Friday, May 30, 2008

Economic Problems

OK so I have not been writing lately, having taken my creativity to work on gardening and springtime pursuits instead of sitting. These hot desert afternoons are now a good time to think and write, since it is just to hot to work outside. Tomorrow it may be hot enough to dry foods on the roof like they used to do.

What ought we be doing like they used to do? Quickly, I think of the food supply. Water use went up parallel to population growth until the 1970s, when groundwater production dropped off in relation to rising population growth. Trucking food in has become a huge necessary business for this desert city. This valley might support a roving band of fifteen humans per year under natural conditions.

The policy of the CAP is set to destroy what farming we have left and replace it with houses containing more mouths to feed. I suggest reviewing this policy, since the trucking in of foodstuffs has risen in price. Possibly the growing of vegetables could be profitable once more. It would certainly provide a cushion of local production.

Citizens can assist with this push to save on food prices. If you have vegetation, assess how you could grow a few vegetable plants. Apartment dwellers could request part of the grounds to grow squash, tomatoes and other small food plants. Not to spend more money on water, just grow something else with it. Gardens grow all year here in Arizona.

If I sound like a survivalist maybe that is correct. This community should have the long term goals of securing the food supply at a reasonable cost to the people. The water supply needs to be managed in order to maximize local food production and provide water for personal needs. People are interested in the idea of growing vegetables, partly because agriculture is our cultural heritage and partly because food prices are rising. Historically, victory gardens have been successful.

I am thankful for the railroad through Tucson. Why cannot we be an international railroad hub? This is the place for it and it could be the economic salvation of Tucson. Tucson is an international city in a position to make money off increased trade between Mexico and the United States. Passenger train connections to Nogales and beyond into Mexico would benefit the economies of this area. Build a passenger terminal for the railroad where the dump used to be and let the surrounding streets vote on new zoning according to the neighborhoods.

I call for the RTA to restudy the need for more public transportation, rather than faster wider new roads. The speed limit should be lower, in order to save gas. Possibly cutting the price of bus fare would attract more ridership, particularly since gas prices are so high. People need a price break and the buses might make more money if ridership numbers rise. If people cannot afford to get to work, the economy will suffer.

Localization of schools within walking distance of the people is a necessity. Smaller closer neighborhood schools would eliminate busing, insurance, fuel and other associated expenses. This transportation expenditure could be used instead to set up smaller schools closer to homes. If busing is necessary, low cost vouchers for student riders on public transportation should be available. Hire mothers to ride the bus with children instead of having to have a separate bus system for them. Redundancy in bus systems is too fuel foolish.

Zoning laws are crippling economic development. Archaic laws prohibit using your private property to open a small business. People who want to do business are forced to obtain storefront, pay extra fees on water and electricity, pay more fees to license, pay more taxes on everything and in general, allows only those with funds to set up a business. An idea won’t work anymore. It has to be upfront fees, zoning purchased from the city for a fee, higher utilities and others unless you are a big developer who can skip all this and rely on the government to provide all that new service need. It’s just a matter of scale, my friends. If you’re small, you have to give up a larger percentage of funding before you can even open. I say have the neighborhoods vote about zoning. Let them vote about whether they can open a business in their homes. This is the land of the free, is it not? And what an economic stimulus this opening up of new opportunity would be.

And while we are taking this on, how about easing up on the building regulations that run up the cost without any real benefit or that prevent the use of a serviceable, cheaper alternative. Why require parking when the consumer could just decide whether or not to buy? Are public school building standards a little too stringent, which drives up the cost unnecessarily? Review all these fees, regulations and cost padding in the building codes.

Insurance is taking too much out of the economy. Mandatory insurance is noncompetitive and expensive. If somebody wants insurance, they should buy it but nobody should be forced to buy it. I’m not talking about auto lien holders contract issues. I am talking about a human right of not being forced to buy something. Mandatory benefits for workers is another noncompetitive burden imposed on businesses. The effects of the mandatory insurance policy should be reviewed. Perhaps the money currently tied up in mandatory insurance would be better circulating in the local economy. There is a money shortage and this would alleviate this ‘credit crunch’ and return to a more user friendly cash economy.

Credit cards are a scam. Quit using them. They charge the seller, they charge you and they run up unearned charges at a usurious rate. Credit is for ventures and total emergencies, not as a matter of course. A moral value of saving for a desired item has been diluted by a deluge of advertising immediate gratification. Avoid interest charges by saving, then spending. These credit card people are leeches on a healthy economy because they demand unearned funds and encourage unhealthy spending habits and gross indebtedness.

All these things affect our community here in Tucson. Our freedom has been curtailed and this curtailment is being taught as the ‘way’ to do anything. The time has come to reassert freedom of choice to buy what we want, use our property how we want and to have a flourishing local cash economy.

Sunday, March 30, 2008

Investment Scams and the Federal Reserve

So now is the time to write concerning the mortgage broker sales of dud securities as a spinoff of the homebuyers who now hold an upsidedown mortgage and the people who hang on to actual cash now getting little or nothing for giving the bank the privilege of holding money. Another downside of this squabble for bubble profits are the tax rates raised by governments as the ‘value’ of the properties increased due to all the quick cash scams perpetuated by lenders now being rewarded with bailouts, cheap loans and smelly deals designed to buy $26,000,000 residences and high payoffs for CEOs. Amply rewarded CEOs of failing businesses preying on loopholes and gullibility did not accept any social responsibility. Just collect those profits, no matter how they were generated. The average person still has to pay higher taxes because of the real estate price hike.

The scam works like this:

The politicians decide that more people need to own houses so policy is suggested that loosens up credit guidelines for well researched clients who will most probably pay the loan. Not researching borrowers at all led to quicker deals and more profits, so why not?

Lending companies find that these loose guidelines allow for more and more people to qualify to buy homes, including speculators. The loose credit allows developers and builders to raise prices, because the credit will be OKed anyway. ARMs or interest only payments become the norm, in order to qualify more people for more and higher amounts of credit. These loans were structured to fail, which would give foreclosures a nice equity in a property or would allow the borrowers to refinance, as long as prices kept rising. Profits were to be had either way. If prices dropped, then people would be left owing more than the property is now worth, plus they would have the ARM factor or the interest only loans that hugely balloon in payment size. No surprise that foreclosures are on the rise.

Back to the scam. So first we have non-researched loans structured to fail that are ‘bundled’ and called securities and sold like they are a viable investment sure to balloon as soon as the ARMs or interest only payments did. It was all planned out. Everybody would pay up and the profits would flow, but it is really better if I cash out now when I sell these bogus securities to investors rounded up by big name brokers. I guess to pay the appraisers of these ‘securities’ a little would be enough if they kept their jobs.

Criminal activity? Loans structured to fail should be a criminal offense. Loaning money to people who cannot pay it back is reprehensible and rips off somebody. Who gets paid? The developer, builder, construction workers, loan personnel, real estate, appraisers, all get cash out. The bond bundlers and bond brokers cash out. The investors who put up the money to be loaned are expecting starry eyed profits based on recent paybacks based on more investment. A Ponzi scheme. The foreclosure rate woke everybody up and the profits disappeared in a wash of red ink.

Lo and behold our government takes steps to prevent this red ink from getting on anybody important. Cut the interest rates and the ARMs don’t adjust upward. It does not matter that the interest rate cuts also cut the rates paid to those unfortunate holders of cash in banks. The cut in interest rates also cut foreign investment, a little side effect of saving your buddies from taking a loss. The falling dollar makes oil cheaper for everybody but us, so the low interest rate is doing a number on the little guy in more ways than one.

So now the latest link in the scam is that a huge brokerage firm will get a bailout in order to avert a financial meltdown. What is going on? Why the bailout? Why not just let it go broke?

Retirement funds invested in low or negative yield bundled mortgage securities? Is this true? Would these retirement funds then be lost while at least three of the perpetrators lounge in millionaire luxury? Exactly who bought these worthless securities? I want to see a list of investors, how much they invested, and why is it necessary to bail them out.

It is my opinion that all this money never existed. It cannot be found because it was only a figment of the imagination fueled by cheap credit. Printing money is not the answer. Inflation is horrid as it is. The inflated housing prices were a scheme to get money via the easy credit avenue. This ‘value’ does not exist. Allow the real estate to deflate and allow people to renegotiate their loans. They did not steal the value. Somebody else did and they are living in luxury at investors and now taxpayers expense.

So the Fed bails out these same charlatans and expects to continue to do business with them, rather than bypassing them and working with the investors and homeowners. They deserve to live in a homeless camp in California where so many former homeowners now live, some in tents and some in camp trailers. I say give them a pup tent until they go to jail.

What is normal? Fair interest rates when cashholders can make a little. Fair rates for loans to people who can and will repay the money. Interest rates that attract investment. Stable currency. Raise the interest rates.