Dr Dani's BABBling

Tips for Home Buyers in 2011 (From Fox News 3/25/11)

2011-03-25T21:52:00.000-07:00

It is a buyers' market, no doubt. Buyers have unprecedented inventory to select from. February sales fell yet another 9.6%, worse than economists expected. Median price is down 5% from this time last year. Affordability is at an all time best, and inventory rose 3.5%.

Put all these together, you get buyers' market -- in a big way.

So how do you buy a house in today's climate? Some diligence.

1. Select more than one home.

This is a great time for buyers, but one that is driving sellers crazy with frustration. Many are still in the mindset that they will get their ideal price for their house. Even reasonable offers get turned down. The general (very general, it's market specific) rule of thumb I tell people today is to offer 10% below asking in most markets, 20% in the previously overheated ones. If the seller doesn't want it, just move on. Banks are more eager than ever to sell the short sales, so consider looking at homes in short sale status.

2. Know your credit score and shop the mortgage.

It's tougher than ever to get credit and interest rates are becoming steeper (though still super cheap) coming close to 5% again. Toughening credit standards continue to make it difficult for the self-employed or people without a full 20% down to get any type of traditional loan. This isn't necessarily bad for the market in general, but not great if you want a new pad. A high credit score is more important than ever. This may change how you chip away at debt. If you are paying down debt only for that purpose, it makes sense to chip away at it based on either highest payment that is causing you worry, or highest interest rate that is making you go more in debt. But, that isn't necessarily the best way to bring your score up. Getting each balance under 50% of its limit (30% even better) is going to get those scores up. Get your credit score as high as possible to have the negotiating power.

3. Be very careful buying into a new neighborhood.

It sounds great to have "new everything". Hell I like it a lot and even found a new place in NYC, almost unheard of because I like to walk in and have stuff work. But, many of these areas with "new everything" are ones where builders overbuilt, and you may not know the house for sale down the block is actually a foreclosure. As those mushroom, the value of your new home will go down. Look for areas that are established. Older (but good) schools and grocery stores are an indicator.

4. Don't make an offer with contingencies. Sell before you buy.

No one likes to be without a home, or in a hotel or a 1 or 2 month rental. But even more, sellers (and the agents advising them) hate contingencies. Bonus to you, not having the debt on your books (and maybe even a little dough if you are one of the few who will get money from the sale) will look great for your loan app/credit score and great to the sellers. Making the new purchase contingent on your home selling isn't going to excite anyone and will put you toward the bottom of the list on two identical offers. People take offers for lower prices with no contingencies over higher prices with contingencies often.

5. Be smart. Do your research.

Location matters and not just for the obvious traditional reasons. We see this when we look at a map of where the foreclosures are at - pockets of issues. The housing crisis after all is not a nationwide one, it's a regional and local one. Take some time to find areas with lower property taxes, lower unemployment rates and shorter commutes to lessen the chance of value depreciation. Determine whether new homes are going up in the area. All of these effect prices over time. Be sure you know what the home is really worth.

Happy House Hunting :)

Bush Tax Cuts - Letting them expire hurts small business owners

2010-11-28T12:54:00.000-08:00

Here is what we face with the tax cuts expiring:

Couples earning 375,700 or more will have a 4.6% increase
Families earning between 232,950 and 375700 will pay 3% more
210,400 to 232,950 will pay 5% more -- this is the hardest hit class
percentage-wise

In total, 36 million people reported small business income in 2009. This is
24% of all tax filers. We aren't talking small numbers here.

Since many business owners report their income as personal income, many
actual businesses will be affected. Many CPA's are recommending that
businesses defer their income for next year and try to take it this year if
possible, including offering an incentive for those owing the business money
to pay up this year.

The hardest hit businesses will be small to middle market companies.

The biggest issue for small business owners is uncertainty. 5% is a lot for
these businesses, and it may mean the difference between paying an extra
employee, laying someone off or having to not expand as they planned.
Reasonable opportunity that they will slow hiring if they'd planned to do
so.

Also, some business owners are being encouraged to delay end of year 2010
bonuses to 2011 so they can take the deduction next year. This could affect
holiday spending.

30% of the nation makes their living from a small business that will be
affected by these increases.

Home Seller Tax Liability after a short sale - and how California is different

2009-12-05T22:15:00.000-08:00

I've been asked a lot more lately about whether a seller has a cancellation of debt tax liability after a short sale if the property is the one you lived in - your primary residence.

A few pieces of demystification.

Sellers take the full loan balance and subtract the sales price. In a short sale, this is a positive number (or zero) and is treated as ordinary income.

But - the Mortgage Forgiveness Debt Relief Act of 2007 requires that the seller not be taxed on this income for federal income tax purposes (note, not necessarily state) if the following conditions are met:

1. You lived in the home - primary/principal residence
2. the loan was used to buy, construct or improve that home referenced in #1
3. the income not taxed is capped at $1 million for a married person filing separate and $2 million otherwise;
4. the short sale has to take place after Jan 1, 2007 and before January 1, 2013 (any guess as to how long the government thought this might be an issue? Hmm...)

A reduction of debt tax savings is applied to reduce the basis of the property though which could increase your capital gains tax owed.

Want to know what else qualifies? Check this out:
http://homebuying.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=homebuying&cdn=homegarden&tm=28&f=10&tt=13&bt=0&bts=0&zu=http%3A//www.irs.gov/individuals/article/0%2C%2Cid%3D179414%2C00.html

California residents? Beware. Cali tax law says that while a lender may have a legal right to go after assets (they usually won't) some states limit their ability to obtain deficiency judgments. In California, according to the California Association of REALTORS, a deficiency judgment may be filed regarding a hard-money loan if the lender forecloses under a judicial foreclosure versus a trustee sale or if the second loan is a hard money loan and the sale takes place as a trustee's sale. This means that if you took a home equity line out and your home is in foreclosure, the lender may try to sue you (though they usually don't).

How does all of this affect credit? Im asked that a lot too so did some homework tonight.

Short sales: You aren't asked about them on applications. All lenders report short sales differently and some do not report them to the credit bureaus at all. A short sale is not a derogatory mark on your credit because credit bureaus do not show the word "short sale" on your credit. It may say "pay as agreed" or "paid as less than agreed". Some report negative FICO score drops from 50 points to 130 points. If your payments have never fallen behind 30 days late and the lender does not require that you pay back the loan, Fannie Mae guidelines may allow you to buy another home immediately. The wait time for an FHA loan is 3 years. If your credit report does not reflect a 60-day+ late pay, under Fannie Mae guidelines, you will be eligible to buy another home immediately.

If your payments are in arrears yet a short sale is granted by your lender, you may qualify to buy another home with a Fannie-Mae backed mortgage within two years, regardless of whether the home is your primary residence.

The point drop is typically due to being in default, that is behind on your payments.

Foreclosures: You are asked about them on applications referring to the past 7 years. You may be denied a job if a company runs credit. Reports of FICO score drops from 200 to 400 points after a foreclosure. Generally this credit score will remain on your credit report as a public record for 10 years. If you want to buy again, you may be eligible to buy another home in 5 years if the home was your primary residence. Otherwise it's often 7 if you need the FHA.

If you are an investor and do not occupy the home, the wait to buy with a Fannie Mae insured loan is 7 years.

If you are in foreclosure and have had a judgment filed, a short sale may put that off for 2-3 months while the bank considers it.

There.. clear as mud? :)

Dani

Afraid to Fly? This Might Help. Or Give You a Good Laugh!

2009-11-25T05:15:00.000-08:00

Warning: I realized after writing this there is a lot of data here.. And this turned more into a story than a blog entry. :) This is probably a 20 minute read, so caution!

It seems lately I've found myself on a lot of flights with quite a few fearful travelers. I can completely empathize because not all that long ago (well okay 19 years ago, but it seems like yesterday) I had to take my first business trip - curled up in the fetal position crying my eyes out certain I was to meet my death that day. Having a crush on the gentleman you are traveling with doesn't exactly help the situation either - it's pretty hard to look cool when you are scared to death.

A few steps back before a few steps forward…

Why on Earth was I so afraid? I was working for a statistician at the time who did his best to help me, without success. I have vague memories of my only flight as a kid, parents and brother with, flying to four islands in Hawaii. With already-overprotective parents and a mother scared to death of flying you can only imagine the things discussed on this flight.. How to hold your head in crash position and "I hope the rivets on this plane door do not come off like on that DELTA flight leaving Honolulu." (When I was a kid, the mantra was DELTA stood for "Don't Ever Leave the Airport"). I don't blame my parents, they were afraid too.

At 17, I was a Technology Director and Stats Advisor while still in High School - and I had to fly to Michigan to take part in a global presentation on Information Technology and talk about what our University was doing that the others might benefit from. I remember laying awake nearly a week before taking that flight, wondering first how I could get out of it, second how I'd ever conquer this fear, and third that I would die - or maybe I could just resign first.

Quite literally. I was completely numb with fear to a point of being unable to function. I called in sick every day that week to work. Not long after my college boyfriend and I were on a trip to Arizona and he wanted to .. Ahh.. Fly! When the plane swung from wind sheer I literally screamed out loud. Thankfully being a super nice guy he just held my hand but the others on the plane wondered what the heck was wrong with me. This continued for some years, and as I boarded a flight in Paris to head back to LA (another terrible experience - GETTING THERE!) the Concord crashed on the runway behind me. We had to wait 4 hours for experts to "clear the runway" to make sure debris didn't cause the crash before we could leave. I spent the next 18 hours staring at the GPS to make sure that our altitude hadn't dropped without my awareness while everyone else slept and jumping at every slight bump along the way. I had images of fiery engines and wings coming off in every area of my brain and it was overwhelming.

So when I say I can empathize with these passengers, I mean it. I never understood how my boyfriends' parents traveled the world without a care in that same world.

I met a freaked out passenger on my very last flight that asked me to write about (and then email him) the way that I "got over it" and I realized that so many people struggle with the same thing, "why not post about it and get others to share their tips too". And now, you are reading this blog doing precisely that. :)

I told this man, Dan, that the key was forcing myself to realize the fear was irrational and then take action on it. His response? "flying in a tin can at 650mph and being afraid of it isn't irrational." Good point - sort of. Emotionally he's right, but using physics and math? He's wrong. I continued… after realizing I had no choice but to fly anyway so I might as well get used to it, I did what any crazy chick trying to overcome a fear would do after growing up in an overprotective household where every time you had to conquer a fear you had to push it to its limits to see "worst case" - do it to an extreme so that you have no choice but to see the worst of the worst - which will make the "average" seem so easy. Yes, I use this method a lot for various things. :)

Step 1 was to fly in little planes with a man that was like a cat on his 8th life. A private pilot that often flew IFR with a VFR license (when that wasn’t suspended) was my boss at my night job while in college (as opposed to the day job I wrote about above) and he flew a lot to Catalina Island (dubbed the aircraft landing strip for VERY good reason - Google it sometime!) and liked to graze mountains in an open-top plane and then stall the motor on purpose to watch mag lights float in the air at 0g's. Sometimes he would follow dirt bikers through the hills at 200 feet above ground - I'm not kidding. We would "wing the water", 30 feet above ground, and try to get out of there before someone gave the FAA his wing number. He was as extreme as extreme gets. And I flew with him every time I had a chance to, scared to death, and yes crying and yelling sometimes. Even hitting him wildly out of pure fear for an hour at a time. He laughed through the whole thing. How could he laugh when I couldn't function -- and then why did I continue to get on that plane? I was NOT having a good time. I had to.

So I continued, afraid. That is.. Until I took the stick. About a year later, not only did I know how to fly these little planes, but I loved every second of it. I loved stalling, I loved recovering, I loved it when we lost the fuel pump on take off and had to go to Plan B, and loved it when I would fly over my parents house at 2000 feet and call them from my brick-sized cell phone and tell them to look outside to try to freak my mother out. I was 20...21, and knew what it felt like to fly in IFR rules without even a VFR license (only a student license) not able to see even 20 meters in front of you, and to have your "instructor" (if you could call him that) say "shit! That's a mountain, holy crap where did THAT come from?" and then veer hard to the right at a stall angle… only to.. Stall, with a mountain right below. You haven't lived until that has happened - or you lose your landing gear on approach while the Ontario, CA airport tower is screaming at you in your headset and the real pilot is trying to jump into your seat so keep you out of trouble.

Never in a million years did I think that not only would I find that to be a blast with some damn funny stories to tell after, but most vitally? It would help me lose my fear of flying. Like truly, madly, deeply gone. What would American Airlines do that could POSSIBLY be worse than what he and I did in that plane? Absolutely nothing. (this guy didn’t have a drivers license, he lost it to reckless endangerment, so he had to fly to work, by the way.) Yes, head case.

So what happened to that 40's vintage plane without the top that soon became my favorite one to fly? He crashed it into a muddy ravine in Central California and it died a slow painful death as mud filled all the gears and open spaces. :( RIP. My friend got out of the mud and used his handheld GPS back in the day when they were the size of a backpack to get to a payphone 15 hours away. He still hadn't used up his lives. I think he's at 8.5 and counting.

Back to Dan and this recent flight. I was assuming Dan didn't want to take that much risk - but I had to tell him the story anyway so he could see that 1) planes can handle an incredible amount of force - in fact our limbs would come apart, as I told him, before the wings did from g forces (he didn't seem to think that was helpful) and are designed to do so, and 2) it could be much worse than a steady 37000 feet for 7 hours at 675 mph. Even if it is a flying tin can.

Now I teach stats, econ, and technology, and needless to say the statistics come in handy. So before I spent the rest of the flight telling Dan what each noise was (a big fear if you are afraid to fly and the Bose just don't block the sound and the Valium just hasn't kicked in) let me first tell you the same statistics I told Dan. There are many ways to calculate them so here are a few.

The odds of dying in a plane crash are about 1 in 22.8 million in the 90s; now roughly stated as 1 in 34 million. You would, statistically speaking, have a greater chance of winning the lottery twice than dying in a plane crash. Fatality rates are about 90% if your plane does crash. (okay that last point probably didn't help my case)

From the book Truly Mad Statistics, more people die in the US in six months in cars than in the air in the last 100 years.

There are about 36 crashes per year according to the NTSB. Here is a link to the NTSB's aviation accident log:
http://www.ntsb.gov/aviation/aviation.htm and here is a table of accidents you can download:
http://www.ntsb.gov/aviation/Stats.htm

Do you want to see stats from one place to another or on a specific carrier? http://www.ntsb.gov/ntsb/query.asp

IF air travel was only as safe as a car, a plane with 120 passengers would crash every single day of the year with no survivors.

A high crash rate was in 1994 with 239 people dying. 2.5 million Americans died that year total, 700,000 of heart disease and 500,000 of cancer. How many from medical screw-ups? 50,000 (now up at about 100,000 with prescription errors). (side note: I've yet to face my fear of surgery/hospitalization/anesthesia, partly because of these odds even though yes, they are small too! That I'm sure will come another day.. I'm just not sure how "extreme anything" will help me prepare LOL)

At any given time over the US alone, there are about 5000 planes in the air. Large aircraft. This doesn't include private planes or jets.

Highest risk flights are short flights in developing countries. Even there the odds are about 1 in 500,000.

The US Bureau of Transportation Stats calculates fatalities per million miles traveled. Car 9.3, Train 5, commercial flights 1.22. Flying is 8 times safer than driving.

Here is a link by year showing a graph of accidents:
http://www.pbs.org/wgbh/nova/planecrash/risk-02.html

Pilots can't avoid pre-checks like drivers can. They can't use old unmaintained equipment like drivers can. They are forced to retire if there is a chance they can't see, and they are given tests often to make sure they're up to date on their procedures. Want to see how safe it is to be a pilot? http://www.bls.gov/opub/cwc/archive/spring2000brief1.pdf Far safer than in construction, in timber, a farmer, a truck driver, etc...

What should you be more worried about? The ride to the airport, not the ride once you get there.

Still, easier said than done if your fear is crippling you. In some cases it's the loss of control and lack of visibility into what is happening, at least it was for me. Remember this though. You'd have to ride on a plane every day of your life and still wait an average of 26,000 years to die in one.

Take a look at Greenspun's General Aviation Safety write up - great stats with fascinating stuff http://philip.greenspun.com/flying/safety

So what about those noises? I'll run through some of them - some that were the worst for me and were the worst for Dan and many other passengers. If you are afraid to fly, print this part out and take it with you. Even book a seat just in front of or just behind the wing or engines so you can see the movement, too.

1. Before takeoff, the AC and lights may go off and back on. This is when the pilot changes power sources from the generator to an internal source.

2. While the plane is making its way to the runway, or taxiing, parts of the wing will move down and back. This is partly a test, and partly to get ready for take off when the flaps have to extend to provide more lift. Lesson 101 from pilot school: lift has to be greater than weight (gravity) to take off. Lift puts pressure upward to make the plane go up, weight or gravity puts pressure downward to make the plane go down.

3. Right after take off, floor panels shake or make noise. This is the landing gear coming up.

4. While climbing up during take off, the sound of the engine goes down, as though the engines are winding down. I remember this being one of the scariest sounds. It's normal! The engines go to lower power outputs after the initial full throttle for take off. This is because during flight, thrust of the aircraft has to exceed drag caused by wind, air, pressure and so on. You don't need full throttle to maximize this, you just have to tweak out your controls to the optimal point. (The engines also go to "idle power" just before you start to descend, so that is another time you might feel "power loss".

5. During the climb, there is a change in the tone of the aircraft. Sometimes it sounds like "vr vr vr vr"… yeah good description huh? This is especially true on older aircraft. (and yes, well maintained older aircraft are very safe. No one has ever died from an accident on Southwest Airlines and they have some of the oldest aircraft period). This is a sound that the flaps make as they retract. You will hear it as they extend, and as you land.

6. Flashing lights. These are usually strobe lights on the wing tips that reflect off the clouds. Sometimes it's lightning but even if that happens and worst case your plane is hit (rare but it does happen and it's happened on one my flights), in almost all cases nothing catastrophic happens to the plane.

7. Wings move up and down and there are turbulence. They are designed to withstand many G's. They wont just come off. Your body will rip limb from limb first. Seriously. Nice mental picture, huh? If the wings come off, you won't even know. ;)

8. Landing produces a hard blowing sound and sometimes more engine sound. To stop, engines often use thrust reverser which redirect air forward to slow the plane. Normal!

And of course there is landing with pulsing brakes. This is much like the braking systems your car uses and they help control skidding. The length of the runway also impacts how intense your landing will be.

According to AA, I have flown over 2 million miles and I'm in my 30s.. And that is one airline. While I still think they are wrong, I'm guessing they'd air on their side and not mine if they were. That doesn’t count all the no-name airlines, the overseas airlines, the small plane trips, the airlines where I haven't checked.. So many millions of miles. I've had a large plane from Chicago into Charlotte lose power because it was struck by lightning, touch and go's in Miami that required diversion to Ft. Myers and bunches of other exciting things happen on flights.. Including just this past weekend simple stuff like a 777 tug overshooting the bridge and pushing back the plane 2 feet. Eventually it's all fun, and you come to enjoy your flight time as a way to get away from the cell phones (though I am liking GoGo a lot). After you start seeing the world and living with other cultures for weeks or months in a year all thanks to a 17 hour flight somewhere, you realize the fear is worth getting over. And it's pretty interesting to see that Air China departs without requiring the pilots shut the door sometimes and that they leave bags laying around "wherever" (not to mention those cool temperature sensors to see if you have h1n1), and which airlines don't have the stupid rules about having cell phones off (because NO, it does NOT cause planes to crash!) and all sorts of various random things you learn.

So if you are afraid to fly, I hope this helps. And if you aren't, thanks for laughing WITH me and not AT me (I hope?) :=)

Dani

Bogus Real Estate Numbers

2009-07-28T18:11:00.000-07:00

I've been listening to many analysts these past few days cite the Case Schiller numbers that came out today along with the existing home sales numbers that came out two days ago as a sign the market is rebounding -- the numbers are *bogus* and here is why.

First - and vital - Case Schiller is a bunch of bunk. They are a 20 metro city index - 20. This is not a national number. They also have a new ETF, UMM, that trades higher if people are optimistic about the market. One of the major indices we "used to use" should be completely removed out of the market because of its now inherent bias.

I'd like to be bullish on real estate too but here is why the numbers suggest otherwise.

1. 11% increase in sales means contracts (number released this week). It doesn’t mean the homes will close. This is up to banks! Have you tried to get a loan lately? :)
2. 32000 more homes sold in May to June than expected. This is 1% of the 3 million in inventory. (note: correction from .01% thanks to Mark Steele)
3. Inventory dropped from 10.8 months to 8.8 months. The 10.8 months was an over inflated number from foreclosures.
4. In major cities it is foreclosures accounting for as many as 60% of sales at incredibly reduced prices. This will create new comps for appraisers, which means many of the homes noted in #1 won't close because they won't appraise!
5. 22% of people are upside down. Studies show that when a homeowner is 15% underwater (owes 15% more than the home is worth) 1 in 4 default on purpose plus the rest that just default. More foreclosures are coming.
6. Foreclosure moratoriums have ended, so we will only now see those hitting the markets.
7. Looking at spring buying numbers - down 21.3% over this time last year. This is a good sign?
8. The tax credit incentivizing some buyers to get off the fence is ending Nov 30, 2009.
9. Jumbo defaults havent hit the market yet.
10. When we hear numbers like "new housing starts up 3%" this is NOT good news! This is inventory which = supply which = downward pressure on prices.

How do you survive in this market? Yes there are some deals!
1. Know your goal (flipping versus living has entirely different tactics)
2. Don’t be deceived by numbers
3. Get a good deal - know the prices
4. Rent when it's appropriate, like if your job isn't stable
5. Buy where jobs are going to - don't buy where they are leaving!

Dani

Why the new home sales numbers dont mean jack

2009-07-27T11:48:00.001-07:00

Analysts are all excited about the new housing numbers - unfortunately they don't mean anything positive for the market. Let's break this down.

1. There is an $8000 tax credit for “first time” home buyers. From May to June, the percentage distribution of sales of homes with prices under $150k rose from 14% of sales to 20% of sales. (For homes priced in the $150k-199.9k range, the percent of total sales went up from 26% to 28%.) The tax credit ranges are where more sales are. Houses have to be purchased before Nov 30 2009 to qualify. This is impacting sales in the low end.

This is a case of some economist forecasting a low number, and even though it's even lower than last year, people are happy that it's higher than the prediction from the Commerce Department.

2 Hardest hit areas are still hit hard. The increases were in the Midwest of over 40% and the northeast at 29%. The areas struggling are still struggling.

3 REALITY - 11% rise yes, BUT -- this is 384,000 - expected was 352,000. This is where percentages can be deceiving. This is 32000 more homes. There are over 3,000,000 homes on the market. The 32000 homes represents .0106% change in that inventory number.

4. Median home price is down this month (May to June) -- had risen previous 2 months. Price destabilization or downward trend isn't good. We need several consecutive stable months.

5. Still have an 8.8 months supply of inventory in a conservative measure.

6. Single family home sales are 21.3% lower than this time LAST year!

7. The homes sold during spring buying season close usually May-June, so this is to be expected...

8. There is also some fear of rising rates in the Fall that may be driving some buyers into the market.

9. 1 out of 4 homeowners today in default are defaulting on purpose! Once the owner owes 15% more than the house is worth, the rate of defaults that are intentional go up to the 25% level. (Chicago School of Business)

10. Still to come - 22% of homeowners have a mortgage bigger than the value of their home. We WILL see more defaults. This will push prices down. Jumbos haven't begun to show up in the markets yet. Banks will stop lending again, and we will face crisis #3.

MultiFamily Areas to Buy – And Avoid – In Today’s Turbulent Market

2009-06-25T16:30:00.000-07:00

MultiFamily Areas to Buy – And Avoid – In Today’s Turbulent Market

In today’s turbulent markets, lots of people are speculating about where to buy -- or perhaps most importantly where not to buy. This analysis is mostly performed for the residential markets because of the gluttony of inventory and the high volume of press that the housing bubble receives – but those in the multifamily industry are trying to determine the same things.

Down payment requirements and loan terms, unlike residential properties, have not improved much for the multifamily borrower. In fact many banks are now requiring higher down payments than ever before, with units that have 4 or more residences requiring 30% or more down and 12 months or more of reserves to cover payments, taxes and insurance. Banks that used to assume a 75% occupancy rate often now assume as low as 60% to cover their proverbial behinds.

Given the restrictions and skin in the game the multifamily investor has in today’s market, analysis is even more vital than it was in the past. As an analyst, I am often asked where I would buy - and most importantly – why. Doing work in the media and calling an area “a wait and see” or a “bad buy” leads to hundreds of hate emails, letters to producers at networks and outcries by those in local markets. I experienced this most recently in the Ft. Myers, Florida area when speaking out against purchasing homes there.

The criteria I use when analyzing which markets I would go into are fairly simple. They focus on:

Jobs – are they moving in, or out?
Humans – are they moving in, or out?
Unemployment trends in the area (6 to 10 mile radius)
Type of jobs (healthcare would worry me, education doesn’t)
How stable prices have been in the past 90 to 180 days
Inventory on the market.

So given these criteria, I have a few places and recommendations for the residential or multihousing investor.

We know that high tech companies are moving into two areas: Omaha, Nebraska and Austin, Texas. In the interest of full disclosure, I own homes in Austin and Round Rock Texas – but I would continue to invest there if the down payment requirements weren’t so high. Median home prices have remained stable in Omaha, and are increasing in Austin. According to a Business Week article from June of 2009, Austin is seeing a lot of transplants from Los Angeles, San Francisco and New York City; partly people looking for work. The median price in Austin this time in 2008 was about $182,000; today it is $191,000. Austin grew about 4% in the past year while most markets declined. Texas tax structure is attracting big tech businesses like Sun MicroSystems.

Seattle, Washington hits my sixth point on the list above – inventory. Seattle had very strict building restrictions that did not allow significant overbuilding. As a result, while the rest of the market has an average of over 10 months of inventory, there is roughly 5 months inventory in Seattle. Many young people are “trying before they buy”, leading to a strong multihousing market. Prices have dropped a bit but appear by some indices to be leveling off.

Another interesting market? Salt Lake City, Utah. I haven’t been overly thrilled with numerous visits to the area partly due to the city seeming to shut down shortly after the sun does. But young people are moving there in droves – and it’s one of the fastest growing metro areas in the US. Prices are remaining stable over a six month period, so people are moving in and price stability seems to be setting in.

Nashville, Tennessee (I happen to be writing this story on the way to Nashville) also has a unique growth story. Nashville has one of the largest Kurdish populations outside of the Middle East (Business Week, 2009) and in the Muslim faith; persons are not allowed to pay interest on a home. Many turn to Habitat for Humanity which requires only principle payments on homes.

So what about places to avoid? I don’t like area where boomers are moving out of. Colorado and Idaho are two states that they’re moving from. I don’t recommend investing in areas with high foreclosure numbers unless you can get an amazing deal allowing for another 20% or more in price declines. As a result, I recommend doing a triple-take in the Riverside/San Bernardino markets in Southern California (referred to as the Inland Empire), and I would not jump into markets like Sacramento, Merced (which has seen up to 70% price declines since the beginning of the bubble burst; median of $230,000 in 2007 and $144,000 in 2008 for instance), Stockton, Ft. Myers, FL or Las Vegas, NV. Merced suffered from significant overbuilding. When the University of California system announced a new UC Merced, builders overestimated the size of the school and number of employees. It will take significant job growth to reduce the size of inventory there.

Today’s investment market is rocky, but this is the time I believe that we see about every decade to invest. Continuing this discussion on my website at The Babb Group, www.thebabbgroup.com, Forums/Real Estate.

Why No Makeup Today? - Fox News Fake Free Friday?

2009-05-30T15:17:00.002-07:00

Okay so after now 50 emails and tweets about the makeup thing I promised to explain in the next couple of hours, and here it is. Last minute decision so no explanation ahead of time. I've sent this to a few fox anchor buddies too - hoping you will join me in a Fox fake-free Friday after you read this! We will do a lot of young women and girls a great service.

When you do a lot of TV spots you get all sorts of email - from wacky to a bit convoluted to incredibly kind to downright rude (particularly if you appear on Hannity's show LOL). But I've been noticing a trend, particularly from women and teens/college kids, and mostly in the past 2 months (maybe as summer approaches and women scrutinize their bodies more? We can thank the lighting in swimsuit stores for that!)

If a viewer wants to know "how did you land your first TV spot" or "what is it like on TV", they usually begin by asking that simple question. I've noticed most of the men tend to drop it once they have the answer they wanted that will help them, but many times (my guestimate would be more than 75%) if a female writes (particularly a young female), there is a comment like "I always wanted to do that too but I am not pretty enough" that leads to several follow up emails.

I remember growing up being the kid that looked so skinny people thought I had anorexia, the kid that had the oddball family that ate Pop Tarts for dinner and had a messy house, and the hard core tech nerd with bad teeth and thick glasses that paid for the family car when she was 10. Those images can create a feeling of NEVER being hot enough, pretty enough or any other word you want to choose to describe that feeling of inadequacy women feel when they don't feel like a knockout.

Quite frankly those emails kill me inside because trust me, if you were walking down the hall or sitting at the desk at Fox, CNN or any other network you'd see that there is nothing special about even the hottest of people on TV. For some people the camera makes them look worse - but believe it or not, for most they look far better.

Worse though is the dismissal, particularly for females, of their capabilities simply because they "aren't pretty enough" (or whatever synonym that individual used for pretty) for television. I think we need less pretty on TV and more intelligence, and if you have both fine - but intelligence and articulation should matter more. Men don't have that issue. I haven't heard one man complain he wasn't pretty enough for TV. Women need to follow this model.

The idea today behind wearing no makeup (sans lipgloss, the lighest shade I could find out of purely a need for something to be able to talk for 2 hours and not have the lips dry out) was to show people that without the makeup, we're all exactly the same and looks aren't an obstacle. The intent was to show these young women and teens what you look like refusing studio make up, and doing none yourself either (my partner had more makeup on than I did.. sorry John LOL - he knew I'd give him shit for that one! LOL). The fact is, that is the norm. Male or female, they cake it on you. At CNN this week, a makeup artist tried to make me "tanless". Huh? Men in studios are basically drenched in powder and thick concealer (and one quite popular host that gets great ratings told me he can't "wait to scrub this crap off" it is THAT much "stuff"; so trust me, their skin isn't flawless either. In person you can see the caked on stuff - on the television? It just looks like flawless skin. It isn't! The most imperfect skin can look flawless with the right camera lighting and makeup person.

So ladies take this seriously - I don't think (maybe I'm an idiot) that not wearing makeup today took away from anything I said. If you think so, you are a shallow bastard and so really you need to go away anyway (but I'd like to hear your comments). You aren't any less valuable if you aren't pretty. You aren't any less capable of getting on television if your style isn't cutting edge or your lips as big as Angelina's. I work with these people - I can think of maybe 1 or 2 that is attractive without make up, and that might be a stretch.

So far the comments I've had today (note this is from FRIENDS and FAMILY plus randomers! LOL) include:

1. Your skin and your body are two different colors (eek who wants that)
2. Your eyes look tired (I dont sleep much, so no kidding - they are!)
3. Your face has uneven complexion (duh)
4. Nice shirt (in otherwords, you didnt look good but your shirt did LOL) (oh and nice hair LOL)
5. You have big lips in person, but they were invisible on the TV
And my favorite from my family
6. You looked ugly today (no Im not joking - yes it was that blunt!)

The only nice comments were from random people and my Gramps, who never has anything mean to say (arent grandfathers the best?) :)

LOL - I laugh, quite seriously, because I don't care! These 6 comments made my point, which is that people will say things even with the best intentions if you don't look like what they think you should look like. But, it doesn't make you any less capable of going on air for 2 hours, doing your thing and giving people important information that will make their lives better. (I forgot my notes too, so I was a bit freaked for 5 minutes)

I say we need a full week of every Fox anchor getting on board and banning makeup (but that won't happen I'm sure) - let people see that you don't have to be gorgeous to help other people on a mass scale.

Fox Anchors and other guests- please join me.. at least one day, a Fox fake free Friday. Let's help young girls and women see that not being flawless doesnt stop them from a career they love.

Dani

The Banks I couldn't remember on Fox Business Network today

2009-05-30T15:17:00.001-07:00

Hi everyone.. thanks for your patience! Sucks to forget your notes! OK, the "banks" (in quotes because they aren't really banks but facilitators) that I promised to get to you today after Your Questions Your Money. (Please check out the forum for thread on my web site at www.thebabbgroup.com and go to Forums, then Entrepreneurs to see what others have to say too)

Mercantile Commercial Capital in Altamote Springs, Florida - $500k to $7mn.. they work on the SBA 504 program, 10% collateral only needed, 5% interest for up to 25 years.. specializing in healthcare/day cares, restaurants, hotels, warehouses. They will look to see that you make about $1.20 for each $1.00 in debt.

Also California Bank and Trust which is setting records in lending.

Check them out!

Skewed Foreclosure Data

2009-05-23T16:40:00.000-07:00

Skewed Data Creating Fear - Haven't We Had Enough of That?

The latest data released by Realtytrac, the leading online provider of foreclosure information (and darn accurate, which is more than I can say for various indexes that shall remain nameless -- for now...) shows that the month of April 2009 hit an all time high in foreclosure numbers.

Foreclosure filings, notice of defaults, auction sales and bank repos were reported as 342,038 in the US during the month of April - a 32% increase over April of 2008. The mainstream media (nawh, not them!) skewed this information and didn't explain WHY to the public.

Homes are selling at accelerated paces and the banks are (finally) helping most troubled homeowners (unless you are a "rich" jumbo borrower) - Condo Vultures recently reported on a news hit on Fox Business we did together that 2/3 of the inventory has been sold in the last year looking at number of homes on the market.

This is good news - so why does the data look so bad? For reasons the media won't tell you. The bad news is that one in 374 US housing units (note I didn't say primary owners, but UNITS - meaning investors are included here - something else the media won't tell you - far less actual FAMILIES are being affected by foreclosure than homes IN foreclosure) are in a state of default.

This number, 1:374 - is the highest since Realtytrac has collected data. So yes, that's bad. But there is more to this story.

Much of the activity in the foreclosure area right now is at the initial stages - bank repos are down - at their lowest levels actually since March 2008. The wonderful administration we've come to know and love decided that they'd institute a moratorium on foreclosure that is now lifted - which means banks are now allowed to process foreclosures again - and so as a survival mechanism (and contractual obligation) they have. THAT is why the number looks so bad but doesn't tell the entire story. They are artificially inflated.

The inserted heat map shows you the worst of the worst - the more red, the worse the foreclosure problem (source: Realtytrac)

So where is the getting good (if you're a buyer) and the market sucking (if you're a seller?)

Forget what the media tells you about that too. It isn't Florida. I am so tired of hearing Florida it is ridiculous! It's Nevada. 1 in 68 housing UNITS (see that word again? Remember I said investors? Yes this was the heaviest investor driven market in the nation) is in some state of foreclosure - 5 times the national average. Note though this is a 44% drop in bank repos from the previous month but default notices ALSO decreased! Yes, this is GOOD news. Is it up from last year? Yep, 111%. That's to be expected.

More investors are realizing they will be dead before the homes they own are worth what they owe (I'm one of them, I'm just foolish enough to wait it out anyway hoping I won't get hit by a bus tomorrow - oh and then there's the whole "I signed the paper" thing), and banks won't work with you unless it's your primary residence. Expect to see this happen even more in towns where lots of investors moved in. (By the way, anyone want to buy my homes in Bullhead City? Ill give you a good deal, I promise.) :-)

OK now onto Florida - it's 2nd highest -- not the highest -- in the nation. 1 in 135 UNITS is in foreclosure, about 2.7 times the national average and about half of what Nevada is dealing with. Repos are down 7% in Florida.. this is good. Total foreclosure activity though is up 75% from April of 08.

Foreclosure activity in California decreased 10 percent from March, but the state still has the nation’s third highest state foreclosure rate in April, with one in every 138 housing units receiving a foreclosure filing during the month. Total foreclosure activity in California was up 42 percent from April 2008.

After that is Arizona and Idaho - yep Idaho making news for the first time in awhile. I still recall a lady about six months ago trying to sell me 20 "units" there. I wonder where those "units" would be today. Probably on someone's default list. ;)

Here is another noteworthy fact you won't read about in the media. The top 10 states? Yeah, they make upa full 75% of the nation's foreclosure activity! The highest total is Cali (96,000), then Florida (64,000), Nevada (16,000) and Arizona (16,000).

What about metro areas? My "friends" over at a certain index fund seem to think they are all that matters, so let's take a look. Las Vegas is tops on the list BUT has a 20% decrease from the previous month. Not all bad news. 1 in every 56 units in Vegas is in foreclosure right now. If you are an investor, it might be time to arrange a short sale or get out of dodge.

Next? Oh boy, do I even go here? I got beat up pretty badly by Ft. Myers residents who weren't happy with me after a CNN hit, but yep -- Cape Coral/Ft. Myers is second in the nation - 1 in 57. They were #1, so congrats - you are now in the #2 spot. Again deals abound. Also in Florida? Miami at Number 9, and Orlando at Number 10.

California is still getting slammed too; Merced posted the third highest metro rate at 1:65; then Modesto at #4, Riverside-San Bernardino (where I grew up) at #5, Bakersfield at 6, Vallejo-Fairfield at #7 and Stockton at #8. Congrats Stockton, you also moved up the food chain. The message here? Unless you are buying in Cali where the jobs are (LA/OC), just please say no.

Below is a chart from Realtytrac showing more info than you might like to know about each state. These are the real facts folks - forget the networks -- this is the real stuff.

U.S. Foreclosure Market Data by State – April 2009

		Properties with Foreclosure Filings
Rate Rank	State Name	NOD	LIS	NTS	NFS	REO	Total	%Change from Apr 08


--	U.S.	65,456	76,608	100,559	35,512	63,903	342,038	32.25
29	Alabama	0	0	1,763	0	545	2,308	269.28*
32	Alaska	1	0	190	0	45	236	61.64
4	Arizona	4	0	12,595	0	3,646	16,245	39.77
21	Arkansas	168	0	1,295	0	401	1,864	45.06
3	California	52,909	0	30,441	0	13,210	96,560	42.13
9	Colorado	31	0	4,213	0	1,251	5,495	-9.29
19	Connecticut	0	1,695	0	119	360	2,174	25.01
39	Delaware	0	0	0	95	91	186	33.81
	District of Columbia	129	0	191	0	78	398	42.14
2	Florida	0	41,674	0	16,800	6,114	64,588	75.41
7	Georgia	0	0	7,809	0	3,712	11,521	21.68
23	Hawaii	117	0	497	0	70	684	216.67
5	Idaho	1,040	0	1,399	0	39	2,478	220.98*
8	Illinois	0	6,407	0	3,942	3,298	13,647	54.40
15	Indiana	0	1,682	1	2,215	1,121	5,019	-0.57
40	Iowa	0	0	287	0	344	631	9.36
37	Kansas	0	214	0	392	181	787	5.64
41	Kentucky	0	296	0	392	203	891	80.73*
38	Louisiana	0	1	0	896	228	1,125	78.57
43	Maine	0	99	0	125	24	248	-20.77
17	Maryland	0	2,351	0	601	661	3,613	-39.89
13	Massachusetts	0	3,790	0	759	706	5,255	-23.59
11	Michigan	0	0	7,270	0	3,560	10,830	-11.77
18	Minnesota	62	0	2,280	0	1,205	3,547	82.84
44	Mississippi	0	0	323	0	12	335	98.22
30	Missouri	1	0	1,672	0	1,025	2,698	-21.06†
47	Montana	0	0	12	0	49	61	-43.52
46	Nebraska	0	106	0	3	9	118	-79.86
1	Nevada	8,657	0	5,131	0	2,478	16,266	111.25
16	New Hampshire	0	0	678	0	357	1,035	62.23
22	New Jersey	0	3,349	0	1,041	644	5,034	-3.51
33	New Mexico	0	380	0	238	95	713	100.28*
36	New York	0	4,256	0	872	463	5,591	-1.01
34	North Carolina	648	0	1,371	0	1,063	3,082	-14.91
48	North Dakota	0	0	0	22	15	37	85.00*
10	Ohio	0	5,107	0	3,890	3,327	12,324	-4.69
35	Oklahoma	431	0	553	0	193	1,177	-30.76
12	Oregon	124	0	3,109	0	604	3,837	127.04
31	Pennsylvania	0	1,928	0	1,806	1,315	5,049	54.55*
25	Rhode Island	13	0	310	0	233	556	-4.63
28	South Carolina	0	1,111	0	501	697	2,309	180.56*
49	South Dakota	0	0	0	15	2	17	-50.00
24	Tennessee	0	0	2,090	0	1,380	3,470	-25.68††
27	Texas	12	0	7,153	0	4,149	11,314	-9.02
6	Utah	1,104	0	1,162	0	703	2,969	120.25
50	Vermont	0	0	0	0	2	2	100.00*
14	Virginia	5	0	4,214	0	2,035	6,254	5.16†
26	Washington	0	0	2,352	0	1,007	3,359	33.88
45	West Virginia	0	0	137	0	8	145	95.95
20	Wisconsin	0	2,162	0	788	911	3,861	71.98*
42	Wyoming	0	0	61	0	34	95	196.88

*Actual increase may not be as high due to data collection changes or improvements
† Collection of some records previously classified as NOD in this state was discontinued starting in January 2009
†† Collection of some records previously classified as NOD in this state was discontinued starting in September 2008

Fox Business Online videos & articles

2009-04-03T19:46:00.001-07:00

Fox Business Online articles and videos:
http://www.fncimag.com/imag/At+Home.

http://www.fncimag.com/imag/At+Home/Foreclosures%3A+What+You+Should+Know
http://www.fncimag.com/imag/At+Home/Lifestyles+of+Renters+vs.+Buyers

Dani

Bank of Obama stopped doing Jumbo's

2009-04-01T14:57:00.000-07:00

Houston, we have a problem. OK, nation, we have a problem. (yeah yeah Young Astronauts program from grade school, still a geek at heart)

I'm in the quest to refinance a property out in Cali that qualifies as a Jumbo mortgage. BofA is freaking me out with their delays, so I decided to do some of my own research. In most of the nation, a Jumbo is about $729,750 or above .. in some areas $417,000 or more to be considered a non conforming loan or a Jumbo. Before I get started, LTV is Loan to Value, which means the amount of principle balance of all outstanding mortgages divided by the value of the home by appraisals (see story on appraisers in my last blog!)

Bank of Obama and team has created a situation where if the government wont buy a loan, the bank won't lend it. End of story. I have the proof.

With the secondary market dead, Fannie, Freddie and Ginnie are getting lots of bucks from the government for conventional loans - those for less than the numbers I noted above. There is no political support for helping jumbo borrowers.

Let me say something right off the bat - I'm not for propping up any of them - but right now the government is yet again creating a gap between what they perceive as the haves and have-not's (there are no political bucks for helping so called rich people), and they are missing a tidal wave of foreclosures about to hit the market with jumbo borrowers unable to refinance. You think conventional homes caused a ruckus? Think what will happen when 15% of the bigger homes fall into foreclosure, too. Talk about devaluing home prices.

Lenders staged when loans would reset. Most in the conventional market are resetting first.. Jumbo's this year and next. Prices are still at least a point higher too on jumbo's than conventionals, even if you can get one. Most lenders want 75% LTV or BETTER! Yes, better. And lookout, but prepayment penalties are coming back!

So I thought it was my imagination that the jumbo market was getting tougher, and went out and did my own research. Thanks to my team of researchers, a lot of phone calls and some dirt digging, here is the scoop as of today on Jumbo mortgages - and who is doing what to even allow you to talk to them.

So here they are, the good, the bad and the ugly - 18 banks and the outcome of the hunt for a Jumbo:

Hanmi Bank (866-654-2664 – Amy Lee)
***Not approving any jumbo/non-conforming loans

Union Bank of CA (866-UB-LOANS, Option 1,3)
***Max loan amount is $417,000 (no non-conforming/jumbo loans)

HSBC (888-346-1717)
***Not approving any jumbo/non-conforming loans

First Commercial Bank US (949-654-2888)
***Stopped personal RE loans. Commercial and industrial only right now.

Bank of the West (800-563-1852)
***Max loan amount is $729,750.00

California Bank and Trust (866-840-4158)
***Not approving any jumbo/non-conforming loans

Citizens Business Bank (714-919-7131)
***Jumbo program only for existing customers

EverTrust Bank (626-854-9700)
***Not approving any jumbo/non-conforming loans

Wilshire State Bank (866-972-2265)
***Not approving any jumbo/non-conforming loans

Chinatrust Bank (949-262-7168)
***Not approving any personal RE loans at this time - commercial and industrial only.

Community Commerce Bank (714-314-9052, Randy)
***Commercial, Industrial, and Retail only right now. Special circumstances apply that will allow for personal RE loans (houses that are on joint residential and commercial zone, fire restoration of home that no other bank will touch, etc.) Other than special circumstances, no personal RE loans!!!

United Commercial Bank (866-821-3899)
***Not approving any jumbo/non-conforming loans…unknown when they will be in the future.

Farmers and Merchant Bank (866-649-3863)
http://www.fmb.com/
***Only 55% LTV on non-conforming loans but may be willing to consider more, credit dependent

Cathay Bank (949-559-7500)
https://www.cathaybank.com/
***Max LTV is 75%, current rate of 6.5

US Bank (800-365-5001)
http://www.usbank.com/cgi_w/cfm/personal/products_and_services/mortgage/home_mortgage.cfm
***95% LTV at 4.5-4.8% interest. -- They are currently ONLY doing this for EXISTING CUSTOMERS! What they say on the phone and what happens are entirely different.

Comerica Bank (866-476-6521)
http://www.comerica.com/vgn-ext-templating/v/index.jsp?vgnextoid=8888577d17a31010VgnVCM1000004302a8c0RCRD
***Here is what they say: Max LTV is 90%, if not in declining market, 80% if declining market. No fixed 30…only fixed 3,5,7, or 10 years. Refused to give interest rate unless I gave them actual numbers of potential loan. Upon further info, only if you give them $250,000 in "other business" (like CDs) will they talk to you.

Wells Fargo https://www.wellsfargo.com/mortgage/ -- not doing anything now.
***Max LTV is 70%. Offering 30 year fixed with no points at 6.5% (aprox., based on limited information). Offering 5 year fixed at 5.3%.

Affinity Bank - only doing conforming loans.

Who does that leave if you need to go to 75 or 80 LTV? Bank of America. And don't even get me started on these guys. That is another blog for another day!

Dani

Oh boy, here we go again -- with appraisers...

2009-03-08T16:41:00.001-07:00

Think it's hard to get a loan? Thanks to the government, it might be juuuust about to get a littttle bit harder (sense any sarcasm?)

Home appraisers played a very big role in the build up and subsequent tear down of the housing bubble. I can tell you some stories from the trenches that would make you cringe and may even take the blame off of the Bush Administration (for awhile) on this whole "housing mess".

So let's look at how appraising works, and what role it has played (so far) in the housing business. Appraisers are generally retained by brokers or lenders. There are shady people in every business (mortgage brokerage companies are full of them) and these brokers (in particular, but lenders too) seemed to find people who would support numbers that they wanted to get deals done. Many of these numbers were overinflated. Appraisers are one of many on the long list of real estate food chain that get paid for a service that really either isn't needed, or could be done online very easily. Some have found Zillow to be more accurate than their local appraiser because Zillow isn't freaked about getting sued.

There are many, many written stories of collusion and fraud so I won't even bother to go into them here, you can google that and have hundreds of thousands of them from reputable sources. But here is the problem - the government.

See, appraisers pulled back after they took a lot of the heat from the inflated market. No one wants to go to the pen over a house appraisal that they made an extra $500 bucks on. They started doing the opposite - being VERY conservative on appraisals such that buyers would often have to come in with another 10 or 15%, just because an appraiser cut an appraisal to cover their asses - not because the house was really worth that but because it "could be later on" (some lenders creatively call this a declining market). This caused lots of sales that would have proceeded just fine to be yanked out from under the buyers and sellers.

Here is the catch. The government has decided it's in "everyone's best interest" to have yet another middleman in real estate (by the way, they already exist - they are called real estate agents - see my former book Commissions at Risk available on Amazon).

A new code of conduct will exist beginning May 1 that requires the nation's 60000 freelance appraisers and lenders and brokers to use Appraisal Management Companies (AMCs), which will prevent lenders and appraisers from actually talking to each other. No, Im not kidding (see previous blog about Countrywide fiasco that I personally went through with appraisers).

This gets better. See added onto the new rules are players in a game of rules that were broken years before and full of shady characters. There is one company exposed in several stories called NovaStar Financial out of Kansas City. This was a subprime lender during the boom and they were slapped on the wrist by three states for employing unlicensed brokers and charging unlawful fees (nawh.. mortgage brokers NEVER do that! See previous blogs about never using a mortgage broker!)

After its collapsed business (like many other brokers), they reinvented themselves into the -- yep --- AMC model and bought an appraisal company, and call themselves StreetLinks National Appraisal Services. One of the very same companies that led to the trouble to begin with is now going to be part of this new group that is designed to police the problem.

There are a few issues here.
1. Screening AMCs - who is going to do that exactly?
2. The communication between lenders and appraisers - it must exist for any deals to get done!
3. This gives appraisers even more power than they had before, and may kill deals particularly in the prime or jumbo markets
4. The government is involved - the fed housing officials will regulate (aHH!)
5. Added processes, and less money to the actual appraiser

So when you buy a house, it should work like this (well it shouldn't - it should be easier - but it has):
1. Borrower goes to get a mortgage or a refinance
2. Lender sends an order to an appraiser
3. Appraiser appraises, sends underwriter the appraisal
4. Bank does their "thing".

Now it will go like this:
1. Borrower goes to get mortgage/refi
2. Lender sends order to AMC
3. AMC sends to a local appraiser
4. After reviewing the appraisal, the AMC may seek changes on behalf of the lender (ah ha!)
5. Borrower pays $300 to $500 - and the AMC keeps half of the change

Do you think appraisers are going to work as hard to be as accurate when they aren't getting the full cash for the appraisal? My guess is we're just going to have even more ticked off appraisers who on top of feeling blamed for the mess (particularly the good ones who did their diligence and take this personally), are also underpaid.

Under the new rules, if AMCs are applying any 'undue pressure', they will be in violation of Freddie and Fannie rules and they will "take action". They will have immense power over freelance appraisers. To earn a living, most have determined that they will have to be part of AMCs preferred group, or most major banks won't use them - they will lose a lot of business.

Fannie and Freddie cannot even lend Grandma $200k to buy a house worth $400k - you think they can handle this too? Oh, and the taxpayers now own a big chunk of yet another government wasteful project that will not only hurt housing, but create yet another layer and another obstacle to get all of this inventory off of the market! All in an effort to save people from themselves -- which could easily be done by reading a contract. I know, crazy huh?

Small biz money not as hard to get as you might think

2009-03-05T17:36:00.000-08:00

Since John Rutledge and I started taking the Entrepreneur calls on Fox Business Saturdays 1-2pm EST, we've had a lot of call-ins with people asking if it's "really hard" to get money, where they should go to get it, and what they need to do to make their dreams a reality. The focus of our show is all about not whining, and not waiting for people to come to you with aid - but to tap into the American spirit we see alive and well in so many viewers, emails, twitter followers, students, book readers and so on. This is not a very PC show, for those of you who have watched it. :)

I think one of the most common mistakes people make is listening to Washington. They're trying to get re-elected; with the exception of very few, they don't really care if you panic because they'll be seen as heros when you stop! So don't let them create the reaction! Yes, our 401ks suck. Yes, who likes logging into eTrade and seeing much of your portfolio wiped away? Or delaying retirement? Or having our houses under water? Or being late on our bills? I realized today that the market is only 5 years off from being at the level it was at when I first started investing! That is enough to make even sane rational people a bit (aka not politicians) freaked.

What we have to focus on is not letting the politicians who are telling us how bad things are so they can spend money for outrageous things like a World Trade Center in Montana and pig-stench research convince us that 1) this "spending" will help, or that 2) this is a sign of how bad things are. The only thing this is a sign of is how stupid our politicians are!

You watch our show, you may have read one of our books, bla bla.. and you want the bottom line. You want to know how to take your idea, get some CASH, and go for it. You may be in the boat that thinks money is harder to get these days than Hillary Clinton looking comfortable in stiletto's and a skirt, know this - it isn't. In fact, thanks to the Obama administration's pork-ridden bill (did I just say thanks? It isn't taxes, think of it as a big tip for Obama) the government has nearly $700 billion more to spend on small businesses. Yes, they'll try to tax it away from you later, but that shouldn't stop you from trying to earn it now. If you spend it all, there are no earnings left to tax. ;) (How is THAT for stimulus!?)

One of the most commonly asked questions is, what kind of loan can I get from the Small Business Admin?

First, know that the SBA doesn't lend. It backs banks that do. It makes it safe for banks to give you money, and right now, quite a lot of it at relatively cheap prices. Think of this as a Fannie/Freddie back in the days when F and F weren't run by morons (or no one was watching).

Go to the SBA.gov and look at the loan types, but here is a quick rundown of the types, and what you can get:

Community Express
250k
Price? Prime plus 2.25%
7 year loan, and you'll have an answer in 36 hours
No collateral
Focused on helping distressed communities

Express Loan
350k
50% SBA guaranteed; 50% bank or collateral
6.5% over prime (eek!)
36 hour turnaround time

Patriot
500k
2.25% over prime
Vet/active duty/reserves/guard/spouse
7 year loan
36 hour turnaround

7a) Capital, Land, Building
10 year loan, rates and time vary

Microloan 7m
35k, inventory, supplies, furniture
Can’t be used to pay existing debt or for real estate

CDC504
Long term
Brick and mortar only - sorry Internet businesses

In addition to this, check out whitehouse.gov in mid March for information on how you can get grants if you're developing clean technology, green "stuff" or anything else that someone like me won't use, but sure can get a lot of dough in this environment.

Most importantly, don't let the government get in the way of your dreams. The government is a buzz killer. Only YOU know your own worth - if someone tells you directly or indirectly you aren't worth the price, give them the finger. It isn't just easier said than done, I do it every day. Believe it or not, it can feel good.

And watch our show every Saturday. :) Thefoxdocs.com

Dani

Havoc in Detroit - Where are Reporters Now?

2009-01-20T20:08:00.000-08:00

Without GoGo on American Airlines to keep me busy doing things I have to do rather than things I want to do, I spent hours studying one thing – Detroit. If you’ve read my past blogs you might wonder why – but it is precisely the underpinnings of those blogs that kept my interest on Detroit rather than reading more about Black Holes and QM or working on my taxes (well okay I did that a little bit).

Detroit is in a whole heap of hurt, and I'm not talking about the obvious “Big 3”. I’m talking about psychological, fundamental, situational, traumatic hurt – the type it is painful to read and “talk” about but so essential to understanding what can happen to a city without direction and without leadership. This has greater applicability – to companies also directed without leadership and what can happen as a result.

I read stories that would make a grown man with a heart cry and more four letter and humiliating words towards specific genders and races than I care to read again for awhile. But it was enlightening; all while economists and political figures try to figure out what went wrong, exactly. (Who knows if we will ever get an answer).

Here is some of the more interesting, gut wrenching facts I’ve learned:

Crime and Murder

Ill start with crime, because I found it most startling and personally interesting. Detroit and its surrounding areas have been given the title “Murder capital of the nation” based on various statistics for years. I once lived about 4 miles from a city in Michigan with the second highest per-capita murder rate in the country, which gave me great comfort as I slept alone in my corporate condo each night; sometimes snowed in completely for days on end without phones or electricity. I hadn’t realized Detroit has continued its murder capital statistic and it has worsened as much as it has.

If this doesn’t shock you, nothing may… part of the problem with the city is the rampant drug problem – with women routinely having sex with dogs for men’s amusement to score drugs for resale to put food on the table for their children. We are letting this happen in America. This makes me sick and is pathetic. Where are all the Bush haters in the media that surrounded the Katrina blunders and why are they not following this story? Democrats in office there? Yeah.

Another shocking statistic – the crime rate goes up dramatically around Christmas – I mean murder – because many family members want to get out of having to buy Christmas presents. What’s cheaper – kill them or buy a gift? While we’re at it, we’ll cut off the body parts and sell them.

The police department is so inept and underfunded that over 10,000 unsolved murders remain so in Detroit, the city, alone since 1960. Detroit is one of the largest out of state gun dealers selling 14 tons of weapons a year. A man recently trying to turn himself into Detroit police for murder found the police department so unresponsive that he hopped on a bus to Toledo to confess there, instead. (I'm not kidding). To try to raise money, the police department has more speed traps set up than any other city in the nation (note to self and anyone else headed there on business: bring radar jammer when visiting) So unresponsive and overworked is the Detroit Police that citizens often fake a fire to get the fire department there for domestic disturbances knowing that the sirens will scare away the perpetrators.

Rights of Citizens to Safety? Where?

Which brings me to the fire department and other fundamental obligations a city has to citizens - particularly with some of the highest real estate taxes in the nation. In most cities fire gear is replaced about every six months; and that is with an average number of fires. Detroit has far more than most; often due to squatters taking up refuge in abandoned homes and starting fire – or worse – people intentionally setting fire to their home (explained a little later here). The fire suits are so old that most have serious rips and tears often resulting in death; as one writer put it, “with the crotch missing in one fire suit, that man’s chestnuts could be roasting on an open fire.” Not exactly what we want our national heroes dealing with.

Real Estate

The real estate market as we all know is in turmoil. Depending on which statistic you read, either Las Vegas, Miami/Dade or Detroit has the most foreclosures – in terms of numbers, that is Detroit (not per capita). There are 60,000 abandoned homes in the city of Detroit alone and that isn’t counting the suburbs. People are frequently setting fire to their homes so that when the fire department shows up, they can try to steal the fire trucks and sell parts for some quick cash. Brass fire poles at the fire houses were sold off by the city to raise cash, by the way.

Education

Education? Well with a 24% graduation rate and an insanely high illiteracy rate, Detroit has a long way to go for resolve. Those not in favor of the No Child Left Behind Act because it “teaches to the test” need to realize that “the test” is math and reading – kind of fundamentals, don’t you think? I don’t want to hear your pathetic arguments over needing to embrace the child’s “inner self”. BS. Kids shouldn’t be allowed to move on if they haven’t mastered the basics. Schools in Detroit haven’t bought new textbooks in 19 years. Yes, 19. Not bad since not much has happened in history over 19 years huh? Students have to bring their own toilet tissue in many districts because the schools can’t afford it. If the kids parents’ can’t either? Well I’ll leave that to your imagination.

Known as a city that once gave Saddam Hussein the keys to its doors (this is when Iraq was an ally .. sort of.. of course, and after giving a large donation to a church), it’s now known for having the fewest sunny days (perhaps metaphorically in addition to literally), is the most murderous city, the poorest city, the most segregated, has more heart attacks per person, and has the slowest income growth in the nation. If you think we can blame this kind of neglect on three auto companies I'm afraid you are highly mistaken. No bailout can fix this type of systemic failure and extreme disservice to humanity. This is incompetence, disgusting at a human level, and rivals the Katrina disaster in my opinion.. yet where is the press? Covering how horrible Bush is. Who cares who is to blame; this city needs to be fixed and fast. And most importantly, we need to know why it happened to avoid a recurrence and treat people there with some damn integrity.

Pissed and Tired,

Dani

Airline Atrocities and Passenger Pain Summed Up in One Trip (and some Sarcasm)

2009-01-04T16:33:00.001-08:00

I'm sitting on a flight, a rather pleasant one for once, to JFK from Los Angeles. I was pulling up some old articles I’d written for a potential contract, and found this one. I hadn’t ever posted it to my blog, and it’s too amusing not to.. so here goes.. a 6 month old blog never posted! I hope you enjoy the sarcash.. I have to admit it made me laugh to read this again.

You will sense I have a disdain for authority without .. well.. my belief they should have it. I dont like people telling me what the 'rules' are when they've had less training or are not so bright. (Cops giving me tickets for driving 'unsafe for conditions' when I've had more track time than they have and flight attendants telling me to turn off headphones are two mild examples).. :)

_

As a 2million+ mile airline traveler on American Airlines alone at the ripe old age of 33 (and many hundreds of thousands more on other airlines), I have seen the tragic deconstruction of the airline industry first hand over the past several years. As a business writer, analyst and practitioner/scholar, I find the repeated ‘solutions’ airlines come up with remarkably ignorant and maddeningly infuriating. One recent trip from Orange County to Minneapolis summed up the stupidity, and perhaps glaringly obvious answers, to the once-service oriented airline business.

No doubt airlines are suffering from betting against future oil prices and the demands of passengers to include air travel as a right rather than a business necessity or luxury. Airlines can really blame only themselves however; trying to compete with low cost carriers designed to fill those needs rather than focus on their core constituents.

Beginning with my attempt at quick booking, I realized American had still not fixed the web site’s primary problem – the inability to check which flights had upgrades available using mileage. Requiring yet another call to American’s Platium AAdvantage desk (which about 90% of the time, from my estimates, results in an individual barely capable of reading his or her screen and relaying accurate information or completing a transaction without a significant error), I booked my flight using upgrades and later my husband’s in Coach – he preferred to save the miles for longer flights. Problem and Solution #1 –if you want to have people service themselves, add services to the web site. It’s really quite easy.

With our ticket set, we were unable to check in online due to web site outages until right before we left. (Problem and Solution #2 – use a reliable web-based system)

As my husband and I check into Orange County’s small and uniquely calm, quick John Wayne Airport, the ticket agent notifies us that while entering my husband’s frequent flier number (which I attempted to do online but the “feature rich” website was down for over a day), his seat on the flight home had been removed – he was confirmed but no longer had a seat assigned. I’m still not quite sure how this happens as it’s an obvious dichotomy, but the system removed his seat while entering a frequent flier number. Ludicrous? An understatement. This of course resulted to yet another call to another incompetent AAdvantage representative that indicated I’d have to wait until the day of travel. (Problem and Solution #3 – Encouraging people to book and make changes early and then subsequently, multiple times, asking them to wait until the day of travel creates extensive stress for the passenger, something airlines perhaps assume we will just get used to).

My husband still unconfirmed, we board the highly aging Super 80. While not in the least bit afraid to fly, I'm wishing my former business colleague with access to repair history was sitting next to me like the olden days, so we could check when the aircraft had last been in for service. Super 80s aren’t exactly known for their reliability these days – and neither is American Airlines. (Problem and Solution #4 – Maintain Your Aircraft! Clean the bathrooms! Simple stuff, people – there is a known issue with the lavatory on Super 80s too.. don’t ever sit close to one).

The relatively uncomfortable (even in first class) flight reminded me of another flight from Atlanta, in which the individual next to my seatmate in coach literally picked up his fat and laid it on her chair, indicating to her that he was bigger and therefore needed more space. (Problem and Solution #5 – Stop worrying about a 51 pound bag and weigh us by our “total flying footprint” – embarrassment and all – our weight plus our baggage and charge us a per-pound fee for all of us, our luggage and gluttonous diet included).

As I usually do, I hide my completely harmless electronic devices under my blanket; I see others doing the same. Statistics show these devices don’t do anything to planes, and even pilots have admitted to me they use their cell phones in flight. About 10% of the time I get caught by an on-the-guard attendant who tells me to put my goodies away. I cover the on switch and go about my flight. Remember, these do nothing to flight controls on a jumbo jet. We are not talking about Cessna’s (which ironically I regularly used my cell phone in while flying). Let’s use logic, people. Are those video monitors not electronic devices?

This brings me to yet another point. Many of us save up our miles to upgrade on flights, particularly long ones. Needing room to type on my laptop to write articles like this and books due to editors, I usually upgrade and take flights only where upgrades are available. We expect food – not nuts – yet again. (Problem and Solution #6 – Try to switch up the food. When we know before getting on the plane exactly what “food” will be provided based on the flight time, ladies and gentlemen, we have high degrees of boredom (although GoGo has helped…. That is how I posted this brilliant blog LOL) What happened to those $3 Musketeer’s bars anyway? At least those were good and got me in the gym the next day out of sheer guilt. Another note about those first class nuts – try to add more cashews okay? I realize they cost more but come on.) Virgin America has fixed this with “on demand” food.

At the airport in Missouri, the attendants on the ground talk as though they barely rank higher on the evolutionary scale than lizards. They appear to have no intelligence or reasoning capability, and cannot answer simple questions. I give up. (Problem and Solution #7 – hire people that pass a simple yes/no common sense test - like knowing your own name). Forget it.. I move onto the next flight, a lovely 2x1 commuter jet – you know the planes with two passengers on one side and one on the other? I’m sure you do. They have less room than tight roller coasters. I think next time Ill put my hands up in the air on take-off. For a 90 minute flight, this hardly seems reasonable or even efficient. We spent more time rebalancing weight on the aircraft than flying. Earlier noted Cessna’s require less weight distribution work. Geez!

I get into my bulkhead seat (not my favorite despite the extra leg room - first you can't have your 'stuff' with you, but I also have a hero complex.. and if Im sitting by the front, the bad guys got too far before I get to hurt them.. If I sit further back, I can stop them before they do any damage.. with my ice skate toe-pik, my water bottle or anything else I happen to have laying around LOL); I count roughly 36 seats on the plane. I may have miscounted trying to see over the tall passengers. I realize that the flight hall monitor was going to be hanging out by my seat and I would probably not be able to hide my electronic gadgets. I turn them all off feeling defeated. I quickly introduce myself to my seat mate, a friendly gentleman from Minnesota, my destination that day. We quickly realize we have something in common – we are both PhDs – though I consider his research to be much more significant than mine. His opinions would consist more of proteins contributing to pancreatic cancer cells than airlines, but two PhDs we both are nonetheless.

The hall monitor quickly zeros in on us – we aren’t quite sure why. I’m reading an economic magazine; he is reading a journal article on cancer cells. She informs us that our magazines and articles, laptops and other goodies must all go in the overhead bin. We stop and look at her, both puzzled; then we look at each other – two strangers confused by her stupidity. We move our briefcases, a common routine in the bulkhead aisle and a small price to pay for more legroom if that is your thing, to the overhead bin. We sit back down. Then she asks that we move our magazines and writing pads into the overhead bin. Huh? I moved mine to the elastic pouch in the front of me – she gets quite irritated. (Problem and Solution #8 – Test for mental instability. Problem inherently noted in the solution). She cups her hands to form what looks like a ridiculous human version of a bullhorn, other passengers now looking at her oddly, screaming (literally) “I said you must put your stuff in the overhead. That elastic thing isn’t going to hold your magazine.” To which I sarcastically replied, “really? It is holding yours.” She had no answer. I'm wondering at this point if my Weekly Standard article opened next to me depicting a funny headline about Obama has her upset; after all it was dissing The Savior.

Remembering that arguing with her could get me detailed, I followed her illogical, ridiculous rule. I did inquire as to why she was making up non-FAA regulated data, to which she replied “you are in the front. Do you see that wall? That magazine can bounce off of the wall and hit a passenger in the head should we encounter turbulence. But only until 10,000 feet, then you can use your magazine.” HUH? First, who uses magazines? Second, I thought that applied to electronic devices. Was my article by Bill Kristol going to throw off the 5 decade old radar based technology? She was truly one of the most irrational, unintelligent human beings I have met on airlines to date. (Problem and Solution #9 – please inform hall monitors, no longer worthy of the name flight attendants, as to real FAA rules and not made up “it’s my time of the month” rules. I can say this, I’m a woman.)

Now with magazines and pads in tow, we both get up and put everything we own, except our headphones, into the overhead bin. My seatmate’s headphones contained no electronic device, no on/off switch, no battery. My Bose do, but I can turn that part off. She yells at him, “the headphones off!” to which he replies, logically and only rolling his eyes within my range of visibility, “they have no on off switch! They are just head phones!” She yells back to him, in a condescending voice, “sir, if we start to crash, you will not know!” WHAT? He looks at me again – this time both of us in disgust – we won’t know? Last time I checked, passengers are quite aware of their rapid descent, except those lucky enough to be in the back hit with my deadly magazine that will be knocked unconscious and won’t feel their bodies ripped apart by more g’s than the human body can handle before hitting the ground at terminal velocity. (Problem and Solution #10 – don’t remind passengers that they may die. Don’t ask us to remove anything without an on/off switch. In general just stop being stupid!)

The rest of the flight remains similar. I sarcastically put my Bose cover behind my head – she cannot argue with my logic (although I could have easily thought of 3 or 4 things to refute my own logic – her lack of anything intellectual within the frame of her body leads her to finally give up). We both laugh, make fun of her openly, and precisely at the “double ding” (her words) we get our stuff back out. We get about 20 minutes before the premature double-ding again. During this time he finishes a journal, some new equations, and I get to finish off my article. At some random time she hands me a baby wipe from her stash – perhaps as a means of mending her now failing passenger-hall monitor relationship. It was later clear why she did so – she indicated, on her own, that the bathrooms were “disgusting” and should I decide to go, I’d need it because they “hadn’t been cleaned in days”. Again reminders of the stench on Super 80 aircraft that emanates from the bathrooms are reason number one for not asking for a drink – keep your bladder empty. Remembering the stories my brother has told me about his time at Carls Jr. working the midnight shift and the things they did to drive-thru customers, particularly when they are irritated, reinforced that lack of request. (Note to airlines – we know you don’t clean the bathrooms, we also know you ignore details like the disgusting pieces of God-knows-what in the airplane windows and the lack of disinfecting everything from the air vent to the handle that pulls out the food tray, should we be lucky enough for it to work). We land and she wishes us well. Huh? Once again. My seatmate and I thank one another for making a 90 grueling minutes a bit less grueling. He was a genuine good-guy that I still stay in touch with.

When we deplane, we call the AAdvantage desk again – which should be referred to as something else, like the “We might answer the phone if you’re lucky” desk, but only after you yell “Agent!” into the phone at least 6 times. (Problem and Solution #11 – if we hit 0, take us to an operator, immediately. Stop asking if there is really not something you can help us with.” I’m trying get my husband a real seat. The story changes – now we must wait until we get to the airport to get him a seat.

Our stay is great – watching a dear friend graduate and a learner I have mentored through her dissertation complete her doctorate. I dread the flight back home, but it goes pretty much as expected. The airline attendant is unable to assign anything but a center seat until we get to the next airport, even though there are 39 seats open. We are assured the next gate agent can rectify the problem. The next gate agent, of course, announces after watching us stand around and wait 20 minutes while she seemingly did nothing that the flight was oversold and he could not change seats.

After over 15 years of loyalty to American Airlines, I'm eagerly awaiting Virgin America’s entrance into more airports. For now I must settle for their cross-country LAX/JFK flight. They offer self-ordering through an electronic menu, a USB port, a real power plug and friendly, normal, seemingly intelligent people – not to mention cool lights. Until American and other “major” carriers figure out what people want, I hope that they become minor. May the worst of them fail – American included. I for one and tired of making excuses for ignorant people, stupid unfounded rules, and excuses for their poor customer service. I guess for now I will have to settle for my little victories which my husband thinks are so hilarious and nothing more than an issue with “authority” figures (aka hall monitors) – a switch in the on position when it should be off and a magazine in a seat pocket. Thank God for those small victories.

Holidays, EGreetings, Expectations, Friends, Family, Online Teaching and a Brain Dump

2008-12-29T13:27:00.000-08:00

Ah... as an online teacher, this is about the only week that life feels somewhat normal. Most schools (not all) are on break. That leaves time for reading, too much time for the gym (exhaustion anyone?), too much time for thinking, and for many of my friends in this profession a lot of guilt that they didn't spend that one week of "quarter time" with family.

I don't believe in feeling guilty for that (and thankfully my husband doesn't hold it against me); most of the time I have a limit on how much time I can spend with humans I'm related to that I don't have much in common with anyway (something many of us feel but don't think is okay to say), so life is good on this week-long quarter-break time. :)

Always the writer (for fun, believe it or not) I've spent quite a bit of time this past 10 days or so since returning from NYC to California thinking and writing about lots of things.. from e-greetings to how electronics have changed the way we communicate and our expectations of others to blogging to narcissism to personalities to holidays and so on. I've noted a few generalities that have been 'proven' (those of us that teach stats know there is no such thing.. and if you took my class, you better know it! :) ) throughout the past week by behavior so repetitive I am certain I could predict it with nearly 100% accuracy. Some of it depressing; most of it enlightening about the human spirit.

But it all makes for an interesting sociology study during this online teacher's "downtime". So, notes written for the day, squeeze cheese (finally) out of my bangs (don't ask), calls taken, interviews done, everything I have spilled this morning cleaned up and schools taught, I can explain what I mean.

I've noticed a pattern with friends and family over the holiday season. I believe that people have an entirely different set of expectations for those that they love (or are related to - which may be mutually exclusive or not) over the holiday season.. beginning around mid December going a few days after New Years. I no longer, after this year, will spend my holidays with someone or people out of obligation. They sense it, you know it, and it isn't right. It isn't worth it.

I posted on Twitter once after reading a Medline study that people who travel most often tend to have difficulty maintaining intimacy. I counted myself among them; not so much after analyzing my ability to maintain intimacy but my frequency of travel and the stats used in the article. While I'm "home" for the holidays, a part of me cannot wait to get back to what has become the norm, and that is not being home - even though it leads to different types of discomforts (like noise).

Which leads this inquisitive mind to wonder what home is anyway really.. perhaps a few-day reconnection with a loved one; perhaps it's a place where your stuff is (a majority of it anyway); maybe it's a place your family is or maybe it's no where at all for some of us. Maybe we spend so much time trying to build a home that we really don't need one anyway and it's fruitless. I haven't figured out where my home is yet. I have a hypothesis but not one I will share here. Not now anyway.

So the pattern. There seem to be a few kind of friends. I've wondered what kind of friend I am over the holidays too.. and I see a little bit of myself in every one of these -- depending on who I am the friend I'm associating with. (confused yet?)

Non Holiday-Friends - Friends that, for the holiday part of the year, disappear and reappear again around mid January and want to go to Starbux as though nothing ever happened. I've concluded that they are either over worked at home and have no time (at least half my friends like this in my view struggle with this) or that they don't know what to say or what to do that is appropriate to them so they disappear and reappear. The other friend of course wonders why they never bothered to say hello or Merry Christmas; but that goes back to expectations.. who says a friend has to say that? Well, most of us.. not for social norming, just out of kindness. The other friend wonders if you even gave them a second thought. I analyze my friends who disappeared and know most of them didn't do so out of malice, they're socially inept. LOL

The over-"electronicized" friends. These are the friends that take the week or two they have off, and read everything, every blog, every twitter and every post and watch every interview you did in the last 350 days. That's cool - but then they apply it all to themselves in a narcissistic fashion. I know all about narcissism, I was married to it in the early 2000s. I have friends that drink too much and think everything you wrote about CEOs in their home state means you think they are losers. I delete their messages knowing that they will come around when they've put down the booze. The friends that think none of anything you wrote had anything to do with them, and it did - at least you were on their mind when you wrote it. Most of what we write, even in specific scholarly disciplines, has something to do with life in general. The friends that want you to explain what you wrote last January in context when you haven't a clue.. you're too busy focusing on your new posts. Maybe they do it out of boredom, or maybe they want to know "what you really thought of them" all year and are a bit paranoid. Chances are, it wasn't about them. I actually lost a friend this year because someone thought a twitter was about them - and it was anything but. If they are that sensitive, they have to go in the prior to 2009-friend-bucket anyway. Time to clean house, as they say.. and figure out who our real friends are. I don't believe in New Years resolutions, but this year I will have one, and that is mine.

Then there are the friends that go out of their way to do and be everything they can be for you. I believe we all have only 1 or 2 of these friends. They are amazing; they make you feel special out of the Love Language (great basic book) of "doing things". They are do'ers and big time. Every gift has meaning, every act has meaning. I believe this is nothing more than their mere love language; as long as they don't expect you to be able to do the same in return.

The gift-phobic friends - that freak out if you give them a gift. (remember these aren't mutually exclusive.. most of my friends have more than one of these elements!) They feel that their gift wont live up to yours.. admittedly I love to buy things for people. That is one of my love languages. I learned many years ago that most people don't enjoy it, and always always give with no expectation of anything in return. But these gift phobic people freak. I had a friend one year beg me never to buy him anything again. I haven't and that is my gift to him. He doesn't realize it's far more difficult than if I did buy him one. But that is the meaning of gift giving anyway perhaps!

There are of course just the regular friends .. we might have lunch a few days before Christmas, they call on Christmas, we say hello and wish one another a great day, and they are in our thoughts all day. We touch bases again the next day to see how things went... and we might see one another again right around the New Year. Most of my friends are rather accustomed to finding that time while I'm in California as my friends are here - NYC, while a big place, is quite hard to make real friends in.

I find it fascinating how electronics have changed the way and the acceptability of being distant.. in the mid 90s greeting cards printed from online services with a picture tried to personalize things; we seem to have come full circle to the most impersonal. This year the night before Christmas I cleaned out all of my texts and the next morning all 100 my phone is capable of handling were filled.... with Merry Christmas's ... about half the people I know and the other were not in my phone. I have no idea who they are. I appreciate the thought though! Then of course e-greetings.. sending e-cards instead of cards, entirely replacing cards.. using the recession or lack of time as an excuse. I don't know whether I believe it's a valid one, even as a technologist. There are those of us that combined technologies; emailing family and friends but also sending traditional cards (well my cards aren't exactly "traditional".. if you've received one, you know what I mean LOL). I think that texting and emailing and e-cards has made it far too easy for all of the types of friends above to make life easy on themselves.

Then there are the people that focus on a small handful of people in their lives and ignore the rest. They're very intimate with those that they're with over the holidays, but "forget about" everyone else - perhaps completely - I haven't figured that part out yet. They give as much as, in their mind, they can.. but my belief has always been "where there is a will, there is a way." I email that reply to everyone that asks how I started and built my career. It holds true in life in all aspects.

Given that last phrase.. it would be and is easy and accurate for my family and friends to say "well you didn't visit me and you were disconnected.. but where there is a will, there is a way.??" Yes, precisely. I believe that we have far too much pressure on us to see and be with people we really don't want to be with or to act and behave in a manner consistent with some fantasy rather than reality. This entire holiday season I've been highly preoccupied - with work, with relationship matters, with 'stuff' in my head, with reading, with trying to take my ground school test, with kicking my butt back into pre-1st-marriage shape (mission accomplished - a hard feat as I was 25 and quite athletic). I've chosen to spend it with people that understand I'm preoccupied, and therefore, probably not "acting normal" or behaving in a manner they would like. That is okay with them because they love me anyway and know I have a lot of 'stuff' happening that is life altering. So I didn't visit the people I might normally have visited, and spent time with ones that I could sit on their bed with them and share our most intimate feelings. That after all in my view is what the holidays should be about. Which basically requires zero expectations.

Dani

Bogus Bailouts Benefit Only Bozo’s

2008-12-12T20:32:00.000-08:00

Bogus Bailouts Benefit Only Bozo’s
10 Reasons we should abolish bridge loans to bankruptcy, bailouts, and revoke TARP

I explained in another blog post tonight why I'm not so worried about unemployment and that is one of many cases I can make for why we should not bail out the auto makers. It is vital to keep perspective in context for this to all make sense.

A friend of mine recently said that the greater the obstacles (I'm paraphrasing and taking this a bit out of context but I believe it applies) to some outcome the greater its value or its “wonderfulness” if or when an outcome is achieved. I have a reflex tendency to disagree with most people (for a few minutes anyway), but applied to business, he may well be right. Obviously my initial knee jerk reaction has changed, since it’s the introduction to this blog. Not everything can come down to costs and benefits – sometimes you just do what you want to do and hope all the cards fall into the right places because you follow something deeper within than cost-benefit analysis. Business owners all over the country are using their gut to make the tough decisions and make it through this market turmoil without bailouts, handouts, and without the pathetic demoralizing groveling required to get either.

The bailout bunnies and bridge loan to bankruptcy buddies have the opposite view; they believe that the only way to “save” companies is with intervention due to the “drastic times” theory – drastic times call for drastic measures. Drastic measures must come from within the free market enterprise and innovation within private companies, not moron politicians or specific Treasury Department people with very precise histories quite used to throwing money at a problem to make it go away.

So why won’t the bailouts work?

1. There is an inherent sense of self worth brought on by how hard you fought for something. When you fight for something, it has value to you. If your business means something, you fight for it. I would hypothesize that these automaker CEOs and bank CEOs etc etc don’t care about their companies; they care only about their own asses. Small business companies aren’t groveling; they care.

When we bail out companies, people want their share of the pie, too – at least those with no self dignity.

2. There is moral hazard in bailing out companies and it trickles all the way down to the individual level. I'm starting to see this more in housing as well. People who CAN afford their mortgage just fine becoming delinquent on purpose, throwing their pride, moral obligations (and credit scores) out the window simply because the banks will negotiate with them only if they are late. Cry me a river, you people are pathetic. Quite a bit of my housing portfolio is “upside down”. I took risky loans to leverage the heck out of properties that lost some value. I get how that feels. Tough shit. Markets go up, markets go down. You have to work harder to compensate and eventually, you’ll be fine.
We are also seeing people buy and bail, turn in their keys screwing their neighbors’ values when they can afford their payments just fine.

3. There can be NO REAL success without the opportunity to fail. The universe if created in such a way where every action has an equal and opposite reaction; every “thing” has an ‘opposite’. If you are only given an option to succeed, what pleasure is there in doing so? If you don’t risk something, then when you get it all, it’s value is nothing. I believe that is why those born with a silver spoon value their wealth far less than those who worked their butt off for it.

4. Quite simply, bailouts don’t work. Banks hoard the cash “just in case” and to meet reserves, BofA takes $25 billion it didn’t even ask for and then lays off 35,000 workers anyway, auto makers need the money to sustain themselves “just for a couple of months” with salaries that make them unable to compete and union bosses unwilling to sacrifice anything to make it work (why should they? Their leaders wont sacrifice either – see blog about unemployment!) and companies will continue the exact same business practices that they had before the bailout that got them into deep water to begin with. Ultimately, they’ll either go bankrupt – or need another bailout.

5. This isn’t company’s money or earned revenue; it is the tax payer’s money. There is little to no oversight, and who would trust government oversight anyway? Taxpayers have shown in polls overwhelmingly (including in the case of Detroit) that they prefer NOT bailing out companies. It’s our money, listen to us.

6. We must revoke TARP immediately. This is a nightmare. The White House and Treasury think they can bend the rules and do whatever they want with the money. Well unfortunately our Congressional leaders granted them the power to do so. Now they need to take it back. Last I checked survival of the fittest is still at play in all aspects of life – business included.

7. Perhaps most importantly of all, useless companies and companies that cannot adapt to change eat up the resources that good, viable companies need to survive. This includes human capital, motivation, grant money, small business loans and so on. The faster the bad eggs get out of the system, the quicker we will be on the road to recovery. People are left with little capital to start up businesses to innovate if they’re paying more in taxes and banks won’t lend to pay for idiots that didn’t run their businesses well and think it’s the tax payer’s job to bail them out.

8. Markets correct, but only if they are allowed to. We, unfortunately, need a significant recession – the 9th I believe since the end of the last World War, to get ourselves out of this. And we will – if government does its job and stays out. You don’t give a guy trying to quit smoking a pack of cigarettes and expect him to quit.

9. Bailouts are creating new scams. Don’t believe me? Read up on the new FHA scams that look all too much like the Subprime scams of the 2004-2006 era; even the same mortgage brokers are re-filing with the FHA to sell mortgages – it’s the same fraud with a new name (all including faking W2s and so on.. just like we saw in the last setup for disaster) and the government is granting these people licenses after revoking them for fraud the first time. If this continues, in 5 years it will cost taxpayers about $500 billion in yet another round of FHA-backed foreclosures.

10. Under pinning the capital markets is a deflation in house prices. Throwing money at companies won’t fix housing – once prices in housing stabilize, banks can value assets, and we will be on a road to recovery. For now, banks will pass their worst loans onto the tax payers; not loans that will recoup money for Americans.

Layoffs and Unemployment Can Be the Best Thing to Happen to You.

2008-12-12T19:59:00.000-08:00

Layoffs and Unemployment Can Be the Best Thing to Happen to You.

The United Auto Workers (united for what? I wont answer that.. just yet) today said that there are “enough sane people” left in Washington that they are certain the government will eventually loan GM money. Let’s hope there are enough sane people left in Washington that they convince the White House not to override the Senate’s decision today. After all, we are supposed to still be a democracy.

Now before I get the email bashers saying that I'm anti-worker and don’t care about people being unemployed, let me just stop you right there. You’re right. But not for the reason you might think. Being unemployed can lead to great things.

The reason is simple – I’ve been unemployed - both intentionally, unintentionally, and “unintentionally intentional”. The world doesn’t end. Life can in fact actually be better than it was before. Anxiety can (and probably will) set in; but more learning takes place in the end and doors open IF you create opportunity. In fact, I believe it’s the only way that many people, myself at one point included, realize the truth – that working for someone else isn’t all it’s cracked up to be and the only real job security any of us have is that which we make for ourselves. Even if you do want to continue working for “the man”, it might just be time to get a kick in the pants and do something different, re-educate, re-tool, learn a new trade or work for someone different anyway – fear is an amazing motivator. The only way for me to explain why the bailouts wont work and why people shouldn’t be afraid of being fired, laid off or anything else that happens along the way is to describe my own experience, so that is what I will do.

My “long” years in Corporate America (by my definition, they were far too long) were spent making someone else rich so I could pay my rent/credit card bills/car payments and eventually mortgage(s). I was left unintentionally unemployed during my very first venture into the Corporate world from “safe academia” (an on ground institution with a dual faculty appointment in a place where no one ever got fired) into a company that was exciting, fun, and just far enough away from the place I grew up. I had a blast for a bit with a terrific boss that taught me many lessons; a fantastic team I led who were easily all ten-plus years my elders (and loved open debate), and a jackass “President” that knew absolutely nothing about running a business. Starting to sound familiar? I cannot compare him to Big 3 CEOs because I don’t know those guys (although it is ironic they’re all from Michigan). But I knew this guy – Ken Kozminski – looking back I realize just how stupid this coward was. He ran a company called IPC Communication Services; I ran the Information Tech Departments in the Western and Eastern regions. I was their only IT Director to ever create a profit center out of IT (and bring on new clients for them because of our IT capabilities), and I had a blast doing it. Unfortunately, IPC was a part of the Journal Communications Family, and Mr. Ken was rather protected and insulated from his stupid decisions by the good ole’ boys network. He was a wuss (I'm being kind), which is worse than stupid. He came in, flew under the radar, laid off the entire Western Region because of poor management decisions dating back years, and flew back to Michigan before the shit hit the fan. He was the epitome of what I never wanted to be. In the 60 or so days my respected boss and I had there, we spent it finding our team member’s jobs – and ourselves jobs – and we moved on. I took some of my team with me to the next position; he took some with him – we were ALL better off – although demoralized and anxious. The way in which he threw those hard working people under the bus, many of whom would have given anything to save that business (and tried), was pathetic and disgraceful. But what happened for us all? Forced change led to a better job; some people even met their future spouses at their next company -- and forced change will lead to something better for everyone else if they give their job search their all and put everything they have into it – including the auto workers. No one is protected from dumb management, or greedy union bosses. Unemployment here was definitely unintentional.

My disdain for stupidity (and lack of leadership) grew just a bit; and I was still very young, working on a master’s degree. I began working for a homebuilder in Southern California and landed a great job with a lot of flexibility and another absolutely fantastic boss. I was quite content there; I had a fabulous team, did a ton of traveling, had the support of the best in the business, and integrated at least one new business every 30 days somewhere around the country – life was good (this was during the heyday of the building boom). Until - one day, that boss became the fall guy for a pathetic Chief Financial Officer, and I watched him go down with only his dignity remaining. His team literally mourned; they trusted him and it was now our job to explain why the rest of the team was safe – and keep morale up. In this business, the CFO owed a favor to the CMO, and in came – another idiot – a friend of his – to take over the role of CIO. This idiot wanted to make changes – primarily to my team – while he knew nothing about technology (he was an accountant). He needed to lighten the financial load, and what better way to do it than by cutting the people out that keep the systems running? Ultimately I told him where to stick his stupid ideas, and so the attitude began to develop just a bit further. I wasn’t going to watch this happen again and I flat out refused to make the changes he wanted. With a few weeks I found myself out on technicalities just like my former boss, and nearly everyone on my team got “laid off” anyway. This was the unintentional unemployment thing yet again – somehow I thought he might think it was cool for someone to stick up for what they believed. Boy was I wrong. He wanted his wishes turned into orders, which I refused to do.

Now I was really sick and tired of watching the little guy get pummeled. Thinking at this point I’d chosen the wrong field and should have been an attorney, I was thankful to begin my next new job with a masters and the beginning of my PhD (making progress on at least one front)– moving on yet again to another business. It was okay – because life goes on. I had a mortgage to pay and did everything (to quote a CFO I interviewed with) short of “parachuting into the offices of the companies I wanted to work for” to move on – and most importantly – up. This is what all of those facing unemployment today will have to do in this economy. Parachute into the companies you want to work for… or better yet… give them a one finger salute.

So I moved on.. again…– great job – well respected company that, purely out of the respect I have for a few people that still work there, I won’t name (today anyway – same goes for the aforementioned). Good boss, we made great headway.. then in came another moron about 8 months after I was hired who had no clue how to run a business – in fact I found out later he lied about most of what was on his resume. He tried to damage mostly all the little guys (my theory is it made him feel good) – particularly those that he felt threatened by – and particularly a “woman who wouldn’t get a PhD on ‘his watch’” – I did the same thing and told him where to put his ideas, only with a lot more attitude (all 5’4” of it), and within weeks, had a severance package. This was unintentional intentional unemployment – an oxymoron I know – but I had already known the risks of saying “absolutely no you are not doing this” to a jerk on a power trip, so I knew what I’d be facing (along with several other personal things occurring simultaneously that took my anxiety to another level). Trust me, you can survive unemployment. But.. the team was spared, because I told human resources what this guy was doing, what he had really done in his former life (along with the associated proof), and he was promptly fired. I was glad to be given the title of martyr by several team members that had their jobs saved as a result.

I took my resume to yet another company, CB Richard Ellis in Newport Beach. I enjoyed a short year there, made friends for life, and worked for a person with a good heart. He wasn’t always the best manager and couldn’t make a decision to save his life, but his heart was golden and that was what I needed.. something to remind me that not all people suck at the core in business.

After a year or so at CB (with a perfectly fine job), I decided to become unemployed again – only this time, intentionally. I had started a business that was gaining in strength (starting it part time while working in corporate America, something I recommend to entrepreneurs) and I wanted to give it more of myself. About 3 years ago, I realized I didn’t need Corporate America – I needed my own sense of self worth and the knowledge that no one could screw me anymore. Several of my colleagues did the same thing. I believe we are all happier now.

What’s the point of all of this? The UAW workers will be fine. The millions of people (if in fact those aren’t just scare tactics) that will lose their jobs if the auto companies go under will be fine. Those unemployed today will be fine. Many of them may just need the kick in the pants to do something else and may find it was the best thing that ever happened to them. Every time I’ve been fired, unintentionally or intentionally, it led to far greater, better things. The key is to not be afraid to risk it all. No one taught me this, but I know it is true.. from experience, and from consulting with so many people in this situation that got through it and wound up better at the end. Life can be better if you take the road your brain fears most.

Desire, Drive, Economics, Materialism and Generational Learning

2008-12-07T17:38:00.000-08:00

Have you written a piece that really should be separated out into many short excerpts or blogs; you do so only to combine them again; realizing there is too much overlap to continue in that method? That is this post. :) A friend recently said that most movies and songs will always come back to where they started (I believe to keep people comfortable - the happy ending story); this blog post will certainly not invoke those thoughts. Ive never found full circle to be reality unless the individual, the character, the writer never really wanted to move beyond current existence to begin with. If that's the case, why write the play, the song, or the movie? Yeah yeah...

I've spent the weekend thinking about many things; among them, desire, human drive, intervention, interaction, economics, materialism, the human brain, "starters" versus maintainers and their gap; homeostasis or the psychological desire to maintain status quo to reduce tension, equilibrium points, internal stability, core responses, and the brain - particularly the fear many have of neuroscience ... that understanding it at its core might document what many suspect.. that humans have less free will than we think and are a product of our environment and our minds' perception of it rather than free thinking, useful, pragmatic organisms.

I am convinced these are all highly related to one another. It might take me years to figure out precisely how but we all have to start somewhere. ;) Perhaps this thought process started with the many friends, acquaintainces and business partners I have that seem to be terrific "starters"; they love creating something new. Yet several months into it, the desire to complete the project, book, company, relationship etc and drive to do the same seem to be disconnected. Some argue that it is because homeostasis (or in economics, equilibrium) is boring - so although any objects natural state is to try to expend the least amount of energy (and thereby stay at equilibrium), sometimes the desire and excitement of something new creates enough momentum and energy to move beyond this point into actual action. As something becomes the norm, it, too, is equilibrium and no longer requires the energy expense. This explains many things in life I believe.

Yet how do we explain then how objects that are in motion (baseballs included), including the human energy element, tend to slow over time.. beyond the physics involved. It would seem natural that the further along we as humans get into something and the more of a challenge it becomes (growing is hard), the more we'd continue to persevere until the mission is accomplished; yet the opposite seems to happen in real life. This is explained through physics and quick studies of the brain, but it seems illogical and a bit maladaptive to successful strategy of any sorts.

Many people put just as much energy into staying at equilibrium as they do getting out of equilibrium. I have many friends that do their best to maintain status quo and pour their heart and soul into it; and friends that seem to get themselves into situations just to create disequilibrium to get some sort of temporary satisfaction and high, only to go back to equilibrium when things become a bit too hectic or, to use a non scientific word, scary for them. Humans have too many motivations to begin to try to evaluate why this is the case; but it does lead to a great question - who should those who try to create disequilibrium but want to constantly maintain that status pair up with in business, in relationships, and in learning? It is rare to find someone that likes disequilibrium to the point that their version of homeostasis is constant change. I find them a lot in technology because change is the only constant; yet many fight it even in that field.

Constant change is where all the fun happens. There are few people I believe in this world that can make no change into fun constant change.

But this brings up so many other important points for our markets, our friendships, materialism and so on. Many people are great at beginning new things; not so great at maintaining them. Few possess the ability to do both and do them both with drive and passion. Zizek describes many theories and demystifies some; complicates others; debunks many more. He notes the Parallax View in a book titled the same as shifting perspectives between two points. In this particular case, because the individuals or the situation are on exact opposite sides of precisely the same phenomenon - they can never meet and therefore will never do more than be connected; they will never share space or find a point of mediation. But what I find more fascinating is the parallax nature of the "gap" between ones' drive, and ones' desire. If an individual is attempting to do something rather mundane but can never accomplish it, his attitude about that act often changes to the point where he finds excitement and even pleasure in repeating the same failed task! This is when we shift from drive to desire, to desire to drive.

Ultimately drive will then become its own strategy to profit from each failed attempt to reach that particular goal that is now merely desire. When looked at from a variety of perspectives, we can see this in failed businesses; in businesses that continue to operate without success; in personal relationships that are beyond homeostasis to flat out boring yet they are maintained - perhaps merely for the incremental profit (in this case it can be physical, mental, or literally, dollars) gained from repeating that same failed task. This is all fascinating stuff.

I believe that in good businesses, good relationships, in good friendships, in good partnerships, in good models and in good entrepreneurial activities there must be inherent tension. This can take all sorts of forms, but without it our natural tendency to maintain equilibrium is fulfilled; and life takes on a new meaning - going back to what the brain originally "knows" as intuition rather than intention, and not expanding to the point of drive + desire simultaneously. What a great anything this would be if we could combine the two and keep it there!

Greene and Cohen speculated once that neuroscience will toss out the window all intuitive sense of free will and we will be left realizing that very little of what we do is actually intentional; but more or less the product of outside influences - and that which is outside of our control. That has drastic implications; from the way we treat those that commit serious crimes to the way in which we run our businesses. They speculate that individuals are rarely consciously aware of what is driving their own behavior; and that we are not rational creatures. If the brain truly is the most complex living structure in the universe, then perhaps one day (well after I'm no longer living on this planet) we will understand the impact of this theory.

But I think more interestingly is the parallax gap which indicates (albeit using two entirely different areas of study) that the confrontation of two closely linked perspectives can never find neutral ground; if this is the case, we can apply it to markets and probably more importantly, to people (since ultimately they really make up markets). Perhaps then the effects of materialism and what drives our economy is nothing more than a fetish, an ordinary object that fills an empty place within any sort of structure - and perhaps relationships, businesses, and partnerships are nothing more than this either.

Maybe what we need to do (anyone sure how?) is re-establish what learning is - being the ability to become aware of the disturbing sides of something we knew existed all along - or perhaps even to acknowledge it if we are aware of it. That takes courage beyond what most have, and perhaps an ability beyond what our human minds can do out of self preservation. Maybe the ability to do this though would solve economic woes; calm nerves, and create stronger relationships.

If people always take the path of least energy, and markets always take the path of least energy, then the maximum level of achievement and perhaps even happiness can never be achieved - unless happiness is defined as homeostasis for its own sake. From stress often comes the greatest reward if you're willing to take it risk. Entrepreneurs all over America are trying to figure out what level of stress (and risk) they can handle. Automakers are trying to determine how to solve 3 month long stress to come back and revisit the humiliation again - but they are at a point of parallax gap - they will simply perform the same failed task until the need to do that task becomes their soul driven purpose - probably not so consciously either.

Right now an entire generation is learning about markets; that they don't just go up - they can go down, too... and they're not always "fixable" with more than time and government intervention. More likely in my view, they will go up because of the desire of those very few who wish for something beyond equilibrium - to take risk - and try again in a new type of marketplace. A market not afraid of money written in other languages or the people that speak them. This is what will rebuild our future economy over time... the risk takers, the people that don't want homeostasis, and those that aren't afraid of the neuroscience component that perhaps they're doing it for reasons beyond those that they can explain or will even attempt to.

Fear is bondage that keeps people from achieving great things and being incredibly happy because they're wired to do or be a certain thing for a group of people, an individual, or a business - often out of environmental impacts they cannot explain.

While they are perhaps unaware of the grip that the fear is having on their lives (I meet many of them - hedge fund managers, investors, traders and so on particularly in NYC) ... an entire generation is learning that over-leveraging can be a bad thing (present company included) albeit profitable in many instances.

I wrote in a previous blog called Feminism's Defeat... about my grandfather and how many times I've replaced my couch in the time he has reupholstered his. Our economy is being reupholstered; the fundamentals are there because the fundamentals aren't CPI or GDP or GNP or anything economists discuss in three minute segments on Fox News. The fundamentals are the people that encompass the desire to continue to push beyond what is comfortable for what is great and without boundary - courting all that is new to see what is possible. Once enough people do this, we will see recovery.

Neural Networks Explaining Econ & Human Emotion?

2008-11-29T14:40:00.001-08:00

In the process of taking my mind off of too many things to count and needing a few minutes break from work, a student post about neural networks and artificial intelligence got me thinking about its application to today's marketplace. Everyone seems to be trying to come up with a theory to explain what is happening today; I am convinced none exists. It is a series of mistakes, blunders, oversimplifications, overcomplications and greed that got us where we are today, but perhaps it is the use of information technology - and not in the systems sense - that could get us out of it.

Technologists have long studied artificial neural networks, or ANNs.. these are often referred to just as neural nets. This is one of those terms that students are often baffled by; but its really simple when you break it down. We can use many analogies; the brain, IT, math.. If we look at the brain, we have a series of neurons.. these aren't the artificial type however. They connect information through synapse connection; in IT this is referred to as a connectionist approach. But the key about this system is that it is highly adaptive; information is constantly exchanged and new networks are created.

Neural nets are used in statistical data tools too; particular those creating models or trying to explain what isn't explained by a regression equation. We can use them to find patterns, to find relationships - perhaps even from an emotional perspective, to explain relationships. Some nodes in this network are those which are inputs... from a human perspective we have all needs on the hierarchy.. from a neurology perspective we have the senses, and so on. They also consist of those nodes which are hidden; in emotions perhaps intentionally; in neuroscience perhaps because they are nothing more than transmitters to create a synapse connection. Then we have outputs; the results of the input nodes and the hidden nodes; this works much the way a network does. In neural nets though, interestingly, only those hidden nodes produce output - one could say that only our hidden motives or internal needs are those that produce change. In a capital market, one could say that this is yet another proof of Smith's Invisible Hand; with human motivation moving markets.

One thing is certain and that is every discipline uses neural nets in their own way but I don't see it being used in economics much; or in emotions and emotional intelligence (EI) analysis much either. We do generally agree that it is taking the simple to create a complex pattern of behavior; the simple human need to be loved to create a complex set of outcomes that is often unexplainable; the brains need for food to take drastic or creative measures to get it; the markets need for profit to make uninformed and albeit seemingly irrational decisions to achieve it.

I was telling my students earlier that one goal of scientists in neural network study is to not necessarily make the network adaptive.. it does a pretty good job of that on its own. But, to be able to measure the weight of each connection to either modify it to produce an intended effect, or weigh its value. This can be used for a variety of purposes; but perhaps explaining emotion and economics (and the connection of the two even) is of most interest to me. If we can modify the inputs or if we can identify the hidden nodes, then perhaps we can explain and even give value to the outputs; this in turn could potentially predict when markets are overreacting, overrationalizing, or even overcorrecting. We can then tweak the value of the output, which would in turn create a new method of explaining what economists try to dumb down to supply and demand.

Another fascinating element is bio neural nets... with biological NNs, each of the nodes functions in units but in parallel; each node appears to understand the motivation and the hidden nodes and then react accordingly. Tasks are clearly distinguished; each node knows what it needs to do and its relationship to other nodes. Perhaps just as in the human brain, this is missing in our marketplace. Perhaps the goal to keep the market competitive has removed the ability for nodes to work in parallel, thus preventing an intended purposeful and intelligent outcome.

Scientists like systems that adapt; after all if we can tweak the input we can tweak the output. But what seems largely missing in most disciplines is the hidden node, which if we are to follow the original intent of neural nets it is to identify and explain the impact of inputs on the hidden nodes, since they are the only direct impact on the output nodes.

Therefore unless we understand the not so obvious hidden motivations of individuals and markets, we can never surely predict an outcome.

I like the idea that the adaptive NNs are capable of learning and understanding, and therefore making a choice by a learned algorithm. Many try to manipulate this; but it doesn't take into consideration those darn pesky hidden nodes which drive neuropsychology in all aspects. I am cautiously optimistic in believing it may drive our economy too; but I just need to figure out exactly how. Large data sets are needed, and parallel implementations are a must - but this requires an imperfect market as opposed to a tangible perfect one; which economists don't seem to enjoy very much.

Nonetheless, I think this is interesting stuff indeed.... maybe we need Recurrent Networks with bidirectional data flow to really understand this market...and right now we have unidirectional inputs without any transparency as to the hidden node.

Fun stuff.

Dani

Assault on the American Dream?

2008-11-20T11:49:00.000-08:00

Anyone listening to the media that has been working hard to pay their obligations, build a life, send their kids to college, pay for healthcare, and prioritize their own debts is probably frustrated at the constant bailouts, greediness of corporations that seem to think there is no room for them to fail and that they are all too big to allow them to file for Chapter 11.. and it can be rather depressing to listen to this.. billions after billions of OUR money being thrown at people who have proven that even in good times, they cannot manage jack. Newsflash - no one is too big or too small to fail, because one of the wonderful things we reap when we are successful is weathering the storms. Without the ability to fail, there is no ability to be successful. Not in the true sense of the word.

I think most annoying is the auto industry and the constant whining, which seems to sound much like "but mommy, it is the teacher's fault that I got a bad grade.." particularly when I hear "we were doing fine until the credit crunch." HUH? Really? You were? According to WHOM? No, you weren't. This is actually called "lying under oath". You were creating cars people didn't want and some were embarrassed to drive, routinely made fun of by Gen Yers (and some X'ers), and even my favorite relatives in the 80+ year category bought their first "foreign" cars with in the last decade.. a big deal to this generation of loyal consumers.. mostly due to quality issues. I heard my grandfather literaly say it was tough to not buy American, but he loves his Toyota. (and still loved me when I backed it into a parked car)

Did it REALLY start just recently when people couldnt "get a loan"? I dont think so. Polls show that most American's aren't that gullible either.. over 90% dont want the bailout consistently regardless of how bad the pollsters design the questions.. so why don't we see Congress telling these guys to take their jets back to Detroit and go suck their thumbs like the crybabies that they are?

Well that is the nature of today's market it seems.. where everyone is too big to fail.. but where do we draw the line? Why is Petsmart reporting greater earnings today and double digit increases over previous quarters? Does it just mean we care more for our pets than our cars? Maybe because they are more reliable than the Big 3's autos.. but another digression. Maybe we love our pets more. Seems we found room on the credit cards for designer pet food, but a Ford with a dash that feels like cardboard? uh uh. There is a big surprise.

What really, really irks me is this notion that the American dream is being assaulted. Yes, we are in some financial hot water - anyone with 1/4 of a brain left knows this. It isn't anything we haven't faced before. It isn't anything we won't face again. It is nothing like what our elders faced in the 20s and 30s. My grandfather has thankfully shared in much detail the pains he and his family went through, and how that shaped who he is today. There is much to learn from the frugality of that generation even once they started making good money. My grandfather has had his couch reupholstered several times, while I keep buying new ones. But that isn't really the point of this either. I do think it is vital for my generation to see this- to see that not all will go well, and you have to get creative and plow through, using whatever ounce of energy you have left. Don't give up, and don't ask for freebies. Where is the fun.. or the dignity, in that? I am sure many of you would agree; you'd rather lose everything than make it on someone else's dime.

The point is that the American dream.. the desire in the heart and soul of Americans to build something for themselves - to not make someone else rich and to work for themselves and their families.. whether as full time contractors choosing who they do work for or outright businesses supplying products and services to those who share our great fate as Americans.. that soul hasn't died.

It won't die because it is in the heart of many of us that is unwavering - in a sense built-in to many who desire the ability to have no maximum capability. We live, even today, in a time where the sky is the limit - how amazing and fabulous is THAT?!

Sometimes .. in times like this when we see billions being thrown at industries that are burning through $6bn or more every month, it is easy to lose our way or for a bit .. even despair.. after all, we work our butts off to make the next mortgage payment or move up or get our kids to a better school (well for those of you that have them!)

I dont hear great Americans saying "but what about me." Instead, they shake their head .. disbelieving how pathetic this situation has become, which started with granting one individual the ability to spend $700bn of our dollars with little to no oversight. What did we expect would happen?

American entrepreneurs are the lifeblood of this economy. The Big 3 might employ a couple million workers, but that is nothing compared to what small businesses employ. Small and medium sized business owners all over this country are revalidating and realigning their core competencies, bringing in new consumers, going global online, checking their numbers, making plans for the future should consumer spending continue on a downward spiral, and making corrections in business plans to weather the storm because they know no one will give them a handout.

My bet is, even if someone did offer them one, they wouldn't want it anyway. The best part about being an entrepreneur is the ability to design ones' own destiny. This cannot be taken away by stupid acts of politics. Another great part about being an entrepreneur is the ability to fail, should you choose or should life or something else get in the way. Failing sucks. I know that first hand. But the best lessons are learned in failure. What lessons are we teaching children who watch big companies fail and get a hand from US? What are we telling entrepreneurs that really do provide a ton of jobs when we just bail out the big ones because.. well.. they are big.. and an afford the Congressional lobbyists? The best feeling is to wake up (or lay awake) one morning or night and say "damn, I just realized..." and voila, you have the epiphany.. and you won't repeat the mistake.

You learn from those mistakes.. pick yourself up, dust yourself off, and start over again.. all because you have the HEART to do it. That dedication and perserverence and heart felt soul of the spirit cannot be bought, even for $25 billion.

Feminism's Defeat

2008-11-13T18:16:00.000-08:00

I rarely write with little purpose or specific intent. I write books, write letters to friends when time permits, and write story ideas for the media - my take on current events they can use in their daily segments. I write to my students thousands of emails and posts in discussion forums daily. My blogs are mostly informative.. Lacking specific passion or personal divulgence; focused on creating something educational or with the intent to inform a group of people based on questions I'm being asked en-masse... From my students, military men and women asking questions or a way to bulk answer emails that come from hits in the media.. So I find myself writing with a different purpose and perhaps passion tonight..and just maybe this is one of those things you don't put on your blog and write your name to - signed and delivered. But if it's honest and a reflection of yourself, why not? After all isn't that the intent of social networking; of mostly Gen X'ers and Gen Y'ers developing an understanding of one another beyond what we see on MySpace or email? A media host and very savvy business woman shares quite a bit of herself in a blog, so perhaps Ill give it a try tonight.

So here it goes. I spend a lot of time in the air. Not nearly as much time as some of my good friends or those clocking millions of miles per year. I just hit the couple-of-million club on American - just enough to ensure I wont have to pay for the Admirals Club anymore or be put on an upgrade "list". Until recently, the in-air time has been spent writing books; no internet connection. With AA's new GoGo on 767s that has changed, so I can work non stop… in fact I'm typing this and posting it while flying now - I am still shocked they beat Virgin America too it (disappointed actually). Ill have to find new time to write books because flights are out now unless I intentionally take one without internet access.

One of the other things I do on flights when I travel alone (which is over 98% of the time by my most recent calculations) is seat jump… moving around often several times so couples can be together.. Tonight at least after the third seat jump (I usually initiate them when I see "stranded" couples unable to cuddle at 38000 feet), the gentleman was kind enough to move my bag. Ah, I digress.

So.. What to do now besides stay on top of email.. I cannot say "catch up" because I don't go to bed with anything in the inbox, so I'm never really 'behind'. I read. A lot Everything from Medical Science journals (a passion beyond belief) to Pharmaceutical Journals to Economics articles/books/magazines and … perhaps most intriguing these days, political 'stuff'. I believe I'm more interested in the aftermath than I was the election - and I was one of those freakos holding parties for McCain.

Yes I realize the election is over, and no this isn't a blog whining about how "my" candidate didn't win (although he didn't). I find solace in the fact that we're about to enter Hooverville (NOT - on the solace, yes on the Hooverville).. Okay, whatever. We will get past it and get over it (did I just say that?) and have another shot at reality in 4 years. However - both parties are highly highly screwed up and spending is out of control.. I don’t see that changing despite who the president is. Now the balance of power is a concern.. But that is another story for another day. People are too worried about the wrong things so our country will continue down its screwed up path for the foreseeable future. I promise to post if I see that changing. Somehow I think hell will freeze over first. Or at least in 3 years. Or insomnia will take my life and I wont know or care anyway! :)
What I find most ludicrous.. Enraging actually.. Is the anti-feminist feminist. So, to explain a bit, here is my demographic and background. (Funny, I was just telling one of those "highly traveled" friends how one should never admit their demographic on air.. But this is hardly on air now is it - it may be worse!)…

I grew up in a time where the women before me had already fought for my right to vote. The women before me shattered a "few" (billion?) glass ceilings. I was fairly blind to the entire concept of "restriction by gender" when I became a Director of Technology for a world-renowned university and medical center while still a teenager. Sheer motivation, study and perseverance - and asking for what I wanted - landed me where I belonged. I hardly felt undo pressure by anyone to not be anything I wanted, though they did tell me to make the suits a bit more conservative (some things never change).

My parents encouraged me (through no fault of their own - it was their "way" passed down from generations) to settle down and have a family; my grandfather to stay unmarried, stay safe, and go get an education (thanks Gramps!) I had my own way and followed it, probably much to my family's dismay to this day. As I climbed the corporate ladder while running a business on the side (a fairly successful one actually) and going to school full time while learning how to fly and do a bunch of other things I had no business doing, I had no feelings whatsoever of "I wonder what will happen because I'm a woman."

In fact the very first time I experienced it was at a famous private real estate company in Newport Beach, when a new "boss" yelled in my face, a few inches from nose, "no woman working for me will have a PhD". I stood on my tip-toes to get in his face right back and asked if he was "finished". He stormed off obviously frustrated. He subsequently found a bogus reason to "lay me off", and I subsequently found reason to have an amazing severance package. But, again, I digress.

So I started thinking… maybe there is something to this woman thing - being held back by it. But.. It's always felt invigorating.. Powerful.. In its own sense, its own right.. An "anything is possible" feeling.. And I've felt that since childhood despite various people telling me otherwise. Nothing shook it. I was in every sense of the word a nerd.. I did every nerdy thing possible in high school.. Debate team, political clubs.. Science clubs, math clubs, spending my lunchtime playing TradeWars on BBSs on 300 baud modems against all of my male friends (think about the show Big Bang Theory.. That was me.. And not the attractive hot chick working at Friday's)...all the things nerdy girls do.

I grew up a nerd.. Not proud of it at the time, but darn proud of it now. Let's just say I wasn't the one that people were asking to hang out at their parties. In fact I don’t think I went to one party until I was 24. And that was the last one for about 3 years. (yeah yeah…) I had no time in college; I worked my butt off, and worked a full time day job, learning about office politics, leadership, how to manage people 30 years my senior, and eventually running a team and a growing company simultaneously while working on the masters degree. I've had relatively little room for procrastinators in my life.. Very little if any respect for excuses because we have the greatest abilities in this country to do anything we want and we usually hold ourselves back - and many have died for that freedom we have. We all have the ability to change anything if we want it badly enough. As I said, no excuses. My family grew up on the lower income scale - okay exceedingly low - this is something that I'm also very proud of. They stuck to their guns and still managed. Most people think I grew up with a silver spoon in my mouth; nothing could be further from the truth. I'm always amazed at the immediate perceptions of others. I have great respect for individual histories and where someone came from to get to where they are… it's almost never, ever what it seems.

In my family, my father was a democrat and my mother a republican. I don’t think either of them followed politics really; and we didn't have cable so they only heard what hey saw on All My Children and the news on occasion after the Simpsons. I heard them talking about cancelling out one another's' votes.. It was a joke in our family, certainly nothing serious. My father instilled the obligation to vote because others died for that right.

Yes, I am a social conservative on abortion, on not randomly modifying our constitution… and more to the point, I am no less a woman for believing these things. But I also care most about fiscal policy because it can impact how we can progress in life -- the government takes our money - I want them to be accountable with it. If they wont be, I want it back. I can use it in better places than they can. Ill pay to have the 7 feet of road paved outside my home and call it a day.
A bit of oversimplification, but you get the point. Some how growing up even in my teens I got this strong sense of "Republicanism" - not the type that cares what two consenting adults do alone at home - in fact I am a conservative Republican with a bit of an edge (yes, that is the "new Republican".. My demographic..) but the type that cared about being diligent and making life what you want it to be.

I don’t mean the social conservatism that some pundits are saying is the death of the Republican party. I don't know how it occurred but I equated Democrat with "you don’t have to work hard and can piggyback off of others". Perhaps the freebies and handouts the democrats seemed to favor didn't resonate with me - I wanted no handout - I wanted and want to work my own behind off to get anything or anywhere - I have a hard time even letting anyone else buy dinner. I had an opportunity at an easier life full of exciting things with a very handsome suitor and - after several dates - I cut the relationship off because he was too wealthy, and I'd never feel that I made it on my own. I have since learned a bit more balance..we are all interconnected humans and we need each other .. But for support and friendship and an exchange of passions - not for all the reasons he thought he could provide.

So throughout this election cycle, I've watched with great interest the path of Sarah Palin. I remember sitting in bed in California after a long night of insomnia.. Actually all of my insomnia nights are long. I was listening to McCain's VP pick on Fox News. "holy…. What a BRILLIANT move." I had read about her before in the Weekly Standard. Yes I thought.. she appeals to the regular folks, and she's a Christian conservative with values that fought the beauracracy and the male dominance and even her own party.. I don’t like hunting or killing animals or cooking or the things she seems to enjoy doing, but I respect her for shattering so many barriers. I thought it sealed the deal (boy was I wrong).. A kick-butt woman in my view. And so it began, conversations with my friends (most of whom, believe it or not, are liberals to a very hard core degree.. But liberals that usually respect that others can have convincingly intelligent opinions that don’t necessary agree with their own).

But something was different this time. There was this "spewness" of raw anger and hate towards Palin, which made me want to defend her more.. I always, always defend the underdog. I hate watching people get beat up. But it wasn't from men.. They made reasonable comments like "she's unqualified" or she's "not ready to be commander in chief should something happen to McCain". Agreed here. But.. What about the HATE coming from women? I remember a specific quote from Wendy Doniger, a self-proclaimed feminist at the University of Chicago. Her words? "Her greatest hypocrisy is her pretense that she is a woman." So all this time I thought sexism wasn't going to hold us all back anymore.. Until.. A woman, a "feminist", indicated that she was in fact not a woman.. I assumed this is based on her choice to have a Down Syndrome baby (how dare we not kill a baby) and her decision to go to church (and believe in God too - has anyone crunched the numbers of the statistical possibilities that we are created by randomness?? I have! It was a high school project!) and raise a family of 5 (6 if you include the hubby) and lead a life chalk full of hard decisions, fighting tooth and nail against establishment, while still maintaining her role as a mother and a wife. Wow.

I must admit, she was a bit inspirational in this regard. One of the many reasons I don’t have children is a decision to put my career first despite harsh criticism from mostly liberal people (ironically enough). Replicating my DNA has been low on the totem pole of priorities. That may change in the future, but given my "demo" this is where I’m at in life. But here was a woman that actually seems to be managing it all just fine.. And doing great. Perhaps it is possible after all.
What gets me though is why, after all the years of fighting like crazy to shatter glass ceilings, so-called "liberal" women who are all about women being able to make a free choice only respect the choices if they are the same choices they would make. Doniger wasn't the only one - I heard this from many, many people. "Sarah isn't a woman". "Palin has no values." (aka not MY values) That isn't feminism and it isn't liberalism.. It is narcissism. If you are a liberal woman you can value a woman's right to choose - but you must also respect her choice if it's pro LIFE.

Perhaps that is why I've not ever considered myself a feminist - I am all for women's rights - but all women's rights not just some. Women and men aren't equal. Men in general are better at some things; women are better in general at other things - with exceptions to the rules of course. Maybe this makes me not a woman too. In that case Ill take it. This is all about chemistry and biology and not discrimination. I must say that this cycle has made me reflect back on my career.. And it was almost always, always the women who hurt one another.. Who didn't help, who did the damage to each other and one another's' reputation.. Maybe that is why I always enjoyed managing and working for men. The men hung in there, helped one another.. NS and helped me, the woman, too. But not because I am a woman - because I am a competent individual that happens to be a woman.

Everything was competition with women. Perhaps it's Sarah-envy; perhaps it's the mere thought of someone with a different view in a position of power - but women - if we hit another glass ceiling, you can thank the liberal feminists for it. This is the first time I've seen such wide spread efforts against women. Now I know what all those chicks before me fought so hard for. Thanks "guys". :)

6 ways to get a mortgage more easily

2008-09-10T20:21:00.000-07:00

6 ways to get a mortgage more easily in today’s crazy market

Despite homeowner relief and low interest rates, many homeowners are still struggling to get mortgages today. I ran into this issue myself – 11 lenders later I found the one that was decent. It takes patience and is often frustrating.

Those struggling the most are those with either lower than 700 FICO scores, or those who are self employed that were using stated income loans. Here are 6 tips to getting a mortgage more easily in today’s market.

Be prepared with documents! Scan your pay stubs, keep copies of your current employment records, and if you are self employed, keep a letter from your accountant and business license copy in a PDF format. This saves tremendous time when you go to file.

Stay away from companies that will “raise your FICO”. Most of these are scams – they will take your money but you won’t see your credit score increase. One way to do that legitimately though is to, rather than paying off your high interest cards first (which makes the most financial sense in most cases), is to pay 50% of each card. Once your cards drop to 50% of their available limit, your FICO goes up as you are considered a less risky borrower. Another way to improve FICOs is to not close old loans and show them paid off – and until the end of the year, if you are an authorized user on someone else’s card, this can help improve your score too (provided they’re not over their limit!)

Shop around – big time. Lenders are advertising easy loans, but the devil is in the details. Look out for origination fees (as much as 2% or more of the loan amount!), penalties for having a “lower than 700” credit score, and companies that wont take your loan if you have a 2nd mortgage.

Maximize your 1st mortgage. Try to get as much as you can on your primary mortgage because the cost of HELOCs and 2nds today behind other loans at the 75% combined loan to value rate is very high.

Don’t just take your brokers word for it. Some brokers have access to great lenders that you don’t have access to through wholesale lending. But that doesn’t mean you shouldn’t also shop around yourself. Compare what your broker finds to what you find, and be prepared with all the documentation you can handle.

Do your own appraisal. Particularly on jumbos or in areas that are “declining markets” (each bank is different in terms of zip codes they consider in the declining market arena), the banks are often using their own internal appraisals and rather than over inflating price as many did, they’re coming in far less than they should be to be fair and accurate. Having your own appraisal can be a good baseline to see if the banks are ripping you off. If they can show a higher LTV, they can charge you more for the loan!

Dani Babb

House Trading - Myths and Truths

2008-06-08T21:03:00.000-07:00

Interested in trading your house (recommended company is onlinehousetrading.com) but not quite sure what to believe? Do you have agents telling you it isn’t legitimate, but you’re hearing on the news that it is?

House Trading is a legitimate business that matches two sellers and two buyers together to trade homes. Check out onlinehousetrading.com for more information! This is particularly useful for military families needing to move – and fast.

Let me first identify myths and truths:

Your equity position matters. It doesn’t matter if you have $1000 equity or $500,000 equity because you are getting a mortgage for the other house.

It won’t work because banks won’t let you trade mortgages. That is true but with House Trading both parties are simply buying each others homes. Both parties acquire a new mortgage or pay cash.

Both homes need to be the same price because if not you have to make up the difference in cash. That would be like someone telling you if you sold your $300k home that you had to buy another $300k home. As long as you can qualify for the mortgage you can buy what ever you want.

Let’s look at a couple of typical scenarios; upsizing and downsizing a home. House Trading Scenarios

Upsizing:

Seller A has a home valued at $350,000
Seller B has a home valued at $450,000

Equity doesn’t matter! Seller A would get a loan for Seller B’s house and Seller B would get a loan for Seller A’s house.

They will simply buy each others homes.

Downsizing:

Seller A has a home valued at $550,000
Seller B has a home valued at $450,000

Equity doesn’t matter! Seller A would get a loan for Seller B’s house and Seller B would get a loan for Seller A’s house.