February 23, 2013

Bits Bucket for February 23, 2013

Post off-topic ideas, links, and Craigslist finds here.

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Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 01:20:13

Is now the time to buy? (So asked a colleague just yesterday…luckily I was ill so I was easily able to avoid giving a detailed answer.)

Comment by Housing Analyst
2013-02-23 06:36:50


Not when rental rates are a fraction of the monthly carrying costs of buying.

Comment by Skroodle
2013-02-23 09:38:45

Not every where.

Comment by polly
2013-02-23 09:42:34

Absolutely everywhere - improper fractions (fractions where the numerator is larger than the denominator) are fractions too.

So, 4/3’s? A fraction. 2/1? A fraction. You get the idea…

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Comment by Jingle Male
2013-02-23 10:07:39

Funny Polly.

In the Sacramento market the purchase of rental fraction is improper……about 10/9…maybe 11/9 if you can use the interest deduction.

The proper fraction is the purchase price over reproduction cost…..about 3/4. It was even less in 2010…about 2/3. It is rapidly approaching 1/1 as the inventory has shrinks and the homebuilders are cranking up.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 10:08:51

By your definition, true almost everywhere, but not where they are giving away homes for free, i.e. at a price of $0.

Comment by polly
2013-02-23 10:38:06

Even if you get a house for “free” the monthly carrying costs aren’t $0. Not by a long shot. A free house would need a lot of fixing up and still has property taxes associated with it and if nothing else, there has to be some sort of recording fee or something like that just to transfer the title and you might have to clear liens already on the property.

So no, I don’t think we have to worry about going “undefined” by dividing by zero.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 12:51:50

‘Even if you get a house for “free” the monthly carrying costs aren’t $0.’

Aaargh — I knew you were going to call me on that point, even as I typed.

Comment by Housing Analyst
2013-02-23 11:46:30


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Comment by rms
2013-02-23 12:56:18

Bold Caps = Shouting :)

Comment by localandlord
2013-02-23 17:25:33

“rental rates are a fraction of the monthly carrying costs of buying.”

It occured to me you may base your research on Craigslist ads. Around here about 20% appear to be bogus/scams. One hint that they are fake is the location will be listed as Locaville, LL - or in your case San Diego, CA or Providence, RI. But think about it - If you are looking to rent in Providence you are going to know it is in RI, aren’t you? They usually offer 2 pictures and a short but not too short description. Sometimes I see the same photos for different ads.

If it seems too good to be true, it probably is.

Comment by Pimp Watch
2013-02-23 19:57:46

And it occurs to us that you perpetuate the housing lie.

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Comment by azdude
2013-02-23 07:58:08

Buy now or be priced out forever? memories seem to be getting shorter and shorter.

This time its different cause interest rates are so low.

use leverage to buy as many homes as possible.

Remember in 2000 when they were talkn about the new economy and they were wheeling jim cramer out everyday?

These people are great promoters I give them that. They even get politicians and the media in the mix.

Comment by Montana
2013-02-23 13:54:56

Nothing’s changed…they’re still wheeling Cramer out every day.

Comment by 2banana
2013-02-23 08:52:25

The answer is yes, no or maybe.

Depends where. Depends if the area is turning into a 3rd world slum.

Depends if you can buy at 120x the monthly area rent
Depends if you can by at 2.5x the annual area income
Depends if property taxes are low and stable
Depends if you feel secure in job

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 10:28:05

My colleague’s job is stable, and besides, it doesn’t matter, because he is one of those rare individuals who is going to literally inherit a ranch. So other than a “yes” answer to the last question, I believe “no” would be appropriate in his case for your other questions.

I asked my colleague whether he is a net worth buyer or a monthly payment buyer. We are in a “how-much-a-month” buyer’s market, driven by a massive ongoing Fed-funded infusion of federally-guaranteed, low-downpayment, low-interest loans that serve to increase the amount of home a given individual can “afford” to buy for a given slice of his monthly income. The irony is that pushing out this type of loan to anyone who can qualify, while encouraging investors to snap up low-end inventory with a plan to house the masses in rentals, has hit the under-$400K end of the local market with an overload of demand, desiccating the inventory in this price range, while nudging prices of what little remains towards higher levels.

So long as the Fed is actively propping up housing demand (e.g. through $40 bn / month in QE3 MBS purchases), I expect prices to remain artificially elevated and inventories to remain low, favoring “how-much-a-month” buyers who can qualify for “affordability” loans which spread out the high price of buying over a lifetime of debt servitude. When and if the Fed ever exits its position in housing, along with the crowd of investors that it attracted by announcing its move into housing, I expect residential real estate may once again become attractive for net worth buyers to consider purchasing.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 10:40:23

Corollary: If you believe the Fed will never exit its QE3-funded housing price stabilization program, perhaps now really is the time to buy. (I hedged my portfolio by purchasing some REIT shares.)

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Comment by cactus
2013-02-23 09:14:39

time to buy ? Kinda too late don’t you think ? In certain areas the housing markets on a tear I would hate to be cashing this thing up.

Trying to out bid Blackstone and other all cash buyers.

Tough call.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 10:30:17

“Trying to out bid Blackstone and other all cash buyers.”

That’s the succinct version of my answer.

The long version is above.

Comment by Bill in Los Angeles
2013-02-23 09:47:37

I think if you have no more than 1/6 of your net worth set aside for real estate and it is the same as the price of your dream home, then buy.

Further refinement:

If you buy in a state with low property taxes but high income taxes and capital gain taxes, your net worth should be mostly in treasury bills, AAA municipal bonds, and gold bullion.

California is an example.

Conversely if you buy in a high property tax state but it has low or no income taxes and low or no capital gain taxes, your net worth should mostly be in stocks. States such as Texas and Florida are examples here.

In either case your taxes will be relatively lower than the taxes on people who ignore those principles. In either case, I’m not advising against owning real estate, but not put most of your assets in real estate.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 10:33:48

Suppose a little birdie told you that if you buy now, prices will be 65% lower later on and you “knew” the birdie was right. Further, you had a plan to eventually leave California to live on a ranch in Texas.

Would your “1/6 allocation” advise still be applicable?

Comment by Bill in Los Angeles
2013-02-23 12:58:42

Yes. Because I mentioned “dream home.” There are many dream homes, not really just one. And they can be in different states.

My dream home in California is in Big Sur. Price around $2 million. My dream home in Scottsdale is around $500,000. My dream home in Sarasota, FL is over $1 million. My dream home in New Hampshire is above $300,000. Same for Tucson.

I would not move anywhere just to buy a house I could afford. I do like all the above places. But If I cannot afford my dream home on one sixth of my net worth, I cannot afford it. Been renting since 1996 and I could just as easily rent the rest of my life.

Also some nice places might have reasonable rents. There are very nice places surrounded by million dollar homes renting for $5,000 per month. If you can get a $10,000 per month average return on your investments and you want to live in a nice place like that, why not?

When I stop traveling for work, I will consider if I should continue renting or buy. For now it’s no question but to rent.

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Comment by 2banana
2013-02-23 13:22:41

What about a dream house in Oil City????


Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 13:31:31

But why would you buy your dream home now if you could get it for 65% less later?

Comment by Bill in Los Angeles
2013-02-23 14:36:58

Because I have no guarantee the dream home would cost 65% less later. Same thing for the cost of gold. Same thing for the cost of a U.S. bond or a ten year note.

But if you are well diversified to be risk-neutral for 83.33% of your wealth while 16.67% is in your dream house, a 65% cut in the value of your dream house is only a 9% loss of your total assets - the other 83.33% being risk-neutral.

I had colleagues who were 80% or more into real estate during the bubbliest years (2003-2008). They chided me for being in my 40s and not having real estate. I learned to be smug when one of them told me about his property woes later.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 15:26:49

“Because I have no guarantee the dream home would cost 65% less later.”

That was one of the baseline assumptions of my scenario. But I suppose it is rather obvious that one would not buy his dream home today if he expected to be able to buy it for 65% less within the near future.

Comment by Bill in Los Angeles
2013-02-23 13:02:22

If you really intend to go to Texas, for now you should be buying stock index funds and I know you said you are doing so. Don’t realize any gains until you get to Texas. California taxes capital gains as ordinary income. For anyone with income above $48,000, that’s a 9% theft. Texas does not tax capital gains. If you build up a $200,000 gain by the time you move to Texas, you keep an extra $18,000.

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Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 13:27:39

Again, I was referring to a colleague. He may eventually move to Texas, and I definitely would advise he not throw his wealth down the rat hole of a California residential real estate money pit before potentially escaping.

Comment by oxide
2013-02-23 16:33:13

Banana, a dream home in Oil City-ish places would probably cost about $200K. $75 for the house and $125K for fixing up the property with dream home finishes and homesteadery. Or, $25K for the land and $125K to erect one of Pimp Watch’s pre-fab homes. Mind you, it wouldn’t be a mansion, but chances are that if you’re the Oil City type, you don’t really want a huge house.

Comment by tresho
2013-02-23 19:11:10

An essential part of my dream home in Oil City would be a teleportation portal to places like a good beach in Kauai, etc. Unfortunately those portals have not yet been invented.

Comment by Bill in Los Angeles
2013-02-23 19:13:35

Keep reading Larry Niven though :)

Comment by Pimp Watch
2013-02-23 19:17:46

“Banana, a dream home in Oil City-ish places would probably cost about $200K. $75 for the house and $125K for fixing up the property with dream home finishes and homesteadery. Or, $25K for the land and $125K to erect one of Pimp Watch’s pre-fab homes.”

You really don’t know anything about anything do you….. and you’re proud of it.

Comment by cactus
2013-02-23 20:26:13

Suppose a little birdie told you that if you buy now, prices will be 65% lower later on and you “knew” the birdie was right.”

a mocking bridie?

How about if it told you the dollar would be 65% lower

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Comment by Pimp Watch
2013-02-23 20:50:42

How about you come clean and tell us how far underwater you are?

Comment by you're my boy, blue
2013-02-23 04:01:31

Yes it’s good time to buy. Sooner the better.

Comment by Housing Analyst
2013-02-23 11:48:44

Why buy now when rental rates are half the monthly cost? Buy later after prices crater for 65% less.

Comment by localandlord
2013-02-23 17:34:08

See comment at the beginning of the thread about Craigslist scams.

Comment by Pimp Watch
2013-02-23 19:59:03

See response at the beginning of the thread about liars.

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Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 05:56:14

It’s amazing how much panic one honest man can spread among a multitude of hypocrites.

– Thomas Sowell

Upside Down Economics

From television specials to newspaper editorials, the media are pushing the idea that current economic problems were caused by the market and that only the government can rescue us.

What was lacking in the housing market, they say, was government regulation of the market’s “greed.” That makes great moral melodrama, but it turns the facts upside down.

It was precisely government intervention which turned a thriving industry into a basket case.

An economist specializing in financial markets gave a glimpse of the history of housing markets when he said: “Lending money to American homebuyers had been one of the least risky and most profitable businesses a bank could engage in for nearly a century.

That was what the market was like before the government intervened. Like many government interventions, it began small and later grew.

The Community Reinvestment Act of 1977 directed federal regulatory agencies to “encourage” banks and other lending institutions “to help meet the credit needs of the local communities in which they are chartered consistent with the safe and sound operation of such institutions.”

That sounds pretty innocent and, in fact, it had little effect for more than a decade. However, its premise was that bureaucrats and politicians know where loans should go, better than people who are in the business of making loans.

The real potential of that premise became apparent in the 1990s, when the Department of Housing and Urban Development (HUD) imposed a requirement that mortgage lenders demonstrate with hard data that they were meeting their responsibilities under the Community Reinvestment Act.

What HUD wanted were numbers showing that mortgage loans were being made to low-income and moderate-income people on a scale that HUD expected, even if this required “innovative or flexible” mortgage eligibility standards.

In other words, quotas were imposed— and if some people didn’t meet the standards, then the standards need to be changed.

Both HUD and the Department of Justice began bringing lawsuits against mortgage bakers when a higher percentage of minority applicants than white applicants were turned down for mortgage loans.

A substantial majority of both black and white mortgage loan applicants had their loans approved but a statistical difference was enough to get a bank sued.

It should also be noted that the same statistical sources from which data on blacks and whites were obtained usually contained data on Asian Americans as well.

But those data on Asian Americans were almost never mentioned.

Whites were turned down for mortgage loans more often than Asian Americans. But saying that would undermine the reasoning on which the whole moral melodrama and political crusades were based.

Lawsuits were only part of the pressures put on lenders by government officials. Banks and other lenders are overseen by regulatory agencies and must go to those agencies for approval of many business decisions that other businesses make without needing anyone else’s approval.

Government regulators refused to approve such decisions when a lender was under investigation for not producing satisfactory statistics on loans to low-income people or minorities.

Under growing pressures from both the Clinton administration and later the George W. Bush administration, banks began to lower their lending standards.

Mortgage loans with no down payment, no income verification and other “creative” financial arrangements abounded. Although this was done under pressures begun in the name of the poor and minorities, people who were neither could also get these mortgage loans.

With mortgage loans widely available to people with questionable prospects of being able to keep up the payments, it was an open invitation to financial disaster.

Those who warned of the dangers had their warnings dismissed. Now, apparently, we need more politicians intervening in more industries, if you believe the politicians and the media.

Comment by 2banana
2013-02-23 08:39:40

In other words, quotas were imposed— and if some people didn’t meet the standards, then the standards need to be changed.

Isn’t bigger and bigger government GREAT!

It sure has helped:

The housing market
The education market
The health care market

All these markets, with MASSIVE government intervention, now have affordable products that work.

Ask yourself - what would the iphone look like if Apple was regulated has heavily as health care?

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 10:36:20

“…what would the iphone look like if Apple was regulated has heavily as health care?”



Comment by 2banana
2013-02-23 13:13:21

An iphone from the government would cost $10,000, there would be no alternatives, you would be forced to buy it, it would barely work in the best of times and it work stop working altogether in a few months.

There would be no return policy and anyone who argued against using the government iphone would be called racist and wanting to starve children.

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Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 13:36:56

“An iphone from the government would cost $10,000,…”

Obama phones are free.

Some valley residents dial into ‘Obama phone’ program

By Tom Ragan
Posted: Jan. 28, 2013 | 1:59 a.m.

…there is a free cellphone that’s beginning to surface in some of the poorer neighborhoods around Las Vegas and even among some of the hard-working middle-class folks who have fallen on hard times. And they don’t have to pay a cent for it.

…it’s affectionately referred to as the “Obama phone.”

Comment by alpha-sloth
2013-02-23 15:25:44

it’s affectionately referred to as the “Obama phone.”

LOL, a misnomer, when (just like Fast and Furious gunwalking schemes) it’s really the inherited product of a Repub administration. In this case, the great Ronnie Raygun. From the article:

But the reality is the Obama phone’s origins can be traced to the days of President Ronald Reagan, whose Lifeline Assistance program offered federally subsidized discounts to low-income people who couldn’t afford their land line bills. In some cases, the federal government paid for their entire phone bills.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 10:35:10

Alpha-sloth must be engaged in nocturnal behavior today. The bait didn’t work.

Comment by alpha-sloth
2013-02-23 14:55:48

Sowell’s charges have been refuted so many times, it’s not even worth doing it again. It’s like the prisoners who have told each other the same jokes so many times that they’ve numbered them, and now just shout out a number to get a laugh.

It’s actually rather nostalgic to have someone making the tired old charges again. Think I’ll play some Glenn Miller…

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 15:23:30

Sowell’s Alpha-sloth’s charges have been refuted so many times, it’s not even worth doing it again.”

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Comment by alpha-sloth
2013-02-23 16:23:25


Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 22:25:05

Why not just admit that you reject everything Sowell says out of hand without refuting his arguments because he is a black man and you are a racist?

If that were not the case, I am sure you would come up with a more substantive refutation of his arguments than to suggest that somebody else already refuted them before.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 15:51:25

Glenn Miller was dead long before the CRA was born.

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Comment by alpha-sloth
2013-02-23 16:21:37

I thought it all went back to Fannie Mae(1938).

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 17:32:13

Housing Finance and the 2008 Financial Crisis
Lawrence H. White
August 2009

Misguided Blame
Origins of the Financial Crisis
The Federal Reserve Expands Credit
Federal Mandates and Subsidies Increased Risky Mortgages


The financial crisis and recession of 2008 and 2009 were serious blows to the U.S. economy, so it is important to step back and understand what caused them. While some people have pointed to financial deregulation and private-sector greed as the sources of the problems, it was actually misguided monetary and housing policies that were the main causes of the crisis.

The expansion in risky mortgages to underqualified borrowers was encouraged by the federal government. The growth of “creative” nonprime lending followed Congress’s strengthening of the Community Reinvestment Act, the Federal Housing Administration’s loosening of down-payment standards, and the Department of Housing and Urban Development’s pressuring of lenders to extend mortgages to borrowers who previously would not have qualified.

Meanwhile, the government-supported mortgage lenders, Freddie Mac and Fannie Mae, grew to own or guarantee about half of the United States’ $12 trillion mortgage market. Congressional leaders pointedly refused to moderate the distortions created by the government’s implicit guarantee that the firms would not be allowed to fail, which was the catalyst for their rapid expansion. Instead, Congress pushed them to promote “affordable housing” through expanded purchases of nonprime loans to low-income applicants.

The credit that fueled these risky mortgages was provided by the cheap money policy of the Federal Reserve. Following the 2001 recession, Fed chairman Alan Greenspan slashed the federal funds rate from 6.25 to 1.75 percent. It was reduced further in 2002 and 2003, reaching a record low of 1 percent in mid-2003—where it stayed for a year. This created excessive liquidity and generated a huge demand bubble.

Thus, the causes of our financial troubles were unusual monetary policy moves, unwise regulations, and misguided federal housing policies. These poorly chosen policies distorted interest rates and asset prices, diverted loanable funds into the wrong investments, and twisted normally robust financial institutions into unsustainable positions.

The Department of Housing and Urban Development budget costs taxpayers more than $50 billion annually, but the economic damage caused by ill-advised federal housing policies has cost the U.S. economy far more than that. For that reason, HUD housing finance subsidies should be repealed. Fannie Mae and Freddie Mac should be fully privatized and stripped of government guarantees, while being freed from federal mandates. With a neutral and noninterventionist approach to housing policy, federal taxpayers would save money and markets would work more efficiently to benefit everybody—except those seeking subsidies at taxpayer expense.

Comment by alpha-sloth
2013-02-23 20:12:04

Hot off the presses at the Cato Institute? lol One notch of credibility below the NRA.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 22:18:36

“Hot off the presses at the Cato Institute? lol One notch of credibility below the NRA.”

I notice your supercilious opinions about which sources are credible and which are not nearly always crowd out any shards of intelligent dialogue from your posts.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 14:28:50

I frankly don’t see what would prevent HUD from coercing builders to provide affordable housing for the Democratic party’s politically favored racial or ethnic groups on a nominally* legal discriminatory basis?

* Racial discrimination in housing is officially illegal in the U.S.

February 22, 2013, 6:24 p.m. ET

HUD’s Race-Based Housing
The agency rushes out a rule to sway the Supreme Court.

A major goal of President Obama’s second term is to use the brute force of government to reduce inequality. This played out in the struggle over tax increases, but the Obama bureaucracies will do the most to implement this vision. Exhibit A is the Department of Housing and Urban Development’s new rule to impose race-based criteria on virtually all new U.S. housing.

HUD this month finalized a rule that interprets the 1968 Fair Housing Act to allow the use of “disparate impact” to determine if private housing projects violate the racial provisions of the 1968 law. Disparate impact is a kind of statistical analysis that doesn’t require a showing of discriminatory intent to prove illegal discrimination. The change sought by HUD would vastly inflate and formalize government’s ability to socially engineer American neighborhoods.

Clearly no lender, developer, landlord or other housing provider wants to be sued for racism. In the Obama Administration’s first term, the Department of Justice threatened Fair Housing Act lawsuits against several banks. The banks quickly consented to monetary settlements, though Justice did not accuse them of intentional discrimination.

HUD replies that it has “long interpreted” the Fair Housing Act to allow for disparate impact. But then why hasn’t the agency formalized this interpretation over four decades? The answer is that HUD is almost certainly overstepping the law’s authority and intent. The Fair Housing Act prohibits discrimination “because of race, color, religion, sex, handicap, familial status, or national origin.” That language implies an explicit intent to discriminate, rather than a result based on a statistical analysis that claims to find a racist pattern in the random decisions made by thousands of individual builders and homebuyers.

There’s much to dispute in this new rule, which makes it all but impossible to defend against disparate-impact claims. The accused must prove nothing they do “actually or predictably results in a disparate impact” or “creates, increases, reinforces, or perpetuates segregated housing patterns because of race, color, religion, sex, handicap, familial status, or national origin.” This is a field day of variables for a HUD statistician determined to discover racism.

HUD is so confident of its legal standing that the agency didn’t bother to do a cost-benefit analysis and says the rule “adds no additional costs to housing providers and others engaged in housing transactions.”

Seriously? Lenders, landlords, insurers and everyone else in the housing industry now has to weigh every decision through the eyes of HUD’s disparate-impact police. This won’t raise compliance and legal costs? It’s likely that the new HUD rule will reduce the supply of new affordable housing, as builders back away from projects vulnerable to federal litigators.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 15:21:30

“First, the newly protected classes have proven significant sources of new complaints.”

Can anyone who reads and posts here kindly explain how one joins one of HUD’s ‘protected classes’ in order to defend one’s self against race-based housing discrimination?

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 17:38:27

HUD Glossary

protected class — preferred race

responsible — underwater

fair — racially discriminatory

affordable — expensive

improvement — price increase

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Comment by rms
2013-02-23 18:49:45

You really know how to bait the troll hook, bear. :)

Comment by Pimp Watch
2013-02-23 20:40:45

You have to admit…. there are plenty of RealTrolls and their suckerfish on this blog.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 22:21:13

Some times the only way to deal with morons is to stoop to their level.

Comment by ecofeco
2013-02-23 23:44:04

…yet sub prime mortgages were and still are the smallest group of defaulters.

In other words, just another bullcrap article created to blame the poor.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 06:01:26

Feb. 22, 2013, 2:51 p.m. EST
Is it better to buy or rent a home?
Crunching the numbers on the perennial real-estate question
By Eva Rosenberg, MarketWatch

Despite the fact that home mortgage interest rates are near record lows, only 65.4% of Americans own homes, according the U.S. Census Bureau’s 2012 report. (See Homeownership Rates by State: 1984 to 2012) In fact, home ownership in the U.S. is at its lowest level since 2004, when 69% of Americans owned homes.

Of course, home ownership can eat up not only your free time, but your money as well. Is the American dream worth the hassle? To find out, let’s look at it from three angles: taxes, costs, and quality of life.

Are there still tax benefits to home ownership these days?

Back in the days of 8% mortgage interest rates, you were sure to get a generous mortgage interest deduction on your tax return. Add that to the property taxes, and you’d get a nice tax reduction. But what about today, with average national interest rates at 3.46%, according to Zillow.com? See Current mortgage rates and home loans.

The U.S. Census Bureau says that median housing costs for 2012 are $185,200. Assuming you put 10% down, your mortgage would be around $166,700. Your monthly payment, including principal and interest, would be under $750. Your interest expense would be around $5,000 a year. And if your property taxes were around 1% of the property value each year, you’d be paying about $1,850 per year. See Median property tax rates by state.

So, you’re looking at a total tax deduction of less than $7,000 a year. Oops! The standard deduction for a married couple filing jointly in 2013 is $12,200. So there’s no tax benefit here. A single person’s standard deduction is $6,100. So the net income reduction is $900. Even in a 25% tax bracket (plus 5% for state), that only saves you about $300.

These costs will enable some more folks to itemize, when taking into account their high state income taxes, charitable donations, and medical or business expenses. But remember, your real benefit is only the itemized deductions you get, in excess of your standard deduction.

Comment by Ol'Bubba
2013-02-23 09:07:08

But remember, your real benefit is only the itemized deductions you get, in excess of your standard deduction.

I used to live in Florida, a state with no income tax. In that environment the above analysis is fairly spot on. With no state income I didn’t have very many tax deductions.

I now live in North Carolina, a state with a fairly high personal income tax rate (the top marginal rate is about 7.75% or so, and the top rate kicks in at a fairly low income level ~$12k or so).

Filing as a single person, my state income taxes and charitable deductions take me beyond the threshold for the standard deduction. In my case, I can apply the marginal State and Federal tax rates to my mortgage interest expense and real estate taxes.
As a result, my tax savings is meaningful.

In Florida? Not so much. I was only able to write off the marginal amount that my interest and taxes exceeded the standard deduction.

Comment by Housing Analyst
2013-02-23 11:50:31

Yet your losses to depreciation grow by the day.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 12:56:28

So long as the Realtors™ continue to successfully pimp their campaign of lies and propaganda, you will never know how much money you lost until the day you need to sell.

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Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 06:11:15

One thing seems quite certain, and I am pretty sure Combotechie will back me up here: By reducing the flow of cash from the federal government, the sequester would serve to make saved cash more valuable.

The Sequester Could Cause A Recession, But Wall Street Seems Unconcerned
The Huffington Post | By Mark Gongloff Posted: 02/22/2013 12:36 pm EST | Updated: 02/22/2013 2:00 pm EST

Economists warn that harsh budget cuts due to start taking effect next week could hammer the economy, maybe even cause a recession. But Wall Street seems unconcerned.

The latest warning about the dangers of the “sequester” — the $85 billion in congressionally mandated federal spending cuts due to kick in on March 1 — comes from Bank of America chief economist Ethan Harris. In a research note on Friday, Harris writes that he expects this painful shot of austerity to slow GDP growth to just 1 percent in the second quarter, with job growth averaging less than 100,000 per month for those three months.

That is not exactly recession territory, but it is dangerously close. Harris’s numbers match up pretty well with those of other private-sector economists, including Macroeconomic Advisers. The private research firm recently estimated the sequester would gouge about 1.25 percent from GDP growth in the second quarter, leaving growth at a paltry 1.2 percent. Macro Advisers said the sequester could cost the economy 700,000 jobs through 2014.

A less-optimistic economist, Charles Dumas of British firm Lombard Street Research, on Thursday suggested the budget cuts and uncertainty leading up to them could turn GDP growth negative in both the first and second quarters — matching one common definition of a recession.

Wall Street is blithely ignoring this,” Dumas wrote in a note to clients.

Comment by Bigguy
2013-02-23 07:20:26

Wasn’t GDP already negative in Q4? And things seem to have gotten worse this quarter. I think we’re already there.

Cripes I’m also paying 75 cents a gallon more than 6 weeks ago.

Comment by Skroodle
2013-02-23 09:40:41

I am pretty sure we have already entered a recession.

Comment by Blue Skye
2013-02-23 09:49:08

If you subtract government borrowing and Fed buying from GDP we’ve been in a depression for years. Party on though.

Comment by rms
2013-02-23 13:04:52

+1 Agreed…an illusion.

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Comment by alpha-sloth
2013-02-23 17:09:24

Would you prefer a depression?

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Comment by rms
2013-02-23 17:19:18

Is that now or later?

Comment by alpha-sloth
2013-02-23 18:27:24

Are those the only options?

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 10:37:58

“And things seem to have gotten worse this quarter.”

Oh no no no…we are in a recovery…Dow 14K…green shoots…blah, blah, blah.

Comment by Bluestar
2013-02-23 12:15:37

U.S. January oil demand fell to the lowest level for the month in 18 years.


So why does anybody think that if we would just get the government to let our patriotic oil companies just drill more then gas prices would come down? Sure looks like the oil companies are squeezing the consumer/voter to force Obama to approve the XL pipeline. If XL is approved I expect 100% of the tar sands oil to be refined and shipped abroad. Don’t let them make fools of us again.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 13:08:49

“U.S. January oil demand fell to the lowest level for the month in 18 years.”

That would get you back to 2013-18 = 1997, the time of the Asian financial crisis, and before a little recession (March 2001 through November 2001) and a Great one (December 2007 through June 2009) since then.

But no worry…I’m sure it is just a data blip along the road to recovery.

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Comment by SV guy
2013-02-23 10:16:52

Just pull the damn plug and see where we end up.

Comment by palmetto
2013-02-23 06:28:47

Oh, the sequester! Behold the big, bad sequester!

Comment by 2banana
2013-02-23 08:18:30

[clop clop whinny]

KNIGHT: They’re nervous, sire.
ARTHUR: Then we’d best leave them here and carry on on foot. Dis-mount!
TIM: Behold the cave of Kyre Banorg!
ARTHUR: Right! Keep me covered.
KNIGHT: What with?
ARTHUR: Just keep me covered.
TIM: Too late!
TIM: There he is!
ARTHUR: Where?
TIM: There!
ARTHUR: What, behind the rabbit?
TIM: It is the rabbit!
ARTHUR: You silly sod! You got us all worked up!
TIM: Well, that’s no ordinary rabbit. That’s the most foul, cruel,
and bad-tempered rodent you ever set eyes on.
ROBIN: You tit! I soiled my armor I was so scared!
TIM: Look, that rabbit’s got a vicious streak a mile wide, it’s a
KNIGHT: Get stuffed!
TIM: It’ll do you a trick, mate!
KNIGHT: Oh, yeah?
ROBIN: You mangy Scot git!
TIM: I’m warning you!
ROBIN: What’s he do, nibble your bum?
TIM: He’s got huge, sharp– he can leap about– look at the bones!
ARTHUR: Go on, Boris. Chop his head off!
BORIS: Right! Silly little bleeder. One rabbit stew comin’ right up!
TIM: Look!
BORIS: Aaaugh!
ARTHUR: Jesus Christ!
TIM: I warned you!
ROBIN: I peed again!
TIM: I warned you! But did you listen to me? Oh, no, you knew it all, didn’t you? Oh, it’s just a harmless little bunny, isn’t it? Well,
it’s always the same, I always–
ARTHUR: Oh, shut up!
TIM: –But do they listen to me?–
ARTHUR: Right!
TIM: -Oh, no–
KNIGHTS: Charge!
[squeak squeak]
KNIGHTS: Aaaaugh! Aaaugh! etc.
KNIGHTS: Run away! Run away!

Comment by polly
2013-02-23 09:55:58

So in order to demonstrate that the sequester is no big deal you provide an extensive excerpt from a movie where an apparently not dangerous thing is actually capable of chewing the necks of fighting men wearing extensive protective gear and killing them? Isn’t that more a demonstration that something that looks harmless (bunny and/or sequester) can be very dangerous?

That being said, my personal risk is low indeed. I live on quite a bit less than half my gross pay. Furloughs leading to lower pay would be annoying, but a hit to my savings rate would not impact my lifestyle. Though, I have to say, it might be fun to find something to do with the extra time. I met some of the leading women in DC in the area of law I am involved with when I spoke at conferences a few years ago. Another when she called our office for informal advice about whether we would likely approve something her firm was hoping to usher through a bunch of agencies (I said no). Maybe I would call them up one at a time and invite them to lunch. No harm in a little networking and dropping a few bucks on it would do no harm.

Comment by hazard
2013-02-23 11:05:19

Devastating Sequester Spending Cuts? Give Me a Break!

Feb 22, 2013 4:27pmThe Sky is Falling! Maybe, but it really shouldn’t be.

The Obama administration’s list of what will happen if upcoming spending cuts go into effect is downright terrifying. In recent days, officials have warned of more forest fires, workplace deaths and, heaven-forbid — chicken shortages.

And today the White House brought out Transportation Secretary Ray LaHood to warn of big air travel delays across the country as air traffic controllers are forced off the job because of budget cuts.

READ: The full list of alleged consequences from the sequester

LaHood even suggested that some smaller airports – he specifically mentioned the airport at golfing paradise Hilton Head, S.C. — might have to reduce hours of operation or even temporarily close. That should catch the eye of avid golfer and Speaker of the House John Boehner.

There’s no doubt that the automatic spending cuts set to go into effect on March 1 will cause some real pain and many economists believe they would hurt the economy. But all the dire warnings give the impression the cuts are much larger than they actually are.

Take today’s White House example: The Department of Transportation.

The Department of Transportation’s budget for 2013 is $74.2 billion. The automatic spending cuts would slice $1 billion out of its budget: that is a cut of less than 1.4 percent.

And consider this: even if the cuts go into effect, the Department of Transportation will spend more money this year ($73.2 billion) than it spent last year ($72.6 billion).

The administration is saying that the Department of Transportation cannot squeeze 1.4 percent of its budget without sending air traffic controllers home and that they cannot find a way to operate effectively this year with a budget that is actually larger than the budget they had last year.

That may be true, but it raises larger questions about the government’s ability to find relatively modest savings without cutting essential services.

I asked Secretary LaHood about this at today’s White House briefing:

KARL: Can’t you find some other way to cut without telling air traffic controllers to stay home?

LAHOOD: This has to be a part of it. DOT has 55,000 employees. The largest number of those employees are at the FAA, and the largest number of those employees are controllers, and they’re all over the country. There has to be some impact in order to save a billion dollars. A billion dollars is a lot of money.

KARL: Let’s be clear: It’s less than 2 percent of your budget.

LAHOOD: It’s a lot of money, Jonathan.

Another fact lost amidst all the dire warnings is that although the cuts go into effect on March 1, most of the impact won’t be felt until weeks or even months after that.

Here’s why: On March 1, the federal government will give employees 30 days notice that they may have to take unpaid leave (furlough). That means the first furloughs cannot happen until March 31 at the earliest. For employees of the Department of Transportation, the most they will be asked to take is one unpaid day off every two weeks.

At the White House today, Press Secretary Jay Carney insisted the administration is not exaggerating when it warns of more forest fires, chicken shortages and long air travel delays.

“I think all of those things come from reduced, you know, numbers of people fighting fires, you know, reduced numbers of people doing inspections of our food, reduced numbers of people, you know, engaging in air traffic control,” Carney said. “I mean, those are just the facts.”

For more warnings to keep you up at night, take a look at the list of the Administration’s 57 Terrible Consequences of the spending cuts compiled by ABC News’ Chris Good.

http://abcnews.go.com/blogs/politics/2013/02/devastating-sequester-spending-cuts-give-me-a-break/ -

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Comment by 2banana
2013-02-23 12:39:00

Never let a crisis go to waste.

The mantra of the obama administration.

How about a 5% hit to ALL employee pensions and benefits until this “crisis” is over?

But then the public would not feel the pain.

Comment by hazard
2013-02-23 13:13:58

“And consider this: even if the cuts go into effect, the Department of Transportation will spend more money this year ($73.2 billion) than it spent last year ($72.6 billion).”

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 13:13:06

“I met some of the leading women in DC in the area of law I am involved with when I spoke at conferences a few years ago.”

I’m thinking furlough Fridays might result in an inadvertent outflow of talent from the federal government. But perhaps that is part of the Republican plan?

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Comment by polly
2013-02-23 15:19:48

There is no way they would let us all take an extra Friday off per pay period. You are going to get stuck having to sign up for furlough days within your group leaving your boss sufficient coverage so that if a crisis comes up (not common, but it can happen) he can get people to do the work. Might be done by seniority.

In places where there is more direct contact with the public, the restrictions would be even worse, possibly correlated with the volume of calls they receive over the week.

Comment by Blue Skye
2013-02-23 06:37:04

“Don’t get stuck in recovery denial, just like many got stuck in bubble denial.”

The anatomy of a boom/bust is pretty simple. It’s called a sucker’s rally.

Comment by Arizona Slim
2013-02-23 07:04:37

And, IMHO, the American housing market is currently experiencing a sucker’s rally.

Comment by 2banana
2013-02-23 08:45:20

And it will continue to rally (as well as the stock market) - as long as we have $1 Trillion yearly obama deficits.

Comment by Blue Skye
2013-02-23 09:50:09

But I think it is not in a rally overall, despite the deficits.

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Comment by 2banana
2013-02-23 13:14:43

The we will just raise the deficits.

Oh wait - we are.

Comment by Overtaxed
2013-02-23 06:44:35

In the BB yesterday (I think) there was a comment that “saving by paying interest baffles me” or something to that effect. I agree, it does sound a little bit silly, but, IMHO, this is something that everyone needs to understand. It is, in fact, possible to “save” money by paying interest, particularly in 2 circumstances:

1) When the interest rate you are paying is less than the rate of inflation
2) When what you purchased with the borrowed money is appreciating at greater than the interest cost

That’s it. It’s pretty simple, but it’s also be the key to most massive fortunes that you see out there. Borrowed money and the principals above are how many, many people have gone from “well off” to “rich”. Unfortunately, it’s also how many people have gone from “well off” to “broke”. :)

Here’s a simple example. Let’s say Ben Jones was willing to lend me 100M dollars at .25 percent interest for the next 50 years. Should I take it? Hopefully, in this case, the answer is obvious. Of course I should take it, in fact, if I could get a loan like this, I (and most people) would never have to work again. You could just buy ultra-conservative bonds/investments that paid somewhere between 2-5% (today, if interest rates rise, this deal gets MUCH better) and keep the “spread”. In this case, if I invested that money at 2.25% I’d make 2M dollars a year on the spread. So, yes, in fact I have just borrowed my way to prosperity.

This is exactly what people were trying to do during the housing bubble. If you had 500K to invest, buying a 500K house isn’t on the top of the list for good ROI. Even during the boom, maybe it would go up to 750K, but then all the transaction and carrying costs, maybe you’d walk away with 600K. So, call it 100K in profit on your 500K (20%). Not so great, you can do that much easier and safer in many other places.

However, take that same equation with 0 money down. Now the numbers get crazy, it’s an infinite ROI if you put down 0 and make 100K.

Debt cuts both ways, paying interest can be great or it can be awful. IMHO, 5 years from now, people with loans of any type at <5% are going to laughing their way to the bank.. But, it’s a risk, and unfortunately, a risk that’s well understood by about 1% of the country.

Comment by Blue Skye
2013-02-23 07:18:54

“This is exactly what people were trying to do during the housing bubble….”

Which pretty much defnes it as manic thinking.

Manic thinking = lack of insight into possible consequences.

Borrow long and gamble the proceeds = formula for insolvency.

Comment by 2banana
2013-02-23 08:48:59

Of course, with bonds:

You don’t pay a 6% commission when selling them
You don’t pay up to $20,000/year in taxes on them
You don’t suddenly wake up cold one morning and need to pay $6,000 for a new bond heater
You don’t have to worry about a section 8 bond moving next to your bonds

Comment by In Colorado
2013-02-23 17:14:08

All true, but you can suddenly learn that they’ve been defaulted on and are now worthless.

Comment by cactus
2013-02-23 09:23:55

So, call it 100K in profit on your 500K (20%). Not so great, you can do that much easier and safer in many other places.”

completely tax free in many cases

Comment by Overtaxed
2013-02-23 10:49:20

Yes, tax free, but still not worth writing home about. If you bought munis and held them for a few years, you’d probably be looking at about the same profit, also tax free, with much less risk.

Now, if you buy that same house with nothing (or little) down, then the equation changes. Now you’re looking a huge gain on the small amount of money invested.

The only way RE works as a “hot investment” is to leverage up like crazy. And yes, while that can make you big bucks, it can also crush you. It’s dangerous, and that’s what everyone (exception of this blog) seems to forget!

Comment by Housing Analyst
2013-02-23 11:55:05

“When what you purchased with the borrowed money is appreciating at greater than the interest cost”

By virtue of the fact that cash doesn’t appreciate, nothing else will.

But humor us and name one instance were the junk you bought with borrowed money “appreciates”.

Comment by Rental Watch
2013-02-24 03:50:26

I often say with leverage you can lift the world, or be crushed by it.

Comment by Arizona Slim
2013-02-23 07:17:07

Bogus economic recovery backed up by crummy numbers:

The Dog That Isn’t Barking: Why So Little Pundit Attention to the Caliber of Statistics?

Key point from the article:

Ah, the halcyon days of early 2007, when economics and finance bloggers would study the clouds on the horizon and debate what they foretold. Maybe I’m not hanging out in the right circles these days but now that financial markets seem to be completely in thrall to central bankers, there isn’t much point in doing fundamental analysis. As a result, from what I can tell, the level of [bleeping] among market pundits has risen considerably.

Now I am using [bleep in quotes] in the Harry Frankfurt sense. Frankfurt drew a distinction between lying, which is choosing to deceive someone, while [bleeping] has no regard for accuracy. A [bleeper] may coincidentally be speaking the truth or be utterly and hopelessly wrong, but the key is the coincidental nature of any relationship to the truth. The [bleeper] says what he says and where and what the truth is is irrelevant to him.

For instance, one of the things you’ll hear regularly (more like all the time) is how terrific corporate earnings are. Now on the one hand, corporate earnings have hit the highest proportion of US GDP in recorded history. But when stock touts are talking about corporate earnings, they mean of public companies. S&P 500 earnings peaked in the first quarter of 2012 and have fallen each quarter since then. Third quarter 2012 S&P 500 earnings were 6.3% below the year earlier level.

Comment by Blue Skye
2013-02-23 07:21:37

I wonder, do these supposed corporate profits equal the government deficit spending? If they do, it’s a robbery of the taxpayers. If they don’t, it’s fools gold.

Comment by 2banana
2013-02-23 08:33:44

What’s the matter with Walmart?
By Sergio Hernandez - The Week – Thu, Feb 21, 2013

“Where are all the customers?” laments one exec. “And where’s their money?”

Walmart executives recently sent shareholders into panic mode after leaked emails showed them fretting over disappointing sales numbers.

“In case you haven’t seen a sales report these days, February [month-to-date] sales are a total disaster,” Jerry Murray, Walmart’s vice president of finance and logistics, said in an internal email leaked to Bloomberg. “The worst start to a month I have seen in my ~7 years with the company.”

In another email, a corporate exec asked: “Have you ever had one of those weeks where your best-prepared plans weren’t good enough to accomplish everything you set out to do? Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?”

Comment by you're my boy, blue
2013-02-23 09:34:37

Soon to repeat in many many corporate boards.

Comment by you're my boy, blue
2013-02-23 09:38:21

Government is taking everything it can from people. Here’s an idea….Walmart and businesses pay more to employees…how about that?

Comment by Skroodle
2013-02-23 09:42:27

Walmart was in favor of raising minimum wage back 10 years ago.

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Comment by you're my boy, blue
2013-02-23 09:44:48

You know the real motive, right?

Comment by polly
2013-02-23 09:59:23

Propaganda (they didn’t really want the min wage raised) to try to keep their employees from unionizing?

Comment by you're my boy, blue
2013-02-23 10:01:35

May be a propaganda. Another reason is to kill all moms and pops out there.

Comment by Combotechie
2013-02-23 13:18:26

Raising the minimum wage would provide more money to Walmart’s customers.

Tiffany customers wouldn’t be affected much (if at all) but Walmart customers would.

Since the minimum wagers tend to spend all the money they can get their hands on and much of that money ends up being spent at Walmart then it is reasonable to think that Walmart would support the idea of raising the minimum wage.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 14:34:32

“Raising the minimum wage would provide more money to Walmart’s customers.”

But depending on the elasticity of labor demand, it could also lead to higher unemployment of Walmart’s customers. My impression is that with the availability of illegal immigrant labor and foreign labor as close substitutes for low-skilled above-board U.S. labor, the elasticity of labor demand is quite high, which suggests the job loss effect of a minimum wage increase could more than offset the pay increase effect.

Fast food establishments are probably an exception, as it is hard to staff burger flipping positions in plain view of the public eye with illegal immigrant workers, and you clearly cannot outsource the work.

Comment by Skroodle
2013-02-23 15:43:40

Fast food establishments are probably an exception, as it is hard to staff burger flipping positions in plain view of the public eye with illegal immigrant workers, and you clearly cannot outsource the work.


Eat at a Jack-in-the-Box next time you are in Texas.

Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 15:54:05

“Eat at a Jack-in-the-Box next time you are in Texas.”

Note that nothing stands in the way of illegal immigrant workers inside American borders spending their disposable incomes at Walmart.

Comment by ecofeco
2013-02-23 23:52:13

“Fast food establishments are probably an exception, as it is hard to staff burger flipping positions in plain view of the public eye with illegal immigrant workers, and you clearly cannot outsource the work.”

Not where I live. In fact, they are the dominant food service labor force.

Comment by rms
2013-02-23 13:11:55

Isn’t 50% of Walmart’s business in the SNAP, oops, I mean the grocery isles?

Comment by oxide
2013-02-23 16:46:43

From what I saw in WallyMart the other evening, I think you’re right. The clothing, housewares, and hardware sections were sparse, but the front of the store with the grocery aisles and toothpaste were crowded.

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Comment by In Colorado
2013-02-23 17:21:07

Where are all the customers? And where’s their money?

They were offshored in the quest to maximized “shareholder value”

Comment by alpha-sloth
2013-02-23 20:13:21

Rather…Keynesian how that worked, eh?

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Comment by ecofeco
2013-02-23 23:57:41

Marie Antoinette didn’t get it either.

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Comment by 2banana
2013-02-23 08:55:31

Government By Freakout: Threat Manufacturing Complex
Wall St. Journal ^ | Feb 22, 20123 | Peggy Noonan

The president’s sequester strategy is like Howard Beale in “Network”: “Woe is us. . . . And woe is us! We’re in a lot of trouble!”

It is always cliffs, ceilings and looming catastrophes with Barack Obama. It is always government by freakout.

That’s what’s happening now with the daily sequester warnings. Seven hundred thousand children will be dropped from Head Start. Six hundred thousand women and children will be dropped from aid programs.

Meat won’t be inspected. Seven thousand TSA workers will be laid off, customs workers too, and air traffic controllers. Lines at airports will be impossible. The Navy will slow down the building of an aircraft carrier. Troop readiness will be disrupted, weapons programs slowed or stalled, civilian contractors stiffed, uniformed first responders cut back. Our nuclear deterrent will be indefinitely suspended. Ha, made that one up, but give them time.

Mr. Obama has finally hit on his own version of national unity: Everyone get scared together.

Comment by cactus
2013-02-23 09:34:21

Mr. Obama has finally hit on his own version of national unity: Everyone get scared together.”

If the government has to suffer by God so will the average joe citizen.

Comment by hazard
2013-02-23 12:58:06

2/22/2013 @ 8:00AM

The Non-Existent Spending Cuts Wrought By The ‘Devastating’ Sequester

By Bill Wilson

According to Obama, the sequester would represent “a huge blow to middle-class families and our economy as a whole.” Obama’s White House has also referred to the sequester as “devastating,” saying its cuts would “imperil our economy, our national security (and) vital programs that middle class families depend on.”

Sounds frightening – but is it true? Of course not. According to The Wall Street Journal ”federal domestic discretionary spending soared by 84 percent with some agencies doubling and tripling their budgets” during Barack Obama’s first two years in office. In fact the sequester would scale back just one of every six dollars in discretionary spending increases since 2008 – hardly a “huge blow.” Also, discretionary spending in 2008 was already tremendously inflated – having increased by more than 60 percent over the previous eight years.

In other words this isn’t even really a cut – “devastating” or otherwise – it’s a modest growth rate reduction following years of unnecessary, embarrassing and unsustainable excesses.

|2/19/2013 @ 8:54AM

The $995 billion Sequester Cut Is Actually a $110 Billion Spending Increase

Paul Roderick Gregory, Contributor

The sequester has been advertised as “cutting” discretionary spending over a ten year period by $995 billion. After inflation adjustments and exempting more than a trillion dollars of defense and non defense discretionary spending from the sequester, the CBO projects (in its Table 1.1) discretionary spending to increase by $110 billion over the decade. There is no actual $995 billion cut after the CBO applies its magic adjustments. Rather there is a $110 billion increase.

Sequester alarmists will respond that it is impossible to run the federal government without annual inflation adjustments and without exempting certain government spending. We American voters might respond that most of us do not receive automatic inflation adjustments to our earnings and we are expected to tighten our belts when times are tough and our personal debt has gotten out of control.

Whatever the case, it is hard to characterize a $110 billion increase as a draconian cut that will bring America and its federal government to its knees.

http://www.forbes.com/sites/realspin/2013/02/22/the-non-existent-spending-cuts-wrought-by-the-devastating-sequester/ - 76k -

Comment by rms
2013-02-23 13:18:52

Seems like flying the airlines was cheaper before the Second Intifada.

Comment by hazard
2013-02-23 11:50:38

How come section b contradicts section a and says propoganda can be disseminated by the Department of State within the United States when appropriate?

Oh well, it was already going on I guess this just makes it legal.

Statement by the the President on H.R. 4310 | The White House
http://www.whitehouse.gov/the-press-office/2013/01/03/statement-president-hr-4310 - 54k - Cached - Similar pages
Jan 3, 2013 … Today I have signed into law H.R. 4310, the “National Defense Authorization Act for Fiscal Year 2013.” I have approved this annual defense …

H.R. 4310 (112th): National Defense Authorization Act for Fiscal Year 2013
112th Congress, 2011–2013. Text as of Dec 28, 2012 (Passed Congress/Enrolled Bill).

Status & Summary | PDF | Source: GPO


‘(a) In General- No funds authorized to be appropriated to the Department of State or the Broadcasting Board of Governors shall be used to influence public opinion in the United States. This section shall apply only to programs carried out pursuant to the United States Information and Educational Exchange Act of 1948 (22 U.S.C. 1431 et seq.), the United States International Broadcasting Act of 1994 (22 U.S.C. 6201 et seq.), the Radio Broadcasting to Cuba Act (22 U.S.C. 1465 et seq.), and the Television Broadcasting to Cuba Act (22 U.S.C. 1465aa et seq.). This section shall not prohibit or delay the Department of State or the Broadcasting Board of Governors from providing information about its operations, policies, programs, or program material, or making such available, to the media, public, or Congress, in accordance with other applicable law.

‘(b) Rule of Construction- Nothing in this section shall be construed to prohibit the Department of State or the Broadcasting Board of Governors from engaging in any medium or form of communication, either directly or indirectly, because a United States domestic audience is or may be thereby exposed to program material, or based on a presumption of such exposure. Such material may be made available within the United States and disseminated, when appropriate, pursuant to sections 502 and 1005 of the United States Information and Educational Exchange Act of 1948 (22 U.S.C. 1462 and 1437), except that nothing in this section may be construed to authorize the Department of State or the Broadcasting Board of Governors to disseminate within the United States any program material prepared for dissemination abroad on or before the effective date of section 1078 of the National Defense Authorization Act for Fiscal Year 2013.

‘(c) Application- The provisions of this section shall apply only to the Department of State and the Broadcasting Board of Governors and to no other department or agency of the Federal Government.’.

Comment by hazard
2013-02-23 12:16:08

Posted: 4:44 p.m. Friday, Feb. 22, 2013

Woman caught after 14 years of collecting her dead mother’s Social Security checks; buried body in yard of suburban Lake Worth home

By Jane Musgrave

Palm Beach Post Staff Writer

Folks who live in a working-class suburban Lake Worth neighborhood call it “the creepy house.”

It earned that moniker two years ago when Palm Beach County sheriff’s deputies arrived one day with shovels and unearthed the bones of a long-decayed body from the backyard.

“Freaky and creepy,” declared Kathryn Bruckner, who lives down the street from the house on Foss Road.

The strange story took another turn earlier this month when Patricia Hodges, who lived in the house with her aged mother until 1997, was arrested in Ohio on charges of defrauding the federal government out of $141,962. Seems Hodges buried her 89-year-old mother Janet Kelly in the backyard of the Foss Road house, moved to Marietta, Ohio, and continued to cash her mother’s Social Security checks for the next 14 years.

The investigation was triggered when the Social Security Administration realized it was sending checks to a woman who was more than 100 years old, said Marietta Police Detective Troy Hawkins.

“Apparently Social Security wants to lay eyes on you when you hit 100,” he said. “They wanted to lay eyeballs on this woman.”

When an investigator turned up at Hodge’s house asking to see Kelly, Hodges was evasive. The 65-year-old said her mother, who was born in 1909, was on a cruise. When Kelly returned, Hawkins said Hodges told investigators, the centenarian would immediately be moving to New York.

Doubting the veracity of the tale, Hawkins said he and the investigator questioned Hodges further. Finally, she admitted she had buried her mother in the backyard of the house on Foss Road.

On the first day of digging in December 2011, Palm Beach County sheriff’s deputies couldn’t find the makeshift burial site. So, a deputy snapped a photo of the backyard with his cellphone and sent it to Hodges. She told them to dig closer to the sun room.

A week later, digging resumed. Deputies unearthed fabric. Underneath it, they found bones, dentures, a gold chain and, most importantly, a metal disk that indicated whoever was buried there had an artificial hip.

The hip was key to identifying the body, said Harold Ruslander, chief investigator for the Palm Beach County Medical Examiner. Every artificial hip has a unique serial number, he said. By looking at medical records, investigators could prove that the metal hip belonged to Kelly.

Exactly how she died will never be known. With nothing but bones to examine, it’s nearly impossible to determine cause of death, Ruslander said. The bones were sent to a forensic anthropologist at Florida Gulf Coast University to determine if there was any evidence Kelly died violently. The anthropologists, like the county pathologists, found nothing on her bones to indicate she had been struck, shot, strangled or was otherwise a victim of crime. Officially, the cause of death is listed as “undetermined.”

http://www.palmbeachpost.com/news/news/crime-law/woman-caught-after-14-years-of-collecting-her-dead/nWXYg/ -

Comment by 2banana
2013-02-23 12:42:35

Bet the “old woman” voted every election too.

But voter ID laws are racist. And there is no voter fraud anyways.

Comment by Skroodle
2013-02-23 15:45:43

Japan goes thru that every year when they attempt to find the oldest living Japanese Citizen.

Comment by oxide
2013-02-23 16:49:27

And for you Sherlockian scholars out there, I love that the author of the article is named Musgrave.

Comment by frankie
2013-02-23 12:38:21

When a group of dedicated mothers decide to raise money for their children’s school, more often than not they hold a gala or perhaps a cake sale.

But when 10 mothers in Spain wanted to save a bus service for more than 600 school pupils, they went that little bit further.

Not content with a book sale or a tombola, the plucky parents, from Montserrat, decided to make a rather racy calender. And it has proved a huge hit.

Read more: http://www.dailymail.co.uk/news/article-2283388/Whats-wrong-tombola-Spanish-mums-strip-erotic-calender-save-school-bus-600-pupils.html#ixzz2LkiSVsUw
Follow us: @MailOnline on Twitter | DailyMail on Facebook

Rather sad in my opinion, they shouldn’t have to do that.

Comment by 2banana
2013-02-23 13:09:52

I bet all the money they raised was spent pretty wisely too.

Funny how that works when you don’t have a massive government in the way.

Comment by CRATER!!!!
2013-02-23 13:34:52


Comment by hazard
2013-02-23 13:59:17

NRA uses Justice memo to accuse Obama on guns

4 hours ago

WASHINGTON — The National Rifle Association is using a Justice Department memo it obtained to argue in ads that the Obama administration believes its gun control plans won’t work unless the government seizes firearms and requires national gun registration — ideas the White House has not proposed and does not support.

The NRA’s assertion and its obtaining of the memo in the first place underscore the no-holds-barred battle under way as Washington’s fight over gun restrictions heats up.

The memo, under the name of one of the Justice Department’s leading crime researchers, critiques the effectiveness of gun control proposals, including some of President Barack Obama’s. A Justice Department official called the memo an unfinished review of gun violence research and said it does not represent administration policy.

The memo says requiring background checks for more gun purchases could help, but also could lead to more illicit weapons sales. It says banning assault weapons and high capacity ammunition magazines produced in the future but exempting those already owned by the public, as Obama has proposed, would have limited impact because people now own so many of those items.

It also says that even total elimination of assault weapons would have little overall effect on gun killings because assault weapons account for a limited proportion of those crimes.

The nine-page document says the success of universal background checks would depend in part on “requiring gun registration,” and says gun buybacks would not be effective “unless massive and coupled with a ban.”

The administration has not proposed gun registration, buybacks or banning all firearms. But gun registration and ownership curbs are hot-button issues for the NRA and other gun-rights groups, which strenuously oppose the ideas.

Justice Department and White House officials declined to provide much information about the memo or answer questions about it on the record.

The memo has the look of a preliminary document and calls itself “a cursory summary” and assessment of gun curb initiatives. The administration has not release it officially.

Comment by Northeastener
2013-02-23 23:38:40

Want to know what would happen if it weren’t for Republicans in the House and the NRA? Look to Chicago… only gang bangers and cops have guns and see how well that’s worked out for everyone involved. Obama in particular and Democrats in general can take a long walk off a short pier for all I care.

I will never turn my guns in voluntarily. If the government tries to confiscate, there will be bloodshed. I am not alone in this belief and that’s in liberal-infested MA. The more they threaten to ban, the more we purchase. The more they threaten to confiscate, the more we prepare for the inevitable fight. The Revolutionary War started in earnest (Concord, 1775) over an attempt at confiscation of Colonial firearms, let’s see if anyone in Washington DC remembers their history… and more importantly, learns something from it.

Comment by ecofeco
2013-02-24 00:01:03


any day now

Comment by Pimp Watch
2013-02-23 18:52:14

Yo it’s a rockin’ saturday nite. Joe Smith and I are jammin’ on our harpsichords to some sweet Liberace after a day of riding our bicycles!


Comment by tresho
Comment by Cantankerous Intellectual Bomb Thrower™
2013-02-23 22:30:13

Heh! That brings to mind one of the many ways Lawrence Summers got himself into trouble once a few years ago:

Lawrence of Absurdia

By Richard Bradley | Boston Magazine | March 2005

In January of 1991, economist Lawrence Summers took a leave from his Harvard professorship and moved to Washington to work for the World Bank. His job was to create economic plans for countries in need of aid. It was a weighty task, but Summers relished the challenge. Using the kind of provocative imagery for which he would become notorious, he once explained that countries without a strong central government and vigorous private sector were like “a cripple . . . with no legs, pushing himself around on a crude board with wheels, surviving only with begging and trying to look sympathetic.”

But something Summers didn’t even write would mar his tenure at the bank. In December 1991, he signed off on a policy memo written by an aide who argued that less-developed countries, or LDCs, could benefit from accepting the pollution generated by First World nations. “Just between you and me,” the memo read, “shouldn’t the World Bank be encouraging more migration of the dirty industries to the LDCs?” Poor countries could earn needed revenue without great cost, because their citizens tended to have a short life span anyway.

Someone leaked the memo to the Economist, which in February 1992 ran an article about it titled “Let Them Eat Pollution.” Though the magazine concluded that “on the economics, [Summers's] points are hard to answer,” the memo provoked a furor. For years to come, anti-globalization activists, already skeptical of the World Bank, considered it proof of the bank’s callous attitude.

Summers claimed the memo was simply part of the free-flowing discussion he tried to foster among his colleagues. He suggested it was intended to be “ironic.” Eventually he dispensed with explanations and simply apologized, quoting New York Mayor Fiorello LaGuardia’s line, “When I make a mistake, it’s a whopper.”

It was a good line, and Summers would have ample opportunity to reuse it.

Comment by rms
2013-02-24 10:25:17

+1 Great find regarding a disgusting individual.

Comment by Northeastener
2013-02-23 23:24:11

No, no… it wasn’t labeled properly, so the government has deemed it unfit for consumption. Always amazes me how humanity managed to survive without intrusive “nanny state” government for the last 10,000 years.

Comment by ecofeco
2013-02-24 00:02:05

Yeah, they really had it good, didn’t they? :roll:

Comment by hazard
2013-03-02 07:29:12


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