Debt reduction proposals under consideration include raising taxes on small business owners and potentially low- and middle-income families.
You won’t hear about that from Obama.
Instead the president focuses on the very rich, and oil companies.
Ken’s Take Perhaps the President will reveal these considerations in his press conference today … along with his specific plan for cutting the costs of Medicare, Medicaid, and Social Security … he said they’re “on the table” … let’s hear the specifics.
An analysis of home-price and ownership data for the last 30 years in California — the Golden State with notoriously golden property prices — indicates that the average single family house has never been a particularly stellar investment.
If a disciplined investor who might have considered purchasing that median-price California house in 1980 had opted instead to invest the 20% down payment of $19,910 and the normal homeownership expenses (above the cost of renting) over the years in the Dow Jones Industrial Index, the value of his portfolio in 2010 would have been $1,800,016.
The stocks would have been worth more than the house by $1,503,196.
If the analysis is based on 2007, the stock portfolio would have been worth $2,186,120, exceeding the house value by $1,625,850.
Full article < Worth reading
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Great Quote: The sanctity of mortgage obligations has become the rough moral equivalent of the 55-mile-per-hour speed limit.
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Ken’s Take: But, who put 20% down? Lots of upside potential with little downside risk if you don’t care about your credit rating … living in a house for free a couple years – while the bank tries to foreclose – offsets much of the difference .
Punch line: Amid the Greek mini-panic this month, did you notice the really shocking news? To wit, U.S. regulators are worried about the “systemic risk” posed by the exposure of American money-market funds to European bank debt.
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According to the WSJ:
A 1983 Securities and Exchange Commission rule allows money funds to report a stable net-asset value of $1 per share, even if that’s not precisely true based on changes in the fund’s underlying assets.
The result is that investors have come to expect that money funds never “break the buck,” never decline in value.
But since 2008 U.S. money funds have been allowed to pile into European bank debt.
Half the assets in U.S. prime money market funds were invested in European banks as of the end of May.
Bottom line: If Greece tanks and takes down some Euro banks with it, the impact will be felt by US money market funds … which could possibly break a buck …
When the history is written on Pres. Obama’s strained relationship with American business leaders, I think that the GM non-bankruptcy bankruptcy will be tagged as the the first critical shot fired (by the President).
Just in case you forgot, here’s a recap excerpted from Reason:
Many experts suspect that GM could have obtained private bankruptcy financing if it had presented a credible restructuring plan addressing the cause of its malaise: the uncompetitive costs of its unionized work force.
If it couldn’t, then the government could have offered guarantees to private lenders for the amounts they loaned, which likely would have been smaller than the bailout.
But the administration took matters in its own hands, using taxpayer dollars to commandeer the bankruptcy process to protect key constituencies, while giving short shrift to others.
- It gave Chrysler’s secured creditors, who would have had priority in a normal bankruptcy, 29 cents on the dollar.
- Chrysler’s unions, on the other hand, got more than 40 cents, even though they are equivalent to low-priority lenders.
This made a mockery of longstanding bankruptcy law, something that will make credit markets wary of lending to political sacred cows in the future.
I think CEOs could have lived with Obama firing Richard Waggoner as CEO … and then firing his replacement, Fritz Henderson … and then firing his replacement, Ed Whitacre.
But, ignoring the rule of law and subordinating secured creditors to one of Obama’s core constituencies — overpaid union hacks – was over the top.
If there were any hopes of turning around the relationship, the Administration’s moves to keep Boeing from operating a plant in right-to-work South Carolina dashed them
The Homa Files 