Ah... as an online teacher, this is about the only week that life feels somewhat normal. Most schools (not all) are on break. That leaves time for reading, too much time for the gym (exhaustion anyone?), too much time for thinking, and for many of my friends in this profession a lot of guilt that they didn't spend that one week of "quarter time" with family.
I don't believe in feeling guilty for that (and thankfully my husband doesn't hold it against me); most of the time I have a limit on how much time I can spend with humans I'm related to that I don't have much in common with anyway (something many of us feel but don't think is okay to say), so life is good on this week-long quarter-break time. :)
Always the writer (for fun, believe it or not) I've spent quite a bit of time this past 10 days or so since returning from NYC to California thinking and writing about lots of things.. from e-greetings to how electronics have changed the way we communicate and our expectations of others to blogging to narcissism to personalities to holidays and so on. I've noted a few generalities that have been 'proven' (those of us that teach stats know there is no such thing.. and if you took my class, you better know it! :) ) throughout the past week by behavior so repetitive I am certain I could predict it with nearly 100% accuracy. Some of it depressing; most of it enlightening about the human spirit.
But it all makes for an interesting sociology study during this online teacher's "downtime". So, notes written for the day, squeeze cheese (finally) out of my bangs (don't ask), calls taken, interviews done, everything I have spilled this morning cleaned up and schools taught, I can explain what I mean.
I've noticed a pattern with friends and family over the holiday season. I believe that people have an entirely different set of expectations for those that they love (or are related to - which may be mutually exclusive or not) over the holiday season.. beginning around mid December going a few days after New Years. I no longer, after this year, will spend my holidays with someone or people out of obligation. They sense it, you know it, and it isn't right. It isn't worth it.
I posted on Twitter once after reading a Medline study that people who travel most often tend to have difficulty maintaining intimacy. I counted myself among them; not so much after analyzing my ability to maintain intimacy but my frequency of travel and the stats used in the article. While I'm "home" for the holidays, a part of me cannot wait to get back to what has become the norm, and that is not being home - even though it leads to different types of discomforts (like noise).
Which leads this inquisitive mind to wonder what home is anyway really.. perhaps a few-day reconnection with a loved one; perhaps it's a place where your stuff is (a majority of it anyway); maybe it's a place your family is or maybe it's no where at all for some of us. Maybe we spend so much time trying to build a home that we really don't need one anyway and it's fruitless. I haven't figured out where my home is yet. I have a hypothesis but not one I will share here. Not now anyway.
So the pattern. There seem to be a few kind of friends. I've wondered what kind of friend I am over the holidays too.. and I see a little bit of myself in every one of these -- depending on who I am the friend I'm associating with. (confused yet?)
Non Holiday-Friends - Friends that, for the holiday part of the year, disappear and reappear again around mid January and want to go to Starbux as though nothing ever happened. I've concluded that they are either over worked at home and have no time (at least half my friends like this in my view struggle with this) or that they don't know what to say or what to do that is appropriate to them so they disappear and reappear. The other friend of course wonders why they never bothered to say hello or Merry Christmas; but that goes back to expectations.. who says a friend has to say that? Well, most of us.. not for social norming, just out of kindness. The other friend wonders if you even gave them a second thought. I analyze my friends who disappeared and know most of them didn't do so out of malice, they're socially inept. LOL
The over-"electronicized" friends. These are the friends that take the week or two they have off, and read everything, every blog, every twitter and every post and watch every interview you did in the last 350 days. That's cool - but then they apply it all to themselves in a narcissistic fashion. I know all about narcissism, I was married to it in the early 2000s. I have friends that drink too much and think everything you wrote about CEOs in their home state means you think they are losers. I delete their messages knowing that they will come around when they've put down the booze. The friends that think none of anything you wrote had anything to do with them, and it did - at least you were on their mind when you wrote it. Most of what we write, even in specific scholarly disciplines, has something to do with life in general. The friends that want you to explain what you wrote last January in context when you haven't a clue.. you're too busy focusing on your new posts. Maybe they do it out of boredom, or maybe they want to know "what you really thought of them" all year and are a bit paranoid. Chances are, it wasn't about them. I actually lost a friend this year because someone thought a twitter was about them - and it was anything but. If they are that sensitive, they have to go in the prior to 2009-friend-bucket anyway. Time to clean house, as they say.. and figure out who our real friends are. I don't believe in New Years resolutions, but this year I will have one, and that is mine.
Then there are the friends that go out of their way to do and be everything they can be for you. I believe we all have only 1 or 2 of these friends. They are amazing; they make you feel special out of the Love Language (great basic book) of "doing things". They are do'ers and big time. Every gift has meaning, every act has meaning. I believe this is nothing more than their mere love language; as long as they don't expect you to be able to do the same in return.
The gift-phobic friends - that freak out if you give them a gift. (remember these aren't mutually exclusive.. most of my friends have more than one of these elements!) They feel that their gift wont live up to yours.. admittedly I love to buy things for people. That is one of my love languages. I learned many years ago that most people don't enjoy it, and always always give with no expectation of anything in return. But these gift phobic people freak. I had a friend one year beg me never to buy him anything again. I haven't and that is my gift to him. He doesn't realize it's far more difficult than if I did buy him one. But that is the meaning of gift giving anyway perhaps!
There are of course just the regular friends .. we might have lunch a few days before Christmas, they call on Christmas, we say hello and wish one another a great day, and they are in our thoughts all day. We touch bases again the next day to see how things went... and we might see one another again right around the New Year. Most of my friends are rather accustomed to finding that time while I'm in California as my friends are here - NYC, while a big place, is quite hard to make real friends in.
I find it fascinating how electronics have changed the way and the acceptability of being distant.. in the mid 90s greeting cards printed from online services with a picture tried to personalize things; we seem to have come full circle to the most impersonal. This year the night before Christmas I cleaned out all of my texts and the next morning all 100 my phone is capable of handling were filled.... with Merry Christmas's ... about half the people I know and the other were not in my phone. I have no idea who they are. I appreciate the thought though! Then of course e-greetings.. sending e-cards instead of cards, entirely replacing cards.. using the recession or lack of time as an excuse. I don't know whether I believe it's a valid one, even as a technologist. There are those of us that combined technologies; emailing family and friends but also sending traditional cards (well my cards aren't exactly "traditional".. if you've received one, you know what I mean LOL). I think that texting and emailing and e-cards has made it far too easy for all of the types of friends above to make life easy on themselves.
Then there are the people that focus on a small handful of people in their lives and ignore the rest. They're very intimate with those that they're with over the holidays, but "forget about" everyone else - perhaps completely - I haven't figured that part out yet. They give as much as, in their mind, they can.. but my belief has always been "where there is a will, there is a way." I email that reply to everyone that asks how I started and built my career. It holds true in life in all aspects.
Given that last phrase.. it would be and is easy and accurate for my family and friends to say "well you didn't visit me and you were disconnected.. but where there is a will, there is a way.??" Yes, precisely. I believe that we have far too much pressure on us to see and be with people we really don't want to be with or to act and behave in a manner consistent with some fantasy rather than reality. This entire holiday season I've been highly preoccupied - with work, with relationship matters, with 'stuff' in my head, with reading, with trying to take my ground school test, with kicking my butt back into pre-1st-marriage shape (mission accomplished - a hard feat as I was 25 and quite athletic). I've chosen to spend it with people that understand I'm preoccupied, and therefore, probably not "acting normal" or behaving in a manner they would like. That is okay with them because they love me anyway and know I have a lot of 'stuff' happening that is life altering. So I didn't visit the people I might normally have visited, and spent time with ones that I could sit on their bed with them and share our most intimate feelings. That after all in my view is what the holidays should be about. Which basically requires zero expectations.
Dani
Monday, December 29, 2008
Friday, December 12, 2008
Bogus Bailouts Benefit Only Bozo’s
Bogus Bailouts Benefit Only Bozo’s
10 Reasons we should abolish bridge loans to bankruptcy, bailouts, and revoke TARP
I explained in another blog post tonight why I'm not so worried about unemployment and that is one of many cases I can make for why we should not bail out the auto makers. It is vital to keep perspective in context for this to all make sense.
A friend of mine recently said that the greater the obstacles (I'm paraphrasing and taking this a bit out of context but I believe it applies) to some outcome the greater its value or its “wonderfulness” if or when an outcome is achieved. I have a reflex tendency to disagree with most people (for a few minutes anyway), but applied to business, he may well be right. Obviously my initial knee jerk reaction has changed, since it’s the introduction to this blog. Not everything can come down to costs and benefits – sometimes you just do what you want to do and hope all the cards fall into the right places because you follow something deeper within than cost-benefit analysis. Business owners all over the country are using their gut to make the tough decisions and make it through this market turmoil without bailouts, handouts, and without the pathetic demoralizing groveling required to get either.
The bailout bunnies and bridge loan to bankruptcy buddies have the opposite view; they believe that the only way to “save” companies is with intervention due to the “drastic times” theory – drastic times call for drastic measures. Drastic measures must come from within the free market enterprise and innovation within private companies, not moron politicians or specific Treasury Department people with very precise histories quite used to throwing money at a problem to make it go away.
So why won’t the bailouts work?
1. There is an inherent sense of self worth brought on by how hard you fought for something. When you fight for something, it has value to you. If your business means something, you fight for it. I would hypothesize that these automaker CEOs and bank CEOs etc etc don’t care about their companies; they care only about their own asses. Small business companies aren’t groveling; they care.
When we bail out companies, people want their share of the pie, too – at least those with no self dignity.
2. There is moral hazard in bailing out companies and it trickles all the way down to the individual level. I'm starting to see this more in housing as well. People who CAN afford their mortgage just fine becoming delinquent on purpose, throwing their pride, moral obligations (and credit scores) out the window simply because the banks will negotiate with them only if they are late. Cry me a river, you people are pathetic. Quite a bit of my housing portfolio is “upside down”. I took risky loans to leverage the heck out of properties that lost some value. I get how that feels. Tough shit. Markets go up, markets go down. You have to work harder to compensate and eventually, you’ll be fine.
We are also seeing people buy and bail, turn in their keys screwing their neighbors’ values when they can afford their payments just fine.
3. There can be NO REAL success without the opportunity to fail. The universe if created in such a way where every action has an equal and opposite reaction; every “thing” has an ‘opposite’. If you are only given an option to succeed, what pleasure is there in doing so? If you don’t risk something, then when you get it all, it’s value is nothing. I believe that is why those born with a silver spoon value their wealth far less than those who worked their butt off for it.
4. Quite simply, bailouts don’t work. Banks hoard the cash “just in case” and to meet reserves, BofA takes $25 billion it didn’t even ask for and then lays off 35,000 workers anyway, auto makers need the money to sustain themselves “just for a couple of months” with salaries that make them unable to compete and union bosses unwilling to sacrifice anything to make it work (why should they? Their leaders wont sacrifice either – see blog about unemployment!) and companies will continue the exact same business practices that they had before the bailout that got them into deep water to begin with. Ultimately, they’ll either go bankrupt – or need another bailout.
5. This isn’t company’s money or earned revenue; it is the tax payer’s money. There is little to no oversight, and who would trust government oversight anyway? Taxpayers have shown in polls overwhelmingly (including in the case of Detroit) that they prefer NOT bailing out companies. It’s our money, listen to us.
6. We must revoke TARP immediately. This is a nightmare. The White House and Treasury think they can bend the rules and do whatever they want with the money. Well unfortunately our Congressional leaders granted them the power to do so. Now they need to take it back. Last I checked survival of the fittest is still at play in all aspects of life – business included.
7. Perhaps most importantly of all, useless companies and companies that cannot adapt to change eat up the resources that good, viable companies need to survive. This includes human capital, motivation, grant money, small business loans and so on. The faster the bad eggs get out of the system, the quicker we will be on the road to recovery. People are left with little capital to start up businesses to innovate if they’re paying more in taxes and banks won’t lend to pay for idiots that didn’t run their businesses well and think it’s the tax payer’s job to bail them out.
8. Markets correct, but only if they are allowed to. We, unfortunately, need a significant recession – the 9th I believe since the end of the last World War, to get ourselves out of this. And we will – if government does its job and stays out. You don’t give a guy trying to quit smoking a pack of cigarettes and expect him to quit.
9. Bailouts are creating new scams. Don’t believe me? Read up on the new FHA scams that look all too much like the Subprime scams of the 2004-2006 era; even the same mortgage brokers are re-filing with the FHA to sell mortgages – it’s the same fraud with a new name (all including faking W2s and so on.. just like we saw in the last setup for disaster) and the government is granting these people licenses after revoking them for fraud the first time. If this continues, in 5 years it will cost taxpayers about $500 billion in yet another round of FHA-backed foreclosures.
10. Under pinning the capital markets is a deflation in house prices. Throwing money at companies won’t fix housing – once prices in housing stabilize, banks can value assets, and we will be on a road to recovery. For now, banks will pass their worst loans onto the tax payers; not loans that will recoup money for Americans.
10 Reasons we should abolish bridge loans to bankruptcy, bailouts, and revoke TARP
I explained in another blog post tonight why I'm not so worried about unemployment and that is one of many cases I can make for why we should not bail out the auto makers. It is vital to keep perspective in context for this to all make sense.
A friend of mine recently said that the greater the obstacles (I'm paraphrasing and taking this a bit out of context but I believe it applies) to some outcome the greater its value or its “wonderfulness” if or when an outcome is achieved. I have a reflex tendency to disagree with most people (for a few minutes anyway), but applied to business, he may well be right. Obviously my initial knee jerk reaction has changed, since it’s the introduction to this blog. Not everything can come down to costs and benefits – sometimes you just do what you want to do and hope all the cards fall into the right places because you follow something deeper within than cost-benefit analysis. Business owners all over the country are using their gut to make the tough decisions and make it through this market turmoil without bailouts, handouts, and without the pathetic demoralizing groveling required to get either.
The bailout bunnies and bridge loan to bankruptcy buddies have the opposite view; they believe that the only way to “save” companies is with intervention due to the “drastic times” theory – drastic times call for drastic measures. Drastic measures must come from within the free market enterprise and innovation within private companies, not moron politicians or specific Treasury Department people with very precise histories quite used to throwing money at a problem to make it go away.
So why won’t the bailouts work?
1. There is an inherent sense of self worth brought on by how hard you fought for something. When you fight for something, it has value to you. If your business means something, you fight for it. I would hypothesize that these automaker CEOs and bank CEOs etc etc don’t care about their companies; they care only about their own asses. Small business companies aren’t groveling; they care.
When we bail out companies, people want their share of the pie, too – at least those with no self dignity.
2. There is moral hazard in bailing out companies and it trickles all the way down to the individual level. I'm starting to see this more in housing as well. People who CAN afford their mortgage just fine becoming delinquent on purpose, throwing their pride, moral obligations (and credit scores) out the window simply because the banks will negotiate with them only if they are late. Cry me a river, you people are pathetic. Quite a bit of my housing portfolio is “upside down”. I took risky loans to leverage the heck out of properties that lost some value. I get how that feels. Tough shit. Markets go up, markets go down. You have to work harder to compensate and eventually, you’ll be fine.
We are also seeing people buy and bail, turn in their keys screwing their neighbors’ values when they can afford their payments just fine.
3. There can be NO REAL success without the opportunity to fail. The universe if created in such a way where every action has an equal and opposite reaction; every “thing” has an ‘opposite’. If you are only given an option to succeed, what pleasure is there in doing so? If you don’t risk something, then when you get it all, it’s value is nothing. I believe that is why those born with a silver spoon value their wealth far less than those who worked their butt off for it.
4. Quite simply, bailouts don’t work. Banks hoard the cash “just in case” and to meet reserves, BofA takes $25 billion it didn’t even ask for and then lays off 35,000 workers anyway, auto makers need the money to sustain themselves “just for a couple of months” with salaries that make them unable to compete and union bosses unwilling to sacrifice anything to make it work (why should they? Their leaders wont sacrifice either – see blog about unemployment!) and companies will continue the exact same business practices that they had before the bailout that got them into deep water to begin with. Ultimately, they’ll either go bankrupt – or need another bailout.
5. This isn’t company’s money or earned revenue; it is the tax payer’s money. There is little to no oversight, and who would trust government oversight anyway? Taxpayers have shown in polls overwhelmingly (including in the case of Detroit) that they prefer NOT bailing out companies. It’s our money, listen to us.
6. We must revoke TARP immediately. This is a nightmare. The White House and Treasury think they can bend the rules and do whatever they want with the money. Well unfortunately our Congressional leaders granted them the power to do so. Now they need to take it back. Last I checked survival of the fittest is still at play in all aspects of life – business included.
7. Perhaps most importantly of all, useless companies and companies that cannot adapt to change eat up the resources that good, viable companies need to survive. This includes human capital, motivation, grant money, small business loans and so on. The faster the bad eggs get out of the system, the quicker we will be on the road to recovery. People are left with little capital to start up businesses to innovate if they’re paying more in taxes and banks won’t lend to pay for idiots that didn’t run their businesses well and think it’s the tax payer’s job to bail them out.
8. Markets correct, but only if they are allowed to. We, unfortunately, need a significant recession – the 9th I believe since the end of the last World War, to get ourselves out of this. And we will – if government does its job and stays out. You don’t give a guy trying to quit smoking a pack of cigarettes and expect him to quit.
9. Bailouts are creating new scams. Don’t believe me? Read up on the new FHA scams that look all too much like the Subprime scams of the 2004-2006 era; even the same mortgage brokers are re-filing with the FHA to sell mortgages – it’s the same fraud with a new name (all including faking W2s and so on.. just like we saw in the last setup for disaster) and the government is granting these people licenses after revoking them for fraud the first time. If this continues, in 5 years it will cost taxpayers about $500 billion in yet another round of FHA-backed foreclosures.
10. Under pinning the capital markets is a deflation in house prices. Throwing money at companies won’t fix housing – once prices in housing stabilize, banks can value assets, and we will be on a road to recovery. For now, banks will pass their worst loans onto the tax payers; not loans that will recoup money for Americans.
Layoffs and Unemployment Can Be the Best Thing to Happen to You.
Layoffs and Unemployment Can Be the Best Thing to Happen to You.
The United Auto Workers (united for what? I wont answer that.. just yet) today said that there are “enough sane people” left in Washington that they are certain the government will eventually loan GM money. Let’s hope there are enough sane people left in Washington that they convince the White House not to override the Senate’s decision today. After all, we are supposed to still be a democracy.
Now before I get the email bashers saying that I'm anti-worker and don’t care about people being unemployed, let me just stop you right there. You’re right. But not for the reason you might think. Being unemployed can lead to great things.
The reason is simple – I’ve been unemployed - both intentionally, unintentionally, and “unintentionally intentional”. The world doesn’t end. Life can in fact actually be better than it was before. Anxiety can (and probably will) set in; but more learning takes place in the end and doors open IF you create opportunity. In fact, I believe it’s the only way that many people, myself at one point included, realize the truth – that working for someone else isn’t all it’s cracked up to be and the only real job security any of us have is that which we make for ourselves. Even if you do want to continue working for “the man”, it might just be time to get a kick in the pants and do something different, re-educate, re-tool, learn a new trade or work for someone different anyway – fear is an amazing motivator. The only way for me to explain why the bailouts wont work and why people shouldn’t be afraid of being fired, laid off or anything else that happens along the way is to describe my own experience, so that is what I will do.
My “long” years in Corporate America (by my definition, they were far too long) were spent making someone else rich so I could pay my rent/credit card bills/car payments and eventually mortgage(s). I was left unintentionally unemployed during my very first venture into the Corporate world from “safe academia” (an on ground institution with a dual faculty appointment in a place where no one ever got fired) into a company that was exciting, fun, and just far enough away from the place I grew up. I had a blast for a bit with a terrific boss that taught me many lessons; a fantastic team I led who were easily all ten-plus years my elders (and loved open debate), and a jackass “President” that knew absolutely nothing about running a business. Starting to sound familiar? I cannot compare him to Big 3 CEOs because I don’t know those guys (although it is ironic they’re all from Michigan). But I knew this guy – Ken Kozminski – looking back I realize just how stupid this coward was. He ran a company called IPC Communication Services; I ran the Information Tech Departments in the Western and Eastern regions. I was their only IT Director to ever create a profit center out of IT (and bring on new clients for them because of our IT capabilities), and I had a blast doing it. Unfortunately, IPC was a part of the Journal Communications Family, and Mr. Ken was rather protected and insulated from his stupid decisions by the good ole’ boys network. He was a wuss (I'm being kind), which is worse than stupid. He came in, flew under the radar, laid off the entire Western Region because of poor management decisions dating back years, and flew back to Michigan before the shit hit the fan. He was the epitome of what I never wanted to be. In the 60 or so days my respected boss and I had there, we spent it finding our team member’s jobs – and ourselves jobs – and we moved on. I took some of my team with me to the next position; he took some with him – we were ALL better off – although demoralized and anxious. The way in which he threw those hard working people under the bus, many of whom would have given anything to save that business (and tried), was pathetic and disgraceful. But what happened for us all? Forced change led to a better job; some people even met their future spouses at their next company -- and forced change will lead to something better for everyone else if they give their job search their all and put everything they have into it – including the auto workers. No one is protected from dumb management, or greedy union bosses. Unemployment here was definitely unintentional.
My disdain for stupidity (and lack of leadership) grew just a bit; and I was still very young, working on a master’s degree. I began working for a homebuilder in Southern California and landed a great job with a lot of flexibility and another absolutely fantastic boss. I was quite content there; I had a fabulous team, did a ton of traveling, had the support of the best in the business, and integrated at least one new business every 30 days somewhere around the country – life was good (this was during the heyday of the building boom). Until - one day, that boss became the fall guy for a pathetic Chief Financial Officer, and I watched him go down with only his dignity remaining. His team literally mourned; they trusted him and it was now our job to explain why the rest of the team was safe – and keep morale up. In this business, the CFO owed a favor to the CMO, and in came – another idiot – a friend of his – to take over the role of CIO. This idiot wanted to make changes – primarily to my team – while he knew nothing about technology (he was an accountant). He needed to lighten the financial load, and what better way to do it than by cutting the people out that keep the systems running? Ultimately I told him where to stick his stupid ideas, and so the attitude began to develop just a bit further. I wasn’t going to watch this happen again and I flat out refused to make the changes he wanted. With a few weeks I found myself out on technicalities just like my former boss, and nearly everyone on my team got “laid off” anyway. This was the unintentional unemployment thing yet again – somehow I thought he might think it was cool for someone to stick up for what they believed. Boy was I wrong. He wanted his wishes turned into orders, which I refused to do.
Now I was really sick and tired of watching the little guy get pummeled. Thinking at this point I’d chosen the wrong field and should have been an attorney, I was thankful to begin my next new job with a masters and the beginning of my PhD (making progress on at least one front)– moving on yet again to another business. It was okay – because life goes on. I had a mortgage to pay and did everything (to quote a CFO I interviewed with) short of “parachuting into the offices of the companies I wanted to work for” to move on – and most importantly – up. This is what all of those facing unemployment today will have to do in this economy. Parachute into the companies you want to work for… or better yet… give them a one finger salute.
So I moved on.. again…– great job – well respected company that, purely out of the respect I have for a few people that still work there, I won’t name (today anyway – same goes for the aforementioned). Good boss, we made great headway.. then in came another moron about 8 months after I was hired who had no clue how to run a business – in fact I found out later he lied about most of what was on his resume. He tried to damage mostly all the little guys (my theory is it made him feel good) – particularly those that he felt threatened by – and particularly a “woman who wouldn’t get a PhD on ‘his watch’” – I did the same thing and told him where to put his ideas, only with a lot more attitude (all 5’4” of it), and within weeks, had a severance package. This was unintentional intentional unemployment – an oxymoron I know – but I had already known the risks of saying “absolutely no you are not doing this” to a jerk on a power trip, so I knew what I’d be facing (along with several other personal things occurring simultaneously that took my anxiety to another level). Trust me, you can survive unemployment. But.. the team was spared, because I told human resources what this guy was doing, what he had really done in his former life (along with the associated proof), and he was promptly fired. I was glad to be given the title of martyr by several team members that had their jobs saved as a result.
I took my resume to yet another company, CB Richard Ellis in Newport Beach. I enjoyed a short year there, made friends for life, and worked for a person with a good heart. He wasn’t always the best manager and couldn’t make a decision to save his life, but his heart was golden and that was what I needed.. something to remind me that not all people suck at the core in business.
After a year or so at CB (with a perfectly fine job), I decided to become unemployed again – only this time, intentionally. I had started a business that was gaining in strength (starting it part time while working in corporate America, something I recommend to entrepreneurs) and I wanted to give it more of myself. About 3 years ago, I realized I didn’t need Corporate America – I needed my own sense of self worth and the knowledge that no one could screw me anymore. Several of my colleagues did the same thing. I believe we are all happier now.
What’s the point of all of this? The UAW workers will be fine. The millions of people (if in fact those aren’t just scare tactics) that will lose their jobs if the auto companies go under will be fine. Those unemployed today will be fine. Many of them may just need the kick in the pants to do something else and may find it was the best thing that ever happened to them. Every time I’ve been fired, unintentionally or intentionally, it led to far greater, better things. The key is to not be afraid to risk it all. No one taught me this, but I know it is true.. from experience, and from consulting with so many people in this situation that got through it and wound up better at the end. Life can be better if you take the road your brain fears most.
The United Auto Workers (united for what? I wont answer that.. just yet) today said that there are “enough sane people” left in Washington that they are certain the government will eventually loan GM money. Let’s hope there are enough sane people left in Washington that they convince the White House not to override the Senate’s decision today. After all, we are supposed to still be a democracy.
Now before I get the email bashers saying that I'm anti-worker and don’t care about people being unemployed, let me just stop you right there. You’re right. But not for the reason you might think. Being unemployed can lead to great things.
The reason is simple – I’ve been unemployed - both intentionally, unintentionally, and “unintentionally intentional”. The world doesn’t end. Life can in fact actually be better than it was before. Anxiety can (and probably will) set in; but more learning takes place in the end and doors open IF you create opportunity. In fact, I believe it’s the only way that many people, myself at one point included, realize the truth – that working for someone else isn’t all it’s cracked up to be and the only real job security any of us have is that which we make for ourselves. Even if you do want to continue working for “the man”, it might just be time to get a kick in the pants and do something different, re-educate, re-tool, learn a new trade or work for someone different anyway – fear is an amazing motivator. The only way for me to explain why the bailouts wont work and why people shouldn’t be afraid of being fired, laid off or anything else that happens along the way is to describe my own experience, so that is what I will do.
My “long” years in Corporate America (by my definition, they were far too long) were spent making someone else rich so I could pay my rent/credit card bills/car payments and eventually mortgage(s). I was left unintentionally unemployed during my very first venture into the Corporate world from “safe academia” (an on ground institution with a dual faculty appointment in a place where no one ever got fired) into a company that was exciting, fun, and just far enough away from the place I grew up. I had a blast for a bit with a terrific boss that taught me many lessons; a fantastic team I led who were easily all ten-plus years my elders (and loved open debate), and a jackass “President” that knew absolutely nothing about running a business. Starting to sound familiar? I cannot compare him to Big 3 CEOs because I don’t know those guys (although it is ironic they’re all from Michigan). But I knew this guy – Ken Kozminski – looking back I realize just how stupid this coward was. He ran a company called IPC Communication Services; I ran the Information Tech Departments in the Western and Eastern regions. I was their only IT Director to ever create a profit center out of IT (and bring on new clients for them because of our IT capabilities), and I had a blast doing it. Unfortunately, IPC was a part of the Journal Communications Family, and Mr. Ken was rather protected and insulated from his stupid decisions by the good ole’ boys network. He was a wuss (I'm being kind), which is worse than stupid. He came in, flew under the radar, laid off the entire Western Region because of poor management decisions dating back years, and flew back to Michigan before the shit hit the fan. He was the epitome of what I never wanted to be. In the 60 or so days my respected boss and I had there, we spent it finding our team member’s jobs – and ourselves jobs – and we moved on. I took some of my team with me to the next position; he took some with him – we were ALL better off – although demoralized and anxious. The way in which he threw those hard working people under the bus, many of whom would have given anything to save that business (and tried), was pathetic and disgraceful. But what happened for us all? Forced change led to a better job; some people even met their future spouses at their next company -- and forced change will lead to something better for everyone else if they give their job search their all and put everything they have into it – including the auto workers. No one is protected from dumb management, or greedy union bosses. Unemployment here was definitely unintentional.
My disdain for stupidity (and lack of leadership) grew just a bit; and I was still very young, working on a master’s degree. I began working for a homebuilder in Southern California and landed a great job with a lot of flexibility and another absolutely fantastic boss. I was quite content there; I had a fabulous team, did a ton of traveling, had the support of the best in the business, and integrated at least one new business every 30 days somewhere around the country – life was good (this was during the heyday of the building boom). Until - one day, that boss became the fall guy for a pathetic Chief Financial Officer, and I watched him go down with only his dignity remaining. His team literally mourned; they trusted him and it was now our job to explain why the rest of the team was safe – and keep morale up. In this business, the CFO owed a favor to the CMO, and in came – another idiot – a friend of his – to take over the role of CIO. This idiot wanted to make changes – primarily to my team – while he knew nothing about technology (he was an accountant). He needed to lighten the financial load, and what better way to do it than by cutting the people out that keep the systems running? Ultimately I told him where to stick his stupid ideas, and so the attitude began to develop just a bit further. I wasn’t going to watch this happen again and I flat out refused to make the changes he wanted. With a few weeks I found myself out on technicalities just like my former boss, and nearly everyone on my team got “laid off” anyway. This was the unintentional unemployment thing yet again – somehow I thought he might think it was cool for someone to stick up for what they believed. Boy was I wrong. He wanted his wishes turned into orders, which I refused to do.
Now I was really sick and tired of watching the little guy get pummeled. Thinking at this point I’d chosen the wrong field and should have been an attorney, I was thankful to begin my next new job with a masters and the beginning of my PhD (making progress on at least one front)– moving on yet again to another business. It was okay – because life goes on. I had a mortgage to pay and did everything (to quote a CFO I interviewed with) short of “parachuting into the offices of the companies I wanted to work for” to move on – and most importantly – up. This is what all of those facing unemployment today will have to do in this economy. Parachute into the companies you want to work for… or better yet… give them a one finger salute.
So I moved on.. again…– great job – well respected company that, purely out of the respect I have for a few people that still work there, I won’t name (today anyway – same goes for the aforementioned). Good boss, we made great headway.. then in came another moron about 8 months after I was hired who had no clue how to run a business – in fact I found out later he lied about most of what was on his resume. He tried to damage mostly all the little guys (my theory is it made him feel good) – particularly those that he felt threatened by – and particularly a “woman who wouldn’t get a PhD on ‘his watch’” – I did the same thing and told him where to put his ideas, only with a lot more attitude (all 5’4” of it), and within weeks, had a severance package. This was unintentional intentional unemployment – an oxymoron I know – but I had already known the risks of saying “absolutely no you are not doing this” to a jerk on a power trip, so I knew what I’d be facing (along with several other personal things occurring simultaneously that took my anxiety to another level). Trust me, you can survive unemployment. But.. the team was spared, because I told human resources what this guy was doing, what he had really done in his former life (along with the associated proof), and he was promptly fired. I was glad to be given the title of martyr by several team members that had their jobs saved as a result.
I took my resume to yet another company, CB Richard Ellis in Newport Beach. I enjoyed a short year there, made friends for life, and worked for a person with a good heart. He wasn’t always the best manager and couldn’t make a decision to save his life, but his heart was golden and that was what I needed.. something to remind me that not all people suck at the core in business.
After a year or so at CB (with a perfectly fine job), I decided to become unemployed again – only this time, intentionally. I had started a business that was gaining in strength (starting it part time while working in corporate America, something I recommend to entrepreneurs) and I wanted to give it more of myself. About 3 years ago, I realized I didn’t need Corporate America – I needed my own sense of self worth and the knowledge that no one could screw me anymore. Several of my colleagues did the same thing. I believe we are all happier now.
What’s the point of all of this? The UAW workers will be fine. The millions of people (if in fact those aren’t just scare tactics) that will lose their jobs if the auto companies go under will be fine. Those unemployed today will be fine. Many of them may just need the kick in the pants to do something else and may find it was the best thing that ever happened to them. Every time I’ve been fired, unintentionally or intentionally, it led to far greater, better things. The key is to not be afraid to risk it all. No one taught me this, but I know it is true.. from experience, and from consulting with so many people in this situation that got through it and wound up better at the end. Life can be better if you take the road your brain fears most.
Sunday, December 7, 2008
Desire, Drive, Economics, Materialism and Generational Learning
Have you written a piece that really should be separated out into many short excerpts or blogs; you do so only to combine them again; realizing there is too much overlap to continue in that method? That is this post. :) A friend recently said that most movies and songs will always come back to where they started (I believe to keep people comfortable - the happy ending story); this blog post will certainly not invoke those thoughts. Ive never found full circle to be reality unless the individual, the character, the writer never really wanted to move beyond current existence to begin with. If that's the case, why write the play, the song, or the movie? Yeah yeah...
I've spent the weekend thinking about many things; among them, desire, human drive, intervention, interaction, economics, materialism, the human brain, "starters" versus maintainers and their gap; homeostasis or the psychological desire to maintain status quo to reduce tension, equilibrium points, internal stability, core responses, and the brain - particularly the fear many have of neuroscience ... that understanding it at its core might document what many suspect.. that humans have less free will than we think and are a product of our environment and our minds' perception of it rather than free thinking, useful, pragmatic organisms.
I am convinced these are all highly related to one another. It might take me years to figure out precisely how but we all have to start somewhere. ;) Perhaps this thought process started with the many friends, acquaintainces and business partners I have that seem to be terrific "starters"; they love creating something new. Yet several months into it, the desire to complete the project, book, company, relationship etc and drive to do the same seem to be disconnected. Some argue that it is because homeostasis (or in economics, equilibrium) is boring - so although any objects natural state is to try to expend the least amount of energy (and thereby stay at equilibrium), sometimes the desire and excitement of something new creates enough momentum and energy to move beyond this point into actual action. As something becomes the norm, it, too, is equilibrium and no longer requires the energy expense. This explains many things in life I believe.
Yet how do we explain then how objects that are in motion (baseballs included), including the human energy element, tend to slow over time.. beyond the physics involved. It would seem natural that the further along we as humans get into something and the more of a challenge it becomes (growing is hard), the more we'd continue to persevere until the mission is accomplished; yet the opposite seems to happen in real life. This is explained through physics and quick studies of the brain, but it seems illogical and a bit maladaptive to successful strategy of any sorts.
Many people put just as much energy into staying at equilibrium as they do getting out of equilibrium. I have many friends that do their best to maintain status quo and pour their heart and soul into it; and friends that seem to get themselves into situations just to create disequilibrium to get some sort of temporary satisfaction and high, only to go back to equilibrium when things become a bit too hectic or, to use a non scientific word, scary for them. Humans have too many motivations to begin to try to evaluate why this is the case; but it does lead to a great question - who should those who try to create disequilibrium but want to constantly maintain that status pair up with in business, in relationships, and in learning? It is rare to find someone that likes disequilibrium to the point that their version of homeostasis is constant change. I find them a lot in technology because change is the only constant; yet many fight it even in that field.
Constant change is where all the fun happens. There are few people I believe in this world that can make no change into fun constant change.
But this brings up so many other important points for our markets, our friendships, materialism and so on. Many people are great at beginning new things; not so great at maintaining them. Few possess the ability to do both and do them both with drive and passion. Zizek describes many theories and demystifies some; complicates others; debunks many more. He notes the Parallax View in a book titled the same as shifting perspectives between two points. In this particular case, because the individuals or the situation are on exact opposite sides of precisely the same phenomenon - they can never meet and therefore will never do more than be connected; they will never share space or find a point of mediation. But what I find more fascinating is the parallax nature of the "gap" between ones' drive, and ones' desire. If an individual is attempting to do something rather mundane but can never accomplish it, his attitude about that act often changes to the point where he finds excitement and even pleasure in repeating the same failed task! This is when we shift from drive to desire, to desire to drive.
Ultimately drive will then become its own strategy to profit from each failed attempt to reach that particular goal that is now merely desire. When looked at from a variety of perspectives, we can see this in failed businesses; in businesses that continue to operate without success; in personal relationships that are beyond homeostasis to flat out boring yet they are maintained - perhaps merely for the incremental profit (in this case it can be physical, mental, or literally, dollars) gained from repeating that same failed task. This is all fascinating stuff.
I believe that in good businesses, good relationships, in good friendships, in good partnerships, in good models and in good entrepreneurial activities there must be inherent tension. This can take all sorts of forms, but without it our natural tendency to maintain equilibrium is fulfilled; and life takes on a new meaning - going back to what the brain originally "knows" as intuition rather than intention, and not expanding to the point of drive + desire simultaneously. What a great anything this would be if we could combine the two and keep it there!
Greene and Cohen speculated once that neuroscience will toss out the window all intuitive sense of free will and we will be left realizing that very little of what we do is actually intentional; but more or less the product of outside influences - and that which is outside of our control. That has drastic implications; from the way we treat those that commit serious crimes to the way in which we run our businesses. They speculate that individuals are rarely consciously aware of what is driving their own behavior; and that we are not rational creatures. If the brain truly is the most complex living structure in the universe, then perhaps one day (well after I'm no longer living on this planet) we will understand the impact of this theory.
But I think more interestingly is the parallax gap which indicates (albeit using two entirely different areas of study) that the confrontation of two closely linked perspectives can never find neutral ground; if this is the case, we can apply it to markets and probably more importantly, to people (since ultimately they really make up markets). Perhaps then the effects of materialism and what drives our economy is nothing more than a fetish, an ordinary object that fills an empty place within any sort of structure - and perhaps relationships, businesses, and partnerships are nothing more than this either.
Maybe what we need to do (anyone sure how?) is re-establish what learning is - being the ability to become aware of the disturbing sides of something we knew existed all along - or perhaps even to acknowledge it if we are aware of it. That takes courage beyond what most have, and perhaps an ability beyond what our human minds can do out of self preservation. Maybe the ability to do this though would solve economic woes; calm nerves, and create stronger relationships.
If people always take the path of least energy, and markets always take the path of least energy, then the maximum level of achievement and perhaps even happiness can never be achieved - unless happiness is defined as homeostasis for its own sake. From stress often comes the greatest reward if you're willing to take it risk. Entrepreneurs all over America are trying to figure out what level of stress (and risk) they can handle. Automakers are trying to determine how to solve 3 month long stress to come back and revisit the humiliation again - but they are at a point of parallax gap - they will simply perform the same failed task until the need to do that task becomes their soul driven purpose - probably not so consciously either.
Right now an entire generation is learning about markets; that they don't just go up - they can go down, too... and they're not always "fixable" with more than time and government intervention. More likely in my view, they will go up because of the desire of those very few who wish for something beyond equilibrium - to take risk - and try again in a new type of marketplace. A market not afraid of money written in other languages or the people that speak them. This is what will rebuild our future economy over time... the risk takers, the people that don't want homeostasis, and those that aren't afraid of the neuroscience component that perhaps they're doing it for reasons beyond those that they can explain or will even attempt to.
Fear is bondage that keeps people from achieving great things and being incredibly happy because they're wired to do or be a certain thing for a group of people, an individual, or a business - often out of environmental impacts they cannot explain.
While they are perhaps unaware of the grip that the fear is having on their lives (I meet many of them - hedge fund managers, investors, traders and so on particularly in NYC) ... an entire generation is learning that over-leveraging can be a bad thing (present company included) albeit profitable in many instances.
I wrote in a previous blog called Feminism's Defeat... about my grandfather and how many times I've replaced my couch in the time he has reupholstered his. Our economy is being reupholstered; the fundamentals are there because the fundamentals aren't CPI or GDP or GNP or anything economists discuss in three minute segments on Fox News. The fundamentals are the people that encompass the desire to continue to push beyond what is comfortable for what is great and without boundary - courting all that is new to see what is possible. Once enough people do this, we will see recovery.
I've spent the weekend thinking about many things; among them, desire, human drive, intervention, interaction, economics, materialism, the human brain, "starters" versus maintainers and their gap; homeostasis or the psychological desire to maintain status quo to reduce tension, equilibrium points, internal stability, core responses, and the brain - particularly the fear many have of neuroscience ... that understanding it at its core might document what many suspect.. that humans have less free will than we think and are a product of our environment and our minds' perception of it rather than free thinking, useful, pragmatic organisms.
I am convinced these are all highly related to one another. It might take me years to figure out precisely how but we all have to start somewhere. ;) Perhaps this thought process started with the many friends, acquaintainces and business partners I have that seem to be terrific "starters"; they love creating something new. Yet several months into it, the desire to complete the project, book, company, relationship etc and drive to do the same seem to be disconnected. Some argue that it is because homeostasis (or in economics, equilibrium) is boring - so although any objects natural state is to try to expend the least amount of energy (and thereby stay at equilibrium), sometimes the desire and excitement of something new creates enough momentum and energy to move beyond this point into actual action. As something becomes the norm, it, too, is equilibrium and no longer requires the energy expense. This explains many things in life I believe.
Yet how do we explain then how objects that are in motion (baseballs included), including the human energy element, tend to slow over time.. beyond the physics involved. It would seem natural that the further along we as humans get into something and the more of a challenge it becomes (growing is hard), the more we'd continue to persevere until the mission is accomplished; yet the opposite seems to happen in real life. This is explained through physics and quick studies of the brain, but it seems illogical and a bit maladaptive to successful strategy of any sorts.
Many people put just as much energy into staying at equilibrium as they do getting out of equilibrium. I have many friends that do their best to maintain status quo and pour their heart and soul into it; and friends that seem to get themselves into situations just to create disequilibrium to get some sort of temporary satisfaction and high, only to go back to equilibrium when things become a bit too hectic or, to use a non scientific word, scary for them. Humans have too many motivations to begin to try to evaluate why this is the case; but it does lead to a great question - who should those who try to create disequilibrium but want to constantly maintain that status pair up with in business, in relationships, and in learning? It is rare to find someone that likes disequilibrium to the point that their version of homeostasis is constant change. I find them a lot in technology because change is the only constant; yet many fight it even in that field.
Constant change is where all the fun happens. There are few people I believe in this world that can make no change into fun constant change.
But this brings up so many other important points for our markets, our friendships, materialism and so on. Many people are great at beginning new things; not so great at maintaining them. Few possess the ability to do both and do them both with drive and passion. Zizek describes many theories and demystifies some; complicates others; debunks many more. He notes the Parallax View in a book titled the same as shifting perspectives between two points. In this particular case, because the individuals or the situation are on exact opposite sides of precisely the same phenomenon - they can never meet and therefore will never do more than be connected; they will never share space or find a point of mediation. But what I find more fascinating is the parallax nature of the "gap" between ones' drive, and ones' desire. If an individual is attempting to do something rather mundane but can never accomplish it, his attitude about that act often changes to the point where he finds excitement and even pleasure in repeating the same failed task! This is when we shift from drive to desire, to desire to drive.
Ultimately drive will then become its own strategy to profit from each failed attempt to reach that particular goal that is now merely desire. When looked at from a variety of perspectives, we can see this in failed businesses; in businesses that continue to operate without success; in personal relationships that are beyond homeostasis to flat out boring yet they are maintained - perhaps merely for the incremental profit (in this case it can be physical, mental, or literally, dollars) gained from repeating that same failed task. This is all fascinating stuff.
I believe that in good businesses, good relationships, in good friendships, in good partnerships, in good models and in good entrepreneurial activities there must be inherent tension. This can take all sorts of forms, but without it our natural tendency to maintain equilibrium is fulfilled; and life takes on a new meaning - going back to what the brain originally "knows" as intuition rather than intention, and not expanding to the point of drive + desire simultaneously. What a great anything this would be if we could combine the two and keep it there!
Greene and Cohen speculated once that neuroscience will toss out the window all intuitive sense of free will and we will be left realizing that very little of what we do is actually intentional; but more or less the product of outside influences - and that which is outside of our control. That has drastic implications; from the way we treat those that commit serious crimes to the way in which we run our businesses. They speculate that individuals are rarely consciously aware of what is driving their own behavior; and that we are not rational creatures. If the brain truly is the most complex living structure in the universe, then perhaps one day (well after I'm no longer living on this planet) we will understand the impact of this theory.
But I think more interestingly is the parallax gap which indicates (albeit using two entirely different areas of study) that the confrontation of two closely linked perspectives can never find neutral ground; if this is the case, we can apply it to markets and probably more importantly, to people (since ultimately they really make up markets). Perhaps then the effects of materialism and what drives our economy is nothing more than a fetish, an ordinary object that fills an empty place within any sort of structure - and perhaps relationships, businesses, and partnerships are nothing more than this either.
Maybe what we need to do (anyone sure how?) is re-establish what learning is - being the ability to become aware of the disturbing sides of something we knew existed all along - or perhaps even to acknowledge it if we are aware of it. That takes courage beyond what most have, and perhaps an ability beyond what our human minds can do out of self preservation. Maybe the ability to do this though would solve economic woes; calm nerves, and create stronger relationships.
If people always take the path of least energy, and markets always take the path of least energy, then the maximum level of achievement and perhaps even happiness can never be achieved - unless happiness is defined as homeostasis for its own sake. From stress often comes the greatest reward if you're willing to take it risk. Entrepreneurs all over America are trying to figure out what level of stress (and risk) they can handle. Automakers are trying to determine how to solve 3 month long stress to come back and revisit the humiliation again - but they are at a point of parallax gap - they will simply perform the same failed task until the need to do that task becomes their soul driven purpose - probably not so consciously either.
Right now an entire generation is learning about markets; that they don't just go up - they can go down, too... and they're not always "fixable" with more than time and government intervention. More likely in my view, they will go up because of the desire of those very few who wish for something beyond equilibrium - to take risk - and try again in a new type of marketplace. A market not afraid of money written in other languages or the people that speak them. This is what will rebuild our future economy over time... the risk takers, the people that don't want homeostasis, and those that aren't afraid of the neuroscience component that perhaps they're doing it for reasons beyond those that they can explain or will even attempt to.
Fear is bondage that keeps people from achieving great things and being incredibly happy because they're wired to do or be a certain thing for a group of people, an individual, or a business - often out of environmental impacts they cannot explain.
While they are perhaps unaware of the grip that the fear is having on their lives (I meet many of them - hedge fund managers, investors, traders and so on particularly in NYC) ... an entire generation is learning that over-leveraging can be a bad thing (present company included) albeit profitable in many instances.
I wrote in a previous blog called Feminism's Defeat... about my grandfather and how many times I've replaced my couch in the time he has reupholstered his. Our economy is being reupholstered; the fundamentals are there because the fundamentals aren't CPI or GDP or GNP or anything economists discuss in three minute segments on Fox News. The fundamentals are the people that encompass the desire to continue to push beyond what is comfortable for what is great and without boundary - courting all that is new to see what is possible. Once enough people do this, we will see recovery.
Saturday, November 29, 2008
Neural Networks Explaining Econ & Human Emotion?
In the process of taking my mind off of too many things to count and needing a few minutes break from work, a student post about neural networks and artificial intelligence got me thinking about its application to today's marketplace. Everyone seems to be trying to come up with a theory to explain what is happening today; I am convinced none exists. It is a series of mistakes, blunders, oversimplifications, overcomplications and greed that got us where we are today, but perhaps it is the use of information technology - and not in the systems sense - that could get us out of it.
Technologists have long studied artificial neural networks, or ANNs.. these are often referred to just as neural nets. This is one of those terms that students are often baffled by; but its really simple when you break it down. We can use many analogies; the brain, IT, math.. If we look at the brain, we have a series of neurons.. these aren't the artificial type however. They connect information through synapse connection; in IT this is referred to as a connectionist approach. But the key about this system is that it is highly adaptive; information is constantly exchanged and new networks are created.
Neural nets are used in statistical data tools too; particular those creating models or trying to explain what isn't explained by a regression equation. We can use them to find patterns, to find relationships - perhaps even from an emotional perspective, to explain relationships. Some nodes in this network are those which are inputs... from a human perspective we have all needs on the hierarchy.. from a neurology perspective we have the senses, and so on. They also consist of those nodes which are hidden; in emotions perhaps intentionally; in neuroscience perhaps because they are nothing more than transmitters to create a synapse connection. Then we have outputs; the results of the input nodes and the hidden nodes; this works much the way a network does. In neural nets though, interestingly, only those hidden nodes produce output - one could say that only our hidden motives or internal needs are those that produce change. In a capital market, one could say that this is yet another proof of Smith's Invisible Hand; with human motivation moving markets.
One thing is certain and that is every discipline uses neural nets in their own way but I don't see it being used in economics much; or in emotions and emotional intelligence (EI) analysis much either. We do generally agree that it is taking the simple to create a complex pattern of behavior; the simple human need to be loved to create a complex set of outcomes that is often unexplainable; the brains need for food to take drastic or creative measures to get it; the markets need for profit to make uninformed and albeit seemingly irrational decisions to achieve it.
I was telling my students earlier that one goal of scientists in neural network study is to not necessarily make the network adaptive.. it does a pretty good job of that on its own. But, to be able to measure the weight of each connection to either modify it to produce an intended effect, or weigh its value. This can be used for a variety of purposes; but perhaps explaining emotion and economics (and the connection of the two even) is of most interest to me. If we can modify the inputs or if we can identify the hidden nodes, then perhaps we can explain and even give value to the outputs; this in turn could potentially predict when markets are overreacting, overrationalizing, or even overcorrecting. We can then tweak the value of the output, which would in turn create a new method of explaining what economists try to dumb down to supply and demand.
Another fascinating element is bio neural nets... with biological NNs, each of the nodes functions in units but in parallel; each node appears to understand the motivation and the hidden nodes and then react accordingly. Tasks are clearly distinguished; each node knows what it needs to do and its relationship to other nodes. Perhaps just as in the human brain, this is missing in our marketplace. Perhaps the goal to keep the market competitive has removed the ability for nodes to work in parallel, thus preventing an intended purposeful and intelligent outcome.
Scientists like systems that adapt; after all if we can tweak the input we can tweak the output. But what seems largely missing in most disciplines is the hidden node, which if we are to follow the original intent of neural nets it is to identify and explain the impact of inputs on the hidden nodes, since they are the only direct impact on the output nodes.
Therefore unless we understand the not so obvious hidden motivations of individuals and markets, we can never surely predict an outcome.
I like the idea that the adaptive NNs are capable of learning and understanding, and therefore making a choice by a learned algorithm. Many try to manipulate this; but it doesn't take into consideration those darn pesky hidden nodes which drive neuropsychology in all aspects. I am cautiously optimistic in believing it may drive our economy too; but I just need to figure out exactly how. Large data sets are needed, and parallel implementations are a must - but this requires an imperfect market as opposed to a tangible perfect one; which economists don't seem to enjoy very much.
Nonetheless, I think this is interesting stuff indeed.... maybe we need Recurrent Networks with bidirectional data flow to really understand this market...and right now we have unidirectional inputs without any transparency as to the hidden node.
Fun stuff.
Dani
Technologists have long studied artificial neural networks, or ANNs.. these are often referred to just as neural nets. This is one of those terms that students are often baffled by; but its really simple when you break it down. We can use many analogies; the brain, IT, math.. If we look at the brain, we have a series of neurons.. these aren't the artificial type however. They connect information through synapse connection; in IT this is referred to as a connectionist approach. But the key about this system is that it is highly adaptive; information is constantly exchanged and new networks are created.
Neural nets are used in statistical data tools too; particular those creating models or trying to explain what isn't explained by a regression equation. We can use them to find patterns, to find relationships - perhaps even from an emotional perspective, to explain relationships. Some nodes in this network are those which are inputs... from a human perspective we have all needs on the hierarchy.. from a neurology perspective we have the senses, and so on. They also consist of those nodes which are hidden; in emotions perhaps intentionally; in neuroscience perhaps because they are nothing more than transmitters to create a synapse connection. Then we have outputs; the results of the input nodes and the hidden nodes; this works much the way a network does. In neural nets though, interestingly, only those hidden nodes produce output - one could say that only our hidden motives or internal needs are those that produce change. In a capital market, one could say that this is yet another proof of Smith's Invisible Hand; with human motivation moving markets.
One thing is certain and that is every discipline uses neural nets in their own way but I don't see it being used in economics much; or in emotions and emotional intelligence (EI) analysis much either. We do generally agree that it is taking the simple to create a complex pattern of behavior; the simple human need to be loved to create a complex set of outcomes that is often unexplainable; the brains need for food to take drastic or creative measures to get it; the markets need for profit to make uninformed and albeit seemingly irrational decisions to achieve it.
I was telling my students earlier that one goal of scientists in neural network study is to not necessarily make the network adaptive.. it does a pretty good job of that on its own. But, to be able to measure the weight of each connection to either modify it to produce an intended effect, or weigh its value. This can be used for a variety of purposes; but perhaps explaining emotion and economics (and the connection of the two even) is of most interest to me. If we can modify the inputs or if we can identify the hidden nodes, then perhaps we can explain and even give value to the outputs; this in turn could potentially predict when markets are overreacting, overrationalizing, or even overcorrecting. We can then tweak the value of the output, which would in turn create a new method of explaining what economists try to dumb down to supply and demand.
Another fascinating element is bio neural nets... with biological NNs, each of the nodes functions in units but in parallel; each node appears to understand the motivation and the hidden nodes and then react accordingly. Tasks are clearly distinguished; each node knows what it needs to do and its relationship to other nodes. Perhaps just as in the human brain, this is missing in our marketplace. Perhaps the goal to keep the market competitive has removed the ability for nodes to work in parallel, thus preventing an intended purposeful and intelligent outcome.
Scientists like systems that adapt; after all if we can tweak the input we can tweak the output. But what seems largely missing in most disciplines is the hidden node, which if we are to follow the original intent of neural nets it is to identify and explain the impact of inputs on the hidden nodes, since they are the only direct impact on the output nodes.
Therefore unless we understand the not so obvious hidden motivations of individuals and markets, we can never surely predict an outcome.
I like the idea that the adaptive NNs are capable of learning and understanding, and therefore making a choice by a learned algorithm. Many try to manipulate this; but it doesn't take into consideration those darn pesky hidden nodes which drive neuropsychology in all aspects. I am cautiously optimistic in believing it may drive our economy too; but I just need to figure out exactly how. Large data sets are needed, and parallel implementations are a must - but this requires an imperfect market as opposed to a tangible perfect one; which economists don't seem to enjoy very much.
Nonetheless, I think this is interesting stuff indeed.... maybe we need Recurrent Networks with bidirectional data flow to really understand this market...and right now we have unidirectional inputs without any transparency as to the hidden node.
Fun stuff.
Dani
Thursday, November 20, 2008
Assault on the American Dream?
Anyone listening to the media that has been working hard to pay their obligations, build a life, send their kids to college, pay for healthcare, and prioritize their own debts is probably frustrated at the constant bailouts, greediness of corporations that seem to think there is no room for them to fail and that they are all too big to allow them to file for Chapter 11.. and it can be rather depressing to listen to this.. billions after billions of OUR money being thrown at people who have proven that even in good times, they cannot manage jack. Newsflash - no one is too big or too small to fail, because one of the wonderful things we reap when we are successful is weathering the storms. Without the ability to fail, there is no ability to be successful. Not in the true sense of the word.
I think most annoying is the auto industry and the constant whining, which seems to sound much like "but mommy, it is the teacher's fault that I got a bad grade.." particularly when I hear "we were doing fine until the credit crunch." HUH? Really? You were? According to WHOM? No, you weren't. This is actually called "lying under oath". You were creating cars people didn't want and some were embarrassed to drive, routinely made fun of by Gen Yers (and some X'ers), and even my favorite relatives in the 80+ year category bought their first "foreign" cars with in the last decade.. a big deal to this generation of loyal consumers.. mostly due to quality issues. I heard my grandfather literaly say it was tough to not buy American, but he loves his Toyota. (and still loved me when I backed it into a parked car)
Did it REALLY start just recently when people couldnt "get a loan"? I dont think so. Polls show that most American's aren't that gullible either.. over 90% dont want the bailout consistently regardless of how bad the pollsters design the questions.. so why don't we see Congress telling these guys to take their jets back to Detroit and go suck their thumbs like the crybabies that they are?
Well that is the nature of today's market it seems.. where everyone is too big to fail.. but where do we draw the line? Why is Petsmart reporting greater earnings today and double digit increases over previous quarters? Does it just mean we care more for our pets than our cars? Maybe because they are more reliable than the Big 3's autos.. but another digression. Maybe we love our pets more. Seems we found room on the credit cards for designer pet food, but a Ford with a dash that feels like cardboard? uh uh. There is a big surprise.
What really, really irks me is this notion that the American dream is being assaulted. Yes, we are in some financial hot water - anyone with 1/4 of a brain left knows this. It isn't anything we haven't faced before. It isn't anything we won't face again. It is nothing like what our elders faced in the 20s and 30s. My grandfather has thankfully shared in much detail the pains he and his family went through, and how that shaped who he is today. There is much to learn from the frugality of that generation even once they started making good money. My grandfather has had his couch reupholstered several times, while I keep buying new ones. But that isn't really the point of this either. I do think it is vital for my generation to see this- to see that not all will go well, and you have to get creative and plow through, using whatever ounce of energy you have left. Don't give up, and don't ask for freebies. Where is the fun.. or the dignity, in that? I am sure many of you would agree; you'd rather lose everything than make it on someone else's dime.
The point is that the American dream.. the desire in the heart and soul of Americans to build something for themselves - to not make someone else rich and to work for themselves and their families.. whether as full time contractors choosing who they do work for or outright businesses supplying products and services to those who share our great fate as Americans.. that soul hasn't died.
It won't die because it is in the heart of many of us that is unwavering - in a sense built-in to many who desire the ability to have no maximum capability. We live, even today, in a time where the sky is the limit - how amazing and fabulous is THAT?!
Sometimes .. in times like this when we see billions being thrown at industries that are burning through $6bn or more every month, it is easy to lose our way or for a bit .. even despair.. after all, we work our butts off to make the next mortgage payment or move up or get our kids to a better school (well for those of you that have them!)
I dont hear great Americans saying "but what about me." Instead, they shake their head .. disbelieving how pathetic this situation has become, which started with granting one individual the ability to spend $700bn of our dollars with little to no oversight. What did we expect would happen?
American entrepreneurs are the lifeblood of this economy. The Big 3 might employ a couple million workers, but that is nothing compared to what small businesses employ. Small and medium sized business owners all over this country are revalidating and realigning their core competencies, bringing in new consumers, going global online, checking their numbers, making plans for the future should consumer spending continue on a downward spiral, and making corrections in business plans to weather the storm because they know no one will give them a handout.
My bet is, even if someone did offer them one, they wouldn't want it anyway. The best part about being an entrepreneur is the ability to design ones' own destiny. This cannot be taken away by stupid acts of politics. Another great part about being an entrepreneur is the ability to fail, should you choose or should life or something else get in the way. Failing sucks. I know that first hand. But the best lessons are learned in failure. What lessons are we teaching children who watch big companies fail and get a hand from US? What are we telling entrepreneurs that really do provide a ton of jobs when we just bail out the big ones because.. well.. they are big.. and an afford the Congressional lobbyists? The best feeling is to wake up (or lay awake) one morning or night and say "damn, I just realized..." and voila, you have the epiphany.. and you won't repeat the mistake.
You learn from those mistakes.. pick yourself up, dust yourself off, and start over again.. all because you have the HEART to do it. That dedication and perserverence and heart felt soul of the spirit cannot be bought, even for $25 billion.
I think most annoying is the auto industry and the constant whining, which seems to sound much like "but mommy, it is the teacher's fault that I got a bad grade.." particularly when I hear "we were doing fine until the credit crunch." HUH? Really? You were? According to WHOM? No, you weren't. This is actually called "lying under oath". You were creating cars people didn't want and some were embarrassed to drive, routinely made fun of by Gen Yers (and some X'ers), and even my favorite relatives in the 80+ year category bought their first "foreign" cars with in the last decade.. a big deal to this generation of loyal consumers.. mostly due to quality issues. I heard my grandfather literaly say it was tough to not buy American, but he loves his Toyota. (and still loved me when I backed it into a parked car)
Did it REALLY start just recently when people couldnt "get a loan"? I dont think so. Polls show that most American's aren't that gullible either.. over 90% dont want the bailout consistently regardless of how bad the pollsters design the questions.. so why don't we see Congress telling these guys to take their jets back to Detroit and go suck their thumbs like the crybabies that they are?
Well that is the nature of today's market it seems.. where everyone is too big to fail.. but where do we draw the line? Why is Petsmart reporting greater earnings today and double digit increases over previous quarters? Does it just mean we care more for our pets than our cars? Maybe because they are more reliable than the Big 3's autos.. but another digression. Maybe we love our pets more. Seems we found room on the credit cards for designer pet food, but a Ford with a dash that feels like cardboard? uh uh. There is a big surprise.
What really, really irks me is this notion that the American dream is being assaulted. Yes, we are in some financial hot water - anyone with 1/4 of a brain left knows this. It isn't anything we haven't faced before. It isn't anything we won't face again. It is nothing like what our elders faced in the 20s and 30s. My grandfather has thankfully shared in much detail the pains he and his family went through, and how that shaped who he is today. There is much to learn from the frugality of that generation even once they started making good money. My grandfather has had his couch reupholstered several times, while I keep buying new ones. But that isn't really the point of this either. I do think it is vital for my generation to see this- to see that not all will go well, and you have to get creative and plow through, using whatever ounce of energy you have left. Don't give up, and don't ask for freebies. Where is the fun.. or the dignity, in that? I am sure many of you would agree; you'd rather lose everything than make it on someone else's dime.
The point is that the American dream.. the desire in the heart and soul of Americans to build something for themselves - to not make someone else rich and to work for themselves and their families.. whether as full time contractors choosing who they do work for or outright businesses supplying products and services to those who share our great fate as Americans.. that soul hasn't died.
It won't die because it is in the heart of many of us that is unwavering - in a sense built-in to many who desire the ability to have no maximum capability. We live, even today, in a time where the sky is the limit - how amazing and fabulous is THAT?!
Sometimes .. in times like this when we see billions being thrown at industries that are burning through $6bn or more every month, it is easy to lose our way or for a bit .. even despair.. after all, we work our butts off to make the next mortgage payment or move up or get our kids to a better school (well for those of you that have them!)
I dont hear great Americans saying "but what about me." Instead, they shake their head .. disbelieving how pathetic this situation has become, which started with granting one individual the ability to spend $700bn of our dollars with little to no oversight. What did we expect would happen?
American entrepreneurs are the lifeblood of this economy. The Big 3 might employ a couple million workers, but that is nothing compared to what small businesses employ. Small and medium sized business owners all over this country are revalidating and realigning their core competencies, bringing in new consumers, going global online, checking their numbers, making plans for the future should consumer spending continue on a downward spiral, and making corrections in business plans to weather the storm because they know no one will give them a handout.
My bet is, even if someone did offer them one, they wouldn't want it anyway. The best part about being an entrepreneur is the ability to design ones' own destiny. This cannot be taken away by stupid acts of politics. Another great part about being an entrepreneur is the ability to fail, should you choose or should life or something else get in the way. Failing sucks. I know that first hand. But the best lessons are learned in failure. What lessons are we teaching children who watch big companies fail and get a hand from US? What are we telling entrepreneurs that really do provide a ton of jobs when we just bail out the big ones because.. well.. they are big.. and an afford the Congressional lobbyists? The best feeling is to wake up (or lay awake) one morning or night and say "damn, I just realized..." and voila, you have the epiphany.. and you won't repeat the mistake.
You learn from those mistakes.. pick yourself up, dust yourself off, and start over again.. all because you have the HEART to do it. That dedication and perserverence and heart felt soul of the spirit cannot be bought, even for $25 billion.
Thursday, November 13, 2008
Feminism's Defeat
I rarely write with little purpose or specific intent. I write books, write letters to friends when time permits, and write story ideas for the media - my take on current events they can use in their daily segments. I write to my students thousands of emails and posts in discussion forums daily. My blogs are mostly informative.. Lacking specific passion or personal divulgence; focused on creating something educational or with the intent to inform a group of people based on questions I'm being asked en-masse... From my students, military men and women asking questions or a way to bulk answer emails that come from hits in the media.. So I find myself writing with a different purpose and perhaps passion tonight..and just maybe this is one of those things you don't put on your blog and write your name to - signed and delivered. But if it's honest and a reflection of yourself, why not? After all isn't that the intent of social networking; of mostly Gen X'ers and Gen Y'ers developing an understanding of one another beyond what we see on MySpace or email? A media host and very savvy business woman shares quite a bit of herself in a blog, so perhaps Ill give it a try tonight.
So here it goes. I spend a lot of time in the air. Not nearly as much time as some of my good friends or those clocking millions of miles per year. I just hit the couple-of-million club on American - just enough to ensure I wont have to pay for the Admirals Club anymore or be put on an upgrade "list". Until recently, the in-air time has been spent writing books; no internet connection. With AA's new GoGo on 767s that has changed, so I can work non stop… in fact I'm typing this and posting it while flying now - I am still shocked they beat Virgin America too it (disappointed actually). Ill have to find new time to write books because flights are out now unless I intentionally take one without internet access.
One of the other things I do on flights when I travel alone (which is over 98% of the time by my most recent calculations) is seat jump… moving around often several times so couples can be together.. Tonight at least after the third seat jump (I usually initiate them when I see "stranded" couples unable to cuddle at 38000 feet), the gentleman was kind enough to move my bag. Ah, I digress.
So.. What to do now besides stay on top of email.. I cannot say "catch up" because I don't go to bed with anything in the inbox, so I'm never really 'behind'. I read. A lot Everything from Medical Science journals (a passion beyond belief) to Pharmaceutical Journals to Economics articles/books/magazines and … perhaps most intriguing these days, political 'stuff'. I believe I'm more interested in the aftermath than I was the election - and I was one of those freakos holding parties for McCain.
Yes I realize the election is over, and no this isn't a blog whining about how "my" candidate didn't win (although he didn't). I find solace in the fact that we're about to enter Hooverville (NOT - on the solace, yes on the Hooverville).. Okay, whatever. We will get past it and get over it (did I just say that?) and have another shot at reality in 4 years. However - both parties are highly highly screwed up and spending is out of control.. I don’t see that changing despite who the president is. Now the balance of power is a concern.. But that is another story for another day. People are too worried about the wrong things so our country will continue down its screwed up path for the foreseeable future. I promise to post if I see that changing. Somehow I think hell will freeze over first. Or at least in 3 years. Or insomnia will take my life and I wont know or care anyway! :)
What I find most ludicrous.. Enraging actually.. Is the anti-feminist feminist. So, to explain a bit, here is my demographic and background. (Funny, I was just telling one of those "highly traveled" friends how one should never admit their demographic on air.. But this is hardly on air now is it - it may be worse!)…
I grew up in a time where the women before me had already fought for my right to vote. The women before me shattered a "few" (billion?) glass ceilings. I was fairly blind to the entire concept of "restriction by gender" when I became a Director of Technology for a world-renowned university and medical center while still a teenager. Sheer motivation, study and perseverance - and asking for what I wanted - landed me where I belonged. I hardly felt undo pressure by anyone to not be anything I wanted, though they did tell me to make the suits a bit more conservative (some things never change).
My parents encouraged me (through no fault of their own - it was their "way" passed down from generations) to settle down and have a family; my grandfather to stay unmarried, stay safe, and go get an education (thanks Gramps!) I had my own way and followed it, probably much to my family's dismay to this day. As I climbed the corporate ladder while running a business on the side (a fairly successful one actually) and going to school full time while learning how to fly and do a bunch of other things I had no business doing, I had no feelings whatsoever of "I wonder what will happen because I'm a woman."
In fact the very first time I experienced it was at a famous private real estate company in Newport Beach, when a new "boss" yelled in my face, a few inches from nose, "no woman working for me will have a PhD". I stood on my tip-toes to get in his face right back and asked if he was "finished". He stormed off obviously frustrated. He subsequently found a bogus reason to "lay me off", and I subsequently found reason to have an amazing severance package. But, again, I digress.
So I started thinking… maybe there is something to this woman thing - being held back by it. But.. It's always felt invigorating.. Powerful.. In its own sense, its own right.. An "anything is possible" feeling.. And I've felt that since childhood despite various people telling me otherwise. Nothing shook it. I was in every sense of the word a nerd.. I did every nerdy thing possible in high school.. Debate team, political clubs.. Science clubs, math clubs, spending my lunchtime playing TradeWars on BBSs on 300 baud modems against all of my male friends (think about the show Big Bang Theory.. That was me.. And not the attractive hot chick working at Friday's)...all the things nerdy girls do.
I grew up a nerd.. Not proud of it at the time, but darn proud of it now. Let's just say I wasn't the one that people were asking to hang out at their parties. In fact I don’t think I went to one party until I was 24. And that was the last one for about 3 years. (yeah yeah…) I had no time in college; I worked my butt off, and worked a full time day job, learning about office politics, leadership, how to manage people 30 years my senior, and eventually running a team and a growing company simultaneously while working on the masters degree. I've had relatively little room for procrastinators in my life.. Very little if any respect for excuses because we have the greatest abilities in this country to do anything we want and we usually hold ourselves back - and many have died for that freedom we have. We all have the ability to change anything if we want it badly enough. As I said, no excuses. My family grew up on the lower income scale - okay exceedingly low - this is something that I'm also very proud of. They stuck to their guns and still managed. Most people think I grew up with a silver spoon in my mouth; nothing could be further from the truth. I'm always amazed at the immediate perceptions of others. I have great respect for individual histories and where someone came from to get to where they are… it's almost never, ever what it seems.
In my family, my father was a democrat and my mother a republican. I don’t think either of them followed politics really; and we didn't have cable so they only heard what hey saw on All My Children and the news on occasion after the Simpsons. I heard them talking about cancelling out one another's' votes.. It was a joke in our family, certainly nothing serious. My father instilled the obligation to vote because others died for that right.
Yes, I am a social conservative on abortion, on not randomly modifying our constitution… and more to the point, I am no less a woman for believing these things. But I also care most about fiscal policy because it can impact how we can progress in life -- the government takes our money - I want them to be accountable with it. If they wont be, I want it back. I can use it in better places than they can. Ill pay to have the 7 feet of road paved outside my home and call it a day.
A bit of oversimplification, but you get the point. Some how growing up even in my teens I got this strong sense of "Republicanism" - not the type that cares what two consenting adults do alone at home - in fact I am a conservative Republican with a bit of an edge (yes, that is the "new Republican".. My demographic..) but the type that cared about being diligent and making life what you want it to be.
I don’t mean the social conservatism that some pundits are saying is the death of the Republican party. I don't know how it occurred but I equated Democrat with "you don’t have to work hard and can piggyback off of others". Perhaps the freebies and handouts the democrats seemed to favor didn't resonate with me - I wanted no handout - I wanted and want to work my own behind off to get anything or anywhere - I have a hard time even letting anyone else buy dinner. I had an opportunity at an easier life full of exciting things with a very handsome suitor and - after several dates - I cut the relationship off because he was too wealthy, and I'd never feel that I made it on my own. I have since learned a bit more balance..we are all interconnected humans and we need each other .. But for support and friendship and an exchange of passions - not for all the reasons he thought he could provide.
So throughout this election cycle, I've watched with great interest the path of Sarah Palin. I remember sitting in bed in California after a long night of insomnia.. Actually all of my insomnia nights are long. I was listening to McCain's VP pick on Fox News. "holy…. What a BRILLIANT move." I had read about her before in the Weekly Standard. Yes I thought.. she appeals to the regular folks, and she's a Christian conservative with values that fought the beauracracy and the male dominance and even her own party.. I don’t like hunting or killing animals or cooking or the things she seems to enjoy doing, but I respect her for shattering so many barriers. I thought it sealed the deal (boy was I wrong).. A kick-butt woman in my view. And so it began, conversations with my friends (most of whom, believe it or not, are liberals to a very hard core degree.. But liberals that usually respect that others can have convincingly intelligent opinions that don’t necessary agree with their own).
But something was different this time. There was this "spewness" of raw anger and hate towards Palin, which made me want to defend her more.. I always, always defend the underdog. I hate watching people get beat up. But it wasn't from men.. They made reasonable comments like "she's unqualified" or she's "not ready to be commander in chief should something happen to McCain". Agreed here. But.. What about the HATE coming from women? I remember a specific quote from Wendy Doniger, a self-proclaimed feminist at the University of Chicago. Her words? "Her greatest hypocrisy is her pretense that she is a woman." So all this time I thought sexism wasn't going to hold us all back anymore.. Until.. A woman, a "feminist", indicated that she was in fact not a woman.. I assumed this is based on her choice to have a Down Syndrome baby (how dare we not kill a baby) and her decision to go to church (and believe in God too - has anyone crunched the numbers of the statistical possibilities that we are created by randomness?? I have! It was a high school project!) and raise a family of 5 (6 if you include the hubby) and lead a life chalk full of hard decisions, fighting tooth and nail against establishment, while still maintaining her role as a mother and a wife. Wow.
I must admit, she was a bit inspirational in this regard. One of the many reasons I don’t have children is a decision to put my career first despite harsh criticism from mostly liberal people (ironically enough). Replicating my DNA has been low on the totem pole of priorities. That may change in the future, but given my "demo" this is where I’m at in life. But here was a woman that actually seems to be managing it all just fine.. And doing great. Perhaps it is possible after all.
What gets me though is why, after all the years of fighting like crazy to shatter glass ceilings, so-called "liberal" women who are all about women being able to make a free choice only respect the choices if they are the same choices they would make. Doniger wasn't the only one - I heard this from many, many people. "Sarah isn't a woman". "Palin has no values." (aka not MY values) That isn't feminism and it isn't liberalism.. It is narcissism. If you are a liberal woman you can value a woman's right to choose - but you must also respect her choice if it's pro LIFE.
Perhaps that is why I've not ever considered myself a feminist - I am all for women's rights - but all women's rights not just some. Women and men aren't equal. Men in general are better at some things; women are better in general at other things - with exceptions to the rules of course. Maybe this makes me not a woman too. In that case Ill take it. This is all about chemistry and biology and not discrimination. I must say that this cycle has made me reflect back on my career.. And it was almost always, always the women who hurt one another.. Who didn't help, who did the damage to each other and one another's' reputation.. Maybe that is why I always enjoyed managing and working for men. The men hung in there, helped one another.. NS and helped me, the woman, too. But not because I am a woman - because I am a competent individual that happens to be a woman.
Everything was competition with women. Perhaps it's Sarah-envy; perhaps it's the mere thought of someone with a different view in a position of power - but women - if we hit another glass ceiling, you can thank the liberal feminists for it. This is the first time I've seen such wide spread efforts against women. Now I know what all those chicks before me fought so hard for. Thanks "guys". :)
So here it goes. I spend a lot of time in the air. Not nearly as much time as some of my good friends or those clocking millions of miles per year. I just hit the couple-of-million club on American - just enough to ensure I wont have to pay for the Admirals Club anymore or be put on an upgrade "list". Until recently, the in-air time has been spent writing books; no internet connection. With AA's new GoGo on 767s that has changed, so I can work non stop… in fact I'm typing this and posting it while flying now - I am still shocked they beat Virgin America too it (disappointed actually). Ill have to find new time to write books because flights are out now unless I intentionally take one without internet access.
One of the other things I do on flights when I travel alone (which is over 98% of the time by my most recent calculations) is seat jump… moving around often several times so couples can be together.. Tonight at least after the third seat jump (I usually initiate them when I see "stranded" couples unable to cuddle at 38000 feet), the gentleman was kind enough to move my bag. Ah, I digress.
So.. What to do now besides stay on top of email.. I cannot say "catch up" because I don't go to bed with anything in the inbox, so I'm never really 'behind'. I read. A lot Everything from Medical Science journals (a passion beyond belief) to Pharmaceutical Journals to Economics articles/books/magazines and … perhaps most intriguing these days, political 'stuff'. I believe I'm more interested in the aftermath than I was the election - and I was one of those freakos holding parties for McCain.
Yes I realize the election is over, and no this isn't a blog whining about how "my" candidate didn't win (although he didn't). I find solace in the fact that we're about to enter Hooverville (NOT - on the solace, yes on the Hooverville).. Okay, whatever. We will get past it and get over it (did I just say that?) and have another shot at reality in 4 years. However - both parties are highly highly screwed up and spending is out of control.. I don’t see that changing despite who the president is. Now the balance of power is a concern.. But that is another story for another day. People are too worried about the wrong things so our country will continue down its screwed up path for the foreseeable future. I promise to post if I see that changing. Somehow I think hell will freeze over first. Or at least in 3 years. Or insomnia will take my life and I wont know or care anyway! :)
What I find most ludicrous.. Enraging actually.. Is the anti-feminist feminist. So, to explain a bit, here is my demographic and background. (Funny, I was just telling one of those "highly traveled" friends how one should never admit their demographic on air.. But this is hardly on air now is it - it may be worse!)…
I grew up in a time where the women before me had already fought for my right to vote. The women before me shattered a "few" (billion?) glass ceilings. I was fairly blind to the entire concept of "restriction by gender" when I became a Director of Technology for a world-renowned university and medical center while still a teenager. Sheer motivation, study and perseverance - and asking for what I wanted - landed me where I belonged. I hardly felt undo pressure by anyone to not be anything I wanted, though they did tell me to make the suits a bit more conservative (some things never change).
My parents encouraged me (through no fault of their own - it was their "way" passed down from generations) to settle down and have a family; my grandfather to stay unmarried, stay safe, and go get an education (thanks Gramps!) I had my own way and followed it, probably much to my family's dismay to this day. As I climbed the corporate ladder while running a business on the side (a fairly successful one actually) and going to school full time while learning how to fly and do a bunch of other things I had no business doing, I had no feelings whatsoever of "I wonder what will happen because I'm a woman."
In fact the very first time I experienced it was at a famous private real estate company in Newport Beach, when a new "boss" yelled in my face, a few inches from nose, "no woman working for me will have a PhD". I stood on my tip-toes to get in his face right back and asked if he was "finished". He stormed off obviously frustrated. He subsequently found a bogus reason to "lay me off", and I subsequently found reason to have an amazing severance package. But, again, I digress.
So I started thinking… maybe there is something to this woman thing - being held back by it. But.. It's always felt invigorating.. Powerful.. In its own sense, its own right.. An "anything is possible" feeling.. And I've felt that since childhood despite various people telling me otherwise. Nothing shook it. I was in every sense of the word a nerd.. I did every nerdy thing possible in high school.. Debate team, political clubs.. Science clubs, math clubs, spending my lunchtime playing TradeWars on BBSs on 300 baud modems against all of my male friends (think about the show Big Bang Theory.. That was me.. And not the attractive hot chick working at Friday's)...all the things nerdy girls do.
I grew up a nerd.. Not proud of it at the time, but darn proud of it now. Let's just say I wasn't the one that people were asking to hang out at their parties. In fact I don’t think I went to one party until I was 24. And that was the last one for about 3 years. (yeah yeah…) I had no time in college; I worked my butt off, and worked a full time day job, learning about office politics, leadership, how to manage people 30 years my senior, and eventually running a team and a growing company simultaneously while working on the masters degree. I've had relatively little room for procrastinators in my life.. Very little if any respect for excuses because we have the greatest abilities in this country to do anything we want and we usually hold ourselves back - and many have died for that freedom we have. We all have the ability to change anything if we want it badly enough. As I said, no excuses. My family grew up on the lower income scale - okay exceedingly low - this is something that I'm also very proud of. They stuck to their guns and still managed. Most people think I grew up with a silver spoon in my mouth; nothing could be further from the truth. I'm always amazed at the immediate perceptions of others. I have great respect for individual histories and where someone came from to get to where they are… it's almost never, ever what it seems.
In my family, my father was a democrat and my mother a republican. I don’t think either of them followed politics really; and we didn't have cable so they only heard what hey saw on All My Children and the news on occasion after the Simpsons. I heard them talking about cancelling out one another's' votes.. It was a joke in our family, certainly nothing serious. My father instilled the obligation to vote because others died for that right.
Yes, I am a social conservative on abortion, on not randomly modifying our constitution… and more to the point, I am no less a woman for believing these things. But I also care most about fiscal policy because it can impact how we can progress in life -- the government takes our money - I want them to be accountable with it. If they wont be, I want it back. I can use it in better places than they can. Ill pay to have the 7 feet of road paved outside my home and call it a day.
A bit of oversimplification, but you get the point. Some how growing up even in my teens I got this strong sense of "Republicanism" - not the type that cares what two consenting adults do alone at home - in fact I am a conservative Republican with a bit of an edge (yes, that is the "new Republican".. My demographic..) but the type that cared about being diligent and making life what you want it to be.
I don’t mean the social conservatism that some pundits are saying is the death of the Republican party. I don't know how it occurred but I equated Democrat with "you don’t have to work hard and can piggyback off of others". Perhaps the freebies and handouts the democrats seemed to favor didn't resonate with me - I wanted no handout - I wanted and want to work my own behind off to get anything or anywhere - I have a hard time even letting anyone else buy dinner. I had an opportunity at an easier life full of exciting things with a very handsome suitor and - after several dates - I cut the relationship off because he was too wealthy, and I'd never feel that I made it on my own. I have since learned a bit more balance..we are all interconnected humans and we need each other .. But for support and friendship and an exchange of passions - not for all the reasons he thought he could provide.
So throughout this election cycle, I've watched with great interest the path of Sarah Palin. I remember sitting in bed in California after a long night of insomnia.. Actually all of my insomnia nights are long. I was listening to McCain's VP pick on Fox News. "holy…. What a BRILLIANT move." I had read about her before in the Weekly Standard. Yes I thought.. she appeals to the regular folks, and she's a Christian conservative with values that fought the beauracracy and the male dominance and even her own party.. I don’t like hunting or killing animals or cooking or the things she seems to enjoy doing, but I respect her for shattering so many barriers. I thought it sealed the deal (boy was I wrong).. A kick-butt woman in my view. And so it began, conversations with my friends (most of whom, believe it or not, are liberals to a very hard core degree.. But liberals that usually respect that others can have convincingly intelligent opinions that don’t necessary agree with their own).
But something was different this time. There was this "spewness" of raw anger and hate towards Palin, which made me want to defend her more.. I always, always defend the underdog. I hate watching people get beat up. But it wasn't from men.. They made reasonable comments like "she's unqualified" or she's "not ready to be commander in chief should something happen to McCain". Agreed here. But.. What about the HATE coming from women? I remember a specific quote from Wendy Doniger, a self-proclaimed feminist at the University of Chicago. Her words? "Her greatest hypocrisy is her pretense that she is a woman." So all this time I thought sexism wasn't going to hold us all back anymore.. Until.. A woman, a "feminist", indicated that she was in fact not a woman.. I assumed this is based on her choice to have a Down Syndrome baby (how dare we not kill a baby) and her decision to go to church (and believe in God too - has anyone crunched the numbers of the statistical possibilities that we are created by randomness?? I have! It was a high school project!) and raise a family of 5 (6 if you include the hubby) and lead a life chalk full of hard decisions, fighting tooth and nail against establishment, while still maintaining her role as a mother and a wife. Wow.
I must admit, she was a bit inspirational in this regard. One of the many reasons I don’t have children is a decision to put my career first despite harsh criticism from mostly liberal people (ironically enough). Replicating my DNA has been low on the totem pole of priorities. That may change in the future, but given my "demo" this is where I’m at in life. But here was a woman that actually seems to be managing it all just fine.. And doing great. Perhaps it is possible after all.
What gets me though is why, after all the years of fighting like crazy to shatter glass ceilings, so-called "liberal" women who are all about women being able to make a free choice only respect the choices if they are the same choices they would make. Doniger wasn't the only one - I heard this from many, many people. "Sarah isn't a woman". "Palin has no values." (aka not MY values) That isn't feminism and it isn't liberalism.. It is narcissism. If you are a liberal woman you can value a woman's right to choose - but you must also respect her choice if it's pro LIFE.
Perhaps that is why I've not ever considered myself a feminist - I am all for women's rights - but all women's rights not just some. Women and men aren't equal. Men in general are better at some things; women are better in general at other things - with exceptions to the rules of course. Maybe this makes me not a woman too. In that case Ill take it. This is all about chemistry and biology and not discrimination. I must say that this cycle has made me reflect back on my career.. And it was almost always, always the women who hurt one another.. Who didn't help, who did the damage to each other and one another's' reputation.. Maybe that is why I always enjoyed managing and working for men. The men hung in there, helped one another.. NS and helped me, the woman, too. But not because I am a woman - because I am a competent individual that happens to be a woman.
Everything was competition with women. Perhaps it's Sarah-envy; perhaps it's the mere thought of someone with a different view in a position of power - but women - if we hit another glass ceiling, you can thank the liberal feminists for it. This is the first time I've seen such wide spread efforts against women. Now I know what all those chicks before me fought so hard for. Thanks "guys". :)
Wednesday, September 10, 2008
6 ways to get a mortgage more easily
6 ways to get a mortgage more easily in today’s crazy market
Despite homeowner relief and low interest rates, many homeowners are still struggling to get mortgages today. I ran into this issue myself – 11 lenders later I found the one that was decent. It takes patience and is often frustrating.
Those struggling the most are those with either lower than 700 FICO scores, or those who are self employed that were using stated income loans. Here are 6 tips to getting a mortgage more easily in today’s market.
Be prepared with documents! Scan your pay stubs, keep copies of your current employment records, and if you are self employed, keep a letter from your accountant and business license copy in a PDF format. This saves tremendous time when you go to file.
Stay away from companies that will “raise your FICO”. Most of these are scams – they will take your money but you won’t see your credit score increase. One way to do that legitimately though is to, rather than paying off your high interest cards first (which makes the most financial sense in most cases), is to pay 50% of each card. Once your cards drop to 50% of their available limit, your FICO goes up as you are considered a less risky borrower. Another way to improve FICOs is to not close old loans and show them paid off – and until the end of the year, if you are an authorized user on someone else’s card, this can help improve your score too (provided they’re not over their limit!)
Shop around – big time. Lenders are advertising easy loans, but the devil is in the details. Look out for origination fees (as much as 2% or more of the loan amount!), penalties for having a “lower than 700” credit score, and companies that wont take your loan if you have a 2nd mortgage.
Maximize your 1st mortgage. Try to get as much as you can on your primary mortgage because the cost of HELOCs and 2nds today behind other loans at the 75% combined loan to value rate is very high.
Don’t just take your brokers word for it. Some brokers have access to great lenders that you don’t have access to through wholesale lending. But that doesn’t mean you shouldn’t also shop around yourself. Compare what your broker finds to what you find, and be prepared with all the documentation you can handle.
Do your own appraisal. Particularly on jumbos or in areas that are “declining markets” (each bank is different in terms of zip codes they consider in the declining market arena), the banks are often using their own internal appraisals and rather than over inflating price as many did, they’re coming in far less than they should be to be fair and accurate. Having your own appraisal can be a good baseline to see if the banks are ripping you off. If they can show a higher LTV, they can charge you more for the loan!
Dani Babb
Despite homeowner relief and low interest rates, many homeowners are still struggling to get mortgages today. I ran into this issue myself – 11 lenders later I found the one that was decent. It takes patience and is often frustrating.
Those struggling the most are those with either lower than 700 FICO scores, or those who are self employed that were using stated income loans. Here are 6 tips to getting a mortgage more easily in today’s market.
Be prepared with documents! Scan your pay stubs, keep copies of your current employment records, and if you are self employed, keep a letter from your accountant and business license copy in a PDF format. This saves tremendous time when you go to file.
Stay away from companies that will “raise your FICO”. Most of these are scams – they will take your money but you won’t see your credit score increase. One way to do that legitimately though is to, rather than paying off your high interest cards first (which makes the most financial sense in most cases), is to pay 50% of each card. Once your cards drop to 50% of their available limit, your FICO goes up as you are considered a less risky borrower. Another way to improve FICOs is to not close old loans and show them paid off – and until the end of the year, if you are an authorized user on someone else’s card, this can help improve your score too (provided they’re not over their limit!)
Shop around – big time. Lenders are advertising easy loans, but the devil is in the details. Look out for origination fees (as much as 2% or more of the loan amount!), penalties for having a “lower than 700” credit score, and companies that wont take your loan if you have a 2nd mortgage.
Maximize your 1st mortgage. Try to get as much as you can on your primary mortgage because the cost of HELOCs and 2nds today behind other loans at the 75% combined loan to value rate is very high.
Don’t just take your brokers word for it. Some brokers have access to great lenders that you don’t have access to through wholesale lending. But that doesn’t mean you shouldn’t also shop around yourself. Compare what your broker finds to what you find, and be prepared with all the documentation you can handle.
Do your own appraisal. Particularly on jumbos or in areas that are “declining markets” (each bank is different in terms of zip codes they consider in the declining market arena), the banks are often using their own internal appraisals and rather than over inflating price as many did, they’re coming in far less than they should be to be fair and accurate. Having your own appraisal can be a good baseline to see if the banks are ripping you off. If they can show a higher LTV, they can charge you more for the loan!
Dani Babb
Sunday, June 8, 2008
House Trading - Myths and Truths
Interested in trading your house (recommended company is onlinehousetrading.com) but not quite sure what to believe? Do you have agents telling you it isn’t legitimate, but you’re hearing on the news that it is?
House Trading is a legitimate business that matches two sellers and two buyers together to trade homes. Check out onlinehousetrading.com for more information! This is particularly useful for military families needing to move – and fast.
Let me first identify myths and truths:
Your equity position matters. It doesn’t matter if you have $1000 equity or $500,000 equity because you are getting a mortgage for the other house.
It won’t work because banks won’t let you trade mortgages. That is true but with House Trading both parties are simply buying each others homes. Both parties acquire a new mortgage or pay cash.
Both homes need to be the same price because if not you have to make up the difference in cash. That would be like someone telling you if you sold your $300k home that you had to buy another $300k home. As long as you can qualify for the mortgage you can buy what ever you want.
Let’s look at a couple of typical scenarios; upsizing and downsizing a home. House Trading Scenarios
Upsizing:
Seller A has a home valued at $350,000
Seller B has a home valued at $450,000
Equity doesn’t matter! Seller A would get a loan for Seller B’s house and Seller B would get a loan for Seller A’s house.
They will simply buy each others homes.
Downsizing:
Seller A has a home valued at $550,000
Seller B has a home valued at $450,000
Equity doesn’t matter! Seller A would get a loan for Seller B’s house and Seller B would get a loan for Seller A’s house.
House Trading is a legitimate business that matches two sellers and two buyers together to trade homes. Check out onlinehousetrading.com for more information! This is particularly useful for military families needing to move – and fast.
Let me first identify myths and truths:
Your equity position matters. It doesn’t matter if you have $1000 equity or $500,000 equity because you are getting a mortgage for the other house.
It won’t work because banks won’t let you trade mortgages. That is true but with House Trading both parties are simply buying each others homes. Both parties acquire a new mortgage or pay cash.
Both homes need to be the same price because if not you have to make up the difference in cash. That would be like someone telling you if you sold your $300k home that you had to buy another $300k home. As long as you can qualify for the mortgage you can buy what ever you want.
Let’s look at a couple of typical scenarios; upsizing and downsizing a home. House Trading Scenarios
Upsizing:
Seller A has a home valued at $350,000
Seller B has a home valued at $450,000
Equity doesn’t matter! Seller A would get a loan for Seller B’s house and Seller B would get a loan for Seller A’s house.
They will simply buy each others homes.
Downsizing:
Seller A has a home valued at $550,000
Seller B has a home valued at $450,000
Equity doesn’t matter! Seller A would get a loan for Seller B’s house and Seller B would get a loan for Seller A’s house.
Tuesday, March 18, 2008
Abandoned Homes Helping the Poor?
The abandoned homes in areas like Detroit and Stockton are hurting neighborhoods - badly.
But they're helping some poor, remarkably enough.
There is a bright spot for some of these abandoned houses.
Many of these homes, usually foreclosures, find transients have moved in, steal power, tear apart walls for copper plumbing, and set fires to make drugs or heat the home. Police are struggling in many neighborhoods to keep this under control (Source: Yahoo Real Estate). There is a consistent problem with crimes and thefts on foreclosed homes. In the past, these thieves would steal from the outside of the home; now they steal from inside, too - with little repercussion. Even the local humane society shelters are over capacity with pets left behind.
However, there is a bright side here - finally.
Some charities are buying the homes, like Habitat for Humanity, fixing up the abandoned properties, and taking advantage of the low priced homes - basically shells by the time they're robbed and stripped of valuable wiring and plumbing. But, charities are now starting to get these shells for rock bottom prices, use volunteer labor, and turn them into housing for the poor.
Dani
But they're helping some poor, remarkably enough.
There is a bright spot for some of these abandoned houses.
Many of these homes, usually foreclosures, find transients have moved in, steal power, tear apart walls for copper plumbing, and set fires to make drugs or heat the home. Police are struggling in many neighborhoods to keep this under control (Source: Yahoo Real Estate). There is a consistent problem with crimes and thefts on foreclosed homes. In the past, these thieves would steal from the outside of the home; now they steal from inside, too - with little repercussion. Even the local humane society shelters are over capacity with pets left behind.
However, there is a bright side here - finally.
Some charities are buying the homes, like Habitat for Humanity, fixing up the abandoned properties, and taking advantage of the low priced homes - basically shells by the time they're robbed and stripped of valuable wiring and plumbing. But, charities are now starting to get these shells for rock bottom prices, use volunteer labor, and turn them into housing for the poor.
Dani
Saturday, March 15, 2008
Bernanke's Big Bust
The Fed Chairman on Friday March 14th outlined what the Fed is proposing to alleviate the housing crisis. Here are the highlights, and the negative outcomes as a result as I see them - government stay out if these are going to be the plans!
1. Prohibiting lenders from issuing loans that borrowers cannot repay. BIG problem here. We have no accurate way of assessing this. The traditional method, FICO scores, is no longer accurate. The FICO doesn’t take into consideration mortgage resets, and is fairly easily manipulated by people who fix credit. FICO says plans are in the works but a new algorithm wont be released until 2009. Also, more people today earn non traditional income - income working from home on 1099s and so forth. These people are often highly qualified but may not be able to get a loan.
2. Making lenders verify income and assets. I have no problem with verifying assets. But, it's difficult to verify income by many of today's workers. For instance, many of us work off of 1099s and take business deductions. This makes it nearly impossible for the bank to see how much we really make.
3. Requiring escrow accounts for high priced loans. This sounds great, but it's a rip off for the consumer! People are better managers of their money than institutions are. If they aren't, they pay a price. Here is a fact. Take a $1,000,000 home, the "low end" price for many areas in Southern California. If we had to put even 1% into escrow, that is $12,000/year. That is money we could have invested and earned interest on. Unless the bank is going to fork over the interest we could have earned by investing it ourselves, forget it!
4. Ban repayment penalties including loan flipping - While Id love to be able to refi my primary residence without a prepay penalty, the truth is that loans with prepays often come at cheaper interest rates because the bank knows they’ll get X dollars from the consumer. Do this, and the banks will offset this income with higher rates. Period.
Bottom line - none of these are answers to the housing crisis.
1. Prohibiting lenders from issuing loans that borrowers cannot repay. BIG problem here. We have no accurate way of assessing this. The traditional method, FICO scores, is no longer accurate. The FICO doesn’t take into consideration mortgage resets, and is fairly easily manipulated by people who fix credit. FICO says plans are in the works but a new algorithm wont be released until 2009. Also, more people today earn non traditional income - income working from home on 1099s and so forth. These people are often highly qualified but may not be able to get a loan.
2. Making lenders verify income and assets. I have no problem with verifying assets. But, it's difficult to verify income by many of today's workers. For instance, many of us work off of 1099s and take business deductions. This makes it nearly impossible for the bank to see how much we really make.
3. Requiring escrow accounts for high priced loans. This sounds great, but it's a rip off for the consumer! People are better managers of their money than institutions are. If they aren't, they pay a price. Here is a fact. Take a $1,000,000 home, the "low end" price for many areas in Southern California. If we had to put even 1% into escrow, that is $12,000/year. That is money we could have invested and earned interest on. Unless the bank is going to fork over the interest we could have earned by investing it ourselves, forget it!
4. Ban repayment penalties including loan flipping - While Id love to be able to refi my primary residence without a prepay penalty, the truth is that loans with prepays often come at cheaper interest rates because the bank knows they’ll get X dollars from the consumer. Do this, and the banks will offset this income with higher rates. Period.
Bottom line - none of these are answers to the housing crisis.
Thursday, February 28, 2008
Freddie & Fannie can buy more loans!
Good afternoon,
Federal Regulators Fannie Mae and Freddie Mac, the biggest buyers of home mortgages, are going to remove limits on the amount of loans and securities that they can own. This could help the housing market. (Source: The New York Times) This could help relieve the credit crunch in the long term though it is a risky move for the two mortgage giants.
According to the agencies that control these mortgage companies, they are making the change because the organizations began filing financial reports again after lapsing years ago. This is questionable and may be more related to the mortgage “crisis”. One still remaining limitation of course is that Fannie and Freddie still have to hold 30% more capital than they are required to by law, due to tumultuous times in the mortgage market.
Fannie Mae reported a 2 billion dollar loss for 2007, and is noting that home prices will further decline in 08. This is following a 4 billion dollar profit in 06.
In many ways, this means that large mortgage buyers will hold many loans – including potentially fatal loans. While this might help the home market, it isn’t the best financial investment the government could make. Democrats in Congress are of course calling for more. The fact is, few investors are buying mortgage backed securities these days - so without Freddie and Fannie, there are very few investors to buy them. Without investors, banks won’t create loans. Without loans, the credit crunch continues.
Bottom line: it may help home prices, and it may help lenders – but it will surely be a bad deal for these two agencies. I wonder who will ultimately pay for the deals gone bad.
Dani
Federal Regulators Fannie Mae and Freddie Mac, the biggest buyers of home mortgages, are going to remove limits on the amount of loans and securities that they can own. This could help the housing market. (Source: The New York Times) This could help relieve the credit crunch in the long term though it is a risky move for the two mortgage giants.
According to the agencies that control these mortgage companies, they are making the change because the organizations began filing financial reports again after lapsing years ago. This is questionable and may be more related to the mortgage “crisis”. One still remaining limitation of course is that Fannie and Freddie still have to hold 30% more capital than they are required to by law, due to tumultuous times in the mortgage market.
Fannie Mae reported a 2 billion dollar loss for 2007, and is noting that home prices will further decline in 08. This is following a 4 billion dollar profit in 06.
In many ways, this means that large mortgage buyers will hold many loans – including potentially fatal loans. While this might help the home market, it isn’t the best financial investment the government could make. Democrats in Congress are of course calling for more. The fact is, few investors are buying mortgage backed securities these days - so without Freddie and Fannie, there are very few investors to buy them. Without investors, banks won’t create loans. Without loans, the credit crunch continues.
Bottom line: it may help home prices, and it may help lenders – but it will surely be a bad deal for these two agencies. I wonder who will ultimately pay for the deals gone bad.
Dani
Wednesday, February 20, 2008
How to Recession Proof Your Life!
In today’s turbulent economic times, we can lose 2% of our 401k value in a day; 5% in 6 months in our homes; the instability requires a solid plan of action to recession proof your life!
About 40% of economists surveyed today believe a recession is likely in 2008. So what can you do to be prepared:
1) Secure any income. If you have income streams, document them and be sure they’re safe for the next few years.
2) Start getting your financial house in a database, literally. Use a money tool like Quicken or even Excel to help you keep track of things like mortgage balances and credit card debt. Sometimes seeing how much you are in debt can help curb spending, too.
3) Prioritize your debts. You get an $8000 tax return right? You owe $7500 on your car; so it would be nice to remove that payment! But what if you’re paying 6% on your car and 15% on your credit card? Even if the $8000 won’t make much of a difference in your balance, it will make a difference in how much of your money goes to interest each month. Pay the debt that has the highest interest rate first!
4) Transfer balances. Lots of us get the balance transfer offers from credit card companies and ignore them. This is easy to do. But, simply shifting money from one card to another, even if it buys you 6 months with no interest, can save thousands in a year.
5) Begin saving if you haven’t already. It’s very easy to feel insecure right now with fluctuating markets.
6) Take stock in your stocks. Figure out what is in your 401k. Don’t just put it in and forget about it. Look at the balances, re-balance your portfolio, and make sure you are invested wisely for the future. Most investment planners will have you invest based on when you intend to retire or when you need the money.
7) Look for all the tax incentives you can find! There are lots of ways to save money on taxes; 401ks, IRAs, and some not-so-common savings plans such as college funds and donations. Talk with a tax planner and save your money instead of giving it to Uncle Sam.
8) Have 6 months savings. In otherwords, if your bills cost you $3000 per month, you need a minimum of $18000 in liquid capital. This should be something secure, like a six or twelve month CD.
9) Finally, get spending under control. Throughout the early 2000s, many were using their homes as ATMs, feeling the market would continue to increase. We know how detrimental that can be! Figure out where your money goes by keeping track of it for 2-3 months. You will know what you can cut out, and where to save some extra money.
Is this a good time to buy a house? The answer is a resounding absolutely definitely YES!
Is this a good time to buy a house? The answer is a resounding absolutely definitely YES!
Here are the reasons – speaking as a consumer advocate/investor (I am looking for deals like crazy)
1. We always want to buy low/sell high in any investment, whether it is stocks or real estate. This is low! In some areas it’s a 20 year low.
2. Rates are dropping (finally). As rates continue to drop, those who qualify (tighter lending standards are a good thing... it means there’s a very good chance you will be able to afford the house you are approved for) will find it even less expensive to buy the house of their dreams.
3. Foreclosures, while bad for home values, are a great investment. Buying homes in pre foreclosure, saving the homeowner from a foreclosure on their credit record and getting a good deal.
4. The baby boomers that will be moving to Sun Belt states in the next 2 to 15 years will help the markets bounce back in these areas that were pummeled by low housing prices.
5. This is a good time to buy a short sale or REO property. The prices are low; the banks are really trying to keep foreclosures off of their books.
6. This can be a good alternative to stocks, particularly if you get positive cash flow.
7. Home builders are giving away upgrades; and in some areas nearly giving away the farm, too.
Now.. it is absolutely critical that people evaluate several areas before buying. Do your homework!
1. The overall trend in the area they’re buying in. Is it still going drastically downward? Is the national average a 4% loss and the loss in the area they want to buy 30%? A red flag.
2. Are there a lot of people in foreclosure in the area? Is the area in the top 50 metro areas? If so it’s a sign prices may drop further, and you should wait a bit longer before buying.
3. Is there high crime or low crime? Lower obviously is better. Higher crime leads to people moving away, and well.. criminals moving in.
4. Decent schools? This is always a good selling point if you need to get out quickly.
5. Can you afford it??? Don’t overbuy!
6. Finally.. are jobs moving TO or FROM the area? Moving from is a bad sign (e.g. the rust belt states.. Michigan, Ohio etc..) moving to? Round Rock/Austin Texas, Las Vegas.. good deals. Jobs will ultimately support the market!
With good decisions and proper research, it’s a FANTASTIC time to buy.
Dani Babb, PhD, MBA
Here are the reasons – speaking as a consumer advocate/investor (I am looking for deals like crazy)
1. We always want to buy low/sell high in any investment, whether it is stocks or real estate. This is low! In some areas it’s a 20 year low.
2. Rates are dropping (finally). As rates continue to drop, those who qualify (tighter lending standards are a good thing... it means there’s a very good chance you will be able to afford the house you are approved for) will find it even less expensive to buy the house of their dreams.
3. Foreclosures, while bad for home values, are a great investment. Buying homes in pre foreclosure, saving the homeowner from a foreclosure on their credit record and getting a good deal.
4. The baby boomers that will be moving to Sun Belt states in the next 2 to 15 years will help the markets bounce back in these areas that were pummeled by low housing prices.
5. This is a good time to buy a short sale or REO property. The prices are low; the banks are really trying to keep foreclosures off of their books.
6. This can be a good alternative to stocks, particularly if you get positive cash flow.
7. Home builders are giving away upgrades; and in some areas nearly giving away the farm, too.
Now.. it is absolutely critical that people evaluate several areas before buying. Do your homework!
1. The overall trend in the area they’re buying in. Is it still going drastically downward? Is the national average a 4% loss and the loss in the area they want to buy 30%? A red flag.
2. Are there a lot of people in foreclosure in the area? Is the area in the top 50 metro areas? If so it’s a sign prices may drop further, and you should wait a bit longer before buying.
3. Is there high crime or low crime? Lower obviously is better. Higher crime leads to people moving away, and well.. criminals moving in.
4. Decent schools? This is always a good selling point if you need to get out quickly.
5. Can you afford it??? Don’t overbuy!
6. Finally.. are jobs moving TO or FROM the area? Moving from is a bad sign (e.g. the rust belt states.. Michigan, Ohio etc..) moving to? Round Rock/Austin Texas, Las Vegas.. good deals. Jobs will ultimately support the market!
With good decisions and proper research, it’s a FANTASTIC time to buy.
Dani Babb, PhD, MBA
The Obama Plan.. not so bad afterall.
So here are the basics of the Obama Home Ownership Plan: (Source Obama's web site)
1. Stiff penalties for mortgage fraud – it’s estimated up to 15% of people who purchased homes during the boom lied about various pieces of relevant information, thereby creating a ripple effect. This is good for everything and everyone. Some mortgage brokers in particular knew what they were doing when they signed people up for ‘liar loans’. This has created a big problem for everyone.
2. A fund to help people refi their mortgages or sell them if they cannot afford them – while this has the remnants of a bailout which in general I am not a fan of, it certainly may help consumer confidence. If we keep this to people that TRULY got duped and not investors who made a bad call, it could help stabilize the housing market.
3. Creating new affordable housing – individuals that are being punished because of the things others did that created an unstable market and impossible lending standards may be able to buy a home.
4. 10% universal mortgage credit is tax relief! He’s sounding more like a Republican here.. I'm all for less taxes. Please, do, lessen all of our tax burdens. That will help fuel the economy. ALSO, it will help incentivize people to stay in their homes. The more people go into foreclosure, the bigger of a problem we will have. Yeah it will affect those earning 50k or less, but I want tax cuts for EVERYONE.. so this is great!
5. Mandating loan disclosure: many people complain that the mortgage documents are too difficult to read. If making it easier to read helps everyone be aware of what they’re signing up for, go for it.
6. A fund to help homeowners avoid foreclosure – This helps with refi costs for homeowners truly caught in the mess- not investors. The details of this aren’t clear yet… we will see how this one pans out.
All of this seems to be paid for by his fines on mortgage companies that commit fraud… not by tax payers.. at least thus far.
I don’t really see this as a bailout. It is transparency and tax cuts. He’s starting to sound like a Republican. ;)
Dani
1. Stiff penalties for mortgage fraud – it’s estimated up to 15% of people who purchased homes during the boom lied about various pieces of relevant information, thereby creating a ripple effect. This is good for everything and everyone. Some mortgage brokers in particular knew what they were doing when they signed people up for ‘liar loans’. This has created a big problem for everyone.
2. A fund to help people refi their mortgages or sell them if they cannot afford them – while this has the remnants of a bailout which in general I am not a fan of, it certainly may help consumer confidence. If we keep this to people that TRULY got duped and not investors who made a bad call, it could help stabilize the housing market.
3. Creating new affordable housing – individuals that are being punished because of the things others did that created an unstable market and impossible lending standards may be able to buy a home.
4. 10% universal mortgage credit is tax relief! He’s sounding more like a Republican here.. I'm all for less taxes. Please, do, lessen all of our tax burdens. That will help fuel the economy. ALSO, it will help incentivize people to stay in their homes. The more people go into foreclosure, the bigger of a problem we will have. Yeah it will affect those earning 50k or less, but I want tax cuts for EVERYONE.. so this is great!
5. Mandating loan disclosure: many people complain that the mortgage documents are too difficult to read. If making it easier to read helps everyone be aware of what they’re signing up for, go for it.
6. A fund to help homeowners avoid foreclosure – This helps with refi costs for homeowners truly caught in the mess- not investors. The details of this aren’t clear yet… we will see how this one pans out.
All of this seems to be paid for by his fines on mortgage companies that commit fraud… not by tax payers.. at least thus far.
I don’t really see this as a bailout. It is transparency and tax cuts. He’s starting to sound like a Republican. ;)
Dani
Tuesday, February 12, 2008
Foreclosure Freeze - Who Does It Help, How Does It Work, What To Know
There is a lot of misconception out there about the foreclosure freeze and who it really helps, what it takes to qualify, and how it works. My goal is to demystify it a bit. I have listed some bullet points to help:
The freeze is temporary. It freezes legal efforts to remove delinquent borrowers for 30 days while lenders and borrowers work together on a payment plan.
This is a joint effort by 6 of the nation's largest lenders
One big difference between this and other options discussed in the past is that it is available to people regardless of their loan types. Even if you do NOT have an ARM, it may help. (Some people have Pay Option ARMs or fixed rates that are high, too). (ARMS have the highest rate of delinquency though)
The borrower does not need to be subprime to qualify as with other programs like the Bush plan. Any kind of mortgage is okay.
When does the homeowner qualify?
Once they are 90 days or more behind in their payments, lenders will send letters asking the owner to call.
Borrowers will be asked if they ewant to stay in their home. If they do, they will be offered financial counseling.
Important things to note:
Loan modifications are not automatic! Homeowners have to provide proof of wages and debt.
Lenders then decide whether to pause the foreclosure process.
During the freeze, foreclosure prevention specialists decide if a loan modification program will work. Will the borrower have a chance to be successful? Is he/she making enough money?
Potential options are: Lowernig rates, balance on loans, or both. Anything that does happen though requires that the homeowner pay on time for three months at which time the changes become permanent.
As homeowners, remember it costs the bank generally $50,000 per home to process a foreclosure. Most would rather have homeowners stay in homes - so call your bank!
Dani
The freeze is temporary. It freezes legal efforts to remove delinquent borrowers for 30 days while lenders and borrowers work together on a payment plan.
This is a joint effort by 6 of the nation's largest lenders
One big difference between this and other options discussed in the past is that it is available to people regardless of their loan types. Even if you do NOT have an ARM, it may help. (Some people have Pay Option ARMs or fixed rates that are high, too). (ARMS have the highest rate of delinquency though)
The borrower does not need to be subprime to qualify as with other programs like the Bush plan. Any kind of mortgage is okay.
When does the homeowner qualify?
Once they are 90 days or more behind in their payments, lenders will send letters asking the owner to call.
Borrowers will be asked if they ewant to stay in their home. If they do, they will be offered financial counseling.
Important things to note:
Loan modifications are not automatic! Homeowners have to provide proof of wages and debt.
Lenders then decide whether to pause the foreclosure process.
During the freeze, foreclosure prevention specialists decide if a loan modification program will work. Will the borrower have a chance to be successful? Is he/she making enough money?
Potential options are: Lowernig rates, balance on loans, or both. Anything that does happen though requires that the homeowner pay on time for three months at which time the changes become permanent.
As homeowners, remember it costs the bank generally $50,000 per home to process a foreclosure. Most would rather have homeowners stay in homes - so call your bank!
Dani
Sunday, February 10, 2008
Let the Spin Begin - the Media and the R Word
As late as mid January of 2008, economists surveyed by leading financial publications resulted in a prediction that the US had less than a 50% chance of going into a recession in 2008.
If you listened to the media, you'd think the world was ending. Who are the worst offenders?
I did a search to see how many hits I got on web sites noted below, with hit rates indicated:
Fox News 1530
CNN: 1692
ABC (approximately) 3760
and MSNBC an astounding 23,200!
I wanted to take this into the newspaper arena, and found the following:
The far left leaning San Francisco Chronicle in 2008 alone mentioned a recession 464 times according to their web search - already more than the entire 2007 year! (which came in at 329)
The New York Times.. also left leaning.. 420 in 2007, and already 311 since January 1, 2008.
Compare this to the Washington Times (considered more conservative) which mentions it 149 times in 2007 and 77 times in 2008.
One could speculate on the motivations behind using the R word. Perhaps it's pure drama that drives viewers.
But the media has a responsibility here, and it seems very few are holding them accountable. The more they mention the word recession (whether we are in one or not), the more people assume we are.
ABC, CBS and NBC reported in the first two weeks of 2008 negative stories about a pending or looming recession 32 times. The positive? Mentioned in 8 stories. (Source: Business & Media Institute)
What are the facts? Well a study conducted by Bloomberg of 62 economists released January 9th showed economists predicitng a 1.5% GROWTH in the first half of 2008. This is most definitely weak expansion, but it is far from a recession! The Wall Street Journal reported similar findings, predicting growth of 2% or less, and a 42% chance of recession. The same type of issue holds true for unemployment, also exaggerated by the media. Take the Today Show reporting on January 5th that unemployment moved up to 5% last month, the highest rate in two years. Really? In September of 05, unemployment was also at 5.1%. The 5% rate is the highest in SIXTEEN months, not two years. It's also below the 5.4% 10 year average and the 6% 30 year average. (Source: Business and Media Institute)
I can only speculate on why the media would choose to report the news as they do in an election year or when circulation at some aforementioned newspapers are down (you can guess which ones), but the media owes it to the public to talk about the facts and not use scare tactics, selectively choosing the data it wishes to represent.
Dani
If you listened to the media, you'd think the world was ending. Who are the worst offenders?
I did a search to see how many hits I got on web sites noted below, with hit rates indicated:
Fox News 1530
CNN: 1692
ABC (approximately) 3760
and MSNBC an astounding 23,200!
I wanted to take this into the newspaper arena, and found the following:
The far left leaning San Francisco Chronicle in 2008 alone mentioned a recession 464 times according to their web search - already more than the entire 2007 year! (which came in at 329)
The New York Times.. also left leaning.. 420 in 2007, and already 311 since January 1, 2008.
Compare this to the Washington Times (considered more conservative) which mentions it 149 times in 2007 and 77 times in 2008.
One could speculate on the motivations behind using the R word. Perhaps it's pure drama that drives viewers.
But the media has a responsibility here, and it seems very few are holding them accountable. The more they mention the word recession (whether we are in one or not), the more people assume we are.
ABC, CBS and NBC reported in the first two weeks of 2008 negative stories about a pending or looming recession 32 times. The positive? Mentioned in 8 stories. (Source: Business & Media Institute)
What are the facts? Well a study conducted by Bloomberg of 62 economists released January 9th showed economists predicitng a 1.5% GROWTH in the first half of 2008. This is most definitely weak expansion, but it is far from a recession! The Wall Street Journal reported similar findings, predicting growth of 2% or less, and a 42% chance of recession. The same type of issue holds true for unemployment, also exaggerated by the media. Take the Today Show reporting on January 5th that unemployment moved up to 5% last month, the highest rate in two years. Really? In September of 05, unemployment was also at 5.1%. The 5% rate is the highest in SIXTEEN months, not two years. It's also below the 5.4% 10 year average and the 6% 30 year average. (Source: Business and Media Institute)
I can only speculate on why the media would choose to report the news as they do in an election year or when circulation at some aforementioned newspapers are down (you can guess which ones), but the media owes it to the public to talk about the facts and not use scare tactics, selectively choosing the data it wishes to represent.
Dani
Saturday, February 2, 2008
McCain Event, Economics, Mannequins and Illigitimate Middle Class Warfare
I went to a McCain fundraiser in Los Angeles, CA on Thursday the 31st. Among lots of Hollywood celebs, former Congressmen, Senators and our California Governor, McCain spoke about the war in Iraq. He made a comment that was quite interesting to me.
Many critics have said that he must begin discussing the "economic situation", so he's thrown a few comments in here and there to let people know he's in tune with the American concerns. He said, loosely quoted as I didn't write it down verbatim, "yes I know I know, we need to talk about the economy..." and then proceeded to talk about the war again.
In my view, many people on the left and right are using the fundamental misunderstanding of the general population with regard to how economics works to their political advantage. I see Romney doing it to the nth degree, Obama and Clinton of course - not unexpected. They talk about the middle class families; even create a 'war between the classes' that is highly misleading and divisive all while talking hypocritically about unity. Speaking of hypocrits. We need a "CEO to run the country?" Last time I checked, weren't the CEOs being jailed, blamed for scandals and ripping off their shareholders and employees?
Some countries try to avoid having a middle class altogether. American clearly has one; one that has unprecedented homeownership (thanks to the creative lending practices that are now being trampled upon by so-called economic experts saying they "predicted this long ago", and the Bush tax cuts).
What people don't realize is this:
1. What the Dems and some Republicans are calling a debacle with regard to the mortgage "crisis" is that, still, less than 2% of people in this nation are late on their mortgages.
2. The economy not be growing as fast as it did three year ago, but we are hardly in a recession. No one cares to look up what the term actually means.
3. The middle class has the highest home ownership in the history of this nation. Why? Because mortgage companies wanted to make money. Hedge fund managers wanted to money. Mortgage companies got creative, provided funding to people who wanted to buy homes, investors bought the mortgages - and the middle class benefitted this entire thing. And, not commonly heard in the media? Most are actually paying those obligations - so who is losing exactly?
4. As the middle class gains in equity, and they will (markets never go down over a long period), they will become even wealthier. Lower-middle income individuals who bought homes will move into the middle class.
What I found refreshing about McCain is that he knows he has to talk about the economy if he wants to score points. He does.. to a small degree, to avoid losing to a talking mannequin known as the former Governor of Massachusetts.
But what about this? Will losing 70000 jobs after gaining hundreds of thousands matter when another Islamic radicalist boards a plane and takes a Delta jet into the Empire State Building? Probably not. A Dow down day of 300 could be a blessing.
Maybe we need to stop all the whining, cowtowing to Wall Street, and let the Fed do the hard work it needs to do.. and stop using bogus hypocritical claims to try to win the office of President. Maybe for once, people will see through the BS and think of the big picture rather than the $50 their mortgage payment went up in two years on that McMansion they bought on their $50,000/year salary.
Dani
Many critics have said that he must begin discussing the "economic situation", so he's thrown a few comments in here and there to let people know he's in tune with the American concerns. He said, loosely quoted as I didn't write it down verbatim, "yes I know I know, we need to talk about the economy..." and then proceeded to talk about the war again.
In my view, many people on the left and right are using the fundamental misunderstanding of the general population with regard to how economics works to their political advantage. I see Romney doing it to the nth degree, Obama and Clinton of course - not unexpected. They talk about the middle class families; even create a 'war between the classes' that is highly misleading and divisive all while talking hypocritically about unity. Speaking of hypocrits. We need a "CEO to run the country?" Last time I checked, weren't the CEOs being jailed, blamed for scandals and ripping off their shareholders and employees?
Some countries try to avoid having a middle class altogether. American clearly has one; one that has unprecedented homeownership (thanks to the creative lending practices that are now being trampled upon by so-called economic experts saying they "predicted this long ago", and the Bush tax cuts).
What people don't realize is this:
1. What the Dems and some Republicans are calling a debacle with regard to the mortgage "crisis" is that, still, less than 2% of people in this nation are late on their mortgages.
2. The economy not be growing as fast as it did three year ago, but we are hardly in a recession. No one cares to look up what the term actually means.
3. The middle class has the highest home ownership in the history of this nation. Why? Because mortgage companies wanted to make money. Hedge fund managers wanted to money. Mortgage companies got creative, provided funding to people who wanted to buy homes, investors bought the mortgages - and the middle class benefitted this entire thing. And, not commonly heard in the media? Most are actually paying those obligations - so who is losing exactly?
4. As the middle class gains in equity, and they will (markets never go down over a long period), they will become even wealthier. Lower-middle income individuals who bought homes will move into the middle class.
What I found refreshing about McCain is that he knows he has to talk about the economy if he wants to score points. He does.. to a small degree, to avoid losing to a talking mannequin known as the former Governor of Massachusetts.
But what about this? Will losing 70000 jobs after gaining hundreds of thousands matter when another Islamic radicalist boards a plane and takes a Delta jet into the Empire State Building? Probably not. A Dow down day of 300 could be a blessing.
Maybe we need to stop all the whining, cowtowing to Wall Street, and let the Fed do the hard work it needs to do.. and stop using bogus hypocritical claims to try to win the office of President. Maybe for once, people will see through the BS and think of the big picture rather than the $50 their mortgage payment went up in two years on that McMansion they bought on their $50,000/year salary.
Dani
Thursday, January 24, 2008
How do I know when to refi?
How do I know if this is a good time to refi?
With the recent drop in interest rates, many consumers are asking, "is this the time to refi?" The decision is more complicated than "did my rate drop?" There are often many fees associated with refinances, and consumers need to calculate when a good time for them is. Mortgage applications rose over 8% last week.. and there is good reason for it.
When the Fed drops rates, most banks drop their rates on certain mortgages too. People that are locked into negative amortization or option ARM loans, where they aren't even covering their interest or had a teaser-rate loan, may be looking now to refinance.
In general, Home Equity Lines of Credit see rate drops the day after the Fed. How do you know if you should refi? Calculate the savings per month with the new rate, and ask your lender what the refi will cost you. Determine what the break-even point is in months - 6 months and you plan to stay a year? You get a net win! 12 months and you plan to move in the Spring? Keep that higher rate.
Option Adjustable Rate Mortgages, known as Pay Option ARMs, are the risky loans that let people pay less than the interest and accumulate mortgage principle. These tend to drop 30 to 90 days after a Fed rate drop. Margins always tend to lag the Fed rate. To figure out if you should refi, get a good faith estimate with all costs from the lender. Do the same analysis as for a HELOC. With the rate change, what is the savings per month? Then, divide the total cost of the refi into the savings, and you will get your break-even point in months. If you are planning to stay in your home longer than this number of months, you will save money.
Long term rates, 30 year fixed loans, generally remain flat and may even increase. I would not consider this a viable option right now.
Short term interest only loans, where the first 3, 5 or 7 years is held constant, will decrease. To figure out if you should refi, get a good faith estimate with all costs from the lender. With the rate change, what is the savings per month? Then, divide the total cost of the refi into the savings, and you will get your break-even point in months. If you are planning to stay in your home longer than this number of months, you will save money.
What are some intangibles to consider?
1. Is your mortgage stressing you out? Is the unknown tough to handle? If so, you might opt for a short term interest only loan or a fixed mortgage, even if the rate is higher.
2. Is your principle amount climbing faster than the appreciation rate? You may want to refinance even if the rate is the same, just to "stop the bleeding".
With the recent drop in interest rates, many consumers are asking, "is this the time to refi?" The decision is more complicated than "did my rate drop?" There are often many fees associated with refinances, and consumers need to calculate when a good time for them is. Mortgage applications rose over 8% last week.. and there is good reason for it.
When the Fed drops rates, most banks drop their rates on certain mortgages too. People that are locked into negative amortization or option ARM loans, where they aren't even covering their interest or had a teaser-rate loan, may be looking now to refinance.
In general, Home Equity Lines of Credit see rate drops the day after the Fed. How do you know if you should refi? Calculate the savings per month with the new rate, and ask your lender what the refi will cost you. Determine what the break-even point is in months - 6 months and you plan to stay a year? You get a net win! 12 months and you plan to move in the Spring? Keep that higher rate.
Option Adjustable Rate Mortgages, known as Pay Option ARMs, are the risky loans that let people pay less than the interest and accumulate mortgage principle. These tend to drop 30 to 90 days after a Fed rate drop. Margins always tend to lag the Fed rate. To figure out if you should refi, get a good faith estimate with all costs from the lender. Do the same analysis as for a HELOC. With the rate change, what is the savings per month? Then, divide the total cost of the refi into the savings, and you will get your break-even point in months. If you are planning to stay in your home longer than this number of months, you will save money.
Long term rates, 30 year fixed loans, generally remain flat and may even increase. I would not consider this a viable option right now.
Short term interest only loans, where the first 3, 5 or 7 years is held constant, will decrease. To figure out if you should refi, get a good faith estimate with all costs from the lender. With the rate change, what is the savings per month? Then, divide the total cost of the refi into the savings, and you will get your break-even point in months. If you are planning to stay in your home longer than this number of months, you will save money.
What are some intangibles to consider?
1. Is your mortgage stressing you out? Is the unknown tough to handle? If so, you might opt for a short term interest only loan or a fixed mortgage, even if the rate is higher.
2. Is your principle amount climbing faster than the appreciation rate? You may want to refinance even if the rate is the same, just to "stop the bleeding".
Wednesday, January 23, 2008
Best & Worst Places to Buy?
Check out Dani's latest article on Entrepreneur.com!
http://www.entrepreneur.com/money/personalfinance/article189454.html.
What would you add to - or subtract from - this list.. and why?
Dani Babb
http://www.entrepreneur.com/money/personalfinance/article189454.html.
What would you add to - or subtract from - this list.. and why?
Dani Babb
Monday, January 21, 2008
Abandoned Homes cause BIG problems
With the wave of foreclosures hitting lenders, there is a new problem on the rise - houses abandoned by banks AND homeowners, and people left on the block getting hit with substantial value decreases as a result. An intense amount of crime sweeping into these suburban neighborhoods as vandals, thieves, drug dealers, prostitution rings, etc move into abandoned houses.
This is a forgotten, misunderstood component of foreclosure. Fights and legal battles are ensuing all across the nation about just who is responsible for these homes in limbo, being left to vandals and worse.
There are obvious signs that a home has been abandoned. The grass turns brown, eye-level weeds, the garage door becomes boarded up, signs indicating the home is bank owned - no trespassing... in some really bad cities, owners write "no piping" or "no aluminum" or "PVC only" because vandals are ripping the houses apart, bringing in trucks to haul away appliances, copper wiring, take piping out of the walls using sledge hammers, take mouldings, anything metal - you name it, it's being taken. Others are being turned into indoor marijuana farms.
Also, squatters begin to make fires in the homes to stay warm as it gets colder, sometimes burning them to the ground.
Other homes are being left to drug dealers and vandals, criminals running prostitution rings in the home and setting up shop.
Let's walk through it a bit to see how this happens.
1. First, the owner gets a notice of default. The owner often leaves the home - right then. Owners often would rather leave on their own terms than the banks.
If the owners don't leave then, they often wait until they get a notice of foreclosure proceedings.. then leave.
So at this point, the home is abandoned.
2. Foreclosure gives the bank the ability to take the home as collateral for the mortgage. This can take 6 to 12 months. In the meantime, the house sits. It becomes attractive to vandals, homeless, gangs, drug sellers, thieves, etc. This is outlined nicely in Business Week.
3. Ownership becomes an issue. Technically, in most states, the owner still owns the home while the lender decides what it is worth. They include legal costs of taking it through foreclosure (expensive), repairs, back unpaid taxes (a big problem right now), potential repairs if they cannot sell it as is, and the value of the home. They compare all of this to the value of the loan. In many cities, they cannot break even. The lender stops the foreclosure process. The title remains in the borrowers name!
4. The home becomes a problem. It begins to affect property values across the neighborhood. Some of the initial issues that become apparent is the water being shut off and lawns turning brown, pools turning green. Housing inspectors check property records and cite borrowers for violations, which can lead to fines and jail time. But, the borrower says in court he or she thought the bank took the house back.
5. At some point, officials begin to expand the definition of who exactly owns the home. In some states, prosecutors are taking banks that foreclose into court and seeking fines. If the house cannot be sold as it's so badly damaged, it may be demo'd.
Some ask, if the bank won't take care of the home and won't get any money from the home, why not let the owner continue to live in the house and at least take care of it until it can be sold on short sale? Good question. It seems a case of banks going through a process rather than using their heads. They affect property value throughout the entire neighborhood; just being within 150 to 200 yards of an abandoned house severely affects your own property value.
Dani
This is a forgotten, misunderstood component of foreclosure. Fights and legal battles are ensuing all across the nation about just who is responsible for these homes in limbo, being left to vandals and worse.
There are obvious signs that a home has been abandoned. The grass turns brown, eye-level weeds, the garage door becomes boarded up, signs indicating the home is bank owned - no trespassing... in some really bad cities, owners write "no piping" or "no aluminum" or "PVC only" because vandals are ripping the houses apart, bringing in trucks to haul away appliances, copper wiring, take piping out of the walls using sledge hammers, take mouldings, anything metal - you name it, it's being taken. Others are being turned into indoor marijuana farms.
Also, squatters begin to make fires in the homes to stay warm as it gets colder, sometimes burning them to the ground.
Other homes are being left to drug dealers and vandals, criminals running prostitution rings in the home and setting up shop.
Let's walk through it a bit to see how this happens.
1. First, the owner gets a notice of default. The owner often leaves the home - right then. Owners often would rather leave on their own terms than the banks.
If the owners don't leave then, they often wait until they get a notice of foreclosure proceedings.. then leave.
So at this point, the home is abandoned.
2. Foreclosure gives the bank the ability to take the home as collateral for the mortgage. This can take 6 to 12 months. In the meantime, the house sits. It becomes attractive to vandals, homeless, gangs, drug sellers, thieves, etc. This is outlined nicely in Business Week.
3. Ownership becomes an issue. Technically, in most states, the owner still owns the home while the lender decides what it is worth. They include legal costs of taking it through foreclosure (expensive), repairs, back unpaid taxes (a big problem right now), potential repairs if they cannot sell it as is, and the value of the home. They compare all of this to the value of the loan. In many cities, they cannot break even. The lender stops the foreclosure process. The title remains in the borrowers name!
4. The home becomes a problem. It begins to affect property values across the neighborhood. Some of the initial issues that become apparent is the water being shut off and lawns turning brown, pools turning green. Housing inspectors check property records and cite borrowers for violations, which can lead to fines and jail time. But, the borrower says in court he or she thought the bank took the house back.
5. At some point, officials begin to expand the definition of who exactly owns the home. In some states, prosecutors are taking banks that foreclose into court and seeking fines. If the house cannot be sold as it's so badly damaged, it may be demo'd.
Some ask, if the bank won't take care of the home and won't get any money from the home, why not let the owner continue to live in the house and at least take care of it until it can be sold on short sale? Good question. It seems a case of banks going through a process rather than using their heads. They affect property value throughout the entire neighborhood; just being within 150 to 200 yards of an abandoned house severely affects your own property value.
Dani
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