Sunday, January 27, 2008
Thursday, January 24, 2008
Tuesday, January 22, 2008
Common Sense?
Read this on the productivity 501 blog
Struck a cord, particularly in these turbulent financial times!!
(note I have slightly abridged the opening statement)
Help Me Understand the Subprime Mess
I don’t understand the subprime mess. I mean I understand the idea that if you try to loan a bunch of people money who are likely to default (bad credit, poor financial skills, etc.), then you have a high chance of them … well, defaulting. That part makes sense, but the way it is causing problems for banks doesn’t make sense to me.
So lets skip the whole part of the subprime mess where lenders gave loans to people who really shouldn’t have qualified for it at discounted rates that are now starting to reflect the true risk of their loan and triggering a bunch of foreclosures. That part I understand. That is the part we hear about.
Here are the two things I don’t understand:
Why does this matter to the banks that bought up the mortgages?
Where are all the cheap houses that are being foreclosed on?
So starting with the first question: Why is this hurting banks? Recently, Etrade sold several billion dollars worth of mortgages to Citadel for 28 cents on the dollar. That is a pretty steep discount and is supposed to reflect the fact that Citadel assumes that 72% of the original investment will just evaporate. What I don’t understand is why the liability is on Etrade (and now Citadel’s) shoulders. Every mortgage I’ve every had required mortgage insurance until I owned at least 20% equity. So either these were homes selling for $80,000 that they somehow got to appraise for $100,000 and thus didn’t not require mortgage insurance, these were special loans that didn’t require insurance, or the mortgage insurance is somehow packaged into the loan (which would make the mortgage insurance thing seem like even more of a rip off).
If mortgage insurance is involved then there should be a bunch of insurance companies getting into trouble instead of the banks that purchased the mortgages. More importantly, if the mortgages use the houses as collateral, then why does the bank think no one would be willing to pay more than 1/3rd of what the house last sold for? This brings me to my second question.
Second question: Where are all the cheap houses? For banks to start unloading their mortgage investments for less than 1/3rd of their face value they have to really be losing money. Keep in mind that the banks aren’t dealing with just one loan, they are dealing with thousands of loans. For a bank to say, “We have 1,000 mortgages for $100,000 each and for each of these loans we only expect to be able to collect $28,000.” is a pretty big step. That would mean that after the bank forecloses they are only able to recover $28,000 from a $100,000 house. Take into consideration that there are some people that won’t default and that means the average foreclosure will value a $100,000 house at less than $28,000.
So where are these homes? I can’t find anyone selling houses for that type of discount. Detroit has a bunch of run down houses for sale in the $30,000 range, but those weren’t ever $100,000 homes. I haven’t seen any real estate market in any part of the country where people are only will to pay no more than 1/3rd of the price a home went for in the last 4 or 5 years.
So what am I missing? Can anyone shed some light on my confusion? If banks are losing as much money as they say they are then someone should be getting a really good deal on houses. Is this happening in your part of the country?
Struck a cord, particularly in these turbulent financial times!!
(note I have slightly abridged the opening statement)
Help Me Understand the Subprime Mess
I don’t understand the subprime mess. I mean I understand the idea that if you try to loan a bunch of people money who are likely to default (bad credit, poor financial skills, etc.), then you have a high chance of them … well, defaulting. That part makes sense, but the way it is causing problems for banks doesn’t make sense to me.
So lets skip the whole part of the subprime mess where lenders gave loans to people who really shouldn’t have qualified for it at discounted rates that are now starting to reflect the true risk of their loan and triggering a bunch of foreclosures. That part I understand. That is the part we hear about.
Here are the two things I don’t understand:
Why does this matter to the banks that bought up the mortgages?
Where are all the cheap houses that are being foreclosed on?
So starting with the first question: Why is this hurting banks? Recently, Etrade sold several billion dollars worth of mortgages to Citadel for 28 cents on the dollar. That is a pretty steep discount and is supposed to reflect the fact that Citadel assumes that 72% of the original investment will just evaporate. What I don’t understand is why the liability is on Etrade (and now Citadel’s) shoulders. Every mortgage I’ve every had required mortgage insurance until I owned at least 20% equity. So either these were homes selling for $80,000 that they somehow got to appraise for $100,000 and thus didn’t not require mortgage insurance, these were special loans that didn’t require insurance, or the mortgage insurance is somehow packaged into the loan (which would make the mortgage insurance thing seem like even more of a rip off).
If mortgage insurance is involved then there should be a bunch of insurance companies getting into trouble instead of the banks that purchased the mortgages. More importantly, if the mortgages use the houses as collateral, then why does the bank think no one would be willing to pay more than 1/3rd of what the house last sold for? This brings me to my second question.
Second question: Where are all the cheap houses? For banks to start unloading their mortgage investments for less than 1/3rd of their face value they have to really be losing money. Keep in mind that the banks aren’t dealing with just one loan, they are dealing with thousands of loans. For a bank to say, “We have 1,000 mortgages for $100,000 each and for each of these loans we only expect to be able to collect $28,000.” is a pretty big step. That would mean that after the bank forecloses they are only able to recover $28,000 from a $100,000 house. Take into consideration that there are some people that won’t default and that means the average foreclosure will value a $100,000 house at less than $28,000.
So where are these homes? I can’t find anyone selling houses for that type of discount. Detroit has a bunch of run down houses for sale in the $30,000 range, but those weren’t ever $100,000 homes. I haven’t seen any real estate market in any part of the country where people are only will to pay no more than 1/3rd of the price a home went for in the last 4 or 5 years.
So what am I missing? Can anyone shed some light on my confusion? If banks are losing as much money as they say they are then someone should be getting a really good deal on houses. Is this happening in your part of the country?
Wednesday, January 16, 2008
Free Multi media blogging course
I'm evaluating a multi-media course on blogging from the folks at Simpleology. For a while, they're letting you snag it for free if you post about it on your blog.
It covers:
- The best blogging techniques.
- How to get traffic to your blog.
- How to turn your blog into money.
I'll let you know what I think once I've had a chance to check it out. Meanwhile, go grab yours while it's still free.
Sunday, January 13, 2008
Insurance Claim Latest
In the interest of fairness, and balanced reporting, I am happy to report that my insurance claim is being settled to the satisfaction of all concerned. I feel that if I didn't keep calling the claims department, I would probably still be waiting, but maybe Norwich union can look at how they contact people.The main thing is if you promise to call someone within 48 hours CALL THEM!! Don't make it as they have to chase you.
On another note:
I have an outstanding gripe with a magazine subscription offer, which I am still waiting for a gift to be sent to me as a thank you.Again I was told that someone would contact me within 2 days, which was a week ago.I am ready to name and shame, let's see what happens tomorrow!!
Now just so you don't think I am a moaning Git- here's some alternate definitions to some common words- enjoy
ADULT: A person who has stopped growing at both ends and is now growing in the middle.
BEAUTY PARLOUR: A place where women curl up and dye.
CANNIBAL: Someone who is fed up with people.
CHICKENS: The only creatures you eat before they are born and after they are dead.
COMMITTEE: A body that keeps minutes and wastes hours.
DUST: Mud with the juice squeezed out.
EGOTIST: Someone who is usually me-deep in conversation.
GOSSIP: A person who will never tell a lie if the truth will do more damage.
HANDKERCHIEF: Cold Storage.
INFLATION: Cutting money in half without damaging the paper.
MOSQUITO: An insect that makes you like flies better.
RAISIN: Grape with a sunburn.
SECRET: Something you tell to one person at a time.
TOOTHACHE: The pain that drives you to extraction.
TOMORROW: One of the greatest labour saving devices of today.
YAWN: An honest opinion openly expressed.
WRINKLES: Something other people have. You have character lines.
And Have you ever wondered:
When an agnostic dies, do they go to the "great perhaps"?
Why is the time of day with the slowest traffic called rush hour?
Do you think Houdini ever locked his keys in his car?
Can atheists get insurance for acts of God?
If procrastinators had a club would they ever have a meeting?
If the #2 pencil is the most popular, why is it still #2?
Have you ever wondered why just one letter makes all
the difference between here and there?
Isn't it strange that the same people who laugh at
fortune tellers take economists seriously?
If genetic scientists crossed a chicken with a zebra
would they get a four legged chicken with it's own barcode?
If practice makes perfect, and nobody's perfect, why practice?
Why is there always one in every crowd?
If all the world is a stage, where does the audience sit?
Is it possible to have deja-vu and amnesia at the same time?
How do you know when it's time to tune your bagpipes?
On another note:
I have an outstanding gripe with a magazine subscription offer, which I am still waiting for a gift to be sent to me as a thank you.Again I was told that someone would contact me within 2 days, which was a week ago.I am ready to name and shame, let's see what happens tomorrow!!
Now just so you don't think I am a moaning Git- here's some alternate definitions to some common words- enjoy
ADULT: A person who has stopped growing at both ends and is now growing in the middle.
BEAUTY PARLOUR: A place where women curl up and dye.
CANNIBAL: Someone who is fed up with people.
CHICKENS: The only creatures you eat before they are born and after they are dead.
COMMITTEE: A body that keeps minutes and wastes hours.
DUST: Mud with the juice squeezed out.
EGOTIST: Someone who is usually me-deep in conversation.
GOSSIP: A person who will never tell a lie if the truth will do more damage.
HANDKERCHIEF: Cold Storage.
INFLATION: Cutting money in half without damaging the paper.
MOSQUITO: An insect that makes you like flies better.
RAISIN: Grape with a sunburn.
SECRET: Something you tell to one person at a time.
TOOTHACHE: The pain that drives you to extraction.
TOMORROW: One of the greatest labour saving devices of today.
YAWN: An honest opinion openly expressed.
WRINKLES: Something other people have. You have character lines.
And Have you ever wondered:
When an agnostic dies, do they go to the "great perhaps"?
Why is the time of day with the slowest traffic called rush hour?
Do you think Houdini ever locked his keys in his car?
Can atheists get insurance for acts of God?
If procrastinators had a club would they ever have a meeting?
If the #2 pencil is the most popular, why is it still #2?
Have you ever wondered why just one letter makes all
the difference between here and there?
Isn't it strange that the same people who laugh at
fortune tellers take economists seriously?
If genetic scientists crossed a chicken with a zebra
would they get a four legged chicken with it's own barcode?
If practice makes perfect, and nobody's perfect, why practice?
Why is there always one in every crowd?
If all the world is a stage, where does the audience sit?
Is it possible to have deja-vu and amnesia at the same time?
How do you know when it's time to tune your bagpipes?
Saturday, January 12, 2008
Ironic
Recieved this from my sister in law today, it gave me a smile, see what you think
Many thanks to all those who have sent me emails this past year........
I must send my thanks to whoever sent me the one about rat manure in the glue on envelopes because I now have to use a wet towel with every envelope that needs sealing.
I now scrub the top of every can I open for the same reason.
I no longer have any savings because I gave it to a sick girl (Penny Brown) who is about to die in the hospital for the 1,387,258th time.
In fact all my money is gone but that will change once I receive the $15,000 that Bill Gates/Microsoft and AOL are sending me for participating in their special e-mail program...
Or, I'll receive it from t he senior bank clerk in Nigeria who wants to split $7 million with me for pretending to be a long lost relative of a customer who died intestate.
I no longer worry about my soul because I have 363,214 angels looking out for me, and St. Theresa's novena has granted my every wish.
I no longer use cancer-causing deodorants even though I smell like a water buffalo on a hot day.
Thanks to you, I have learned that my prayers only get answered if I forward an e-mail to seven of my friends and make a wish within five minutes.
Because of your concern I no longer drink Coca-Cola because it can remove toilet stains.
I no longer buy petrol without taking a man along to watch the car so a serial killer won't crawl in my back seat when I'm filling up.
And I dont go to shopping malls because someone will drug me with a perfume sample and rob me.
I no longer answer the phone because someone will ask me to d ial a number and I will get a phone bill with calls to Jamaica , Uganda , Singapore and Uzbekistan
Thanks to you, I can't use anyone's toilet but mine because a big brown African spider is lurking under the seat to cause me instant death when it bites my bum.
And thanks to your great advice, I can't even pick up the £5.00 I found dropped in the car park because it probably was placed there by a sex molester waiting underneath my car to grab my leg.
If you don't send this e-mail to at least 144 people in the next 70 minutes, a large dove with diarrhea will land on your head at 5:00pm this afternoon and the fleas from 12 camels will infest your back, causing you to grow a hairy hump. I know this will occur because it actually happened to a friend of my next door neighbour’s ex-mother-in-law's second husband's cousin's beautician.
By the way....a South American scientist after a lengthy study has discovered that people with low IQ who have infrequent sexual activity always read their e-mails with their hand on the mouse.
Don't bother taking it off now, it's too late.
Many thanks to all those who have sent me emails this past year........
I must send my thanks to whoever sent me the one about rat manure in the glue on envelopes because I now have to use a wet towel with every envelope that needs sealing.
I now scrub the top of every can I open for the same reason.
I no longer have any savings because I gave it to a sick girl (Penny Brown) who is about to die in the hospital for the 1,387,258th time.
In fact all my money is gone but that will change once I receive the $15,000 that Bill Gates/Microsoft and AOL are sending me for participating in their special e-mail program...
Or, I'll receive it from t he senior bank clerk in Nigeria who wants to split $7 million with me for pretending to be a long lost relative of a customer who died intestate.
I no longer worry about my soul because I have 363,214 angels looking out for me, and St. Theresa's novena has granted my every wish.
I no longer use cancer-causing deodorants even though I smell like a water buffalo on a hot day.
Thanks to you, I have learned that my prayers only get answered if I forward an e-mail to seven of my friends and make a wish within five minutes.
Because of your concern I no longer drink Coca-Cola because it can remove toilet stains.
I no longer buy petrol without taking a man along to watch the car so a serial killer won't crawl in my back seat when I'm filling up.
And I dont go to shopping malls because someone will drug me with a perfume sample and rob me.
I no longer answer the phone because someone will ask me to d ial a number and I will get a phone bill with calls to Jamaica , Uganda , Singapore and Uzbekistan
Thanks to you, I can't use anyone's toilet but mine because a big brown African spider is lurking under the seat to cause me instant death when it bites my bum.
And thanks to your great advice, I can't even pick up the £5.00 I found dropped in the car park because it probably was placed there by a sex molester waiting underneath my car to grab my leg.
If you don't send this e-mail to at least 144 people in the next 70 minutes, a large dove with diarrhea will land on your head at 5:00pm this afternoon and the fleas from 12 camels will infest your back, causing you to grow a hairy hump. I know this will occur because it actually happened to a friend of my next door neighbour’s ex-mother-in-law's second husband's cousin's beautician.
By the way....a South American scientist after a lengthy study has discovered that people with low IQ who have infrequent sexual activity always read their e-mails with their hand on the mouse.
Don't bother taking it off now, it's too late.
Friday, January 04, 2008
This is the best nutrition advice you will ever get.
Happy New Year. Here's a timely bit of advice!
This made a lot of sense to me. If you would like to find out more go to Josh Hillis's Blog
Stop looking at different diets
They aren't very different anyway.
If you consume less calories and higher quality food, you'll lean up. That is THE diet.
Everything else is just someone's unique expression of those concepts.
Or it's marketing B.S.
Either way, all you need to know is that you should consume less calories and higher quality food.
Your ultimate super advanced bonus diet tips: Drink more water and get more sleep.
Don't try a new diet this year.
Keep a food log.
Grade your food log on quantity and quality.
Stop buying diet books, start collecting cookbooks.
Eating Clean Cookbook.
Elimination Diet Cookbook
Eating For Life Cookbook
Start eating the meals that are in the books.
Pay careful attention to portion size.
This made a lot of sense to me. If you would like to find out more go to Josh Hillis's Blog
Stop looking at different diets
They aren't very different anyway.
If you consume less calories and higher quality food, you'll lean up. That is THE diet.
Everything else is just someone's unique expression of those concepts.
Or it's marketing B.S.
Either way, all you need to know is that you should consume less calories and higher quality food.
Your ultimate super advanced bonus diet tips: Drink more water and get more sleep.
Don't try a new diet this year.
Keep a food log.
Grade your food log on quantity and quality.
Stop buying diet books, start collecting cookbooks.
Eating Clean Cookbook.
Elimination Diet Cookbook
Eating For Life Cookbook
Start eating the meals that are in the books.
Pay careful attention to portion size.
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