Friday, January 7, 2011


"Four rules for life:

         Show up

         Pay attention

        Tell the truth

        Don't be attached to the results."

-Angeles Arrien

NAR lobbies for its sacred cow................

The National Association of Realtors wasted little time in attacking
President Obama's National Commission on Fiscal
Responsibility and Reform's  proposal to tamper with the
"mortgage interest deduction."

Faithful readers will know my bias.  My first reaction was that this
was a typical knee jerk reaction by an industry trying to protect
itself.  I changed my opinion a bit once I read the letter NAR sent
to the Commission.  While parts of it are arguable, it seems fairly
well thought out and is certainly defensible, and maybe even
prudent.  Full letter here.  Excerpt here:

 "Our internal research and the research of outside experts
consistently has shown that an overnight or even a phased
loss of these deductions would cause the value of existing
housing to fall by as much as 25%. The average loss of
value would be 15%. This is simply unacceptable, particularly
because our research also has shown that this loss of value
is never fully recouped."

The question arises, 25% - really?

Let's do the math.   A hypothetical $200,000 mortgage at 6%
interest amortized for 25 years has a monthly payment of
$1,288.60, or $15,463 per year.  After paying on the mortgage
for the first twelve months, the principal has been reduced by
$3,560.  Therefore, in year one, the borrower paid $11,903 in
interest payments.

Assuming a 35% marginal tax rate, the $11,903 interest
deduction would save the borrower $4,166, or $347.18 per
month in income taxes.  If we plug in a monthly payment of
$347.18 for a 6%, 25 year loan, that payment will amortize
$53,884 of debt.

So, it is not totally unrealistic to conclude that absent the
mortgage interest deduction, our borrower could only  afford 
a $150,000 mortgage, instead of $200,000.   It doesn't
necessary extrapolate that this will cause property values
to fall by 25%, but clearly there will be affordability issues
for some buyers.

Unless that is, as part of the process of surrendering the
Mortgage Interest Deduction, the Tax Code was re-crafted
removing all deductions and having a much lower marginal rate. 
In that event, the whole economics of the deal could be a push. 
Real estate would lose tax favored treatment, but if the Tax Code
was simplified and taxation became a straight forward operation,
and if  Congress resisted the urge to tinker to reward friends,
punish enemies, and to create campaign fund raising
opportunities (I can dream), the economy as a whole would be
way healthier.  Which benefits all of us.

Isn't it at least worth discussing the concept?

Ezra Klein made some news........................

.............with his lament that the Constitution was just too hard to
understand.   A few of my favorite bloggers had fun with him over
that admission.

Still, maybe he has a point.  Professor Green recently posted
about the problems with gentrification of cities like Pasadena,
California.  These life cycles that cities go through clearly create
inequalities from time to time.  The post, here, raises issues that
are clearly worth thinking about.   But.................

The professor then opines:

" First, make Section 8 vouchers and entitlement, so that
people can choose to live in whatever city they like.  That
is a federal responsibility."

I have a passing, but not scholarly, familiarity with the U. S.
Constitution.  The only "entitlements" I am aware of are liberty
and that pursuit thing.  Need to re-read it to figure out all
these "federal responsibilities."

I would like to live in Granville again, but have chosen not
to because of the relatively high priced housing stock and
absolutely high property taxes.  How silly of me!  I didn't
realize I was entitled to live there and that you all had to
pay to make it happen.  I'll be checking my mailbox.
Federal responsibility indeed.

"It started with real fundamentals.........."

This is what practicing two hours a day will do for you.
Patience. The news tease lasts about 5 seconds. Original link here

thanks Mark be young again

Thanks FinerMinds

Thursday, January 6, 2011

"Hard work and tough decisions will be required....."

"........mindful of the lessons of the past...."  ".....robust debate...."
"....disagree without being disagreeable......."  ".......dedicated to
proving worthy of the trust and confidence.........."

And then John Dingell administers the Oath of Office, "Do you
solemnly swear, or affirm, that you will support and defend
the Constitution of the United States against all enemies,
foreign or domestic....."

Well worth listening to.

"Don't forget to look closely."

And listen closely.  And read closely.  A blog with heart, here.

Some wisdom about climate change.......or whatever we are calling it today

In a longish essay, titled What the Earth Knows, Robert B.
Laughlin talks about the changes to the earth in its way more
than 600  million years.  He counsels caution to the belief that
we can cause - or fix - much damage.  The earth itself seems
to have that responsibility.

"The major glacial episodes are spectacular examples of the
natural climate change that has occurred in geologic time.
They took place at regular intervals of 100,000 years and
always followed the same strange pattern of slow, steady
cooling followed by abrupt warming back to conditions
similar to today's."

"Climate change, by contrast, is a matter of geologic time,
something the earth routinely does on its own without asking
any one's permission or explaining itself.  The earth doesn't
include the potentially catastrophic effects on civilization in
its planning.  Far from being responsible for damaging the
earth's climate, civilization might not be able to forestall any
of these terrible changes once the earth has decided to make
them.  Were the earth determined to freeze Canada again,
for example, it's difficult to imagine doing anything except
selling your real estate in Canada.  If it decides to melt
Greenland, it might be best to unload your property in
Bangladesh.  The geologic record suggests that climate
ought not to concern us too much when we're gazing into
the energy future, not because it's unimportant, but
because it's beyond our power to control."

Full essay here

Good stuff indeed.........................

My daughter's volleyball coach sent out this e-mail to her troops:

"Good stuff!!!

Written by a 90 year old

This is something we should all read at least once a week!!!!!
Make sure you read to the end!!!!!!

Written by Regina Brett, 90 years old, of the Plain Dealer,
Cleveland , Ohio ."

"To celebrate growing older, I once wrote the 45 lessons life
taught me. It is the most requested column I've ever written.

My odometer rolled over to 90 in August, so here is the column
once more:

1. Life isn't fair, but it's still good.

2. When in doubt, just take the next small step.

3. Life is too short to waste time hating anyone.

4. Your job won't take care of you when you are sick. Your
     friends and parents will. Stay in touch.

5. Pay off your credit cards every month .

6. You don't have to win every argument. Agree to disagree.

7. Cry with someone. It's more healing than crying alone.

8. It's OK to get angry with God. He can take it.

9. Save for retirement starting with your first paycheck.

10. When it comes to chocolate, resistance is futile.

11. Make peace with your past so it won't screw up the present.

12. It's OK to let your children see you cry.

13. Don't compare your life to others. You have no idea what
      their journey is all about.

14. If a relationship has to be a secret, you shouldn't be in it.

15. Everything can change in the blink of an eye. But don't worry;
      God never blinks.

16. Take a deep breath It calms the mind.

17. Get rid of anything that isn't useful, beautiful or joyful.

18. Whatever doesn't kill you really does make you stronger.

19. It's never too late to have a happy childhood. But the
      second one is up to you and no one else.

20. When it comes to going after what you love in life, don't take
      no for an answer.

21. Burn the candles, use the nice sheets, wear the fancy lingerie.
      Don't save it for a special occasion. Today is special.

22. Over prepare, then go with the flow.

23. Be eccentric now. Don't wait for old age to wear purple.

24. The most important vital organ is the brain.

25. No one is in charge of your happiness but you.

26. Frame every so-called disaster with these words 'In five years,
      will this matter?'

27. Always choose life.

28. Forgive everyone everything .

29. What other people think of you is none of your business.

30. Time heals almost everything. Give time time.

31. However good or bad a situation is, it will change.

32. Don't take yourself so seriously. No one else does.

33. Believe in miracles.

34. God loves you because of who God is, not because of
      anything you did or didn't do.

35. Don't audit life. Show up and make the most of it now.

36. Growing old beats the alternative -- dying young.

37. Your children get only one childhood.

38.. All that truly matters in the end is that you loved.

39. Get outside every day. Miracles are waiting everywhere.

40. If we all threw our problems in a pile and saw everyone else's,
      we'd grab ours back.

41. Envy is a waste of time. You already have all you need.

42. The best is yet to come...

43. No matter how you feel, get up, dress up and show up.

44. Yield.

45. Life isn't tied with a bow, but it's still a gift."

Optimism with some statistics..............

If your glass is half full and your eye wear is rose colored,
Carpe Diem is for you.

If you want to balance the negativity that passes for news on
most days, Carpe Diem is for you

In many ways, psychology - that good old unpredictable human
element - drives our economy.  Mark has been banging on his
drum for quite a while now, telling us that thing are looking up. 
That it is time to get our heads out of the muck of negativity and
find that the more realistic point of view is that this is an abundant
universe and there is tons of good stuff going on around us.

If you're still worried, take two doses of Carpe Diem and call
me in the morning.

Reasons I won't be switching to Sprint...........

Glad I'm not the only one who cringed at this oft played TV
commercial.   The Head Butler chimes in:

"If you have Asberger’s, you want Sprint

I am a connoisseur of stupid commercials, but the holiday
Sprint commercial stands knees and ankles below the
dumbest. The set-up: two neighbors, one standing in front of
his holiday-lit house, one --- Mr. Asberger --- standing in the
street. Mr. A has just texted that his neighbor’s house is an
eyesore. And he has just e-mailed that his neighbor’s holiday
card is ho-ho-rendous. For the neighbor, what was said is all
that matters. Mr. A only cares that Sprint gives him one low
price for lots of features.

This ad tells us that Sprint cherishes customers who are
socially inept and pathologically hostile --- or, to put it simply,
assholes. We currently use Sprint. But we get the message:
our personalities are too good for this carrier. So…we’re
outta there.

What asshole approved this disaster?"

Wednesday, January 5, 2011

My hometown..........100 years ago

Thanks to Cultural Offering for reminding me how much fun the
Shorpy blog is.  If you like pictures of old stuff, go here.

The Philadelphia sky line looks vastly different today.

City Hall with Billy Penn atop.   Still there. 

The Broad Street Station.  Not there

The Bellevue Stratford Hotel.  Still there.

The Hotel Flanders.   Not there.

Wanna bet...................?

Now taking bets on whether Palin will announce her candidacy
for the Presidency by 12/31/11..............

Now taking bets on Obama being a two term President........

Now taking

Is this a great country, or what?

Fun with numbers....................

Thanks Ka-Ching

Just don't call this investing..............

Average stock now held for 22 seconds.  Story here.   While
this may be profitable for those with the fastest and bestest
computers, is this really how our system is supposed to work?

Thanks Yves

Tuesday, January 4, 2011

A tribute.......................

A few spins from a mentor's jukebox:

Thanks Nicholas

Life It's Ownself......In a "Moment"

Thanks to Nan for pointing the way

On Leadership, Thinking, and Moral Courage...........

Friend Jim sent me this link - here - and suggested I read the
essay.  Being old fashioned, I printed it out and saved it to read
in that space in time between the high school girls JV and Varsity
basketball game tonight.  I think I made a good investment in
time and paper.

The essay is by William Deresiewicz and appeared in the
American Scholar.  It is titled Solitude and Leadership.

A few excerpts:

"We have a crisis of leadership in America because our over-
whelming power and wealth, earned under earlier generations
of leaders, made us complacent, and for too long we have
been training leaders who only know how to keep the routine
going.  Who can answer questions, but don't know how to ask
them.  Who can fulfill goals, but don't know how to set them. 
Who think about how to get things done, but not whether they
are worth doing in the first place.  What we have now are the
greatest technocrats the world has ever seen, people who
have been trained to be incredibly good at one specific thing,
but who have no interest in anything beyond the area of their
expertise.  What we don't have are leaders,  What we don't
have, in other words, are thinkers.  People who can think for

"No, what makes him a thinker - and a leader - is precisely
that he is able to think things through for himself.  And
because he can, he has the confidence, the courage, to argue
for his ideas even when they are not popular.  Even when
they don't please his superiors.  Courage: there is physical
courage, which you all possess in abundance, and then there
is another kind of courage, moral courage, the courage to
stand up for what you believe."

"Multi-tasking, in short, is not only not thinking, it impairs
your ability to think.  Thinking means concentrating one one
thing long enough to develop and idea about it.  Not learning
other people's ideas, or memorizing a body of information,
however much those things may sometimes be useful. 
Developing your own ideas.  In short, thinking for yourself. 
You simply cannot do that in bursts of 20 seconds at a time,
constantly interrupted by Facebook messages or Twitter

The full essay is worth printing out and savoring.

(Ed. note:  One of the blogs I frequent posted about this essay
recently.  My apologies for not remembering who or where.)

The Truth wills out.................

".....But suddenly the conversation shifts when I finally ask Eddy
if, in fact, he doped.
     'Do you think I did?' he asks me.
     'I don't know,' I reply.  'I don't know you.  All I know is what
I've read and heard.'
     Hellebuyck hesitates.  He no longer looks like a man at home
in the world.
     'Yeah,' he says, 'I did it.'
For the next 25 minutes, Eddy Hellebuyck continues to confess.
On the bright winter afternoon, out of the blue of the desert sky,
he single handedly begins to break the code of silence shrouding
the use of performance-enhancing drugs in distance running...."
The above passage was excerpted from the excellent feature
article in the December issue of  Runner's World.  Full article
here.   It is an interesting tale of accusation, conviction, six years
of denial, and then confession.  Forgiveness and restoration?
Too soon to tell.

Please be advised that I am not an unbiased source here.  The
author, John Brant, has been my friend since first grade.  He is
also the author of  Duel in the Sun, a book worth reading.

Happy 51st Birthday to Michael Stipe............

Monday, January 3, 2011

Walk Away...................

Over the last few days we've played Boney James, Bob James,
James Taylor, James Brown, and Sonny James.  Seems
appropriate to close this set out with The James Gang.  Enjoy...

Whither go house prices...........?

Faithful readers will realize two things:

      1.   I think average housing prices will continue to decline in

      2.   I am enamored with Bill McBride's charts at Calculated

Calculated Risk also foresees a drop in housing values.  Here.

Part of the essay offering his reasons for said belief was this chart:

This chart shows the relationship between the average price of
homes and Median Household Income.

I am strictly an amateur chart reader, but this looks like good
news to me.  What it says to me is that during the bubble years
(2002-2006) the historic relationship between Median House-
hold Income and single family homes got seriously out of whack. 
Prices reached unsustainable levels.  A correction was needed.

If the prices of homes drop another 5% or so, the correction
will have been realized.  At that point, basic housing affordability
should cause the residential market to finally stabilize.  A boringly
predictable housing market has to be a good thing for our
economy over the long haul.

A poem for Monday................

        Choose Something Like a Star

O Star (the fairest one in sight),
We grant your loftiness the right
To some obscurity of cloud -
It will not do to say of night,
since dark is what brings out your light.
Some mystery becomes the proud.
But to be wholly taciturn
In your reserve is not allowed.
Say something to us we can learn
By heart and when alone repeat.
Say something!  And it says, "I burn."
But say with what degree of heat.
Talk Fahrenheit, talk Centigrade.
Use language we can comprehend.
Tell us what elements you blend.
It gives us strangely little aid,
But does tell something in the end.
And steadfast as Keats' Eremite,
Not even stooping from its sphere,
It asks a little from us here.
It asks of us a certain height,
So when at times the mob is swayed
To carry praise of blame too far,
We may choose something like a star
To stay our minds on and be staid.

-Robert Frost

"Tax the comfortable"

Scott Adams, the creator of Dilbert, has been thinking about
taxation and what passes as our national conversation on the
subject.  Full thoughtful post here.  Concluding excerpt, with
a great last paragraph,  here:

"Now we have three income groups;

1. Rich (such as Larry David)
2. Suckers (such as doctors and small business people)
3. Majority

Now let's look at the fairness argument using our new
categories. In a democratic system, the majority is in charge.
Therefore it is fair to say that the Majority left the bank
door unlocked so the Rich could loot it. Nice work, Majority.
Now the Majority's proposed solution is to take money from
the Suckers income group to compensate for their own gross
mismanagement of the country.

You might argue that the rich are the ones who are really in
charge, even in a democratic system. That makes the story
even worse. In that case, the rich plundered both the Majority
and the Suckers, and now Warren Buffett and Larry David
are pointing fingers at the Suckers in the hope that the
Majority doesn't decide to boil the rich for food. That's what
I would do if I were a billionaire. Just sayin'.

My own view, as a member of the Suckers group, is that if
economists determine that the best way to make the country
solvent is to increase my taxes, I'm willing to look at those
numbers. I'm a practical guy. But I do resent being gang
raped by the Rich and the Majority while they high-five each
other and call it fairness. And I'd feel a little better about it
if the Majority would do a better job managing things going

Curly, Moe, and Larry..........

A Three Stooges marathon was on TV this weekend.  The boys
stand for everything that political correctness is not.  Wikipedia
offers this great analysis of their work:  "Aesthetically, the
Stooges violated every rule that constitutes "good" comedic
style. Their characters lacked the emotional depth of Charlie
Chaplin and Harry Langdon; they were never as witty or
subtle as Buster Keaton. They were not disciplined enough to
sustain lengthy comic sequences; far too often, they were
willing to suspend what little narrative structure their
pictures possessed in order to insert a number of gratuitous
 jokes."    No kidding.  If you missed them on TV, enjoy these:

Frankly, this leaves me speechless.........

One more reason to turn the TV off...............

Ed. note:  After growing up in Philly, I'm still an Eagles fan

Sunday, January 2, 2011

...filled with true devotion...............

On Sunrises and Project Blogging..........

Folks blog for many reasons, but considering the work and time
involved, it has to make a difference to them personally. 

Tigerhawk led me to his cousin Robin's blog.  Robin set a goal
to see every sunrise for a year, and to photograph and write
about it.  A year of getting up to meet the day is the result.

Dick Francis, one of my favorite mystery authors once wrote:

    "I had always loved sunrise: was always renewed in
     spirit. For all my life I'd felt cheated if I'd slept through
     dawn. The primeval winter solstice on bitter Salisbury
     Plain had raised my childhood's goose pimples long
     before I understood why; and it had long seemed to me
     that dawnworship was the most logical of primitive

Robin's blog combines the love of sunrises, photography, and
her dogs with a wise introspection about life its own self.  She
thinks deeply about what is going on within her, and around her,
and she writes well. 

    "Perhaps the process of growing up, changing, aging, is all
     just practice. Practice hanging on, yes, but also practice
    letting go. The key is to do all of it without ever giving up."

There is a book here.  Do yourself a favor and scroll through
her blog.  At least read the entry for New Years Eve, here.

For some reason, Blogger won't let me copy any of the
photographs from her blog.  Trust me, there are some glorious
sunrise pictures.  For instance here and here.

On the folly of benchmarking Cap Rates........

Mathematically, Capitalization Rates (cap rates) measure the
relationship between the annual net operating income (NOI) a
property generates and that  property's market value.

NOI divided by Rate = Value.  The lower the Cap Rate, the
higher the property's value.  The higher the Cap Rate, the lower
the property's value.

The main thing to remember about investment real estate is that
all cash flow streams (net income) are not created equal.  A
$60,000 annual cash flow from a land lease to McDonalds is
usually more valuable than a $60,000 annual cash from a 20
unit apartment building with significant deferred maintenance
and tenant issues.     A $60,000 NOI at a 6% cap rate yields
a value of $1,000,000.  The same NOI at a 9% cap rate yields
a value of $666,666 value.  A bit of a value difference.

In real world practice, Cap Rates should measure the risk
inherent in the investment.  In my experience, the measurement
of risk is more art than science.  Some of the factors to be
measured include the quality of the tenant, the terms of the lease,
the condition of the building, upside potential that could be
realized by new ownership, and of course, location, location,

During the late great real estate bubble, the rocket scientists
on Wall Street decided that, because real estate and real estate
debt was being securitized, real estate must be just like a
security instrument.  Serious money began chasing real estate
cash flows.  People began benchmarking Cap Rates to financial
instruments like the 10-year Treasuries.  I guess the reasoning
was that if Treasury rates fall, so should Cap Rates.  Here

Where historically Cap Rates for investment real estate bounced
around in the 8% to 10% range, beginning in 2002, as more and
more smart (but not very knowledgeable about the nature of real
estate) money flooded into the real estate investment arena, cap
rates began to fall.  Prices for investment real estate shot up. 
Good news for Sellers. 

The bad news is that some people made investments fated to lose
a fair amount of money.  Chasing a certain rate of  return ON their
investment, they put the return OF the investment in serious
jeopardy. The really bad news is that a lot of the too-big-to-fail
banks lent a lot of money on this over priced real estate.   That
exposure has not gone away.

I long for the day when Cap Rates return to their rightful job
of measuring the risk and reward of an investment.

A Verse for Sunday................

                   46th Verse

         When the world has the Way,
running horses are retired to till the fields.
       When the world lacks the Way,
  warhorses are bred in the countryside.

There is no greater loss than losing the Tao,
     no greater curse than covetousness,
   no greater tragedy than discontentment;
the worst of faults is wanting more - always.

         Contentment alone is enough.
           Indeed, the bliss of eternity
     can be found in your contentment.

-Tao Te Ching
Version from  Change Your Thoughts-Change Your Life
by Wayne Dyer.

The basic of the basics............

Thanks to gapingvoid

Fabian reminds us................

............not to let the pursuit of the goal get in the way of living life
its ownself.   Full post here.  Excerpt here:

"What I am advocating, though, is not resistance to change.
I am advocating embracing the simple, yet totally astonishing
fact that you are already complete. That you are already alive.
That you are already here.

Life is not a race, and once you step back from the minutiae,
you are free to enjoy it. You won’t be more complete once you
make six figures. You won’t be more complete once you finally
marry that beautiful girl, once you finally date that handsome
guy, once you lose 20 pounds, once you get that new car, or
phone, or house. (Or once you declutter and live with only
100 things.)

All of this can be nice. All of this can have some positive
impact on your life. But if you aren’t self-sufficient and happy
to be yourself, don’t expect these things to make a difference.
If you are looking for illumination, for contentment, for
happiness, all you have to understand is that you can have it
right here, right now. In this very moment, reading this very
sentence, in the very place you happen to be."