Abandoned Stuff by Saskboy

Ha ha, hee hee, ho ho! To the funny farm!

Happy Halloween everyone! Don’t get bitten by a blog-vampire.

Ignorance has advantages for those who practice it as a skill. Being thoroughly ignorant of something means you don’t have to worry about the past, or the future. The skill can come back to bite its practitioner though, if not knowing history is what leads to a downfall in the present. During the financial crisis underway around us, I think it would be much easier to be completely ignorant of the economic system that drives our modern world.

It would be easier to have hope for the future if I didn’t know that there are so many people who live well beyond their means and wear their waste as a badge of pride. People who take out loans on homes, or just for trinkets, without any plan or hope of paying them back, they need to feel shame for what amounts to spending their childrens’ money. It’s one thing to borrow to pay for a home, but it’s another to borrow money to pay for something, and KNOW that you’ll never have a job that will pay back your loans in even a hundred years. That’s fraud.

With interest rates so low, and the stock market still on its way down, it’s hard to see how anyone can have investments that get better than 4% in the short and medium terms. I think average savings will continue to plummet until there is some kind of revolution of the middle class in the States, and they take a quarter of (or more of) the wealth locked into so few moneybags in the States. They’ll also have to crack down on all sorts of people living well beyond their means with Yukons and ‘Canyonero’ SUVs in their paved driveways in front of their $600,000 suburban homes. The days of throw away credit will have to end.

As someone with some savings, I can only imagine how uncertain the future is for people who have debt. There’s no wonder why so many choose to be ignorant about economics. Who can afford to worry about the future more than I do?

Flopping Aces is a disturbing read for someone looking for honesty and thought in the blogosphere. It was highlighted by Jon Swift as one of the blogs spreading misinformation about Barack Obama. I decided to interject into a discussion about Cindy McCain. They were heaping praise on her philanthropic deeds, of which I was unfamiliar with. They also provided some details about McCain’s multiple homes which makes more sense than the fuzzy figure I heard before. One little problem though. After 3 or four comments, MataHarley blocked my IP as one to be moderated, after accusing me of several funny things.
(UPDATE: Mataharley denies this in comments here, suggesting it was a “higher power”, probably a co-blogger at her blog who did it.)

Here’s the snippet of the exchange:
(http://www.floppingaces.net/2008/10/27/meeting-the-future-first-lady)

“In fact I know normal people who own several properties, and they are only wealthy in the eyes of Obama and Biden.”

I doubt that, because anyone who owns several properties (and by own we mean the bank doesn’t own them?) is fairly wealthy in the grand scheme of the world.

However, I didn’t realize that McCain’s homes were used by members of his (and her) family, which isn’t bad as if they were just cottages, unused most of the time.
October 28th, 2008 at 4:32 pm

MataHarley

You “doubt” that? LOL! Ah, the chutzpah of the young.

You must not only be a recent public education grad, but you also demonstrate you are totally disconnected to the real world of investments, Saskboy. Real estate is my business. I have many clientele that own multiple properties. They purchase by cashing out equity (where then was equity) to purchase new places, rent them out to they pay for themselves. They are long term investments, much like mutual funds. Comes out in the wash, except perhaps by tax depreciation write off benefits. But let’s not get into areas obviously over your head.

Are they wealthy? No. They work a job and live from paycheck to paycheck… just like you probably do. The only difference might be they are probably also chasing rent for their property with tenants who don’t pay that month’s rent. So they not only have their own bills, but have to cover what their tenants do not.

In which case, guess what… comes out of their pocket, and their credit scores take the hit. They become some of those foreclosed on, and a media statistic.

As far as owned by trusts and dependent children… some of Pelosi, Kerry’s and Cindy’ McCain’s properties may be rentals or vacation homes. Why are you only concerned about McCain’s, and not Pelosi’s, Reids… or say, Kennedy’s?

Answer.. you’re a partisan bigot. And I’ve lost patience with your presence here on FA. Let’s the others take a bite of what’s left of your amoeba brain. I suggest you either go home… do 50 “duh wuhs” and come back here when you’ve got a clue. Or perhaps hang out on HuffPo or DailyKOs where the IQ quotient is more “fair”.

Your comment is awaiting moderation.

“Why are you only concerned about McCain’s, and not Pelosi’s, Reids… or say, Kennedy’s? ”

Who said I wasn’t? I am. I don’t stop at calling out Republican hypocrisy and elitism, Democrats and others are subject to the same rules in my books (and officially American law and opinion too). I’m a partisan bigot suddenly, based on your now incorrect assumption? Tell me, my “publicly” educated self, what partisanship do I hold?

I don’t live paycheque to paycheque.

“the only difference might be they are probably also chasing rent for their property with tenants who don’t pay that month’s rent.” Can you really see Cindy or John chasing after rent on their properties? I dare say there are a great many more differences between their multiple property ownership, from what you are used to seeing, than what you care to admit to.

Again, demonstrate to me that someone who owns multiple properties, even if only for investment through renting them out, isn’t more wealthy than a statistically average American. Once you do that, you’ll also show that they are more wealthy than most people in the world.
October 28th, 2008 at 8:47 pm

–

And the fact remains, Obama has promised to lower taxes for more Americans than John McCain would. Because McCain wants to lower taxes on the richest Americans, of whom own most of the country’s wealth, few Americans would see a tax cut. McCain says he wants to cut peoples taxes, but the voters are not asking the important question — whose taxes would he cut?

Reaganomics is a failed experiment. Wealth does not do more than trickle out of the pockets of the wealthy, downhill to the working class. However, people like Joe the Plumber seem intent on rewarding the wealthy beyond all reason, in some kind of long shot dream to be taxed less should they ever win the lottery.

–

My comment was allowed, and the discussion continues.

MataHarley
15Reply to this comment

Why would I demonstrate to you why “someone who owns multiple properties, even if only for investment thru renting them out, isn’t more wealthy thatn a statiscally average American”.

First of all, you’re a Canuck, so unless your investment process there is significally different than the US for wisely investing cash for retirement, I’m not sure where to start educating you on what you obviously don’t understand. But I’ll give it my best shot since cash is cash, and debt is debt internationally.

So let’s try something simple for you. And it comes down to income vs debt. When you are “wealthy”, your income is significantly larger than your debt. Would you agree there?

So if you have $5000 monthly mortgage debt service… whether it be one property or five properties… you have $5000 monthly of what we call debt service.

If you make $6500 montly between your paycheck as an accountant or whatever - plus your rental income of the properties - and have $5000 monthly debt service, you net $1500 montly for your own debts. Still with me, Canuck?

Let’s say that $5000 is income in five different properties. And let’s say two of those properties fall behind in tenant payments for over 3 months. Here in the US, a tenant can still hang in your property for another 190 days with legal delays. That puts you well into the foreclosure process.

Meanwhile, the two banks call you and call in your promissory notes on the mortgage. You owe $400K on the two mortgages that are served as forclosure. You only make $1500 clear… even tho you own five properties. You won’t qualify for a new combined mortgage to pay off the $400K. At a 6.7% annual rate, NOT including taxes and property insurance (called PITI payment), at max you can qualify for $238K…. and that’s if that debt ratio fits in your income. Ain’t happening nowadays, cowboy. We need the CRA/redlining days of easy money for that miracle to happen.

Sell ‘em? Sure. But with the falling market values (which they do need to do…), and the fact you purchased them during the 1995-2007 real estate boom, that $400K you owe to the banks for the default is only worth $310K on the market today. And it may take you six months to sell them at a firesale price at that.

Still there, Canuck? Any good at math?

You only make $1500K clear after debt service for your own bills. You now instantly owe $400K, and only have $310K in assets. But you own five properties. Even with your other properties, if you pull out any equity that may exist, you may go into new debt with the new mortgage and the new higher payment, and no more equity (if at all) in the falling market. Not necessarily a cure.

Welcome to the reality of assets vs wealth 101… dumbed down.
October 28th, 2008 at 9:10 pm

MataHarley
16Reply to this comment

BTW, Saskboy… INRE your comment:

I doubt that, because anyone who owns several properties (and by own we mean the bank doesn’t own them?) is fairly wealthy in the grand scheme of the world.

Again you show your inexperience with the investor world. Rarely do investors “own” real estate flat out.

First of all, there is no interest write off when you don’t have the interest payments in mortgage

Second of all, it’s a waste of cash. i.e. you have $200K worth of cash to invest. Do you buy one place for $200K, and wait to get it back with monthly payments of $1200 monthly over 30 years?

Or do you buy four places, putting $50K down on each, and get $1000 monthly towards each mortgage, PLUS write off the interest on your taxes for the payments (which, in the first 10-15 years, is the majority of the payment).

Finances and wealth is not based on using your own cash. It’s based on using credit plus the write offs.
October 28th, 2008 at 9:21

Continue Reading »

The rumours are not good for Canadians interested in purchasing an XO laptop, and giving one to a child in a poor country. After a dismal performance last year by the OLPC organization when distributing laptops to Canadians (months late in most cases) this year they aren’t even going to try, instead of fixing the problem from last year. So now they will lose thousands of donors, including most of the people I’ve shown my XO laptop off to.

UPDATE: Nov. 14
OLPC coming to Europe? Surely they can’t exclude Canada now?

CBC Morning Edition had an interesting recording of an award winning American author speaking in Saskatoon to 1600 people. He makes the point [Real Audio] that simply having a pile of resources is not enough to ensure a secure future for a society.

A fool and his money are soon parted. The jury is still out on how foolish the province will be in managing our resources and the revenue/pollution they generate. Will we invest in reducing pollution, before the problem becomes economically unmanageable? Brad Wall is talking about a carbon tax, but only payable by the province’s biggest polluters. After his unjustified criticism about the Green Shift, his shift seems hypocritical. Can Wall be trusted with saving the province’s environment, given his track record?

I think the answers to those questions, is ‘no’. “Clean coal”, “carbon capture”, and tar sand development are at the forefront of his brain, and none of those things will benefit Saskatchewan in the short, or long term environmentally speaking. Without accounting for the environmental damage, there is no way to say there’s a net economic gain from those developments.

It occurred to me while listening to this radio clip, that the Dirty 30’s were an environmental disaster brought about by poor environmental stewardship. Top soil was allowed to erode, and it blew away in the drought. Improved farming practices saved many family farms, and another turning point like the Great Depression may be around the corner for the province. Will we find a way to adapt our agricultural practices to make enough money to sustain families, and also the land that they live off?

The answer is yes, of course. Saskatchewanians are a resourceful people. However, factors outside of the province will play a large role in how we are permitted to cope with coming economic and environmental degradation. WWII interrupted the Depression last time. Let’s hope it isn’t a war that defines the next cycle in advancing the development of society.

–
Hat tip to a blog reader.

The Purple People Eater sounds a bit like Wall-E. Patty and I watched “Cars” [7/10] last night, and “Wall-E” [9/10] Monday night. I really enjoyed Wall-E, and only one realism plot hole bugged me a tad. Plants can’t survive being exposed to space! Ugh, well I got that out of my system. Yes, I know it’s just a cartoon plant.

==

I made it to the Rider game on Saturday, and wooooweee it was a doozy. In the stands I remarked that the last time I remembered the Riders blowing out a team so well, it was against the Ottawa Rough Riders at Taylor Field about 15 years ago. It turns out it was in 1989, and I remember it because it was one of the first games at Taylor Field that I saw on TV, by VCR and tape delay on CBC due to the blackout. This morning I knew the answer to the CKRM Rider trivia question, but was not the first to call in for free Pats tickets.

==

CKRM remarked on the news today that 9 inmates have been mistakenly released over the last year[?] in the province :-O Colour me unimpressed.

Stephen Harper’s propaganda in the federal election is about to pay dividends for the Saskatchewan Liberals and Sask NDP, as they will get a boost next election from the Sask Party musing on implementing a “carbon levy”. This carbon tax would apply to SaskPower (and other major polluters), which is a major greenhouse gas contributor, and so would indirectly increase customers’ power [hydro] bills. There is as of now no Sask Party plan to further reduce income taxes to offset the increased energy prices.

So in summary, the Sask Party which supported Stephen Harper’s Conservatives because they didn’t propose a Green Shift, are now in the planning stages of implementing a Green Shift without the important part of reducing income taxes to make the “levy” revenue neutral. Truth really is stranger than fiction in Saskatchewan. Name brand parties are more important to voters than ideas or action.

Three stories this week of prisoners being let go by mistake, and one from not that long ago, plus a massive escape this season too? What is wrong with the penal systems in Regina and Halifax? Does this happen everywhere quite often over the years, I don’t pay close attention to this type of news.

==

This parent is only half right.

Steve Crisp said there are online gaming teams that play in tournaments for money. “I wish I’d known before” because the team environment with its strict rules “gave him a whole new identity.”

When Crisp said he would take Brandon’s Xbox away for good, “basically, I took away his identity.” That prompted the youth to leave, he said.

He did not blame Xbox maker Microsoft Corp. for Brandon’s disappearance, conceding that computers and the internet are facts of life. Online tournaments are the real problem, he said.

Online tournaments are not the problem. The problem was that their son lost touch with reality so much that he thought he could survive on his own with the help of friends in an online video game. The same thing could have happened in an offline group like a cult.