servants). During the World Wars, middle class women were encouraged to enter the workforce out of patriotism, to replace men. Poor women were always in the workforce, out of necessity.
Immigrants came to America and were resented as competitors for the "good" jobs that were available to the poor. They congregated in ghettos, and learned the language as quickly as possible. The critical skill for an immigrant was to assimilate. But that was easy - they came to America because of the greater freedom and opportunity it offered. No one immigrated to America to stay English or German or Argentinan; they came here to be Americans. Then we eased restrictions on Asian immigration, and we freed the slaves, and no one quite noticed that, say, a German who spoke excellent English and wore American-style clothing was soon an American, but a dark-skinned immigrant with the same traits was still an "Oriental" or "black."
Wherever they were born, America's poor, lacking capital to invest, professional contacts to obtain "plum" jobs, "education" in the sense of both book learning and social/linguistic skills, and high-paying professional skills, worked in crappy jobs. America, however, is the land of opportunity. Our middle class could obtain education to qualify them for desk jobs, and our poor could work their way up to foreman or other better-paying job. Eventually, the guy who started by picking up debris on the construction site could work his way up to s
winging a hammer, then supervising the crew, and the really talented folks - whose talent had been hidden and diminished by their poverty and lack of born-into opportunity - could work his way up to running a company. We had genuine upward mobility, but upward mobility always requires a starting point. For the poorest and least advantaged Americans, that starting point was the bottom, the worst jobs.
Now, we have welfare and jails for the poorest of the poor, and gentle justifications for their poverty. Middle class and above expect to finish college and take a "professional" job (not to be confused with professional trades). Since middle class and above are the primary consumers, our media focuses on their needs and expectations, and the poor see a lot more of the chasm between the haves and have nots, and a lot less of the ladder that can lift them into the "have somes". And immigrants take those entry-level jobs that really suck but get the employee a paycheck and a job reference and an opportunity to move on and move up. Where even a poor American used to be able to come home and tell the kids "I did something meaningful today, and I was paid poorly but it is better than I used to have, and you're going to stay in school so you do even better," now it is the immigrants that are taking those jobs, and setting that example for their children. The poorest of our poor no longer even see that ladder to upward mobility, and they give up without even climbing the first rung.
Employers benefit from a stable workforce, and reduced turnover generates a direct cost savings. Turnover costs the employer for advertising, recruiting, evaluating job applicants, paperwork, and training employees. If a Guatemalan is willing to do what Americans consider a crummy job, and stay with it for many years, the employer willingly shrugs and says "I guess this is one of those jobs Americans just won't do." Yet, when a poor young American comes of age and looks for a job, those first-rung jobs aren't in the want ads because they've been filled. The employee thinks there are no jobs for unskilled workers with poor English and math skills, the employer thinks that Americans won't do the jobs, and the immigrants think they are doing very well, indeed.
I haven't been in America all that long - I was born here, but only a few decades ago. So my grasp on history may not be 100%, and I'll welcome correction from you old-timers who know better....
A long, long time ago, entire families performed the bulk of labor necessary to keep a family in food, shelter, and tools. A limited amount of barter provided the balance. Then job specialization came along and eventually morphed into an industrial revolution. Poor women, children, and the elderly worked in jobs that were considered "easy enough" for their limited strength and skills, and men worked the jobs that required "a real man". Wealthy men worked in jobs requiring education (which only the wealthy had) and capital to invest (which only the wealthy had). Wealthy women lived lives of comparable leisure, supervising servants, rearing children, and running the social scene. Eventually, a middle class developed in which non-wealthy men acquired sufficient education to perform "professional" work, and non-wealthy women could specialize in running a home (albeit without servants). During the World Wars, middle class women were encouraged to enter the workforce out of patriotism, to replace men. Poor women were always in the workforce, out of necessity.
Immigrants came to America and were resented as competitors for the "good" jobs that were available to the poor. They congregated in ghettos, and learned the language as quickly as possible. The critical skill for an immigrant was to assimilate. But that was easy - they came to America because of the greater freedom and opportunity it offered. No one immigrated to America to stay English or German or Argentinan; they came here to be Americans. Then we eased restrictions on Asian immigration, and we freed the slaves, and no one quite noticed that, say, a German who spoke excellent English and wore American-style clothing was soon an American, but a dark-skinned immigrant with the same traits was still an "Oriental" or "black."
Wherever they were born, America's poor, lacking capital to invest, professional contacts to obtain "plum" jobs, "education" in the sense of both book learning and social/linguistic skills, and high-paying professional skills, worked in crappy jobs. America, however, is the land of opportunity. Our middle class could obtain education to qualify them for desk jobs, and our poor could work their way up to foreman or other better-paying job. Eventually, the guy who started by picking up debris on the construction site could work his way up to s
winging a hammer, then supervising the crew, and the really talented folks - whose talent had been hidden and diminished by their poverty and lack of born-into opportunity - could work his way up to running a company. We had genuine upward mobility, but upward mobility always requires a starting point. For the poorest and least advantaged Americans, that starting point was the bottom, the worst jobs.
Now, we have welfare and jails for the poorest of the poor, and gentle justifications for their poverty. Middle class and above expect to finish college and take a "professional" job (not to be confused with professional trades). Since middle class and above are the primary consumers, our media focuses on their needs and expectations, and the poor see a lot more of the chasm between the haves and have nots, and a lot less of the ladder that can lift them into the "have somes". And immigrants take those entry-level jobs that really suck but get the employee a paycheck and a job reference and an opportunity to move on and move up. Where even a poor American used to be able to come home and tell the kids "I did something meaningful today, and I was paid poorly but it is better than I used to have, and you're going to stay in school so you do even better," now it is the immigrants that are taking those jobs, and setting that example for their children. The poorest of our poor no longer even see that ladder to upward mobility, and they give up without even climbing the first rung.
Employers benefit from a stable workforce, and reduced turnover generates a direct cost savings. Turnover costs the employer for advertising, recruiting, evaluating job applicants, paperwork, and training employees. If a Guatemalan is willing to do what Americans consider a crummy job, and stay with it for many years, the employer willingly shrugs and says "I guess this is one of those jobs Americans just won't do." Yet, when a poor young American comes of age and looks for a job, those first-rung jobs aren't in the want ads because they've been filled. The employee thinks there are no jobs for unskilled workers with poor English and math skills, the employer thinks that Americans won't do the jobs, and the immigrants think they are doing very well, indeed.
Tuesday, October 23, 2007
Breaking Point in Immigration Debate - The Lede - Breaking News - New York Times Blog
Breaking Point in Immigration Debate - The Lede - Breaking News - New York Times
Blog:"Around this time last year, pear growers mourned major crop losses,
and one told The New York Times that “there weren’t any people to pay” higher
wages to. Here are two sides of the debate from Julia Preston’s most recent
article on immigration in The New York Times:
Some academics say warnings of a farm-labor debacle are exaggerated. “By
and large the most dire predictions don’t come true,” said Philip Martin, an
agricultural economist at the University of California, Davis. “There is no
doubt that some people can’t count on workers showing up as much as they used
to,” Professor Martin said. “But most of the places that are crying the loudest
are exceptional cases.”"
One report I read last week (and can't remember where) said that paying Americans $50 an hour wouldn't induce them to pick crops. I find that difficult to believe. If nothing else, some Americans who have been marginalized from the work force, like mothers who cannot afford day care or who choose to work only part-time, are out there, ready to work for the business with the ingenuity to meet employees' needs.
However, it seems virtually accepted as fact -without, so far as I know, any attempt to disprove it - that ONLY Mexican immigrants can, and will, pick food crops. So I propose a solution: food banks. Let the poor work in the fields in exchange for free fruits and vegetables. Let volunteers work in the fields in exchange for free fruits and vegetables for the elderly and sick. Contact churches and food banks, and tell them to send volunteers to your farm, and you'll send the volunteers back with food.
If that doesn't get farmers enough workers, then it's time for reform welfare - able-bodied folks who need assistance can be sent out on work crews to help farmers. For many crops, no day care is needed - very young children can be carried in a pack, while older children can play quietly or even help. That's the way it's been done for thousands of years, right?
If that still doesn't get the crops picked, then farmers need to improve their recruiting methods. Hire college and high school students during vacation. Heck, innovative farmers' coops could offer scholarships to students who spend an entire summer working the farms. Senior citizens have more time than money - and many of them want to do something productive. Have farmers tried recruiting seniors? For younger workers, advertise the advantages of doing temporary farm labor (get exercise, be out in nature, feel the sun on your back, etc.) and, most importantly, get out the word that stereotypes about farmers underpaying their workers are false stereotypes. If Americans thought they'd earn a fair wage, I bet they'd be lined up to work the farms. It's not a stable job, it's not a secure job, but it's a source of income for which almost anyone is qualified.
Do you know there are Americans who pay dude-ranches and dude-farms for the privilege of working on a farm/ranch? Yet farmers can't find enough paid laborers to harvest their crops. There's a massive disconnect here. Let's get it fixed before food prices go crazy.
About California's health care debate
The following is an excerpt from my California Senator's constituent newsletter, and I thought it was well stated and worth sharing with folks from other districts.
"Dave Cox Senate Report: October 2007
Health Care Next
The Governor has also called a special session on health care. Proposals being considered by Democrats and the Governor call for a largely tax-funded program which ensures that every resident be provided with health insurance.
Other nations that have implemented universal health care programs have unfortunately discovered that government-run programs increase demand and costs, reduce access and personalized care, and achieve cost containment by rationing care. It is not my desire to see California move in that direction. Should the Legislature and/or the voters proceed toward the implementation of a government-run healthcare system, significant tax increases will be required to fund it. Some proposals put forward so far specifically target businesses and hospitals for new taxes– a counterproductive option. Throughout the twelve-county First Senate District, rural hospitals struggle to keep their doors open – and some have simply closed. Taxing businesses and medical facilities will make it even more difficult to provide jobs and keep hospitals open in these rural communities.
Some proposals would expand eligibility for government healthcare to everyone, including illegal immigrants. Such provisions have been known to create an incentive for employers to eliminate job-based healthcare plans and allow the taxpayers to pick up the tab. The coverage of illegal immigrants will be solely at the state taxpayers’ expense, since federal law prohibits the use of any federal funds for that purpose. Additionally, no minimum residency requirements have been proposed, which would make California a magnet state – not only for illegal immigrants, but anyone seeking health care. The costs the state could incur are incalculable. Without appropriate residency requirements, California taxpayers will be essentially signing a blank check.
After researching the options, I am convinced that there are more appropriate means of achieving the desired end without the creation of a massive, impersonal bureaucracy funded through tax increases. Approximately 85% of the population currently has some form of health insurance. It does not make sense to dismantle 100% of the health care system to provide insurance to the 15% of the population who lack coverage.
Research shows that, in many ways, government has been a part of the problem – adding to the cost of insurance. Through laws and regulation, California has imposed approximately 48 health care mandates that can add as much as 30% to the cost of health insurance premiums.
From my perspective, the free market has the greatest success in providing health care coverage options in the most cost-effective manner. To remove the barriers to access, the Legislature should support efforts to equalize the market by shoring up provider rates under state programs to reduce cost-shifting to the insured, and increase insurer competition by reducing regulation.
A market where insurers may more freely customize their policies, co-payments, premiums and coverage allows consumers to choose the best product based upon their means and medical needs. Enabling insurers to compete through innovation and efficiency improves both affordability and accessibility. The Legislature should also make it easier to refer the uninsured to community clinics for non-emergency care, and provide tax credits for employers and individuals who purchase coverage.
Senate Republicans have introduced our own health care proposals as alternatives to government-run programs. You can look at them at this website:http://republican.sen.ca.gov/calcare
To subscribe a friend or to unsubscribe, please visit this page."
Reprinted by permission. All rights reserved to original author, Senator Dave Cox.
"Dave Cox Senate Report: October 2007
Health Care Next
The Governor has also called a special session on health care. Proposals being considered by Democrats and the Governor call for a largely tax-funded program which ensures that every resident be provided with health insurance.
Other nations that have implemented universal health care programs have unfortunately discovered that government-run programs increase demand and costs, reduce access and personalized care, and achieve cost containment by rationing care. It is not my desire to see California move in that direction. Should the Legislature and/or the voters proceed toward the implementation of a government-run healthcare system, significant tax increases will be required to fund it. Some proposals put forward so far specifically target businesses and hospitals for new taxes– a counterproductive option. Throughout the twelve-county First Senate District, rural hospitals struggle to keep their doors open – and some have simply closed. Taxing businesses and medical facilities will make it even more difficult to provide jobs and keep hospitals open in these rural communities.
Some proposals would expand eligibility for government healthcare to everyone, including illegal immigrants. Such provisions have been known to create an incentive for employers to eliminate job-based healthcare plans and allow the taxpayers to pick up the tab. The coverage of illegal immigrants will be solely at the state taxpayers’ expense, since federal law prohibits the use of any federal funds for that purpose. Additionally, no minimum residency requirements have been proposed, which would make California a magnet state – not only for illegal immigrants, but anyone seeking health care. The costs the state could incur are incalculable. Without appropriate residency requirements, California taxpayers will be essentially signing a blank check.
After researching the options, I am convinced that there are more appropriate means of achieving the desired end without the creation of a massive, impersonal bureaucracy funded through tax increases. Approximately 85% of the population currently has some form of health insurance. It does not make sense to dismantle 100% of the health care system to provide insurance to the 15% of the population who lack coverage.
Research shows that, in many ways, government has been a part of the problem – adding to the cost of insurance. Through laws and regulation, California has imposed approximately 48 health care mandates that can add as much as 30% to the cost of health insurance premiums.
From my perspective, the free market has the greatest success in providing health care coverage options in the most cost-effective manner. To remove the barriers to access, the Legislature should support efforts to equalize the market by shoring up provider rates under state programs to reduce cost-shifting to the insured, and increase insurer competition by reducing regulation.
A market where insurers may more freely customize their policies, co-payments, premiums and coverage allows consumers to choose the best product based upon their means and medical needs. Enabling insurers to compete through innovation and efficiency improves both affordability and accessibility. The Legislature should also make it easier to refer the uninsured to community clinics for non-emergency care, and provide tax credits for employers and individuals who purchase coverage.
Senate Republicans have introduced our own health care proposals as alternatives to government-run programs. You can look at them at this website:http://republican.sen.ca.gov/calcare
To subscribe a friend or to unsubscribe, please visit this page."
Reprinted by permission. All rights reserved to original author, Senator Dave Cox.
Friday, October 19, 2007
Continent-size toxic stew of plastic trash fouling swath of Pacific Ocean
Continent-size toxic stew of plastic trash fouling swath of Pacific Ocean: "The enormous stew of trash - which consists of 80 percent plastics and weighs some 3.5 million tons, say oceanographers - floats where few people ever travel, in a no-man's land between San Francisco and Hawaii."
Alka Zadgaonkar-- Catalyic conversion of plastic to fuel: "New Delhi Jan 31: The Zadgaonkars' Unique Waste Plastic Management & Research Company plant devours a whole range of plastic waste -- from discarded carry bags to mineral water bottles and broken buckets to PVC pipes, polyethylene eriophthalate (PET) bottles, even ABS (acrylonitrile butadine sterine) plastic material used in the making of computer monitors and TV sets, keyboards et al -- and converts it 100 percent into liquid hydrocarbon fuels (85 percent) and gases (15 percent)."
There is a single location in the ocean containing 3.5 million tons of plastic. There is a process being developed to convert waste plastic into gasoline. Oil hit $90 a barrel today.
Alka Zadgaonkar-- Catalyic conversion of plastic to fuel: "New Delhi Jan 31: The Zadgaonkars' Unique Waste Plastic Management & Research Company plant devours a whole range of plastic waste -- from discarded carry bags to mineral water bottles and broken buckets to PVC pipes, polyethylene eriophthalate (PET) bottles, even ABS (acrylonitrile butadine sterine) plastic material used in the making of computer monitors and TV sets, keyboards et al -- and converts it 100 percent into liquid hydrocarbon fuels (85 percent) and gases (15 percent)."
There is a single location in the ocean containing 3.5 million tons of plastic. There is a process being developed to convert waste plastic into gasoline. Oil hit $90 a barrel today.
Tuesday, October 16, 2007
Paulson Urges Action on Housing Crisis
October 15, 2007: Bloomberg.com: News: "Under pressure from European governments to abandon his hands-off approach to financial regulation and the depreciating dollar, the U.S. Treasury secretary and former Goldman Sachs Group Inc. chief executive officer may be forced to accede to the first while resisting the second. "
October 16, 2007: Paulson Urges Action on Housing Crisis: "'Let me be clear, despite strong economic fundamentals, the housing decline is still unfolding and I view it as the most significant current risk to our economy,' Paulson said in a speech delivered at Georgetown University's law school. 'The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.' In his most somber assessment of the crisis to date, Paulson said that the housing correction is 'not ending as quickly' as it had appeared it would and that 'it now looks like it will continue to adversely impact our economy, our capital markets and many homeowners for some time yet.'"
October 16, 2007: Paulson Urges Action on Housing Crisis: "'Let me be clear, despite strong economic fundamentals, the housing decline is still unfolding and I view it as the most significant current risk to our economy,' Paulson said in a speech delivered at Georgetown University's law school. 'The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.' In his most somber assessment of the crisis to date, Paulson said that the housing correction is 'not ending as quickly' as it had appeared it would and that 'it now looks like it will continue to adversely impact our economy, our capital markets and many homeowners for some time yet.'"
Paulson Urges Action on Housing Crisis
October 15, 2007: Bloomberg.com: News: "Under pressure from European governments to abandon his hands-off approach to financial regulation and the depreciating dollar, the U.S. Treasury secretary and former Goldman Sachs Group Inc. chief executive officer may be forced to accede to the first while resisting the second. "
October 16, 2007: Paulson Urges Action on Housing Crisis: "'Let me be clear, despite strong economic fundamentals, the housing decline is still unfolding and I view it as the most significant current risk to our economy,' Paulson said in a speech delivered at Georgetown University's law school. 'The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.' In his most somber assessment of the crisis to date, Paulson said that the housing correction is 'not ending as quickly' as it had appeared it would and that 'it now looks like it will continue to adversely impact our economy, our capital markets and many homeowners for some time yet.'"
October 16, 2007: Paulson Urges Action on Housing Crisis: "'Let me be clear, despite strong economic fundamentals, the housing decline is still unfolding and I view it as the most significant current risk to our economy,' Paulson said in a speech delivered at Georgetown University's law school. 'The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth.' In his most somber assessment of the crisis to date, Paulson said that the housing correction is 'not ending as quickly' as it had appeared it would and that 'it now looks like it will continue to adversely impact our economy, our capital markets and many homeowners for some time yet.'"
Saturday, October 13, 2007
Gold Pirates Plunder South African Mines: Financial News - Yahoo! Finance
Gold Pirates Plunder South African Mines: Financial News - Yahoo! Finance: "The gold poaching does not only endanger the pirates -- known here as 'zama-zamas.' Haphazard digging -- the miners often lack technical skills -- can destabilize the shafts, putting thousands of legal miners' lives at risk."
Gold at $748 an ounce (today). South Africa's per capita income (PPP, GDP per capita) is $13,300. If you can just recover 18 ounces of gold - I have a necklace that weighs nearly an ounce of pure gold, over an ounce gross weight, if it helps you visualize it - just 18 little tiny ounces of gold, about as much as a decent gold coin, will catch one up to the national GDP in South Africa. Wealth and poverty are relative - most studies say that one simply wants to do better than one's reference mates. How hard can it be to gather 18 ounces - just over a pound - of gold from a proven mine? Plenty hard, the mine-owner says, but the poor, starving man trying to convince himself that he's a good provider, maybe he thinks differently.
I am not a humanist. I am an Americanist, if such a thing can exist. I understand that every human has a right to a good life, but I want to support the American right to a good life first and foremost. It is to my own benefit, it supports my ideological beliefs that the Constitution is a superior document that created a superior nation, it is a goal that drives me. Let Bill Gates rape America for every penny he can, only to donate it to the very worthy cause of providing education and health care to the very poor non-Americans of this world. I say, take care of Americans first. Let non-Americans take care of non-Americans first.
Yet, to support American success, I think one must understand - as best one can, in a nation where our garbage is often of better quality than the food and goods offered at many non-American public markets - how the competition lives. Would you sacrifice your life for $750? Heck, I pay to insure my life, and I don't even do anything more dangerous than drive on California freeways. I am absolutely positive that some of America's criminals are foreign invaders - illegal immigrants - national burglars - whatever you want to call them - for whom a stolen stereo is quite the coup. I worked with a woman whose car was broken into in San Francisco - the window damage cost a couple hundred dollars, the thief took a few dollars in coins out of the ashtray. The risk of arrest was worthwhile for the thief, presumably, while the cost of the theft was excessive for the victim. She stopped locking her car after that, and I stopped keeping coins visible in my own car. Not to say that all car break-ins are perpetrated by people of foreign birth, in this nation illegally (is there a shorter, more precise term for such people??). Just that there is an American culture, largely derived from a perspective of such wealth that our trash can support people - and there is a separate culture, most specifically attributable to foreign-born illegals, but also recognized and ascribed to by our homeless and other economically displaced citizens. And there is another culture, where life is worth far, far less (in their home countries) than it is here in America.
Oh, sure, our gang-bangers have no compulsion about shooting each other, but I think they place a high enough value on life to secure their own lives in some ways. It takes a tremendous pessimism and disregard for life for a person to say "what, go down in those dangerous mines way underground and steal gold? Okay, sure! Hey, if I die, give my wife a couple bucks, okay?" And those people are taking jobs that we Americans largely don't believe or realize exist (Chinese counterfeiter, anyone?) and jobs that directly benefit our national competitors to our own detriment.
It is very 30-ish of me to say that I don't think that Americans are willing to die over a few bucks. Americans have always been the same combination of thrifty, smart, foolish, spendy, calm, aggressive, pugilistic, peace-loving, etc., as any other large population (though we do have the relative disadvantage of being highly diverse, which gives us less of a cohesive national culture to draw upon). But I can tell you, as a 30-something American who has lived in many states, I have not met many people who have told me - despite friendships and deeply meaningful conversations - that they understand how very, very poor many foreigners are compared to us, who have told me that they appreciate our relative wealth, even among poor Americans.
Americans cannot truly understand International trade - nor International terrorism or International security - without understanding how freakin' rich we are. Let me throw in the fact here, that I graduated from a foster home into "holy crap, how do I support myself? What do you mean, I have to have kid to get welfare? What if I screw up, like most 18-year-olds do? Holy crap" at 18. I haven't experienced the abject poverty of the inner city, of not knowing when one will eat again, but I have experienced the absolute responsibility to provide my own meal every day, without a viable fallback position.
Still, that cannot compare with the total hopelessness that motivates a child to blow himself up for the fuzzy hope of 72 virgins in heaven, and, I propose, the far more important notion that his family will be well-provided-for after his death by the remaining terrorist organization. Our economic competitors are equally scrappy. Nigerian fraudsters have become a particular thorn in our sides, but how could they not?
We feed our pigs on better slop than many humans hope to eat for dinner tonight. Our dogs can reasonably expect good medical care in most American homes - indeed, many of us put our dogs through dialysis, chemotherapy, and the like - while the majority of humans in the world face less hopeful medical outcomes.
Gold at $748 an ounce (today). South Africa's per capita income (PPP, GDP per capita) is $13,300. If you can just recover 18 ounces of gold - I have a necklace that weighs nearly an ounce of pure gold, over an ounce gross weight, if it helps you visualize it - just 18 little tiny ounces of gold, about as much as a decent gold coin, will catch one up to the national GDP in South Africa. Wealth and poverty are relative - most studies say that one simply wants to do better than one's reference mates. How hard can it be to gather 18 ounces - just over a pound - of gold from a proven mine? Plenty hard, the mine-owner says, but the poor, starving man trying to convince himself that he's a good provider, maybe he thinks differently.
I am not a humanist. I am an Americanist, if such a thing can exist. I understand that every human has a right to a good life, but I want to support the American right to a good life first and foremost. It is to my own benefit, it supports my ideological beliefs that the Constitution is a superior document that created a superior nation, it is a goal that drives me. Let Bill Gates rape America for every penny he can, only to donate it to the very worthy cause of providing education and health care to the very poor non-Americans of this world. I say, take care of Americans first. Let non-Americans take care of non-Americans first.
Yet, to support American success, I think one must understand - as best one can, in a nation where our garbage is often of better quality than the food and goods offered at many non-American public markets - how the competition lives. Would you sacrifice your life for $750? Heck, I pay to insure my life, and I don't even do anything more dangerous than drive on California freeways. I am absolutely positive that some of America's criminals are foreign invaders - illegal immigrants - national burglars - whatever you want to call them - for whom a stolen stereo is quite the coup. I worked with a woman whose car was broken into in San Francisco - the window damage cost a couple hundred dollars, the thief took a few dollars in coins out of the ashtray. The risk of arrest was worthwhile for the thief, presumably, while the cost of the theft was excessive for the victim. She stopped locking her car after that, and I stopped keeping coins visible in my own car. Not to say that all car break-ins are perpetrated by people of foreign birth, in this nation illegally (is there a shorter, more precise term for such people??). Just that there is an American culture, largely derived from a perspective of such wealth that our trash can support people - and there is a separate culture, most specifically attributable to foreign-born illegals, but also recognized and ascribed to by our homeless and other economically displaced citizens. And there is another culture, where life is worth far, far less (in their home countries) than it is here in America.
Oh, sure, our gang-bangers have no compulsion about shooting each other, but I think they place a high enough value on life to secure their own lives in some ways. It takes a tremendous pessimism and disregard for life for a person to say "what, go down in those dangerous mines way underground and steal gold? Okay, sure! Hey, if I die, give my wife a couple bucks, okay?" And those people are taking jobs that we Americans largely don't believe or realize exist (Chinese counterfeiter, anyone?) and jobs that directly benefit our national competitors to our own detriment.
It is very 30-ish of me to say that I don't think that Americans are willing to die over a few bucks. Americans have always been the same combination of thrifty, smart, foolish, spendy, calm, aggressive, pugilistic, peace-loving, etc., as any other large population (though we do have the relative disadvantage of being highly diverse, which gives us less of a cohesive national culture to draw upon). But I can tell you, as a 30-something American who has lived in many states, I have not met many people who have told me - despite friendships and deeply meaningful conversations - that they understand how very, very poor many foreigners are compared to us, who have told me that they appreciate our relative wealth, even among poor Americans.
Americans cannot truly understand International trade - nor International terrorism or International security - without understanding how freakin' rich we are. Let me throw in the fact here, that I graduated from a foster home into "holy crap, how do I support myself? What do you mean, I have to have kid to get welfare? What if I screw up, like most 18-year-olds do? Holy crap" at 18. I haven't experienced the abject poverty of the inner city, of not knowing when one will eat again, but I have experienced the absolute responsibility to provide my own meal every day, without a viable fallback position.
Still, that cannot compare with the total hopelessness that motivates a child to blow himself up for the fuzzy hope of 72 virgins in heaven, and, I propose, the far more important notion that his family will be well-provided-for after his death by the remaining terrorist organization. Our economic competitors are equally scrappy. Nigerian fraudsters have become a particular thorn in our sides, but how could they not?
We feed our pigs on better slop than many humans hope to eat for dinner tonight. Our dogs can reasonably expect good medical care in most American homes - indeed, many of us put our dogs through dialysis, chemotherapy, and the like - while the majority of humans in the world face less hopeful medical outcomes.
Superbug kills 90 in UK hospitals - CNN.com
Superbug kills 90 in UK hospitals - CNN.com: "nurses at three hospitals run by the Maidstone and Tunbridge Wells NHS trust were often too busy to wash their hands and left patients in their own excrement."
My SIL died last year. She spent some time in a government-subsidized nursing home. She was returned to the hospital after she suffered a serious infection at the nursing home. The nursing home staff ignored her concerns, failed to clean up her projectile vomit, and, very probably, directly caused her infection.
Government-run health care is not the panacea that Californians think it is.
"Many medical tourists from the United States are seeking treatment at a quarter or sometimes even a 10th of the cost at home. From Canada, it is often people who are frustrated by long waiting times. From Great Britain, the patient can't wait for treatment by the National Health Service but also can't afford to see a physician in private practice. "
Why, when foreign nations have already proven that nationalized health care works no better than our own private health care, do Americans want to hand their health over to the same people who brought us $200 hammers? Penny-wise, pound foolish?
Yes, American health care is out of whack. No, costs should not be growing faster than true inflation (as opposed to the government's monkey'ed inflation figures). Yes, Americans are asking insurance companies to reimburse ever more care (I remember, just 10 years ago, when health insurance was truly insurance, and did not cover general maintenance costs - we actually had to pay out-of-pocket for preventive maintenance, just like we do on our cars). Yes, doctors pay ridiculous rates for malpractice insurance. Yes, patients are getting hosed.
My SIL died last year. She spent some time in a government-subsidized nursing home. She was returned to the hospital after she suffered a serious infection at the nursing home. The nursing home staff ignored her concerns, failed to clean up her projectile vomit, and, very probably, directly caused her infection.
Government-run health care is not the panacea that Californians think it is.
"Many medical tourists from the United States are seeking treatment at a quarter or sometimes even a 10th of the cost at home. From Canada, it is often people who are frustrated by long waiting times. From Great Britain, the patient can't wait for treatment by the National Health Service but also can't afford to see a physician in private practice. "
Why, when foreign nations have already proven that nationalized health care works no better than our own private health care, do Americans want to hand their health over to the same people who brought us $200 hammers? Penny-wise, pound foolish?
Yes, American health care is out of whack. No, costs should not be growing faster than true inflation (as opposed to the government's monkey'ed inflation figures). Yes, Americans are asking insurance companies to reimburse ever more care (I remember, just 10 years ago, when health insurance was truly insurance, and did not cover general maintenance costs - we actually had to pay out-of-pocket for preventive maintenance, just like we do on our cars). Yes, doctors pay ridiculous rates for malpractice insurance. Yes, patients are getting hosed.
Thursday, October 11, 2007
Outsourcing creates hazards to U.S. consumers, economy
Outsourcing creates hazards to U.S. consumers, economy: "Currently, Americans are paying for inferior products that pose hazards to their children, their pets, and to themselves. A lesser, but still important, result of our willingness to give away a manufacturing base is the long-term effect on our own economy. Good jobs disappear, along with the buying power and tax base that goes with those jobs.
Just drive through what we used to call a mill town back in the Southeast and see what closing cotton mills has done to downtown businesses. ....An even better option is to find ways to maintain our own manufacturing base, keep plants operating in this country, and keep people employed."
Well said.
Just drive through what we used to call a mill town back in the Southeast and see what closing cotton mills has done to downtown businesses. ....An even better option is to find ways to maintain our own manufacturing base, keep plants operating in this country, and keep people employed."
Well said.
Sunday, October 07, 2007
TaxProf Blog: "Generosity Index" Mirrors Red State-Blue State Divide
TaxProf Blog: "Generosity Index" Mirrors Red State-Blue State Divide: "The 50-state ranking has a decided Red State-Blue State flavor: 28 of the 29 'most generous' states are Red States that voted for President Bush (including all 25 of the 'most generous' states), while 17 of the 21 'least generous' states are Blue States that voted for Senator Kerry (including all 7 of the 'least generous' states):"
In Red states, people are generous with their money. In blue states, people are generous with other people's money.
In Red states, people are generous with their money. In blue states, people are generous with other people's money.
Vacation
I won't be posting much for the next two weeks, as we're on vacation.
We drove from California to Texas. On the drive down, we were talking about the quality of newspapers in California. The Sacramento Bee and the San Francisco Chronicle both operate the same way - choose a perspective, tell the story from that perspective, and leave out any point-of-view or fact that contradicts that perspective. Neither paper provides "just the facts." Living in California for as long as we have, we've come to accept that as the way things are. Today, we picked up the local Austin newspaper - Austin is a pretty liberal city, too - and were pleasantly surprised to find reporting that includes nearly enough facts to form an informed perspective. The front page features an article about a bond measure, with bullet points alongside summarizing the case for and against the measure.
Back in California, sfgate.com today featured an article about Chauncey Bailey, a Bay Area journalist killed for writing about Your Black Muslim Bakery. He was prepared to write a story about allegations of murder and financial malfeasance. Bailey was praised as an activist journalist, using the power of the pen to advocate for blacks. While advocating for human beings is a noble cause, it is not the traditional role of the media. The media's traditional role has been to inform, letting its informed readership advocate as they see fit. But advocating through the press is praised in the Bay Area, while failure to fully inform is forgiven and accepted.
Austin is the Capital of Texas, a liberal city in the middle of a conservative state. I wonder if conservatism, with its emphasis on individual responsibility, creates an incentive towards an informed citizenry?
We drove from California to Texas. On the drive down, we were talking about the quality of newspapers in California. The Sacramento Bee and the San Francisco Chronicle both operate the same way - choose a perspective, tell the story from that perspective, and leave out any point-of-view or fact that contradicts that perspective. Neither paper provides "just the facts." Living in California for as long as we have, we've come to accept that as the way things are. Today, we picked up the local Austin newspaper - Austin is a pretty liberal city, too - and were pleasantly surprised to find reporting that includes nearly enough facts to form an informed perspective. The front page features an article about a bond measure, with bullet points alongside summarizing the case for and against the measure.
Back in California, sfgate.com today featured an article about Chauncey Bailey, a Bay Area journalist killed for writing about Your Black Muslim Bakery. He was prepared to write a story about allegations of murder and financial malfeasance. Bailey was praised as an activist journalist, using the power of the pen to advocate for blacks. While advocating for human beings is a noble cause, it is not the traditional role of the media. The media's traditional role has been to inform, letting its informed readership advocate as they see fit. But advocating through the press is praised in the Bay Area, while failure to fully inform is forgiven and accepted.
Austin is the Capital of Texas, a liberal city in the middle of a conservative state. I wonder if conservatism, with its emphasis on individual responsibility, creates an incentive towards an informed citizenry?
Tuesday, October 02, 2007
China's desperate quest for oil - Can America Compete? - MSNBC.com
China's desperate quest for oil - Can America Compete? - MSNBC.com: "In a nod to the building frictions, Washington and Beijing set up extensive bilateral energy talks between the Department of Energy and its Chinese counterparts in 2004, with discussion on ways of increasing energy efficiency in China, cleaner coal technology and reforming the power sector. In this and other forums, China has been pursuaded to set up a strategic petroleum reserve to hedge against supply disruptions and emergencies. Although cooperation will be key to averting conflict, the underlying distrust is likely to persist, says University of Miami's Teufel Dreyer in a new paper on China's energy sector: 'Just as many Chinese are concerned that Washington uses a desire to establish democracy to disguise its desire for hegemony and many Americans believe that Beijing talks about a China that is peacefully rising while providing its military with unjustifiably large annual budget increases, each side worries that gestures of cooperation may disguise an intent to block oil supplies to the other.'" May 4, 2006
Fueling the dragon: China's race into the oil market, by Gal Luft
Fueling the dragon: China's race into the oil market, by Gal Luft: "This may indicate not only that China is interested in a militarily strong, even nuclear Iran that dominates the Gulf but also that for China, energy security considerations trump international cooperation on critical global security issues. In addition to its special relations with Iran, China is also known to be a provider of WMD technologies to rouge states including North Korea, Syria, Libya and Sudan. " from the Institute for the Analysis of Global Security
Monday, October 01, 2007
Reducing our dependence on foreign oil: A plan
Alternative energy technologies do not make a compelling cost-benefit case right now. Tax incentives designed to improve the economics don't work. We should do something about this.
In my home, the average electric bill is $73 a month. For most Americans, that surely seems cheap. We have upgraded our windows, air conditioner, dishwasher, washer, and dryer. We use natural gas for cooking, heating, and water heating, and we use electricity for everything else (including our clothes dryer). We are reasonably careful with energy consumption, but not excessively so. We do not spend winters buried under blankets, and we live in a reasonably mild climate (although summer temps climb to 100+ degrees, so summer is when our costs peak).
A solar electric system sufficient to reduce our electric usage to "baseline" levels would cost about $12,000, plus installation. It would save us a little shy of $50 a month. $12,000 amortized over 20 years (the warranted lifespan of the system) at 5% - i.e., if we took out a 20-year mortgage to pay for it - would cost us $80 a month. California has rebate incentives that would probably cover the installation costs. The federal tax credits are not available to us because all tax credits are eliminated under the Alternative Minimum Tax (AMT). However, in 20 years, it is highly likely that our savings will be greater than $80 a month, because electric rates rise consistently over time. However, it is impossible to predict how much rates will rise. Installing solar today would require paying a 60% price premium over today's KNOWN costs to reap an assumed, but unknown, savings later.
I do believe that the nation needs a better energy policy. Every dollar spent on foreign oil is a dollar that is not flowing through our own economy. $1 worth of domestic grain represents money flowing to a local farmer, who then flows the money to the local taxing authority, local workers, domestic seed companies, etc. $1 worth of foreign oil represents a small portion of domestic refining and transporting, and a big chunk of the dollar flows to foreign oil producers. Worse yet, that dollar is likely to come back as foreign investment. Americans borrow, spending tomorrow's dollars today, and foreigners invest here, staking a claim on our future income using the dollars we spend today to fill our gas tanks.
I propose two fixes to the energy incentive program. One, allow energy efficiency credits to take precedence over the AMT, so that people paying AMT can still reduce their federal tax burden by investing in alternative energy. This makes a lot of sense. Americans who can afford alternative energy systems are usually also subject to AMT. So the tax credits target an incredibly narrow band of potential users.
Two, create an FHA loan program for energy efficiency improvements. This program has 4 key points.
1) The loan can be transferred to the new home owner with payment of a small processing cost. Home buyers stretch to afford the most house, and rarely reimburse the home seller for the cost of an alternative energy system. They are more interested in getting more square footage or a better location than lower energy bills, and they assume they can add an alternative energy system later, if they want one. If the buyer assumes a loan, however, they can save their mortgage dollars for the house, and pay the alternative energy loan from their utility budget. For homeowners who want alternative energy, but might be moving, this would be a substantial incentive to go ahead and install it now.
2) The loan payment can be re-amortized if the loan is paid down in advance of the scheduled payment. In my example, the loan payment would be $30/month higher than the electric bill. If a buyer was unwilling to pay that extra $30 a month, I could pay the loan down by $4,000, and recover the remaining $8,000 up-front cost that "cash-flows". The buyer would have the best of both worlds - the security of a fixed energy cost, without the higher costs in today's dollars. This allows a buyer who *really* doesn't want to invest in alternative energy to negotiate how much loan they assume from the seller, without the seller eating 100% of the up-front costs. The U.S. Energy system wins, because there is one more solar array providing day-time oil-free power to the grid, even if the buyer of the home would not have installed one. Chances are, I'd go buy another house, and install another solar system. More energy dollars stay in America, and the only cost to the taxpayer is the cost of guaranteeing the loan.
3) Require local energy utilities to pay the homeowner for unused energy credits, at the prevailing wholesale rate. If the loan is not paid, or if the home goes into foreclosure, the FHA can recoup some of the missed payments through payments from the electric utility, until a new homeowner assumes payments. Make the FHA "first-in-line" for the payments, in case the loan is not paid. This also provides an incentive for homeowners to scale the system up to provide a larger portion of their energy needs.
4) The alternative energy mortgage should be calculated outside the standard debt-to-income ratios used in mortgage approvals. It should be considered a utility cost rather than a mortgage debt (for the purpose of calculating the mortgage ratio).
Here's a frightening read about the economic security implications of our dependence on foreign oil:
http://www.energycommission.org/files/contentFiles/oil_shockwave_report_440cc39a643cd.pdf
In my home, the average electric bill is $73 a month. For most Americans, that surely seems cheap. We have upgraded our windows, air conditioner, dishwasher, washer, and dryer. We use natural gas for cooking, heating, and water heating, and we use electricity for everything else (including our clothes dryer). We are reasonably careful with energy consumption, but not excessively so. We do not spend winters buried under blankets, and we live in a reasonably mild climate (although summer temps climb to 100+ degrees, so summer is when our costs peak).
A solar electric system sufficient to reduce our electric usage to "baseline" levels would cost about $12,000, plus installation. It would save us a little shy of $50 a month. $12,000 amortized over 20 years (the warranted lifespan of the system) at 5% - i.e., if we took out a 20-year mortgage to pay for it - would cost us $80 a month. California has rebate incentives that would probably cover the installation costs. The federal tax credits are not available to us because all tax credits are eliminated under the Alternative Minimum Tax (AMT). However, in 20 years, it is highly likely that our savings will be greater than $80 a month, because electric rates rise consistently over time. However, it is impossible to predict how much rates will rise. Installing solar today would require paying a 60% price premium over today's KNOWN costs to reap an assumed, but unknown, savings later.
I do believe that the nation needs a better energy policy. Every dollar spent on foreign oil is a dollar that is not flowing through our own economy. $1 worth of domestic grain represents money flowing to a local farmer, who then flows the money to the local taxing authority, local workers, domestic seed companies, etc. $1 worth of foreign oil represents a small portion of domestic refining and transporting, and a big chunk of the dollar flows to foreign oil producers. Worse yet, that dollar is likely to come back as foreign investment. Americans borrow, spending tomorrow's dollars today, and foreigners invest here, staking a claim on our future income using the dollars we spend today to fill our gas tanks.
I propose two fixes to the energy incentive program. One, allow energy efficiency credits to take precedence over the AMT, so that people paying AMT can still reduce their federal tax burden by investing in alternative energy. This makes a lot of sense. Americans who can afford alternative energy systems are usually also subject to AMT. So the tax credits target an incredibly narrow band of potential users.
Two, create an FHA loan program for energy efficiency improvements. This program has 4 key points.
1) The loan can be transferred to the new home owner with payment of a small processing cost. Home buyers stretch to afford the most house, and rarely reimburse the home seller for the cost of an alternative energy system. They are more interested in getting more square footage or a better location than lower energy bills, and they assume they can add an alternative energy system later, if they want one. If the buyer assumes a loan, however, they can save their mortgage dollars for the house, and pay the alternative energy loan from their utility budget. For homeowners who want alternative energy, but might be moving, this would be a substantial incentive to go ahead and install it now.
2) The loan payment can be re-amortized if the loan is paid down in advance of the scheduled payment. In my example, the loan payment would be $30/month higher than the electric bill. If a buyer was unwilling to pay that extra $30 a month, I could pay the loan down by $4,000, and recover the remaining $8,000 up-front cost that "cash-flows". The buyer would have the best of both worlds - the security of a fixed energy cost, without the higher costs in today's dollars. This allows a buyer who *really* doesn't want to invest in alternative energy to negotiate how much loan they assume from the seller, without the seller eating 100% of the up-front costs. The U.S. Energy system wins, because there is one more solar array providing day-time oil-free power to the grid, even if the buyer of the home would not have installed one. Chances are, I'd go buy another house, and install another solar system. More energy dollars stay in America, and the only cost to the taxpayer is the cost of guaranteeing the loan.
3) Require local energy utilities to pay the homeowner for unused energy credits, at the prevailing wholesale rate. If the loan is not paid, or if the home goes into foreclosure, the FHA can recoup some of the missed payments through payments from the electric utility, until a new homeowner assumes payments. Make the FHA "first-in-line" for the payments, in case the loan is not paid. This also provides an incentive for homeowners to scale the system up to provide a larger portion of their energy needs.
4) The alternative energy mortgage should be calculated outside the standard debt-to-income ratios used in mortgage approvals. It should be considered a utility cost rather than a mortgage debt (for the purpose of calculating the mortgage ratio).
Here's a frightening read about the economic security implications of our dependence on foreign oil:
http://www.energycommission.org/files/contentFiles/oil_shockwave_report_440cc39a643cd.pdf
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