Considered musings and random commentary.
Tuesday, January 01, 2008
Happy New Year? Too much to catch up on...
There's just so much stuff that has gone on in the last year and a half, that I could take a year (and a half) to catch up and comment on it. Instead, I'm still being bombarded by little spittle droplets of idiocy from the real world. Just now, we had a couple of very nice commercials in a row, that encourage people to re-re-re-finance.

Dang it, when will either people learn or finance companies get some decency and encourage people NOT to continue to extend themselves? Are they hoping for an increase in forclosures? It makes a good sound bite.

I don't think that there is a huge wave as described in the media... there is an increase, and of course, anything can be spun -- but an increase in WHAT? "Forclosure rates the highest that they've been in 10 years!" -- OK, what COULD that mean? It could mean that forclosure rates dropped for 8 years and then sky-rocketed (that's not really a measurement, now is it?) for the last two... you have to know the numbers and the trends.

An interesting example is, DC (Washington DC, for the un-hip) experienced a 300 percent increase in 2006! That was 10 foreclosures in the first quarter up to 155 foreclosures in the 4th quarter. Those numbers include multiple stages of foreclosure including stages that might not result in final foreclosure: Pre-foreclosure, Notice of Default, Lis Pendens (what?); foreclosures, Notice of Trustee Sale and Notice of Foreclosure Sale; and REO properties.

Now, personally, I don't understand all of the accounting. If I miss a payment, I'll get a friendly call. If I miss a couple I'll get a really un-friendly call. If I miss enough, I'll get a Notice of Default, and a little token gets slid across a string in a billiard room somewhere. If I keep missing payments and don't make any effort to pull chestnuts out of the fire, I'll keep progressing through the different stages. Does that mean that a potential foreclosure could show up 4 or 5 times in one year? If I get the NOD and I beg, borrow, or steal some money to fix it, does the NoD get removed from the foreclosure counts? Who knows. Either way, would the press have any interest in checking it out and reporting it accurately, or would they go for the glorious disaster report? I would bet that it's the latter.

When the media reports that "the Dow PLUNGED today!" when there was a One Half of One Percent drop, how much confidence can you put in the media? It's not the media we have to have confidence in, but in the market and it's ability to move, advance, adjust, ease, recover, advance... But, the market responds as people react. I hear acquaintences note that "the market is down!" and they actually have that little exclaimation mark in their voice. It was up 300 points in the last 4 days, and it dropped 150 in one day. Net result? It's up 150 points.

So, now we have commercials encouraging people to take out larger loans to pay off what they shouldn't be buying on credit, commerials for credit cards encouraging people to do that daring thing, fly to France and propose, buy that diamond bracelet, and don't worry, but XYZ card is THERE for you!

NOW, we've got an advertised push in Virginia to "don't let the government take your "right" to a Pay-Day loan away!"

1) You don't have a "right" to a Pay-Day loan,

b) Pay-Day loans are userious (30%+), and

iii) Pay-Day loans are for people who are despirate, or foolish -- in either case, they shouldn't be borrowing money w/ out a guardian.

I was surprised (and disgusted) when Virginia elected to allow Pay-Day loans in the first place. But what can you expect when politicians are... politicians. The only time they do something that is "good for the people" is if it benefits a special interest group. Instead of allowing these financial vampires to charge a good 9% up front, I think that they should either severely limit the interest that the predators can charge, or give the state, churchs, public schools, etc., the same chance. Think of the amount of money that they could raise WHILE "helping" people? And, of course, the interest would then be tax-deductible -- consider it a donation or a pre-tax-payment.

I am not a fan of government involvement in individual matters -- but this goes beyond matters between individuals. The valid purpose of government is to prevent individuals from harming one-another, or to protect the individual from force. In this case, the force is from the lenders. Why can't the politicians get ANYTHING right?

Ultimately, the best thing *I* can do (at least for my general irritation level) is to turn the TV off.

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