President Obama's First State of the Union

I am pretty impressed by the first State of the Union delivered by President Obama.  I feel that for the first time in my life, we have a true statesman as a leader.

I like that he took some ballsy positions, such as saying we should repeal don't ask don't tell, allowing gays to serve openly in the military (as many other countries do, including strong military countries like Israel).

I also liked that he called out both Republicans and Democrats for putting politics above the common good; this is the type of leadership that we need.

iPad pricing is all wrong

A big mistake that Apple made in its launch of the iPad is the pricing.  Most of Apple's products have two or three options.  The iPad has 6: 16GB, 32GB, 64GB and all with or without 3G.  This creates a lot of confusion for consumers when looking at the product.  I would bet anyone thinking of buying a model right now is deliberating which model to get.  This thinking makes them focus more on the price, and focusing on price is generally not good when a consumer is deciding whether to buy a product.

Apple should have only come out with three models: 16GB, 32GB, 64GB.  The 16GB would have no 3G while the other would have it.  That way, consumers would still have the bare bones option at $499 and the middle option would only be premium.  Most people would buy a medium-high product before a medium-low.

Oh yeah, they also really fucked up on the name.

iPad Accessories: Get Ready to Pay Up

It seems that only bare bones is included with the iPad's "low price" of $499.

Want GPS?  That'll be $130, you need 3G assist for that.
Want a keyboard?  Pay.
Want to plug it into the wall to charge? Pay.
Want to take photos?  Pay. You are out of luck, the accessory only allows you to attach a camera.
Want a dock?  Pay.
Want to protect it with a case?  Pay.

Full details here.

iPad Pricing

I think the pricing of the iPad is going to cause mass consumer confusion.  They are going to have 6 different price points, ranging from $499 - $829.  These models range from 16GB - 64GB and either have or do not have 3G.

How will a consumer know which to buy?  I predict that either the 16 or 32GB models will be discontinued by year end, likely the 16.

Add to that hundreds in accessories, this seems like a complete ripoff.

iPad: First Impressions

The Apple iPad.

The only interesting this is that Apple is back in the chip-making business with the Apple A4 Chip.

What a horrible name.  Sounds like a new type of maxi-pad.

Watching the live blog at Engadget, I don't see how this thing is better than an iPhone.  I don't see any need fulfilled by this device.

It doesn't even have flash, which is very disappointing.

Toyota is in trouble

Toyota is halting the (new and used) sale of 8 models, including the popular Corolla and Camry.  The problem is that the accelerator pedal can stick, leading to some pretty messy results.  While its better for their image that they are voluntarily stopping sales, I can see this sticking with them for a long time.  

The big beneficiaries are Ford and Honda, since the Fusion, Focus and Accord, Civic are (nearly) perfect substitutes for the Camry and Corolla.

Disclaimer: I am a shareholder of Ford

The Supreme Court acted justly in Citizens v. FEC

Citizens United v. Federal Election Commission is somewhat of a landmark decision.  The Supreme Court ruled that it is unconstitutional to restrict campaign spending by corporations.  It seems that many on the left are very angry about this, saying that corporations will run the country.  But I'm sure that unions are just as happy about this, and we all know how they vote.

The bigger picture is that this is a victory for the freedom of speech, and freedom of speech includes paying for that speech.  The government has absolutely no right to tell anyone (or any corporation) how they can donate money to political campaigns.  When speech is restricted in anyway, it brings us down an Orwellian path, in which the government has a bigger role in deciding the type of information that can be disseminated.

In this case, it was about an anti Hillary Clinton movie being banned, but next time it could easily be an anti-GOP movie.  The bottom line is that people deserve to be heard.

DC Area Bicycling Laws Need Improvement

Greater Greater Washington has a list of 12 ideas that could make bicycling safer in this area.  I agree with most of these, especially #'s 1, 8 and 11.  I can't believe that VA, MD, and DC still have contributory negligence; how rediculous.

And as for #11, I generally already treat a stop sign as a yield, and a red light as a stop sign.

FHA imposes new standards - house prices to plummet?

Today the FHA has proposed new underwriting standards.

For those of you who do not know how an FHA loan works, here is the gist:
If you want a house, but don't have much of a down payment, or you have bad credit, the federal government will guarantee your loan.  A normal bank still issues it.  In return, you pay private mortage insurance (PMI), have a somewhat higher interest rate.  But almost everyone gets approved and the down payment is 3.5%.

The changes being proposed could end a lot of this easy money lending.  First of all, a minimum credit score of 580 will be required for 3.5% down payments, otherwise you'll need 10%.  This won't deter too many, in my opinion, because if you have a score of lower than 580 it is doubtful you are currently in the market for a house.

Here are the changes you need to pay attention to:

1. A .5% increase in PMI.  This means that a $300,000 house will require $1500 more up front, plus an extra $125 per month payment.  This is pretty substantial.
2. Worse yet: a reduction in seller concessions from 6% to 3%.  This is a huge deal.  On a $300,000 house that would mean $9,000!  This covers a lot of the (ridiculous) fees that realtors, mortgage brokers, and settlement companies charge.

I predict that home prices could easily fall 3-5% if all of the US or more in places that have a lot of FHA loans.  But overall this is a good thing, because homes are still mostly overvalued.

Revisiting the healthcare odds post MA election

In my last post, I predicted that healthcare had a 65% chance of passing.  With the election of Scott Brown, this would give us about a 30% chance of healthcare passing in its current form.

There are a few ways healthcare could still pass soon:

1. The House can pass the Senate version of the bill, bypassing the need for a revote in the senate
2. It will take 15 days to certify the vote, per MA state law.  Congress could reconcile and vote within that time frame.
3. Come up with a compromise with the GOP, or a bill that is good enough that while the GOP won't vote for it, at least 1-2 in the Senate would vote to break a filibuster.  

I think that option 1 is a bit more likely, as much as I detest the Senate bill.  Why do I dislike it so much?  It does a fair amount of damage to the best healthcare plans out there: HSA's.  My HSA costs me $10 a month to cover two people.  I also set aside several thousand per year into a tax advantaged account that I can use to pay the up to $4,000 deductible.  What the senate version of the bill would do is prevent me from spending my HSA dollars on over the counter medicines, and also double the penalty if I withdraw funds early.

What I'm hoping is that options 2 or 3 are in play, especially 3, since some bipartisanship could go a long way toward preserving some good things about the current system (like HSA's) while possibly also fixing some of the other problems that the first bill is silent on (like tort reform).

Odds of healthcare reform passing

The special election in Massachusetts to fill the seat vacated when Senator Kennedy passed away, threatens to block healthcare reform.  It is looking increasingly likely that the GOP candidate will win, the race is basically a tossup.

If the GOP candidate wins, republicans would have 41 votes in the senate, enough to enact a filibuster, a stupid procedure that effectively requires a super majority rule.  There is always the so-called "nuclear option" which would attempt to end a filibuster on a majority vote.  This goes against the historical senate rules, however none of this, including the filibuster itself, is described in the Constitution.  Anything goes.

I am also a bit angry with the latest change to the final bill, which will exempt union members from a tax on "Cadillac" plans.  This is discriminatory and should not be in the final bill, but it seems it was necessary to cater to Big Labor to get the bill to pass.

Here's how I handicap it:

• 50% chance of Democrats keeping control of the senate.
• If they keep control, 95% chance that healthcare reform passes.
• 50% chance of the GOP winning in MA.  
• If this happens, 30% chance that it takes a longtime to seat the new senator, long enough that healthcare passes.
• 70% chance that the winner is seated soon enough that they can vote against healthcare, and in that case I'd give this bill a 5% chance of succeeding.

All in all, this leads to a 64.5% chance of healthcare reform passing.  Decent odds, but not great.

Good news for free speech

Google just stuck up its middle finger at Communist China by declaring that it will no longer censor its search results within the country.

I think a likely outcome will be that Google is banned in China, but hopefully this will usher in a new wave of free speech movements within China, with the end goal of stopping censorship.  Only time will tell.

For Profit Schools a bad deal for everyone

This expose on online education for-profit universities should make anyone think twice about attending University of Phoenix or other for profit universities.

When it comes to for-profit vs. non profit, note the average salary of University of Maryland University College (online, NON-profit) vs. Phoenix (online, FOR profit).  The difference is quite staggering.

The reason for lower quality education makes sense.  A for profit school is probably going to have a higher student/faculty ratio and less qualified instructors (they cost more).  State supported non profits, such as UMUC are basically normal universities that offer a lot of courses online.

The article also implies that for profit schools are ripping off the taxpayers.  This is a PR nightmare for Phoenix, Strayer, and their ilk.  Why go to a for profit school that costs more and provides less return?

Studios last ditch power grab

Warner Bros is forcing Netflix customers to wait 28 days before renting movies that the studio produces.  I think this is ridiculous, and it won't last for long.  People are not going to rush out and buy DVD's.

Very few people feel the need to own movies, with the exceptions for movies that are watched often.  In my case, this may be 3-5 total movies.  With music, people can listen to a song multiple times a day, so ownership makes sense.  But the public has made it pretty clear that they are content to rent movies, and Netflix has come out on top.

I predict that customers are going to complain big time to Netflix and possibly the studios.  With the only option to buy the movie (its not like you can walk into a Blockbuster anymore, with most of them closed) or wait 28 days, I'll wait 28 days.

Decade Wrap-Up

We stand at the end of the "naughts" or "double o's".  The 00's.  Whatever you want to call them, it is ending.  The period of 2000-2009 was much more turbulent for me than 1990-1999.  I think most would agree that this decade was especially unique.

2000 started with a United States election that many thought (and continue to think) was rigged.  Our new president in 2001 faced the largest terrorist attack ever only 9 months into his job and spend the rest of his administration over-reacting to that one day, 9/11/01.  That singular day may define the decade more than any other, because much of the United States' budget and standing within the world for the next decade will likely be affected by the reaction to September 11 (including Iraq, which was sold to the public as a reaction to 9/11).

On a more positive note, technology made leaps and bounds.  Broadband has become the standard way of connecting for the middle class, and I suspect, much of the lower class.  Smart phones continue to show tremendous growth, and I doubt that anyone will have a "dumb phone" in 2015.  Social networks have also taken off big, which allows us to stay in touch with others from our past.

And finally, only about 40 years after massive race riots hit the United States, we elected our first African American president: Barack Obama.

What will the teens bring?  Hopefully less war, better tech, and more money for all.