Be Good Little Consumers...Spend!

For many months now we have been inundated with the news of massive loses being sustained by the banks, mortgage lenders and Wall Street investment houses. You know the names, Citi, Bear, Fannie, Countrywide, Freddie, Merrill, BofA. These Masters of the Universe have managed to lose $100billion dollars so far, and some experts suggest perhaps another $200-$300 billion yet to come.

Of the many bad things to result from these asinine investments and there are many, the one to affect the average American the most is the drying up of available funds from the two sources most drawn on by American consumers for the last 5 years. The first is the unavailability of anymore borrowing on the equity from the ATM cash cow formally called home. The second is the tapping out of the lines of credit available from plastic. Along with these two pieces of bad news is the unarguable fact that Americans don't save for the inevitable rainy day, nothing to fall back on. Food costs are up, oil was around $100 dollars a barrel earlier this month, and most of the talking heads have stopped wondering about a recession and have now taken to betting on whether it will be short and shallow or not.

What we have is a slowing economy, a tightening of credit, rising food and energy costs, some serious signs of inflation on the horizon, falling home values and indications that it will be some time before things get back to normal. So what advice do we get from our leaders and elected officials...don't worry, be happy, borrow more if you can and spend, spend, spend. We're being told by the Fed, the Treasury, the Administration and both parties in Congress that we can save this faltering economy by personally spending more.

Now I ask you, does the admonition to keep digging when you are already in a hole seem like good advice? Granted, we will survive as a viable democracy and eventually see the economy get back on track. But almost all financial gurus agree that it might be a year or maybe two before this happens so wouldn't the prudent thing to do be to conserve your resources, cut back on all unnecessary purchases, pay on your debts but don't increase them and be as financially neutral as you can possibly be until you know how the economy seems to be going? How could "go spend more" possibly be anything but the worst advice you could get get considering the state of the current economy in the country?Think about it, why would your government want you to keep digging when common sense says you should stop?

Why are they sending you and your children perhaps a $1000 dollars or so in the next 3 months with the hopes that you will spend it on something that you really don't need. After all, even if it turns out to be a $1200 or $1500 rebate all it will get you is some more crap that you know you really don't have a use for, particularly during this unsettled economic period. Save it! That's right, save it. Cash the check and then put the money in your sock drawer for a rainy day. Better yet put it in a 5% savings account, you can find one in every town.

Why should you? Because your government wants you financially extended and worried. It makes you easier to control. This $150 billion giveaway is a bailout for Wall Street but not for you, all it is for you is a chance for the powers that be to prod you into one more shovel full. There is no better feeling than waking up in the morning and knowing you are a financially prudent and not overly extended consumer. All Americans should take this money, after all it's yours to start with, and use it if at all possible to start a nest egg. Old fashioned? Maybe...but you will feel good about it knowing that eventually Washington will get the message that Wall Street, the White House and Congress may be home to a bunch of short sighted, greedy morons but you aren't buying it anymore.

Save your rebate and use these trying times to send a message to our leaders that you don't intend to support their greedy, nasty little spending habits anymore... not Wall Street's and not Washington's. Trust me, you'll feel great if you do!

Sunday, January 27, 2008
Western North Carolina's Hidden Hazards

On September 16, 2004 Macon County, North Carolina was in a state of emergency as were 14 other counties in the western region of the state. "The Hurricane Recovery Act of 2005" found that:

People lost their loved ones, their homes, sources of livelihood, and, in some instances, their communities. During Hurricane Ivan, the community of Peeks Creek was devastated by a debris flow triggered by the heavy rains. The debris flow traveled speeds as great as 33 miles per hour for two and a quarter miles from the top of Fishhawk mountain. Five persons were killed and 15 homes destroyed by the flow that was estimated to be several hundred feet wide and up to 40 feet high.... Further, people could not know the landslide risks associated with their housing location because such maps are not readily available. The State needs to...prepare landslide zone mapping for the region so that homes may be rebuilt in safe areas.

On October 3, 2004 Governor Mike Easley issued a press release to the residents of Western North Carolina advising that the first of the state landslide maps had been completed. The "Is it safe to build or buy here" maps for Macon County show historic landslide events, attempt to determine factors of slope instability, and how far a mountainside would move in the event of slope failure. The Governor said, "These maps will show which areas are prone to landslides, and that will help developers, county officials, and residents decide where to safely build homes, roads, and other structures."

As Governor Easley states: landslide mapping provides critical information to all parties involved in the regulation, development, and purchase of hazardous land.

Starting in the fall of 2004, residents and prospective buyers should have been apprised of the now identified high risk real estate designations within Macon county's jurisdiction.

J. W. Williamson, of Wataugawatch, asks a pertinent and worrisome question. "So far, what has Macon County government done with those (landslide) maps? Word is that they've essentially hidden them from the public. The Macon County Commission have evidently expressed fear that if they release the information of potential landslide hazards to the public, they might get sued...because, you know, information just gets people upset (the truth sets the fees, so to speak). Go to the official Macon County website and look for any evidence that its slopes have ever been mapped and evaluated according to the best scientific evidence for life-and home-destroying potential. Go on. I dare you. You won't find a word." Please see "Landslide Hazards in Watauga County." January 23, 2008

If you do visit the Macon County website you will find the following reassuring words from the Planning Department. "Our mission is to serve the people of Macon County by: "Applying land use regulations in a way that promotes the health and public safety of our citizens."

Who is right? The planning board who continues to permit the undisclosed development of hazardous slopes or state geologists who warn that the Macon County hazard maps show mountainous terrain at serious risk of future devastating landslides.

United States prepares to attack Wall Street!

It was widely reported today that the White House and Pentagon were completing plans to bomb Wall Street into submission as a final solution to bringing to an end the current year long string of economic problems fomented by the evildoers of high finance.

An unnamed but generally credible spokesperson close to the President said that Mr. Bush had decided that since bombing the Nazi death camps in Germany, some 60 years after the war had ended, would no longer be an effective tool to bring about the desired changes in Nazi behavior, but still feeling that since massive bombing somewhere in the world was always high on his list of personal diplomatic choices and having already set about bringing the US Air Force to Def Com One, its highest state of readiness, the President said he felt it would be a waste of the taxpayer's money not to make use of this opportune time to unleash the world's most lethal and effective fighting machine on the evil forces of Wall Street, which the President was quoted as saying, "now makes up the fourth corner of the triangle that is the axis of evil."

Flanked by Condi Rice and Hank Paulson and surrounded by the Joint Chiefs, the President when asked about the possibility of unacceptable civilian casualties, said he was assured that precision and laser guided bombing runs carried out after the dropping of propaganda leaflets advising any CEO's and CFO's not involved in the creation or marketing of SIV's or CDO's to evacuate the Street would preclude unnecessary deaths of innocent traders.

When pressed the President allowed that, "Yes, there would probably be some collateral damage but that it would amount to small numbers of dead innocent civilians." He went on to further explain that the Fed and Treasury had depleted or run out of any further useful methods of forcing the financial titans to their senses and besides the CIA had credible sources inside Citi, Merrill Lynch and Morgan Stanley that told of the further development of WFD's, which Ms Rice explained were "weapons of financial destruction."

She went on to also suggest that if the CEO's and CFO's that had, "instigated this frightful mess in the first place," would surrender within 24 hours of this announcement they would be allowed to resettle in southern Florida with their families, a reasonable size entourage and all vested stock remaining intact. Further they would be allowed the continued use of one private corporate jet and in a show of goodwill the Fed would cover all appropriate country club and golf fees for a period not to exceed 5 years beyond their resettlement dates.

At present it is not known whether the administration is willing to extend this offer to CEO's that had earlier fled into hiding after receiving "golden parachutes" on their way out.

Cheap credit makes you dumb!

Think not? This is the cheap credit part.
The past Fed and its Chairman Allen Greenspan keeps the target fund rate so low for such a long period that banks and mortgage originators decided to expand their offerings of cheap mortgage products to a segment of the home buying public that had never before been able to qualify for a loan. On June 30th. 2004 the Fed bumps the rate from one percent to one and a quarter. By Dec. 2005 it was up to four and a quarter but the damage had already been done. By then there were millions of subprime mortgages in the system waiting to go sour in a few years

This is the dumb part.
Apparently willing to overlook these borrowers miserable credit histories and proven inability to repay their debts, and willing to believe that home values would continue to rise at 10 to 20 percent a year indefinitely, from 2004 thru early 2007 the banks proceeded to gin up all sorts of innovative vehicles to lure these credit impaired clients to the closing table. The idea being that if these questionable mortgages could be packaged up with AAA rated paper or better yet be AAA rated themselves then sliced into small pieces(tranches)and then be packaged into a Securitized Investment Vehicle(SIV) and sold off to the unsuspecting investors, all would turn out well so long as home values rose unrealistically year after year.

Not to be outdone by the greed of the mortgage originators, the borrowers suspended reality and decided that if a mortgage they could never afford to pay off, even if they got it at zero percent interest, were offered to them at such an unbelievably low interest rate, say three or four percent for the first year or two, they could then afford it. Cheap credit makes you dumb.

How could this unlikely scenario come to pass in a presumably sophisticated 21st century financial market? Greed, plain and simple greed. It is the grease that keeps our society skidding ever faster toward more of the same type economic problems that we presently face. Ask any three economists what the immediate problems are and you are likely to get three answers...inflation, recession or, stagflation. Not a pretty future regardless of which turns out to be the correct answer.