mad anthony

Rants, politics, and thoughts on politics, technology, life,
and stuff from a generally politically conservative Baltimoron.

Saturday, March 07, 2009

Yet another mortgage - related post...

So I've already made it clear that I'm not a big fan of the he Homeowner Affordability and Stability Plan, AKA the mortgage bailout. But if someone is giving out free money and they are willing to give it to me, I certainly wouldn't stop them, so I decided to call up my lender, and find out if I qualified.

Of course, I didn't. I used the Maryland More Home 4 Less program, so my mortgage is considered a state mortgage, which evidently is not sold to Fannie May or Freddie Mac. The mortgage bailout only covers loans held by those two groups.

Now, I don't need a bailout - I have enough savings and can live frugally enough that I should be able to survive, although recent overtime cuts at work and rather poor eBay season so far have made me think about every purchase I make. But I certainly wouldn't turn down money if the government offered it, especially since I'll pay for it in the long run tax-wise anyway.

But I think this does reveal the problem with the bailout program - it's completely non-targeted. When mortgage bailout stuff gets posted on financial forums like FatWallet, someone usually responds to the inevitable "pay your bills, deadbeat" comments with "what about people who had medical bills or lost their jobs and are losing their homes because of that"?

My first thought is - so what? People have always been at risk of losing their houses if they have a sudden decrease in income. The difference is that in previous years, people have been able to resell their houses and get back most of what they put in, and possibly even walk away with cash, because housing prices were going up instead of down. Now that they are going down, they are simply losing the house.

But if we really want to help those people, the logical thing would be not to look at the expenses - ie mortgage payments - but rather the income. If you want to extend unemployment, I can probably live with that, given the rather high unemployment rate. I'm not normally a big fan of unemployment during times when jobs are available - it discourages people from taking a job, since they can not work and still get paid - but when there are few jobs to be taken, it's more palatable. If we want to help people who are unemployed or had medical emergencies, then give those people money - don't give people with mortgages money in the hopes that some of the people really need it.

The other major problem with the bailout is the randomness of it. People had no control over who bought their mortgage, and having a fannie or freddie mortgage in no way makes you more deserving of a bailout - but those are the people who are getting it, and people who happened to have mortgages that were securitiezed in a different way aren't. I understand the why - since the government now basically owns freddie and fannie - but it's a completely arbitrary way of taking money from one group to another. And as my luck would have it, I'm the transferer and not the transferee.


At 12:54 PM, Anonymous Anonymous said...




Page 02 of 08


Energy, Natural Disasters and Employment Plan: Page 03

Additional Job Creation and Immigration Plan: Page 06

Drug Enforcement Plan: Page 07

Housing Recovery Plan: Page 08

Page 03 of 08



America, once the world leader in manufacturing, energy and farming has begun to loose our position as the world leader. Without going into the political reasons, this paper will only address the economic problems. Previously when anyone said oil, they looked at the United States, this however is no longer the case as environmental restrictions have blocked new drilling on shore and off as well as building new refineries or nuclear power sites. This dependency on foreign countries is not only an economic issue but a much larger national defense issue.

Because of energy cost and also for political reasons great deals of our nation’s framers have diverted corn into the energy field where they can obtain higher prices. Other farmers are changing their existing crops into corn to capitalize on the higher energy prices and subsidies. The net effect to the consumer is higher food prices.

Every year we can expect California to be burning and the east and Midwest to be flooding. Billions of dollars each year are spent by the Federal government for federal disaster aid. (See Chart below – Cost and Losses). In an effort to try and reduce flooding, the Army Corp of Engineers have constructed dams that control the flow of the rivers while using the rushing water to generate energy.
Costs and Losses:
Drought Floods Hurricanes
Annual average $6–8 billion $2.41 billion $1.2–4.8 billion

Our current transportation infrastructure has collapsed while Congress misused our transportation funds. Bridges and highways need major repair and gas is consumed at a much higher volume due to a congested and inadequate highway systems.
The average American city dweller wastes 62 hours per year stuck in traffic, according to the 2002 Urban Mobility Study by the Texas Transportation Institute. The institute measured traffic delays in 75 major cities, including Columbus, Ohio, where the average
Page 04 of 08
delay is 36 hours per year; Cleveland, where the average is 21 hours per year; and Cincinnati, where it's 43 hours per year. According to the same study, traffic jams cost the average city $900 million in lost work time and wasted fuel every year
$78 billion tab cited
The study estimates that drivers wasted 2.9 billion gallons of fuel while sitting in traffic. That's about 26 gallons a year per driver. (Author’s Note: Today 6/28/08 gas is $4.00 per gallon – 2.9 billion gallons of gas = $11.6 Billion wasted in traffic jams.).
Together with the lost time, traffic delays cost the nation $78.2 billion, the study estimates. (My Note: The $78.2 billion was the cost from a 2005 report. Gas at that time was $2.27 per gallon in 2005 according to the Energy Information Administration.
Based upon 2.9 billion of fuel used in traffic jams at the $2.27 price per gallon, the total amount was $6.583 billion. Today, gas is $4.00 a gallon or $11.6 billion. That is an increase of $5.017 billion. Add this increase to the $78.2 billion the study listed for lost time and traffic delays the amount increases to $83.217 billion).

The next president of the United States will be facing huge internal issues ranging from high energy cost, rising food prices, possible recession and continued natural disasters such as flooding and forest fires. In this plan the author ties all of the issues mentioned above into a comprehensive energy plan that once in place will eliminate America’s dependency on foreign oil, increase food supplies, create thousands of jobs, and reduce significantly the high cost of natural disasters that we see year after year.
If we look at all of the economic issues facing us as a nation we should also look at what currently is working. The U.S. Army Corps of Engineers are responsible for 12,000 miles (19000 km) of the U.S. waterways. This figure includes the Intracoastal Waterway. Most of the commercially important inland fuel taxed waterways are maintained by the Army Corps of Engineers, including 11,000 miles of waterways. Commercial operators on these waterways pay a fuel tax, which funds half of the cost of current new construction and rehabilitation of the current waterway infrastructure.
* Source
• U.S. Army Corps of Engineers
A principal value of the inland waterways is their ability to efficiently convey large volumes of bulk commodities moving long distances. Towboats push barges lashed together to form a "tow". A tow may consist of four or six barges on smaller waterways up to over 40 barges on the mighty Mississippi River below its confluence with the Ohio River. A 15-barge tow is common on the larger rivers with locks, such as the Ohio, Upper Mississippi, Illinois and Tennessee rivers. Such tows are an extremely efficient mode of transportation, moving about 22,500 tons of cargo as a single unit. A single 15-
Page 05 of 08
barge tow is equivalent to about 225 railroad cars or 870 tractor-trailer trucks. If the cargo transported on the inland waterways each year had to be moved by another mode, it would take an additional 6.3 million rail cars or 25.2 million trucks to carry the load.
The ability to move more cargo per shipment makes barge transport both fuel efficient and environmentally advantageous. On average, a gallon of fuel allows one ton of cargo to be shipped 59 miles by truck, 202 miles by railway, and 514 miles by barge (95 km, 325 km, and 827 km, respectively). Carbon dioxide emissions from water transportation were 10 million metric tons less in 1997 than if rail transportation had been used. Inland waterways allow tremendous savings in fuel consumption, reduced greenhouse gas emissions and air pollution, reduced traffic congestion, fewer accidents on railways and highways, and less noise and disruption in cities and towns.
Inland and intercostals waterways directly serve 38 states throughout the nation's heartland as well as the states on the Atlantic seaboard, the Gulf Coast and the Pacific Northwest. The shippers and consumers in these states depend on the inland waterways to move about 630 million tons of cargo valued at over $73 billion annually. States on the Gulf Coast and throughout the Midwest and Ohio Valley especially depend on the inland and intracoastal waterways. Texas and Louisiana each ship over $10 billion worth of cargo annually, while Illinois, Pennsylvania, West Virginia, Kentucky, Mississippi, Alabama, and Washington state each ship between $2 billion and $10 billion annually. Another eight states ship at least $1 billion annually. According to research by the Tennessee Valley Authority, this cargo moves at an average transportation savings of $10.67 per ton over the cost of shipping by alternative modes. This translates into over $7 billion annually in transportation savings to economy of the United States.

Energy and Environment:
The current highway system is not keeping up with the population and the congestion on our roads harms our environment and increases our fuel usage. On the other hand, our current intercostals waterways are extremely cost effective and transportation cost is extremely low.
Flooding and droughts cost the taxpayers billions of dollars each year because rivers over flow there banks and other parts of our country lack sufficient water. The Army Corp of Engineers has made some impact on the flooding.

Page 06 of 08
This plan suggests that in order to obtain our stated goals for energy, natural disasters and employment that we begin the following:
1.) Working with the Army Corp of Engineers we immediately develop a plan to harness the inland rivers of the East and Midwest by creating large channels from the East and Midwest to the Western part of the nation.
This type of “Panama Canal” could generate power, reduce commercial traffic on over crowed highway system, and also reduce energy use. The excess water could turn desserts into new farmland that could generate food or fuel. Thousands of workers would be needed for this major infrastructure investment thereby keeping unemployment at bay and stimulating the economy. New businesses would spring up along the channels as they would also be used for recreational purposes.
The government would save billions each year in cost savings from flooding and droughts. America has the raw materials to turn this country around and make it once again the leader economically that we once were. We can do this by satisfying all concerns from environmentalist to business people. We must do this for our nation.


America has been and will continue to be the melting pot. Recently individuals who have played by the rules and are waiting in line are to immigrate to our great nation are frustrated as they see thousands descend upon America illegally. We are a nation of rules and while we can be sympathetic to the illegal alien population we can not and must now send a message to the rest of the world that the fastest way to immigrate to America is illegally.

The current estimate for illegal aliens in our country is currently 12 million to 20 million. Currently our elected officials fail to remove illegal aliens from our country stating that it is not realistic to think that we could find all the illegal aliens or that we simply do not have the manpower.

Page 07 of 08

Our proposal is an economic, fairness and employment plan. Instead of wasting billions of dollars in the stimulus plan and new budget, let’s put thousands of Americans to work locating and deporting illegal aliens. With unemployment above 8% currently we no longer have the excuse of lack on manpower to deport illegal aliens. The deportation of 12 million to 20 million illegal aliens will allow and dramatic increase in legal immigration and will reward those waiting immigrants who have respected our laws.

With 12 to 20 million people removed from the job market, we can then fill jobs that are left vacant by the void. For those who say Americans will not perform the work that illegal aliens do, we say we have thousands of carpenters who would love to build houses again but lost their jobs to illegal aliens. And to the employers who will not pay a living wage we say, increase your pay or close your doors because your competitor will. Imagine even if this plan freed up on ½ of the jobs - that could be 6 million to 10 million jobs.



We currently spend 50 billion dollars each year for drug enforcement. Currently in parts of Texas on the border, drug cartels have taken over and kidnapping and murder are common place. Mexico is very close to losing their country to the drug cartels. Our prison system is overflowing from drug offenders.

We must face reality; we cannot win the drug war using our current battle plan. We have proposed two options that will dramatically change our battle plan on illegal drugs.


Institute mandatory drug testing for all private sector and public sector employees, including politicians. This random testing will be done at least once within a 3 month period or 4 times per year. Unemployment and or welfare recipients will undergo the same testing. Students in grades 6th or above will also be subject to the same testing.

If we can’t stop the flow, let’s stop the consumption by mandatory testing. The cost of the testing shall be born by the Federal government.

Page 08 of 08

Make marijuana legal and have American farmers grow it, tax it and sell it to Americans. Other non-addicting drugs might also be considered.



Beginning with the Carter Administration regulations were loosened to allow more individuals to become home owners. When is first became clear that Fannie Mae, Mack and the housing industry was in trouble due to a huge increase in foreclosures due to individuals being qualified for a home they could not afford. The regulators warned the oversight committee in Congress that these two institutions were mismanaged and were on the verge of collapse, some members of the committee, denounced the regulators as being racist and uniformed. Therefore nothing was done to correct the problem.

Housing prices continue to fall due to empty houses being destroyed or lack of daily maintenance such as lawn care. What few buyers there are will not buy a standard house for sale when the can purchase a repo at a deeper discount.
We must take repos off of the market to stabilize prices and begin the much needed turnaround. The lenders and government must dramatically increase sales of these vacant homes through the auction process. Incentives must be create by the Fed for investors to purchase these properties and turn them into rental properties. This one market tool would remove the majority of existing repos provide rental properties for individuals who lost their homes and stabilize the housing market.

To insure that investors do not purchase properties and immediately try and flip them, there must be a condition of purchase at the auction that the properties will not be left empty for more than 5 months and that they shall be rented. They could not resale the properties for at least 3 years or they would suffer a severe penalty. This would stimulate the sell of existing homes and new homes by take the majority of repos of the market.


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