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Showing posts from February, 2014


I have always believed that things are best proven and learned in the extremes.  For example, we have so many people who we call friends, however, how many would be there for you if it meant a real sacrifice on their behalf?  It is in those moments, when there is a test, that we discover reality.

Since last week my wife has received a continual stream of emails and texts from friends and family in Venezuela, who almost uniformly express shock and horror at the degradation of their previously proud society. Violence, both government-sponsored as well as civilian, has taken over the streets. It seems to me that disaster, with the real prospect of starvation, may be imminent as streets have been barricaded and normal societal systems can no longer function.   This is indeed an extreme situation.

Mortgage Debt

This may surprise some given that I’ve made much of my career in the mortgage debt markets.  As I have observed the housing market’s ups and downs during much of my career dating back to the 1980’s I have concluded that our system of encouraging people to stretch for homes they cannot afford is among the most harmful aspects of our society’s systems. When I began my career as a loan underwriter at Mercury Savings & Loan the mortgage industry held firm to the 28/36 ratio standard. This standard required that for a prospective borrower to be approved he/she must have his/her housing costs including principal, interest, taxes, and insurance be no more than 28% of his/her total monthly income. Further, the borrower must also pass the total debt service-to-income test at 36%.  This standard insured that, for the most part, only those who could afford a home bought them.  It also insured that families had spare money after their housing costs to afford a decent quality of life and maybe…

Venezuela: A Fine Example of Big Government

Venezuela is collapsing.  Society there is breaking down.  Food, medicine, toilet paper, and other essentials are in increasingly short supply.  Replacement parts for cars are nearly impossible to find. The official inflation rate exceeds 50% and private estimates have the rate as being substantially higher.  The currency, the bolivar, is worth very little and life savings have been destroyed.   Dollars are nearly impossible to come by.  Government has taken over every television station, and has recently blocked access to the Columbian station that was broadcasting there unedited until this past week.  There are mass protests in the streets.  Not surprisingly, government militia has taken to violence.  The ability to use guns and violence with impunity tends to attract those in society who derive joy from these activities, just as government leadership roles often attract those who desire to control others.

Why Write?

In reflecting upon this blog, I realize that I've never properly introduced myself or my reasons for writing.  The roots of my instincts to write were born from the financial crisis of 2007/08 which caused me to re-think some long held beliefs that I realized were mistaken.  It dawned on me then that pervasive citizen apathy had become a danger to our society, with the voices of the very few who participated actively in the political process determining the fate of the large majority who had chosen silence.  Until 2007 I would have been included in that silent majority, incorrectly believing that the U.S. was so strong that political incompetence couldn't undermine our wonderful foundation.  When the world’s financial system nearly collapsed under the weight of a toxic mix of misguided social policy regarding homeownership, impossibly naive banking regulation, easy money policies, and completely unchecked government spending, I realized how dangerous it is for citizens to bli…

Preschool, College, and Results

In past years the political hue and cry focused on how important it was for everyone to earn a college degree, and how that would somehow help lift everyone to a higher economic plateau.  This prizing of a college education, along with a concurrent expansion of the federal government’s commitment to finance students’ educations, has had somewhat predictable results.  With demand driven up and subsidized financing available, colleges have raised the price of tuition astronomically.  The cost of a four-year degree, in real/inflation-adjusted dollars, has increased some 300% on average since I graduated in 1982, and by approximately 1,000%, or ten fold, since 1965.  Remember, this is measured after adjusting for inflation!  Worse still, for too many the college degrees have done little to assist them in their hunt for decent jobs.  Millions of graduates are now either unemployed or desperately under-employed, and most of them are saddled with student loan obligations that will remain a m…


I cried last week as I read an article about how hundreds of maimed and injured Syrians are crossing the border into Israel, chaperoned by Israeli military to Israeli hospitals where they are being healed.  Once healed, these Syrians and their families must then sneak back into Syria and keep their treatments secret lest they be accused of being an Israeli collaborator and killed.