The world you live in has changed because some rules changed, some of the patterns in law and practices changed. Up until about 200 years ago, transferability was not allowed. What is that? Say I buy a house form you and we agree that I will pay you $500 a month for 30 years. I know you, we like each other. We agree. And I start paying you. At some point along the line, you decide to buy sell this contract to someone I do not know and when I meet I do not like. I do not want to be "in business" with the new person. Today, such an arrangement is possible, in fact, common. It is called the secondary market. A few hundred years ago, it was not allowed (unless all parties agreed.) Much of the high fiinance mischief today comes from that change in law.
About 30 years ago, mortgages were common. This is no longer the case. As is usual, the term mortgage is still used, but almost no one gets a mortgage. You have a deed of trust. The difference is a mortgage is grounded in complex law that protects the homeowner from the bank. A deed of trust gives a bank a fast track to throw you out of your home. You still pay for the advantages of a mortgage, but you get none of the benefits. This change contributed greatly to bank profits. At the same time, it allows for robo-signing and mass eviction of tenants in bad times.
At the same time, bankers ended the practice of "assumable loans." before about 30 years go, it was common to write into mortgage contracts that the loan was assumable, that is to say, anyone who met the credit criteria could take over the house and payment. As long as the new person was of the same credit standing as the original buyer, what did the bank care, the money kept coming in.
An assumable loan allowed elderly parents to pass a house on to the kids before the house was paid off, it allowed someone in a jam to get out from under a house he could not afford and other unusual circumstances.
Well, with assumable loans there is no sale and resale, no new mortgage fees, no excise taxes, all sorts of revenue opportunities do not emerge. So that option disappeared, like mortgages about 30 years ago.
Those options disappeared during the savings and loan crisis of the 1980s. It was a crisis that did not go to waste. I recall watching those changes and thinking, this is not good. 20 years later, deeds of trust and non-assumability are playing a big role in the housing crisis.
It does take about 20 years for the bad effects of awful policy to take full bloom. In 2012 Obama signed The National Defense Authorization Act (NDAA) for Fiscal Year 2012...
In about 20 years we'lls see the full horror of that law.
Saturday, January 7, 2012
Assumable Loans, Mortgages and Transferability
Posted in law by John Wiley Spiers | 0 comments
Friday, January 6, 2012
Ron Paul And Donations
Ron Paul's average campaign contribution is something like $38, and Mitt Romney has over quarter million donation from Goldman Sachs so far. Who are Ron Paul's top three sources of donations? Active duty Air Force, Army and Navy, in that order. Watch what happens when a soldier expresses his views on government owned (CNN) TV...
Posted in election fraud by John Wiley Spiers | 0 comments
Thursday, January 5, 2012
Posted in anarchy, free market by John Wiley Spiers | 0 comments
Wednesday, January 4, 2012
Chomsky On Capitalism
Chomsky is a socialist, and he probably would not object to marxist, and as I have said many time, they get their facts straight Here is is saying something I've argued for a while, and he seems to be arguing for free markets.
Posted in anarchy by John Wiley Spiers | 2 comments
Monday, January 2, 2012
Why Police Cannot Be Reformed
Posted in free market, govt regulation by John Wiley Spiers | 0 comments
Costco And Order Out of Chaos
The fellow who created and built Home Depot is notorious for claiming today it would be impossible to do what he did in 1979, for new constraints on free business practices. Today, in USA, 40,000 new laws went into effect that further constrain freedom.
In the current issue of the Costco magazine, retiring CEO James Sinegal traces the growth of Costco. He and other top Costco people started at a company called Fed-Mart as boxboys, cashiers and stockers, etc. That company famously went bust and out of the ashes one worker and his son started Price Club in San Diego in 1976, a members only warehouse concept. In 1983 ex-Fed-Mart boxboy Sinegal and others started a version called Costco in Seattle, and all of these players, in a scene reminiscent of The Return of The Magnificent Seven, merged Price Club and Costco into one business named Costco in 1993. The rest as they say is history. The new CEO of Costco is also a veteran Fed-Mart boxboy who wandered aimlessly for a decade after the Fed-Mart immolation. The moral of the story is this crew learned good habits and sound business principals while working at those other gigs. They are now centimillionaires.
I recall the demise of Fed-Mart, and those times when it seemed the world was coming to an end. The endless, pointless war in Vietnam, Boeing apparently going out of business, housing prices plummeting, rare opportunities, terrorism, and a paranoid, criminal government under Richard Nixon.
Yet these people saw clear opportunity, carefully tested and grew businesses, that in time became staples of the economic landscape. Apple computer comes out of these times. While many others failed, a new, different, better IBM emerged, after a wrenching process. Protected industries, such as auto and defense became truly awful.
An aspiring politician once said "We're searching for more immediate, ecstatic and penetrating mode of living.” Can you think of anyone who has better lived such a life than the founders of Costco and Apple? Or the countless unheralded businesses who have done likewise? Such a life is not possible in politics, so I am afraid that acolyte will find disappointment at the apogee.
Yes, starting a business has been made much harder by pointless regulation, but even worse is a lack of people who see business as a route to a better life. When I mentioned to a 20-something 1 in 6 Americans needs food stamps, she noted many of her college friends use them. CNN reports only 55.3 percent of people ages 16 to 29 have jobs, although I'd like to see the source of that. Perhaps they need the food stamps. But the problem is the lack of opportunity, not food stamps.
Gone are the days, due to pointless regulation, where in my youth I could have a job within a few days of starting to look for one. When "help wanted" signs were posted outside of small businesses, and one could work one's way up, where a job at Fed-Mart or countless other businesses were plentiful. Education was better, a high school diploma was comparable to a bachelors degree today, so an employer knew if you graduated from high school you could read, write and think.
Now, although the regulations are pointless, the regulations serve a purpose. By driving small business into the ground, and preventing new businesses from forming, the collectivization of where you get health from the government, home furnishings from IKEA, food from Safeway, clothes from Macy's, your home from Pulte, your job from homeland security, your loan from BofA, schooling from the government, etc. Although there is nothing inherently wrong with big business and low prices, in practice big business promotes and then co-opts big government.
For my part, I will continue to encourage people to start businesses, emphasizing lifelong process for younger people (innovation) and teaching and writing for older people (conservation). In extreme times people call for extreme solutions, but it is simply good habits and sound business principals, which one learns by doing, that leads to more immediate, ecstatic and penetrating mode of living. Encourage people around you to make the revolutionary act of starting a business.
Posted in anarchy by John Wiley Spiers | 0 comments