Friday NonSense

Reading the news tonight its particularly clear that there is not much positive news on the national scene. The country is in a right-shitty state these days. This week has brought news of a softening (probably not the appropriate terminology) in the housing market, which has probably been one of the most significant contributors of the economic growth since 2002-2003.

Data from last month shows that new home sales have slowed and we have the highest supply of new homes on the market since 1995. As builders adjust to the new market they are cutting back on workers and slowing their pace in housing starts.

What does this mean to the rest of us you might ask... For one, if you own a home the huge increases in home values that you may have enjoyed or leveraged for home improvements in the past couple of years, are most likely a thing of the past. Some areas might even begin to experience a correction in home values. According to this survey twenty-six of 151 areas studied actually saw reductions in values overall.

California has seen a huge spike in default rates with the rate of defaults up 67 %, the number of defaults at its highest since the first quarter of 2003. Industry experts believe this trend is related to two issues, the slowing pace in home sales and the prevalence of Adjustable Rate Mortgages and Interest Only Mortgages that have become more popular in the Mortgage industry as of late.

Slowing home sales make it more difficult for homeowners to move a property when they may have difficulty making their monthly payment. In the past few years, the market has been so successful that homeowners in payment trouble had little issue in quickly unloading a property before it went into default. If the market continues to slow, this problem may prove to be tenacious.

In order to keep pace with the market, Mortgage Lenders and their investors have developed an exotic variety of mortgage products to qualify as many borrowers as possible. An interesting and, rather risky new product that has become very popular in areas such as California are the Interest Only Adjustable Rate Mortgages (IO ARMS.)

These products are similar to traditional ARM products, however for Adjustable rate period the borrower does not pay any of the principal value in their monthly payment. The advantage (to the lender) of this type of mortgage product is that it enables borrowers to qualify for a more expensive property than they normally would have been able to afford. The disadvantage (to the borrower) is exactly the same, more property than they should really be purchasing.

The prevalence of IO ARMS in markets such as California should be of concern to the market in this climate. With what appears to be a slowdown brewing, we could see more correction in home values across the country. This will leave homeowners that have purchased homes financed by IO ARM products at a distinct disadvantage. If values decrease homeowners that did not enter the transaction with a significant amount of equity could potentially owe more money to the lender than the property is worth.

Here are some facts that should disturb you:

• 32.6% of new mortgages and home-equity loans in 2005 were interest only, up from 0.6% in 2000;
• 43% of first-time home buyers in 2005 put no money down;
• 15.2% of 2005 buyers owe at least 10% more than their home is worth (negative equity);
• 10% of all home owners with mortgages have no equity in their homes (zero equity);
• $2.7 trillion dollars in loans will adjust to higher rates in 2006 and 2007.
Source

The previous six years of the boom mentality in the Mortgage industry have turned what used to be a generally conservative mindset where credit, collateral and a substantial downpayment were required to obtain a mortgage into a much riskier affair. Mortgage companies and their investors have greatly broadened their guidelines to increase their volume and portfolios.

This change in the basic mindset has created an environment that could be conducive to a severe contraction in the housing market which could send shockwaves through the rest of the economy. With rising fuel costs caused by high oil prices as well as the onset of winter we should continue to watch this situation carefully. We may well live to see a time where people have to choose between keeping their heat on or paying their mortgage, and when that time comes things will get downright ugly...

Re-Localization: Saving us from ourselves...

One of the most critical conversions that has to happen in the coming years is a re emergence of local food sources, "Mom and Pop" shops and cottage industries... As oil prices increase, it will be more critical for our society to convert our suburban wastelands of strip malls and McMansions into viable and self sustaining communities.

Familes will need to begin to consume less refined goods and produce grown at industrial farms and produce a greater portion of their food in home gardens. Neighborhoods can convert empty plots of land into local gardens for shared use. Our culture will need to turn away from fast food restaurants (fat factories) and change dietary habits. Not only will a savings be realized in the overall health of the average American, but it could contribute to a drastic reduction in the amount of energy required to ship the food across the country by diesel guzzling freight trucks.

Local businesses will also be critical in the conversion from a "mass produced" culture to more traditional local/regional supply chain for goods and servies. Sure its been a few decades since we regularly thought of fixing something rather than driving to the local ***-Mart to purchase a new version of the same gadget, but we certainly posess the abilities to do so.

Certainly, this stance is viewed as crazy by a majority of my fellow citizens, however in due time, the reality of our current predicament will be proven positive. There simply cannot be infinite growth on a planet with finite resources. Simply put, humanity cannot continue to consume anything and everything that it "wants" without end... At one time in our country, great men with the names of Washington, Jefferson, Adams and Franklin broke ranks with the silent majority and risked their lives for what they believed in.

It is time for our generation, it is time for the great men and women of our generation to apply our innovative ways, our perseverence and our spirit to a better cause than voting for the next Am*erican Idol. We have to wake up from these vain and mind numbing pursuits and enact serious change at the local, regional and state level of our governments.

This conversion has to happen from the ground up. Until we stop purchasing their gas guzzling SUV's, auto makers will continue to manufacure them. Until we demand alternative sources of energy to power our homes, our power companies will stay the course. The only meaningful change will have to be driven by the demands of the market (AKA We the People.) Until we demand change with our collective purchasing power, until we opt out of their mass market, the corporate overlords and their accomplices in the halls of Congress will not see the light. We do hold the true power, and shame on us if we don't take back our nation and change the course to a sustainable future.

Time to wake up...

We need to come out of our collective dream state that has led us all to believe that unlimited economic growth will propel us into a future where new technologies and wishes will prevent the coming collapse of our economy or worse our society. Our governments, talking heads and corporate overlords are more than content to take full advantage of our collective ignorance, which renders each and every one of us complicit in the faciliation of the eventual crisis that will come to fruition in the coming decade...

While the corporate figureheads and government naysayers collude in backroom deals, make record profits, and marginalize the rights of the Individual, We the People sit idly by and allow ourselves to be buried in debt and manipulated by lies that the coming shortages in energy supplies are not real and that anyone that speaks up and demands a course change is a fringe lunatic. It is not uncommon these days for one person to drive an SUV to a grocery store to purchase a piece of fruit that has traveled 2000 miles, a piece of fruit that could have been grown in an orchard within walking distance, or in a community/neighborhood garden...

After the energy crisis of the 1970's, there was a brief course change in the US culture which resulted in more efficient motor vehicles, utilization of nuclear power and pursuit of more environmentally friendly sources of energy. The awareness of that era was eroded when, during the 1980's new deposits of oil were found that were readily accessible to US oil interests, enabling production of cheaper oil and again, the populace was lulled into ignorance, swayed by cheap fuel, a growing economy and relative prosperity for the middle class...

The corporate oil interests were quite happy to feed the cultures lust for cheap goods, providing them huge profits for investment in their favorite market, politics... (http://www.opensecrets.org/industries/indus.asp?Ind=E01)
Their friends in the national government were happy to take the campaign contributions in turn for Oil friendly policies espoused through out the better part of the last 3 Presidential administrations... The Feds also has been reluctant to impose stricter fuel economy standards on vehicles . A series of policies that were devised to protect the inept management of the Big 3 auto makers from themselves, for without this policy these companies, and their astounding lack of vision and inspiration would have been bankrupt in the early part of the 1970's.

Over the coming decade global demand for oil will be increasing as India and China continue their conversion to an industrial status, couple this with what will most likely be diminished oil production from all of the major producers, we need to become aware that our entire society is on the brink of a new age, and what that new age will be is still hanging in the balance. We must, locally, regionally and nationally begin to make difficult choices. Choices between the convenience of staying the course, hoping for a miracle, discovery of a new source of fuel or a technology that solves the energy question or making a bold course change. We must invest in technologies that will improve the efficiency of automobiles (http://www.ornl.gov/info/ornlreview/v38_1_05/article05.shtml), choices that require auto manufacturers to increase fuel efficiency, not just on small vehicles but on trucks and vans. Tax credits that incent businesses and homes to convert to renewable sources of energy such as solar power to reduce the burden on the system as a whole.

With smart choices now, we might, just might be able to buy ourselves enough time to develop additional technology to leverage renewable sources of energy for our benefit, the benefit of our society, our children and their children. If we continue to minimize the voice of those calling for change and innovation, if we continue to allow the small minded members of Congress to ignore the fact that there is indeed an impending energy crisis of global proportions so that they may continue to suck public funds and ensure they are padded from the shockwaves that would surely result, we have no one to blame but ourselves...

What species IS this guy?

I am not quite sure what to say about this guy, I'm not so sure he's a homosapien, maybe they've found the missing link...

He was found hiding in a briar patch about 150 yards from where a sherrif's deputy was murdered during the episode...

http://www.breitbart.com/news/2006/08/21/D8JL47O81.html

Got Apocolypse...?

Well, I am am impatiently waiting to see if 8/22 brings about the end of the world. I am plugged in to the information superhighway waiting for news of impending doom. Its only 10 pm EST, perhaps I will have a cup of coffee and make it a night...

Only time will tell if the rampant speculation about Iran's nuclear weapons program is senseless fear mongering and paranoia, spread like jelly on toast.

Lets everyone make our peace and wait to see if the night brings a white-hot flash of radioactive cataclysm...

Here's something to read while you are waiting...

http://today.reuters.co.uk/news/articlenews.aspx?type=worldNews&storyID=2006-08-21T114728Z_01_BLA026520_RTRUKOC_0_UK-NUCLEAR-IRAN.xml&archived=False

Israeli Raid threatens Ceasefire

Early Saturday morning Israel conducted a raid deep into Lebanon to interfere in the re-arming of Hezbollah by Syria and Israel, according to the IDF.

The casualties included 1 officer killed and two soldiers wounded.

This action is a flagrant violation of the truce according to Lebanon's Prime Minister.

Additional troops to bolster the 2000 strong UN Peacekeeping force will continue to filter into the region over the coming weeks.

Both sides in this conflict seem eager to maintain the instability of the situation with Syria and Iran funneling arms into the region and Israel continuing to respond to these actions.

http://apnews.myway.com/article/20060819/D8JJPQL02.html

The Art of War and Nonsense:

Ye gods man, there is nothing more disgusting than cable news. The leviathan has risen and he is one ugly son of a bitch. Our country is in a major state of disarray, we stand at the brink of chaos, utter collapse, and the globe has a fever and BUDGET OVERRUNS!!! The deficit, woe is the dollar for its day is nearly done. The time has come for us to pay the piper and our tab is long and ugly. The nation, and the world is coming to from a long carbon fueled binge and the hangover is going to be wicked.

As I write, I am stricken with second degree burns on the bottoms of both of my feet. I would like to tell you that the wounds were received in the course of a noble action, where I rescued a kitten from a burning tree, but alas, no such truth will be had here.

With all that being said, let’s review the current state of affairs in these here United States. Given the urgency of this correspondence I will forgo any further platitudes and get right to business.

The Earth has a fever that Tylenol won’t fix…

According to experts, the year of our Lord, two thousand ought six has shown to be the hottest year on record. This summer has seen heat waves that have scorched crops in multiple states, spiked electrical usage to record levels and caused numerous deaths among the young and elderly.

In my research I have learned that many of the world’s glaciers are melting at unpecedented rates. Glaciers are masses of ice that form over centuries of winters, they are slowly moving rivers of ice, and they are melting. They are melting faster each year.

According to a recent BBC article (http://news.bbc.co.uk/2/hi/science/nature/4346211.stm) Glaciers in the Himilayan mountains stand on the brink to hit humanity with a one two punch of devastation that could impact two of the largest population centers in the world. These glaciers have previously melted at a much more conservative pace. This annual snow melt feeds rivers that provide drinking water to hundreds of millions of people in China and on the Asian Subcontinent.

With increased melt, experts predict that these areas will be flooded, raising the levels of rivers such as the Mekong, Yangtze, Ganges and Indus. These same experts predict that this flooding will last for a few decades. Ten, twenty or thirty years of annual flooding in regions loaded with people that live in flood plains, in minimal housing. This will create the first catastrophe that will utterly devastate tens of millions of lives and send shockwaves throughout the rest of the world.

As if nature could not do enough, the period of flooding will be followed by periods of excessive drought. Farmers that depend on these rivers for irrigation will no longer be able to rely on a steady source of water. The impact to food supplies will be as devastating if not more so than the preceding flooding disasters.

The increased rapidity in the melting of glaciers is one and only one example of many. Couple this on a global scale with: heat waves that are more severe, droughts that are more pronounced in their intensity and duration, and hurricanes that pack a more severe punch ripping through oceans, tourist areas, population centers across the globe…

Starbucks Credit Cards and the death of the Dollar…

Why put off buying today what you can purchase and pay for tomorrow. Today an ever growing amount of purchases are made on Credit. The American People as well as the Federal government refuse to acknowledge the bottom line. We live in a consumer culture that is addicted to spending, and does not mind borrowing to get what it wants.

Early in ’06 Congress raised the debt limit to 9 trillion dollars. One dollar is about 6.4 inches in length; laid end to end a line of 9 trillion dollars would reach from the earth to the sun over four and one half times. This equates to about thirty thousand dollars in public debt for each citizen of the United States.

Like our government, We the People are addicted to our lifestyles and seemingly unwilling to make the adjustments to live within our means. According to The Motley Fool (http://www.motleyfool.com/) We the People carry approximately 1.7 Trillion dollars in consumer credit card debt, which is a fairly hefty debt to carry.

Nearly 75 % of credit card company revenues are derived from finance charges assessed to card holders, a debt free American public is not profitable for the corporations that finance our debt, the cycle is perpetuated by marketing to consumers that uses deferred interest charges (“Buy now – Pay later”) schemes that serve as a dangling carrot that is luring more and more American familes into the black-hole of debt.

In our culture, the status symbols that people are driven to attain have risen in cost to the point where consumers find themselves spending more on credit cards than ever before. With all this increased spending, household savings are at an all time low. In fact Average Household savings was in the negative in 2005, the first full year of a Negative annual average household savings since 1932 and 1933. That’s right - that was during the Great Depression…

Our country is spending itself silly. At both the household and Federal level we are sacrificing future economic stability for the short term. Pork Barrel spending, the War in Iraq and plush limousines for members of Congress are far more important than the future our children and their children. We the People need to come to grips with reality, the reality of our finances at home and in Washington D.C. and the reality that if we do not make hard choices now, the cost of waiting will be too much to bear.

The taxman cometh, bearing gifts for the rich…

Good times, good times. One day we might look back at our gaudy lifestyles lit by plasma televisions, cell phones, iPods, Blackberry’s and the like and collectively wish that we had done some of this a bit differently. I am afraid that not too enough of us ponder our place on this earth and what we are doing here, or what our species is meant to do.

I hope that after all of this is done, we turn out to be more than a plague of locusts that came and stripped this planet bare of resources, bare of life and bare of value. There is no time better than the present to take notice of our state and make a course change. That is if we wake up in time…

Amazing news today, authorities in Maine have found the body of a hybrid animal of some kind that has been killing dogs and cats around rural areas. This may be the creature that is the source of legends stretching back over the last few decades. The supposed half wolf-half dog met his end while chasing a cat across the street. His wild nature led him out of his habitat and into civilization, into traffic to his death… unaware of the peripheral circumstances.

Benjamin Franklin and other members of the 1787 Constitutional Convention often wondered if the chair with the carving of a half sun, used by the President of the Congress, George Washington, represented a rising or a setting sun. The optimistic idealism of the time has surely proven that the sun was and always will be rising in the unbreakable spirit of the American people.

It is time for us wake up and take off our blinders, and see what is occurring in the peripheral, to take note of our path. We must start to change our course to return our nation to the greatness that it deserves, the bastion of innovation, equality and freedom that it should be, an example to all the nations of the world, leading by example.