Category Archives: Current Affairs

Clear Title

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Clear title is becoming a serious issue in the residential mortgage sector. It might be more accurate to say that clear title has been a serious issue in the residential mortgage sector, but it's now becoming a more commonly known problem. It appears that what's happening is people are realizing that the banks have done some pretty crappy, and sometimes fraudulent paper work on the mortgages that they're now trying to foreclose, and as the courts have started calling them on it the title insurance companies have decided that they can't insure what the banks are trying to resell.  Here's the scoop:

So why is it a big deal that Old Republic National Title isn’t going to insure Chase’s or GMAC’s foreclosures?

Because if a house doesn’t have clear title, you can’t get a title insurance policy for it. If you can’t get a title insurance policy for a property, lenders won’t lend because there is a huge risk that someone else is going to come forward with a valid title claim and take away the property and they will lose the investment they’ve made in the mortgage.

Clear title is one of the main tenets of homeownership in this country. If lenders can’t be assured that the seller (in this case, the banks who are reselling millions of foreclosures as REOs) have clear title to the property, they won’t issue a mortgage.

Which means homeowners can’t buy homes.

Which will be the perfect storm scenario that tanks the already crippled housing market.

If you think the current foreclosure freeze is bad news, think about what will happen if the millions of homes that are already in foreclosure and the millions more heading into foreclosure can’t be resold.

You know where all this is heading, right? Hello class action lawsuits.

(h/t to Fec for the link)

 

America’s Top 400

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The IRS annually produces a report that shows the tax rate for the 400 families with the highest household income and compares it to the tax rates for the other tens of millions of households.  The Clinton administration was the first to publicize the report, the Bush administration stopped the practice (surprise!) and the Obama administration has once again started to publicize them.  So what do you think happened?

The incomes of the top 400 American households soared to a new record high in dollars and as a share of all income in 2007, while the income tax rates they paid fell to a record low, newly disclosed tax data show. 

In 2007 the top 400 taxpayers had an average income of $344.8 million, up 31 percent from their average $263.3 million income in 2006, according to figures in a report that the IRS posted to its Web site without announcement that were discovered February 16. (For the report, see Tax Analysts Doc 2010-3372 .)…

Payroll taxes did not add a significant burden to the top 400, not changing the rounding of rates by even one decimal. With payroll taxes taken into account, the effective tax rate of the top 400 would be 17.2 percent in 2006 and 16.6 percent in 2007, my analysis shows — the same as not counting payroll taxes. As a point of comparison, about two-thirds of Americans pay more in Social Security, Medicare, and unemployment taxes than in federal income taxes…

Most of the income going to the top 400 tax returns is from capital. Salaries and wages accounted for only 6.5 percent of the top 400's income in 2007, down from 7.4 percent in 2006 and 26.2 percent in 1992. The average salary rose from 2006 to 2007, however, just at a slower rate than overall income growth. 

The biggest source of income was capital gains, which are taxed at a maximum rate of 15 percent. Gains accounted for 66.3 percent of 2007 income for the top 400, up from 62.8 percent in 2006 and 36.1 percent in 1992…

The report shows that the number of the top 400 who paid an effective tax rate of 0 percent to 10 percent declined slightly, to 25 in 2007 from 31 in 2006. In 1992 only 6 of the top 400 paid an effective income tax rate of less than 10 percent. 

Another 127 paid 10 percent to 15 percent in 2007, up from 113 in 2006. 

 Only 33 of the top 400 paid an effective tax rate of 30 percent to 35 percent, which is the maximum federal tax rate.  

Happy Days

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You know how the economists are all like, "The recession is over! The recession is over!" and we regular schmoes are all like, "Maybe, but the world's still a big ****hole"?  Well, the Census Bureau is here to validate our feelings:

The new figures show, among other things, that the number of people getting married fell to a record low level in 2009, with just 52 percent of adults 18 and over saying they were joined in wedlock, compared to 57 percent in 2000…

The government revealed that the income gap between the richest and poorest Americans grew last year by the largest margin ever, stark evidence of the impact the long recession starting in 2007 has had in upending lives and putting the young at greater risk.

The top-earning 20 percent of Americans — those making more than $100,000 each year — received 49.4 percent of all income generated in the U.S., compared with the 3.4 percent earned by the bottom 20 percent of wage-earners who fell below the poverty line, according to the newly released Census figures. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968.

A different measure, the international Gini index, found U.S. income inequality at its highest level since the Census Bureau began tracking household income in 1967. The U.S. also has the greatest disparity among Western industrialized nations.

At the top, the wealthiest 5 percent of Americans, who earn more than $180,000, added slightly to their annual incomes last year, government data show. Families at the $50,000 median level slipped lower.

Three states — New York, Connecticut and Texas — and the District of Columbia had the largest gaps in rich and poor, disparities that exceeded the national average. Similar income gaps were evident in large cities such as New York, Miami, Los Angeles, Boston and Atlanta, home to both highly paid financial and high-tech jobs as well as clusters of poorer immigrant and minority residents.

On the other end of the scale, Alaska, Utah, Wyoming, Idaho and Hawaii had the smallest income gaps.

Bradbury’s Prescience

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After reading this piece (h/t to Lex for the pointer), which is an essay that basically says that Ray Bradbury accurately predicted today's America when he wrote Fahrenheit 451, I've decided that I either didn't read the book in high school and depended on Cliff Notes when I wrote my paper, or my memory is in much worse shape than I thought.  I highly recommend reading the essay, even though it'll make you feel guilty about watching TV.  At least until the next episode of Amazing Race comes on.

The Hill’s Revolving Door

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Live in D.C. long enough you'll realize that there's a fairly standard playbook for the ambitious:

  • Get a job, no matter how lowly, in a Congresscritter's office.
  • Pay your dues.  Work insane hours for pretty low pay, at least by D.C. cost of living standards.
  • Build connections.
  • Go to work for a lobbyist, or start your own lobbying firm, and continue to work insane hours but now make some insanely good money in the process.
  • Pray that your people stay in power.
  • If necessary repeat the process to rekindle your connections/influence.

One guy I knew worked for a Republican senator, left working for him to partner with a couple of guys in a new lobbying firm, and his first year was close to earning seven figures.  I heard through the grapevine that subsequent years were even better, but I lost touch over the last few years so I have no idea how the rise of the Democrats in 08 affected his business.  I suspect it wasn't good, especially after seeing this research (found via Freakonomics blog)about the direct correlation between influence and income of ex-staffers from the Hill.  From the summary:

While there is no scarcity of anecdotal evidence, direct econometric evidence on the extent to which previous ocials are able to convert political contacts into lobbying revenue remains, to the best of our knowledge, non-existent. In this paper we provide such evidence. In particular, we study how the lobbying revenue of congressional sta ers turned lobbyists depends on the power of the congressional politicians for whom they have worked in the past…

Our main nding is that lobbyists connected to US Senators su er an average 24% drop in generated revenue when their previous employer leaves the Senate. The decrease in revenue is out of line with pre-existing trends, it is discontinuous around the period in which the connected Senator exits Congress and it persists in the long-term. The sharp decrease in revenue is also present when we study separately a small subsample of unexpected and idiosyncratic Senator exits. Measured in terms of median revenues per ex-sta er turned lobbyist, this estimate indicates that the exit of a Senator leads to approximately a $177,000 per year fall in revenues for each aliated lobbyist. The equivalent estimated drop for lobbyists connected to US Representatives leaving Congress is a weakly statistically signi cant 10% of generated revenue. We also nd evidence that ex-sta ers are more likely to leave the lobbying industry after their connected Senator or Representative exits Congress.

Here's a nice synopsis of the research:

Katy Perry vs. Little Mermaid

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Some people are making a big stink about Katy Perry's attire in a video shot for Sesame Street.  Basically they're taken aback by her cleavage and are afraid that their rugrats might be scarred for life by the hint of booby existence.  I understand what they're saying but I have to ask: how do they feel about their kids watching a cartoon with a scantily clad fishwoman?  For that matter do they cover their children's eyes when they go to the pool and subject them to young ladies, and some not-so-young ladies, prancing around in dental floss?  I'm gonna call hypocritical BS on this one, but judge for yourself (click on the images to enlarge them):

Katyperry  
Littlemermaid  

Here's the video:

Millionaire’s Club

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Greenwald's reaction to the O'Donnell reaction is spot on I think:  

You want to know why it's so unusual for a U.S. Senate candidate to have what Rove scorned as "the checkered background" of O'Donnell, by which he means a series of financial troubles?  In his interview with me earlier this week, Sen. Russ Feingold said exactly why.  It's not because those financial difficulties are rare among Americans.  This is why:

"It's not a new thing; it's been going on for a couple of decades. If you look even in the Senate, I'm one of the very few people in there who doesn't have a net worth over a million dollars; my net worth is under half a million dollars, after all these years. "

And as poor as Russ Feingold is relative to his colleagues in the Senate, he's still a Harvard Law School graduate who owns his own home and has earned in excess of $100,000 as a U.S. Senator for the last 18 years.  People with unpaid Farleigh Dickinson tuition bills and home foreclosures just aren't in the U.S. Senate.  And there are a lot of people — those who see nothing wrong with the U.S. Senate as a millionaire's club and as an entitlement gift of dynastic succession – who want to keep it that way.  

If you don't feel like clicking through to Greenwald's column I can summarize it for you: he disagrees with much of what O'Donnell says and stands for, but he thinks a big part of the establishment reaction to her is the fact that you're more likely to find her at WalMart than at Macy's. I think he's right.

Protecting Our High School Kids from the President of the United States of America

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Today I received the following message from our kids' high school:

West Forsyth families… this message is to inform you that President Obama will be giving a back-to-school speech on Tuesday, September 14  at 1 p.m. He gave a similar speech last year in which he encouraged students to work hard, stay in school and graduate.

The school system will be showing the President's speech again this year. If you would prefer your student not watch the speech, please send a note with him or her on Tuesday.

Thank you.

I truly, truly, truly don't get this.  What have we come to when a back-to-school speech from the President is treated like sex-ed?  And I don't say this just because it's this President.  I'd say it if we were talking about either President Bush, President Clinton, President Reagan, President Carter, etc.  

What's even more troubling is that these are high school kids we're talking about. I can't believe parents feel like their kids aren't mature enough to take what they hear from the President, evaluate it, discuss it and then make their own judgments. 

For the record I don't really blame the school administrators; they're obviously reacting to feedback they received last year and are putting a system in place in anticipation of a similar reaction from parents this year. I'm just supremely disappointed that some members of my generation feel like they've raised kids who aren't smart enough to figure out for themselves whether or not a speech from the President is an innocuous message of encouragement, or some sort of "liberal propaganda" disguised as a back to school speech.