Housing crisis far from over

As of August, more mortgages are delinquent than ever. While the first wave hit and hit hard, the second, possibly even bigger foreclosure crisis is on its way.

Let's walk through the history of this mess.

From around 2004-2006 a lot of people got mortgages who shouldn't have. This includes all of the crazy "exotic" mortgage loans that reset after 1-3 years and ended up doubling homeowners' monthly payments, making them unable to buy the property. Most of these foreclosures are in the system now, getting flushed out. For the past year, I'd venture that this group makes up the majority of foreclosed properties.

But we should not forget the economic crisis that has emerged in September 2008. From Lehman to Circuit City, big names went down in all sectors leaving a lot of unemployed people. Worse yet, most new construction stopped, leaving contractors without jobs. Many of these people were not part of the first group; but they have been on unemployment for most of 2009. These are the everyday people, of whom many were NOT sub-prime to begin with, who are now facing foreclosure.

I think that we could easily see prices fall another 20-30% in certain areas, such as LA, Phoenix, Las Vegas, DC, and Florida.

We'll know the full extent by the middle of 2010, but don't believe for a second that buying right now will get you the best deal.

Census worker hanged

Yet another sign that terrorism can be domestic, a census worker was hanged and the words "fed" put on his body. This happened in Kentucky.

We can only assume that this is some type of anti-government terrorism, likely (but not certainly) perpetuated by someone on the right. It will be interesting to see what the leader of the loonies, Glenn Beck says about this. Those on the left are already blaming him for what happened. While I disagree, everyone is responsible for their own actions, Beck himself is quite crazy and may lead some people over the edge.

China is moving ahead on climate change

What are we doing? We're stuck debating healthcare, at a time when democrats have full control of the government. Just pass something and turn us into Switzerland. We'll live longer and spend less.

Now let's move onto climate change. Regardless of whether you believe that climate change is caused mostly by us or not (I do), consider this: oil will run out sooner or later, it is dirty on many levels, and there's a lot of money to be made coming up with technology to replace it. Would you rather have that tech developed in China or here? Here you say? Well, the only way to get that done is to pass massive taxes that will make energy so expensive in the US that it will be profitable to create version 1.0 of this technology.

Net Neutrality

The Obama Administration's FCC has just setup a website in which it comes out in favor of net neutrality. Net neutrality basically says that an internet service provider cannot limit bandwidth depending on what it is (e.g. video downloads cannot be slower than text). ISP's argue that some of these forms of information should be limited, since a free for all would make it slower for all users.

This may be one case of the government undoing a wrong that it has created. Normally I would be all for a free market, which in this case would be to argue that the ISP's have the right to limit traffic on their network. However in this case the ISP's are not a free market; generally you are limited to 1 or 2 choices of who will provide your broadband. In my condo, I am limited to Cox Communications and Verizon DSL (not even FIOS). So this is a monopoly or duopoly situation, usually setup by some local government.

The thought was, if the government gave someone a stranglehold on the market, that would entice the provider to divvy up cash to build the network. They were mostly right. So since the government basically gave these ISP's entire swaths of the country, I think it makes sense that the government can tell them what to do with it. And given how slow the US broadband is compared to the rest of the world, I think that net neutrality makes sense at the moment.

Clove cigarettes now illegal, rebranded as legal cigar

Today clove cigarettes, kreteks, were made illegal thanks for our friends at the FDA.

However, the largest kretek manufacturer is now going to sell them as cigars, which is permitted under the new legislation: cigars are exempt from these regulations.

What this means, is that they will come in a pack of 12 instead of 20 and will likely be bit thicker.

Confederacy and States' Rights

I'm a proponent of some states' rights, but one thing that has always gotten on my nerve is that a lot of people who are for states' rights wave the Confederate Battle Flag in some kind of historical lovefest.

Reading this makes me feel a bit better, seems that the CSA was not much of a "limited government" and was actually worse than the North when it comes to liberty (though this should be pretty obvious since they enslaved over half their population).

Interesting ruling from the courts

Apparently you cannot be sued for accessing internal company data with the intent to start your own business. Seems very strange, and given that we have 2 appeals courts who conflict with each other I bet SCOTUS will take a look.

Hot Sauces

It is no secret I am a big fan of hot sauces. I pile on Tabasco, Sriracha, and others. Even the Tabasco habenero sauce is not too much for me to pile on food.

I just had a sauce that even I think is a bit extreme. I went to Firehouse subs today, and they have a range of hot sauces. I grabbed the one in the highest possible category. It is called 357 Mad Dog and you better believe it is the hottest stuff I've had. For about 20 minutes after I ate it, it kept coming back in waves, burning my throat and making me feel like I was going to vomit.

My stomach still hurts 4 hours later.

I'll probably try it again.

What will happen when the housing credit expires?

Today fed chairman Ben Bernanke said that the recession is over.  That's likely true for most production work, and I'd bet that employment will start going up within a few months.  However, the second wave of the housing crises will probably be in full swing by early next year.

For those of you who are not aware, there is currently an $8,000 no strings attached credit for new buyers of homes.  The credit is available to any buyer within 6-8 weeks of the purchase.  While we can leave the short term merits of this policy to another discussion, one thing is for sure: it is likely that a good deal of houses being bought now are partially financed by this credit.  Using this credit as a down payment of sorts, someone's monthly payments will probably only go down by a hundred bucks, if that.  However most buyers likely using this credit to furnish a new house, or just blow it on other things.  Regardless, it is one thing that definitely motivates people to buy a house.  I know this, because I planned on using it before I abandoned my home search several months ago.

The housing credit is set to expire on Dec 1.  If this is not renewed, it means that people will need to be under contract by mid-October to safely get it (all contract contingencies aside).  

So what happens if this credit is allowed to expire (which I think it should)?  For most buyers, it will mean that they will either stop looking, or start looking at cheaper houses.  For sellers, it means that their house is at least priced about $8,000 too much, but likely much more, since buyers are probably not using this credit as a down payment.  At any rate, there is going to be a rush to buy every house on the market within the next month, and then housing activity is likely to drop substantially.  Will this induce congress to introduce an even larger tax credit next year?  Maybe $15,000?  We shall see.

Lions first loss of 2009

Coming off the first 0-16 season in NFL history, in their first game of 2009 the Lions allow the opposing QB to set a franchise record for TD's in a game. Nice.

Loudoun County Wine Tasting

Friends from out of town were visiting this weekend so we decided to go wine tasting to 3 wineries we had not been to before. All were in Loudoun County, VA near Leesburg and within a 5 minute drive of each other.

First up was Tarara Winery. Despite being rated the best in Loudoun County for the past few years, we all agreed that the wines were not that great. Additionally, it is the McDonalds of small wineries, with live music, fruit picking, 3-4 tasting counters, etc. It was just way too overblown. The line to checkout looked like it would take at least 30 minutes. We had a quick tasting and did not buy anything. On the upside, the staff seemed to be very knowledgeable and were very nice. The only wines we liked were the Rose and the Cab Franc, everything else was horrid. The cave where they age the wine was also a neat touch.

Our next stop was Lost Creek, about a 5 minute drive from Tarara. The staff seemed to know what they were talking about, but were a little rushed. However, the wine itself was very good; we bought a bottle of their Springtime, which is a blend of viognier, chardonnay, and others. Good blend of atmosphere and wine.

Our last stop was about a quarter mile from Lost Creek, Hidden Brook Winery. Basically a small log cabin with a porch, the atmosphere was the worst (though still not bad). However, the wine was pretty good. We ended up with a bottle of cab sauv, always a good choice.

Will iPhone MMS take down AT&T?

AT&T is finally going to bring multimedia messaging service to the iPhone. This service allows sending of pictures via the phones. Nearly all other carriers support this service for all of their phones. AT&T supports it for everything but the iPhone.

I predict that this is going to make a bad situation worse. There have been many reports lately of AT&T's 3G network being hard hit by iPhone usage. Time will tell, but this may be a decision they'll regret.

Unsubsidized bus fare experiment

Fairfax County has just kicked off a pretty interesting experiment: will people pay unsubsidized bus fares? It seems the answer is yes, as long as the routes are still the best form of transportation.

Perhaps this is another argument for privatization of transit, or at least shows government agencies strapped for cash that jacking up the bus fares won't cost their bottom line. At any rate, it will be interesting to see if this trend holds continues, and if more fares are raised.

AT&T to go up in flames by year's end

Maybe that headline is a bit much, but some are speculating that AT&T may lose its exclusive on the iPhone by 2010. If either CDMA carrier gets ahold of the iPhone, it could be really disastrous for good ole Ma Bell.

The other GSM carrier, T-mobile, is not much of a threat at this point. But Verizon is regarded by many as having the best coverage, and Sprint would probably have the most to gain. With the cheapest data prices by far, I could see many switching if they landed the iPhone (not to mention that their network is as good as Verizon's since all Sprint phones roam on Verizon).

It will be interesting to see how this plays out, but no matter what happens it is probably great news for Apple and not so great news for T.

Big profits on the way?

Since a lot of big bank did not go under, TARP is starting to actually make money. If it continues to play out this way, it will be interesting to see what those who were against the program say, especially since the return could be 15% or more. We're not out of the woods yet though.