Are Banks Shooting Their Own Feet Again?

It appears the pendulum has swung too much to the careful side, to the extent of being paranoid, when it comes to mortgage lenders approving home loans. They seem to be not giving out loans even to the most qualified and motivated buyers (and refinancers). This way they may be contributing to the further decline of the home values, which will only worsen the rate of their clients defaulting on their loans.

This is all anecdotal at the moment. First from my own experience in trying to refinance my mortgage. The appraisers are so afraid of over-valuing, they are ridiculously undervaluing the property. Now, I realize, as a (so called) home owner, I will refuse to accept that my home is worth less than what I paid for it. Even then, valuing our 4-bedroom house less than what buyers are offering for an identical, though 3 bedroom, house in the next street is baffling.

What's funny is, the 3-bedroom house is not closing, even though they are getting offers close to the asking price, because, at least in one case that we came to know about, the buyer's lender rejected the appraisal that valued the house close to the asking price.

In effect, the banks are saying that these homes are not worth what buyers and appraisers think they are worth. This will probably force a desperate seller to lower the price further to close a deal. This way banks are now contributing to driving the home values further down.

Smart.

intelligent road debris

have you noticed that most of the time, debris fallen on a busy freeway is nicely positioned away from the middle of lanes and more or less on the dividing line/buttons? (this is true unless it's a big object or if it has fallen off very recently)

this is convenient, because, traffic doesn't have to swerve to avoid them. but from a pure probability stand-point, it's impossible that a majority of objects that fall off vehicles going at high speeds land at such a convenient place. perhaps the debris are *intelligent*. or, there is a benevolent force guiding this.

if you didn't get my drift, this sounds like the 'intelligent design' argument.

anyway, i think that the reason for this phenomenon is simply this: the object initially will land most likely in the middle of a lane. then a vehicle will hit it and it will be moved. then another vehicle will hit it, and so on. this will continue until the object accidentally comes to rest at a harmless location.

we could say the object's position evolved to perfection.

I Won't Touch the Bailout Bonds

It's being reported that the Obama administration is working on a proposal to make the "opportunity" to "invest " in the bailout of banks available to the small investor. Apparently, the administration will choose a handful of fund managers to form Bailout Bond Funds that are sold to retail investors.

The motivation seems to be to preempt any new wave of anger or resentment on the part of the public, when down the line, they find out that a rich few (hedge funds) made handsome profits by investing in the "dirt cheap" toxic assets (low quality mortgage backed assets), while they shelled out their tax dollars to bailout the bankers and ended up losers.

My problem with this is two fold:

1. my tax dollars are already subsidizing these toxic assets. i don't think i need more exposure to this risk
2. more importantly, this is a good investment only if you buy the assumption that the toxic assets are grossly undervalued

#2 is the trillion dollar question: how do you value these assets? Are they really that under-valued?

Remember that we had a housing bubble, which means that the home values during the bubble were artificially inflated. Then the bubble burst. The market may be over-reacting a bit in the negative direction now, but it'd seem to me that expecting the values to go "back up" is stupid. That's just wishing for another bubble.

So, why would I rush to throw money at a bunch of sub-prime mortgage assets, which are highly likely to default, just because there may be a small discount?

i shouldn't have to pay to "e-file" my taxes

By electronically filing my tax return, I am doing "them" several favors:

1. reduce their expenses (assuming paper pushing people cost more than computers)
   
2. significantly reduce errors - again less headache for them
3. by authorizing direct deposit/direct debit, I again make things cheaper, faster and easier for them

Also, I eliminate paper waste and pollute less by avoiding a trip to the post office.

So why the hell do I have to pay an extra fee?

Ah, wait a minute. It's the government I am dealing with. I am asking the bureaucracy to eliminate itself. Nice try.