David's Blog

What I Do Today

David Holzmann (Holzmann & Associates) — Fri, 20 Nov 2009 11:38:59 -0600

This just came in. It was too good to keep to myself:

What I Do Today

What I do today is very important because I am trading a day of my life for it.

Tomorrow this day is gone forever, leaving behind what I traded for it.

Therefore I will do everything I can to assure that what remains will be:

productive, great, good and successful......

...in that way I need never regret the price I paid for today!

- Author Unknown

Only one thing to add that was implied but not explicitly said: To assure I have no regrets I want to also assure that first and foremost, what I do today is in alignment with my Purpose, Vision(s), Mission(s), and Values.

Enough said

School Report: "My Dad is in Iraq right now" -

David Holzmann (Holzmann & Associates) — Fri, 13 Nov 2009 18:58:57 -0600

A friend of my posted this story elsewhere, and I just had to share it here with you-all.

This fourth grade girl thinks she is about to give a school report on where her Dad is stationed in Iraq and is surprised when he shows up for her report.

Here's what that sentence looks like in real life. (WARNING: You may want to have some tissue handy before clicking on that link.)

How to Buy a Bank-Owned Home - Humor

David Holzmann (Holzmann & Associates) — Mon, 19 Oct 2009 17:47:14 -0500

Thanks to Lisa Spalding, I just saw this video. I imagine you'll find it as funny and sad as me... unfortunately there seems to be at least a grain of truth to the impression.

Agreement 2 - Health Care Control

David Holzmann (Holzmann & Associates) — Tue, 01 Sep 2009 10:46:21 -0500

OK, time to post another area where I think, despite screaming matches to the contrary, there really is widespread agreement. This one is also about Health Care... specifically, whether or not the Government should be controlling our healthcare. (I believe the real disagreement comes in when the discussion turns to whether any healthcare decisions should be controlled by our government, and how many of those decisions should be left entirely up to the individual and/or his/her Healthcare Provider. But let's leave that discussion for another thread. One where we're not as interested in finding points of agreement. Feel free to start just such a thread if you feel you must comment about that and want to start that discussion.)

Do you agree with the following statement?

Our Government should not be controlling all healthcare decisions.

The options for responding:

I agree - Our Government should not be controlling all healthcare decisions.

I disagree - Our Government should be controlling all healthcare decisions.

Whoo Hoo! 50,000+

David Holzmann (Holzmann & Associates) — Sat, 29 Aug 2009 19:07:51 -0500

It finally "happened"! I finally got to 50,000 points!

It took a while, but I did it. And no, it wasn't just "luck" nor was it through any special insider information or skill. It was just a matter of sticking with this. And DOING SOMETHING from time to time. (I haven't even been all that regular at posting things... instead doing posts in bursts.)

I did learn along the way a few things that don't help in the points game:

1) There's a limit on how many original posts one can make and still get points. (I believe you don't get any points if you post more than 10 original posts within a week. So, you could make 10 posts on one day and then wait until the next week to post again. Or you could post one a day continuosly forever and get points every day. But if you're doubling or tripling up every day, your effort will stop getting rewarded with points after a few days, until the next week.) (NOTE: See this blog for clarity on "Points" and other Frequently Asked Questions.)

2) There's a limit on how many comments you can make and still get points. (You'll stop making points after 10 comments in a single day.)

3) There's a limit on how short both posts and comments can be and still get points.

4) You'll get no points (but perhaps a sense of satisfaction) from posting non-original material. (And please be careful to neither plagiarize (claim something as yours when it's not) nor violate copyright (use material outside of "fair use" without permission.))

But I've found ActiveRain is really more about community than the game of "winning" points. So, if you have a lot to say, by all means: SAY IT! And if you find something interesting from someone else to share, SHARE IT!

Agreement 1 - Health Care Reform

David Holzmann (Holzmann & Associates) — Sat, 29 Aug 2009 18:40:12 -0500

Can we all, or at least a vast majority of us, agree that our Health Care System is not perfect, that it has flaws, and could stand to be reformed in SOME manner? That it could be improved?

This is not a place to determine exactly what manner it should be reformed, but just to see if we can agree that leaving things exactly as they are is not an ideal to be aiming for.

As a poll this question would have the options for answering:

A) Yes - I agree that the U.S. Health Care System could be improved.

B) No - I think the U.S. Health Care System has no room for improvement.

What do you think?

Agreement

David Holzmann (Holzmann & Associates) — Sat, 29 Aug 2009 18:34:27 -0500

With all the heated discussions (or screaming sessions) that are going on, I think it would be helpful to take a step back and affirm those things that we can all agree on. Or at least, affirm those things that most of us can mostly agree on.

Sure, there are issues where there will be staunchly held, diametrically opposed perspectives. But even there, perhaps we can find one or to points of agreement.

What would you say to starting a series of posts to try to find those points of agreement?

Course Correction (Warning: Long Post)

David Holzmann (Holzmann & Associates) — Fri, 28 Aug 2009 18:36:19 -0500

Just spent a bit of time reading a personal development book. It's called "One Door, Two Locks: The 7 Keys to Unlocking the Door to Success in All Areas of Your Life" by Dr. Jim Muncy. (It was a recent Recommended Book from Network21, and is a derivative work based on: A Few Keys To All Success.)

What I was reading was from the chapter titled, "Discernment: Judge the Seed by the Harvest". In that chapter he says, "Everything we have in life comes from what we do, and everything we do comes from how we think. Thus, the seeds of our life are our thoughts."

He goes on to tell the stories of a couple of women: Ms. Crabb and Gertrude.

Ms Crab is the name he gave to a coworker of one of his students. She "holds a master's degree and yet the best job she could get was one that anyone off the street could do. She felt overqualified, and underpaid. As a result, she had a real big chip on her shoulder."

One day, she "let loose" on Dr. Muncy's student, saying,

"They really have you fooled. You come in here and rush around all day long. For what? The measly wages these cheap people pay you? I don't understand why you think you have to solve the problems of every whining customer that comes in that door. I don't understand why you think you have to work so hard. You won't find me doing that, not for what they pay us."

The student asked Dr. Muncy how she should handle Ms. Crab. His reply? "That depends... on where you want to be in ten years."

He further explains that if she (the student) wanted to be in the same position as Ms. Crab, she should listen very carefully to what Ms. Crab had to say, and follow that advice carefully. But if not, she shouldn't pay any attention at all.

Then he told the story of Gertrude. ("Gertrude" was a name he'd solicited from his class before telling them the story. so as to keep the name fictitious.)

Dr. Muncy's wife, Lisa, called him at work one day, and told him that an acquaintance of hers didn't have anything to eat for Thanksgiving.

Initially, I thought that just meant that she did not have turkey and dressing. I was wrong. It literally meant that she did not have one thing for her family to eat in their whole house, and they had no way of getting any money for the next two weeks.

I didn't want to see Gertrude and her family starve, but I also believe that people should, if possible, earn their money. So I told Lisa to pick some things that she thought Gertrude could do from her "honey-do" list and tell her that, if she wanted to do them, I would pay her when I got home.

To make a not-too-long of a story a bit shorter: the arrangement worked out very well for everyone. And it lasted for a few months. In fact, he continued,

Gertrude spent so much time over at our house, we got a very good picture of what her life was like. It was a total mess. It wasn't just her finances where she had problems. The most common words heard out of her son's mouth were "I hate you, Mom." She wasn't 100% sure her husband was the boy's father. Her marriage was in shambles. We pleaded with her to go to the local battered women's home for protectino when she told us that her husband had threatened her with a chain saw. She cried all the time. She didn't feel like she had any friends. She was estranged from her parents and her brother. It was hard to find any aspect of her life that wasn't a total wreck.

Gertrude also got a good chance to see how we lived out lives from the inside. She was absolutely amazed that anyone lived as we do. Over and over, Gertrude told Lisa and me that we live in a "fairy-tale-world." Our kids love us. We have a great marriage. We don't have any financial stress or strain. Both Lisa and I love what we do. Our parents, brothers, and sisters all like us. We are in good health. Gertrude told us that everything she wanted in life, we have.

The strange thing was that Gertrude, while envying our product, constantly criticized our process. She envied our children but criticized our child raising. She envied our finances but criticized the way we handled our money. She envied the love Lisa and I had for each other but constantly criticized the dynamics of our relationship.

He goes on to tell of a ladies-only party his wife, Lisa, held one evening. It didn't end until after he was fast asleep, so he didn't get to talk with his wife about it until the next morning. She hadn't slept all night. When asked about it, she said the party was "90% great and 10% terrible." The "terrible" part was Gertrude. It seems, Gertrude had spent the whole night criticizing Lisa, telling everyone at the party how she thought everything Lisa did was wrong.

Dr. Muncy calmed his wife by assuring her that Gertrude's opinion should only bother Lisa if Lisa wanted what Gertrude had. He pressed her:

"So tell me, exactly what part of her life do you want? Do you want me to bring the kids in here and have them scream "I hate you"? Do you want me to clean out the bank accounts and empty the kitchen cabinets so that we can starve for a few days? What do you want me to do? Do you want me to go get the chain saw? Specifically, which part of Gertrude's life do you want?"

"I don't want any pert of her life!" Lisa responded emphatically.

"Then, I guess it doesn't matter that she criticized you. I guess it doesn't matter that you and she think differently. Be glad that you do."

Lisa replied:

"I wish I would have woken you up last night, and we would have had this conversation then. I wouldn't have spent the night tossing and turning, worrying about what Gertrude said."

Both Ms. Crab and Gertrude had missed the key that Dr. Muncy was talking about: We are where we are in life because of the way we think.

If we want to improve our lives, we can't just change the circumstances, but we can improve our thinking that influences our circumstances.

In marriage - we can't (or shouldn't) throw out our spouse - but we can improve our thinking about how we treat our spouse.

In child-rearing - we don't trade kids with the neighbors - but we can improve our thinking about parenting.

In finances - we don't steal from others (either illegally directly or legally through the government) - but we can think about thrift and/or improving income.

In health - we can't buy another body - but we can change the way we think about physical fitness.

We ALL believe we are right all of the time. If we didn't believe we were right, we wouldn't believe whatever it is that we believe. As soon as we discover we're wrong, we change what we believe, and get back to believing we're right - with the new belief(s) in place. So, checking to see if we believe we are right is a poor test of whether or not we actually ARE right.

So what's the real test?

The real test of our thinking is to look at where we are in life. Our thinking can't be all right if our life is all wrong. Our life is the harvest, our thinking is the seed. We must judge the seed by the harvest, not by staring at the seed.

The good life isn't reserved for the super-smart. (If it was, perhaps the only one here who would qualify for the good life would be Ted Baker. Maybe there's someone else here who's smarter, but I have yet to find them. And I'm not convinced I'm smart enough to know.)

So who IS it for? According to Muncy, it's for those who properly feed their minds.

He suggests there are four major influences that affect how we think:

They are the people we associate with, the books we read, the entertainment we watch and hear, and the dialog that goes on within our heads. We can greatly improve our lives by choosing these four influences wisely.

And that's where I intend to make a course correction. See, I'm not satisfied with all aspects of my life. I don't like the "harvest" I'm reaping.

I find my mind filled with too many negative influences. So, the thing for me to do is proactively cut out at least some of those negative influences. How and where to do that is going to be the challenge.

Part of the problem is that I REALLY like to stay "up" on current events. Yet most reported news is of the negative variety. (You know the old saying, "If it bleeds, it leads." I don't care which source you consider "fair and balanced", that maxim holds true pretty much across-the-board.) So, I need to figure out how to stay up on news without the negative. At this point, I don't know how I'm going to do that. (Have any of you, my readers, found a good solution for this? If so, I'd love to hear.)

Another part, is the people in my life.

Some familial relationship are with people who seem to take great pride in being in a bad mood and in hiding behind excuses for their sullenness. ("It's my meds" or "today was a bad day" ("today" just happens to be almost every single day for weeks on end) or "it's all my boss's fault" or "doctors suck" (when they won't prescribe the desired drugs for self-medication)) Yet they fill their minds with endless self-destructive messages - from entertainers who are on perpetual self-destruct mode, to friends and leaders who are perpetually declaring their victimhood, to "documentary" movies that are all about showing what's wrong with you-name-it.

Some friendships are with people who take great pride in being angry most of the time... angry at "injustice", angry at "oppression", angry at others for their achievement (claiming they're just lucky or cheating), and the list could go on.

I want to help these people overcome their challenges in life. But I'm realizing I can't. They have chosen what they're filling their minds with, and the harvest is anger, sullenness, and self-destruction. Yet, I can't just sever most of those relationships. Or maybe I'm just not willing to do that. (One of them I truly can't, because we live in the same house, without severing one or more other relationships that are far more important.) Perhaps my compassion is getting in the way of my own mental health. I'll have to work on that one.

The "outside" influence I CAN "fix" starting right now is the books I read.

A couple of days ago I picked up Orwell's 1984 as a bedtime story to read. It's a classic and I'd seen it recommended quite a few times... particularly recently. I'm sure it's a great book. But, at least the way it starts, it reinforces all kinds of negative imagery in my mind.

I found myself resonating with the sense of being all alone, politically, in a sea of people who would just as soon kill me as hear my views. I don't completely fit in with those on the Right, yet I'm FAR too conservative for those on the Left. I live in a part of the country that's KNOWN for its Liberal politics, and my Representatives don't in any way represent my views.

As I read, it seemed almost like Orwell was not-so-subtly describing the current adminstration in the White House. Instead of "FREEDOM IS SLAVERY" the current adminstration could easily be saying "SLAVERY IS FREEDOM." (Do as we say, when we say, exactly how we say, and then you'll know what it is to be free.) And they'd keep the phrase "IGNORANCE IS STRENGTH" intact. (Just look at their adulation for the Educational System that's churning out illiterates.

And the description of the crowd breaking into "a deep, slow, rhythmical chant of "B-B! ... B-B! ... B-B!" over and over again, very slowly..." reminded me so much of a video I saw, I think it was just prior to the election, in which a large choir was singing while the camera panned over huge crowds and vast expanses of nature's beauty. And the choir was repeating, in a deep, slow rhythmical chant, "O-Ba-Ma! ... O-Ba-Ma! ... O-Ba-Ma!" like they were in a trance.

It was just way too creepy!

So, to start my course correction, that book is getting dropped. I may pick up the Cliff Notes version of it. But, at least for now, I don't plan to finish reading it.

Instead, I'll be reading more books like "One Door, Two Locks" and watching movies that are truly moving, and listening to music that's uplifting, and spending more time with friends who are achieving great things and encouraging others to do the same.

Are you in need of a course correction? If so, what will be your first step(s)?

Doctors weigh in on the new Obama Health Care Proposal

David Holzmann (Holzmann & Associates) — Thu, 27 Aug 2009 21:16:17 -0500

Just saw this one, could help but pass it along. Enjoy!

The Allergists voted to scratch it, but the Dermatologists advised not to make any rash moves.

The Gastroenterologists had sort of a gut feeling about it, but the Neurologists thought the Administration had a lot of nerve.

The Obstetricians felt they were all laboring under a misconception. Ophthalmologists considered the idea shortsighted.

Pathologists yelled, "Over my dead body!" while the Pediatricians said, "Oh, Grow up!"

The Psychiatrists thought the whole idea was madness, while the Radiologists could see right through it.

Surgeons decided to wash their hands of the whole thing. The Internists thought it was a bitter pill to swallow, and the Plastic Surgeons said, "This puts a whole new face on the matter...."

The Podiatrists thought it was a step forward, but the Urologists were pissed off at the whole idea.

The Anesthesiologists thought the whole idea was a gas, and the Cardiologists didn't have the heart to say no.

In the end, the Proctologists won out, leaving the entire decision up to the @$$h01e$ in Washington.

The Vendor-Client Relationship - In other contexts.

David Holzmann (Holzmann & Associates) — Wed, 08 Jul 2009 09:03:38 -0500

For a number of years I worked as a Sales Manager for an Audio Visual Services company in various hotels. What you're about to see is a video I just found that accurately illustrates the way my clients often treated me... just put in different contexts.

What was amazing to me was how so many seemed to consider such treatment of their Vendors as normal and reasonable.

I understand the clients' suspicions of vendors. All too often I was pressured to take advantage of clients by charging exhorbitant prices. But I never caved to that pressure. When our prices were higher, I could easily justify it as providing superior service and/or superior products. (And when in doubt, I'd research it to confirm we were competitive price-wise for providing as good or better products/services.)

Question: As you interact with others, how do you think your treatment of them is viewed? And is your treatment of them really necessary, or might there be a better way (and/or time) to make your needs and desires known?

Problems with the FairTax

David Holzmann (Holzmann & Associates) — Wed, 06 May 2009 19:16:03 -0500

Dave Ramsey wrote a response to someone asking about the FairTax. Unfortunately (and frustratingly) Dave got a few of his facts wrong*. Nevertheless, I have to agree with one person from OH (identified only as "Kicker"), who commented on Dave's article saying:

While many applaud the benefits of the FairTax, very few discuss the drawbacks.

First, because people will receive their whole paycheck, they will have control over more of their own money. This means they will waste a greater percentage of their total income buying things they don't need, or that are not approved of by those who now work for the government and know better.

Second, businesses will have expanded markets overseas due to lower production costs and more competitive products. This means that our trade deficit will decrease, and foreign governments will have less money with which to buy American real estate and businesses. This will be a blow to trans-nationalism, and will result in fewer Americans working for foreign-owned companies, and fewer jobs being moved off-shore.

Third, government corruption will be decreased. Without a thick cover of convoluted IRS regulations, government employees and elected officials will be less able to hide nefarious behaviors. Manipulation of the tax system in return for political contributions or outright bribes is a time-honored tradition, practiced around the world. Instituting the FairTax will strip Congress of the ability to manipulate the tax system in favor of political cronies, reducing Congressional contributions, and, maybe, even resulting in the election of more honest politicians. Don't let it happen!!!

The dangers of allowing people to keep their money, keeping American jobs at home and American business strong, coupled with the horrors associated with honest government, are just too great.

For the sake of our children, who fortunately already owe $22,000 in debt, don't let reactionaries pass the FairTax and end a system we, almost, understand.

Ban the FairTax.

*Note:

Dave's mistakes:

DR: "The basic premise of the Fair Tax is that it’s immoral to tax someone’s income"

No. The premise is that taxing retail sales makes for better incentives, and less opportunity for government meddling than an income tax. It's not a question of moral or immoral - just better / worse, or effective / ineffective.

DR: "People would only pay taxes on items they buy, except for food, basic clothing, and other kinds of necessities."

No, That is what is commonly called a VAT (Value Added Tax) plan - as they have in Europe. The FairTax taxes EVERYTHING sold at retail. This, combined with the prebate, is what makes the FairTax fair - it treats everyone exactly the same, no matter how much money they make - and yet it is NOT a regressive tax due to the prebate. Up to the poverty level of spending on retail products and services, all taxes are prebated. Those who spend above the poverty level will pay the FairTax out of their own pocket for all retail goods and services above that level.

DR: "We’d see a lot of job losses if the Fair Tax system were put in place. Tax preparation services and things like that..."

While it's true that those in the tax preparation industry, as well as lobbyists and tax advisors would lose their jobs, those "losses" would be MORE than made up for by new jobs created in the new tax haven for manufacturers. And most assuredly, those who are skilled at accounting (such as CPAs) would undoubtedly find MORE than enough work as business boomed. So, while a few people would lose their current jobs, the net effect would be significant job gain. (And, honestly... most people are savvy enough to understand that the tax preparation industry is really a seasonal one - working from January through April 15th every year, with only a very few (comparatively) employed throughout the year to handle quarterly taxes for businesses.)

Latest Breakthrough From Apple!?!

David Holzmann (Holzmann & Associates) — Tue, 28 Apr 2009 16:02:47 -0500

Here's a very exciting break through in miniaturization! Think of the possibilities! It's so convenient. And it seems like they've thought of almost everything. They've got the player, specialized tools, the ability to expand its capacity, extended-life battery, remote control, and even a convenient way to carry it along with all the accessories. Would we expect anything less from them? Truly amazing.

Enjoy the Ad!

Re-Igniting Contentment or Gratitude

David Holzmann (Holzmann & Associates) — Fri, 24 Apr 2009 13:53:35 -0500

This clip of comedian Louis C.K.’s appearance on Conan’s show is a funny, clear explanation of how we take so many amazing things for granted. Some of the things he touches on include: telephones, banking, internet, and transportation.

I LOVE his little story:

This is what people are like: they’ve got their phone [acts out dialing on a cell phone] and they’re like, “Ugghh!!… … [waiting for a connection] It won’t… … “ GIVE IT A SECOND!!! It’s going to SPACE! Can you give it a SECOND to get back from SPACE? Is the speed of light too slow for you?

Then, after relating another funny story of someone getting frustrated with the failure of some totally new service he point out the ingratitude by saying, “How quickly the world owes him something he knew existed only 10 seconds ago?

Everything is Amazing, Nobody is Happy

We’re so quick to lose perspective.

As I wrote this I was reminded of an experience I had back in 1992. That was the year Intel released the 486DX2 which increased computer processing speed all the way up to 66MHz. (If my understanding is right, for comparison, current consumer-grade computers are frequently at least 45 times faster.) I was tasked with putting together a small ad to place in a national magazine.

A friend worked for one of the local mainframe computer companies. Their computers were among the best in the world for dealing with graphics - they had lots of memory, and were significantly faster than anything else out there.

Well, we had scanned in images of the album, and each of those images took up about 10-15 MB of memory. (Which at that time was an awful lot, given that one had a “lot” of storage if one’s hard drive could handle two or three of that size image.) We were trying out different layouts, and my friend was getting really frustrated and upset when it took the computer 10-20 seconds to process our changes. (At one point he was so frustrated, he yanked out one of the computer’s sheets of circuits and, using some tools, tweaked a few things before shoving it back into place.) Mind you, this was a machine that was valued at something well in excess of $100,000. And no other computer any of my friends had access to could have completed one of those processes in less than an hour. The computer’s processing was amazing but he wasn’t happy.

I was amazed… both with the computer and with my friend’s reaction. I wasn’t just content, I was very grateful. Today, I can’t honestly say that would be my gut reaction. Do you, like me, find yourself becoming less content and less grateful for the amazing things we are able to do?

Let’s work on developing a better sense of contentment and gratitude. First step: pay attention to the amazing, wonderful things in life. Maybe even write out a list as a reminder. What amazing things would you list that would help re-ignite your contentment if not gratitude?

Putting another's best interest ahead of self

David Holzmann (Holzmann & Associates) — Fri, 17 Apr 2009 14:40:53 -0500

Most coaches are upset when a basketball player misses a free-throw. But this situation was different, and coach Dave Rohlman made sure his player knew that this time he was expected to miss the shots. "You realize you're going to miss them, don't you?" Rohlman said. Darius McNeal nodded his head. He understood, and missed the free-throws by a mile! What was going on?

It was a lesson in sportsmanship.

Here's another account of this amazing, unusual story of sportsmanship... no, it's not so much sportsmanship as it is selflessness. Sportsmanship would be playing the game sincerely and to the best of one's ability within the rules and spirit of the game without gloating over a win or doing anything unreasonable to harm another, nor getting unreasonably upset.

Despite winning this particular game

It hasn't been the greatest season for the team, but they have stuck together through a lot of adversity.

"We maybe don't have the best basketball players in the world but they go to class and take care of business," (Milwaukee coach) Womack said. "We have a losing record but there's life lessons going on, good ones."

None so good, though, as the moment a team and a player decided there were more important things than winning and having good stats.

I loved the comment DeKalb coach Rohlman later made:

"This is something our kids will hold for a lifetime. They may not remember our record 20 years from now, but they'll remember what happened in that gym that night."

As we live and work and interact with others, what can we do to develop a sensitivity to what's most important? To live out our personal Purpose, Vision(s), and Mission(s) in alignment with our core Values?

Here it is! The ULTIMATE all-in-one device. Going where no phone has gone before.

David Holzmann (Holzmann & Associates) — Thu, 02 Apr 2009 20:25:39 -0500

My sister-in-law pointed this out to me. She found out about it from her very-tech-savvy daughter.

I think I've GOT to get me one of these Pomegranate Phones. How about you?

YSP Worth Rereading!

David Holzmann (Holzmann & Associates) — Thu, 02 Apr 2009 10:49:50 -0500

Wonderful, detailed explanation of YSP (Yield Spread Premium) and why it can be a BIG mistake to fixate on that when comparing Mortgage Brokers and Mortgage Lenders (Banks, Credit Unions, etc.)

Via William J Archambault Jr (The Real Estate Investment Institute ):

In light of Georgia bill SB 57 as discussed in Ken Cooks excellent blog The Attack on Yield Spread Premium Goes Mainstream and "The Mortgage Originator's" unsupported report of Congress considering the same thing, I'm reprinting my article from 2004 I'm told it was the most reprinted article on the subject that year, I know it was circulated on 3 contents and at least 4 languages. It sold a lot of books.

A Consumers Guide To Mortgage Brokers And The Evil Yield Spread Premium /action/blogs_admin/write/6544/action/blogs_admin/delete_entry/6544

Kick backs, hidden cost, back points, HUD (Housing and Urban Development) calls it "Yield Spread Premium" (YSP), money paid by the a lender to mortgage brokers outside of closing. Money paid by the lender to the broker because you got a higher mortgage interest rate. Mortgage brokers are suppose to show this on line 801 of their "Good Faith Estimate" and escrow will show it on the estimated and final closing statements (HUD- I) when closing a loan for a mortgage broker. You'll never see these "points" on a loan from a bank, mortgage banker. Savings and loan, thrift, or credit union! Several Congressman and Senators have expressed concern over YSP's in recent years citing undo enrichment of mortgage brokers and their agents. The news media often mentions "kick backs" to mortgage brokers, and yet this practice continues!

First we need to understand mortgage pricing. The traditional bank offered one mortgage interest rate that fluctuated occasionally, after WW 11 loans often included an "Origination" fee (normally 1 point, 1% of the loan amount) more recently we have seen many additional bank and third party fees. Until about 1973 mortgage banks and mortgage brokers as we know them dealt mostly in "government" loans (FHA and VA) the rates were set by the FHA and VA respectively if these rates were below the current market these lenders added "discount points" to increase the "Yield" sufficiently to make money available. We soon saw wide spread use of these "discount points" to buy-down interest rates on all types of mortgage loans. After 1974 when mortgage brokers began their dominance of the mortgage origination market (current estimates have mortgage brokers originating 75 to 90+% of all mortgage loans) your bank normally had I rate and it included I origination point, mortgage bankers normally have "the rate" and one "buy down" rate. Strangely, mortgage brokers have many rates in 1/8% increments of rate, spanning 2 or more % interest. This is strange because most money offered by mortgage brokers comes from mortgage bankers, the same banks that offer only, the afore mentioned, two, higher cost, rates to their retail clients. About half the rates available to mortgage brokers were the traditional "Buy-down" rates costing up to 2 points more than the so called "par rate" (no discount cost to the broker) the other half were "buy-up" rates paying the broker up to 4The payments, kick backs, hidden cost, back points, etc... were finally named "yield spread premium" by HUD about a decade ago. It's not uncommon for a mortgage broker to have available a 6 point spread (4 points YSP to 2 discount points) available on any given loan program. That 6 points on a $300,000 loan means up to $18,000 difference in closing cost, regardless of all the other closing cost. Yet, all that extra cost only means about 2% difference in the interest rate. Most consumers don't have the luxury of choice, they seldom have an extra $18,000.00. Unless they need the lower rate to qualify for the loan the lowest rates seldom make sense.

A quick glance at the rates and discount points might make you think that you'd always save money after 3 years ( 6 discount points divided by 2% interest reduction) but that's not true. The idiosyncrasies of loan amortization mean that the break-even point is normally closer to 5 years, not counting the time value of money. In today's society it's rare in deed that a mortgage loan actually exists for five years, either the house is sold or it's refinanced long before the break-even point.

Yet HUD and certain congressman keep holding hearings about the evil YSP and the abuses by mortgage brokers of this "hidden" cost. Selected witnesses offer tales of over charges and hidden cost they are bone chilling. Claims of over charging abound. The problem is they can't explain why mortgage brokers originate almost all residential mortgage loans, and why it's almost always less expensive and more successful to finance with a mortgage broker.

There have been abuses, many of them, you're more likely to be abused by a broker and or his agent than other lenders, because: there are more of them, remember up-to 9 out of 10 mortgages come from brokers.. These abuses and promises of reform make great head lines. "Reformed" is always an interesting term, it implies you're better than the un-reformed. The argument is that only mortgage brokers charge YSP, but is it a charge? Yield is the return on investment or the product of an investment. Spread is the difference between cost and return, or gross profit. Premium is something extra above the cost.

In it's simplest form, if a $100,000.00 loan is at 6.000% it will yield $6,000.00. If the cost of funds is 2.000% then the spread is 4.000% or $4,000.00. If administrate and overhead cost the lender 0.5% then the premium is $3,500.00. YSP is a relatively new term coined by HUD. When most of us went to school if you subtracted cost from yield you determined The payments, kick backs, hidden cost, back points, etc... were finally named "yield spread premium" by HUD about a decade ago. It's not uncommon for a mortgage broker to have available a 6 point spread (4 points YSP to 2 discount points) available on any given loan program. That 6 points on a $300,000 loan means up to $18,000 difference in closing cost, regardless of all the other closing cost. Yet, all that extra cost only means about 2% difference in the interest rate. Most consumers don't have the luxury of choice, they seldom have an extra $18,000.00. Unless they need the lower rate to qualify for the loan the lowest rates seldom make sense.

Why don't banks and mortgage bankers have to report their profits and why do we call it YSP? We don't require any business to report their profits to anyone except to stockholders and the IRS. We have to further define YSP, it is that portion of the anticipated profits the lender shares with the mortgage broker. In that 10% or so of mortgage loans originated by lenders they pay commissions and overhead to their own in-house sales department it is considered cost. It is only when the loan originates with an outside mortgage broker that the commission is called YSP.

Shouldn't the consumer go to direct lenders to save money? It sounds good but it doesn't work that way mortgage brokers do most mortgage loans for two very good reasons. Loans from mortgage brokers are almost always less expensive, because of competition! Thanks to mortgage brokers the mortgage origination business is possibly the most competitive business in the country! Secondly, success! Mortgage brokers are able to close more loans because they have more than one source for a loan. When the consumer doesn't qualify for a banks program he's turned down, that's the end of the application. The turned down consumer will never know that several other lenders would take his loan, mortgage brokers will get the loan approved.

Mortgage brokers have all those fees! Yes there are a lot of cost in closing a mortgage loan. Ads are always telling you, you can be finance for only $395 to $995, that's true. But they are not talking about third party cost! Direct lenders advertising these low closing cost are simply using some of the spread to absorb those costs, mortgage brokers do this all the time using the YSP to off set the consumers cost. Normally the direct lender can avoid showing you the real cost, where the broker will have to show all the cost and issue a credit, he'll also show the YSP adding to the consumer's confusion. When a consumer sees a long list of costs he may never notice the total at the bottom of the page may be less than the direct lenders short list. All other terms being equal, the only way to compare loans is to check the amount out of pocket and the monthly payment.

Lenders who paint them selves in to a corner advertising fixed fees (like $395) limit their ability to provide the best loan for the individual. Mortgage brokers have a lot more flexibility to aid the consumer and normally will have a lower rate for any given cost, or a lower cost for any given rate. You have to compare apples to apples!

If Congress and HUD are investigating the evils of YSP, won't we be better off? A few years ago the same people investigated "predatory lending" a couple of large direct lenders had preyed on a southern state. To cure the problem we now have new law "Section 32." The new law did nothing to help the people suffering form the "predatory" lenders. What the new law did was to drive more morally cognizant lenders out of the business of helping troubled lenders! If the lender now makes one of these high risk loans they must have the client sign a new form in escrow 3 days before closing that says if you don't make your payments you could lose your house! I've only been in lending since 1969 but I've never seen a mortgage or deed of trust, that didn't very clearly say if you don't make the payments you could lose the house. The only thing the new law accomplished was to reduce competition in this already expensive field driving up prices, and cause a few people to lose their home or worst because their loan was delayed.

The horror stories are true and all the same. The predatory victim explains: I agreed to pay $1,0001 month, I spent the money, I can't make the payment, they foreclosed on me! There's enough sin to go around, who's more immoral? The lady who spent the loan proceeds knowing she couldn't make the payments or the lender who should have known she'd never make the payments? The evil YSP story goes like this: I agreed to pay 6.5%, he told me I only had to pay I point origination, I found out this YSP thing was the lender paying him 2 points! Where's the problem, the bank would have given her the same loan for 6.5% at I point origination, it's what she agreed to pay. Consumers never ask the bank what there making The evils of YSP are imaginary but they make great sound bites! We can only hope HUD and/or Congress doesn't solve a non-existent problem.

Bill

William J Archambault Jr

The Real Estate Investment Institute

To avoid unwanted or unnecessary purchases, keep your hands off the goods.

David Holzmann (Holzmann & Associates) — Tue, 31 Mar 2009 18:47:43 -0500

In 2003 the Illinois state attorney general's office warned holiday shoppers to be cautious of retailers who encourage them to hold objects and imagine the objects as their own when shopping.

Authors Joann Peck (University of Wisconsin-Madison) and Suzanne B. Shu (UCLA) wondered whether the warning was valid and, more generally, if touch influences the feeling of ownership and valuation of an object.

Their conclusion?

"In our research, we have evidence that the warning from the attorney general is valid. In four studies, we find that merely touching an object increases the feelings of ownership a person has for the object. This, in turn, results in a person being willing to pay more for most objects that they touch versus objects that they cannot touch. We also find that when touch is unavailable, such as shopping online, having people imagine owning a product increases their perception of ownership and how much they are willing to pay for a product."

The research may help explain the link between touch and impulse purchasing, the authors explain. "Encouraging touch in a retail store, as Apple does for products like the iPhone, may increase the feelings of perceived ownership and influence the amount a customer is willing to pay for a product." Likewise, offers of "free trials" for a certain time before the consumer is obligated to pay are likely to increase perceived ownership and product valuation.

So, if you're struggling to pay all your bills... it would be wise to keep a "hands off" attitude when going through stores. (How often have you been tempted in the store by those people with the samples of food? How about at the car dealership, after you've sat in the vehicle?) Keep your distance and you'll undoubtedly spend less, and come home with less - saving your money for bills for things you bought on impulse. Use this knowledge to your financial advantage!

On the other hand, if you've got something to sell - like a home - one of the best things you can do is give your prospective buyers something nice to experience. Engage their senses... all of them, if possible! You too can use this knowledge to your financial advantage.

What to celebrate?

David Holzmann (Holzmann & Associates) — Sat, 28 Mar 2009 14:03:02 -0500

Many people are going to join the mob and celebrate Earth Hour tonight. The claim is that there will be more than 1 Billion participants. But I, along with others, question if that estimate includes people in countries that don’t have enough electricity to make the choice to turn out their lights. Of course, they don’t have the choice to acquire electricity whereas anyone can choose to stop using human technology if they wish. Put another way, this "celebration" isn't pro-earth, it is anti-man and anti-innovation.

Or, in the words of Keith Lockitch,

Earth Hour makes the renunciation of energy seem like a big party.

Participants spend an enjoyable sixty minutes in the dark, safe in the knowledge that the life-saving benefits of industrial civilization are just a light switch away. This bears no relation whatsoever to what life would actually be like under the sort of draconian carbon-reduction policies that climate activists are demanding: punishing carbon taxes, severe emissions caps, outright bans on the construction of power plants.

Forget one measly hour with just the lights off. How about Earth Month, without any form of fossil fuel energy? Try spending a month shivering in the dark without heating, electricity, refrigeration; without power plants or generators; without any of the labor-saving, time-saving, and therefore life-saving products that industrial energy makes possible.

When you put it that way, this "celebration" doesn't sound anywhere near as "cool" or "desireable" does it? If it still does, then how about it? Those who want to "celebrate Earth"... how about celebrating "Earth Month" without any form of fossil fuel energy for a month? You can start right now... turn off every electrical and fuel-burning thing in your home and/or office. Oh, yeah... that means you can't drive anywhere in your vehicle(s), and it includes turning off your cell phone, TV, computer, and the connection to the internet.

Here in the Mtn. View, our all-wise city council is going to spend up to $500 to pay employees to turn off all the lights for an hour. What a waste. They're going to pay people extra to go around and turn lights off, sit around for an hour, and then turn them all back on. Why not just make it a common practice to turn off lights when leaving a room? Or, better yet, install motion sensors and timers so that in the long-term energy and money is saved. That works well in private business, why not implement that in the public sector?

But I digress. Continuing on with Lockitch's comments...

Those who claim that we must cut off our carbon emissions to prevent an alleged global catastrophe need to learn the indisputable fact that cutting off our carbon emissions would be a global catastrophe. What we really need is greater awareness of just how indispensable carbon-based energy is to human life (including, of course, to our ability to cope with any changes in the climate).

It is true that the importance of Earth Hour is its symbolic meaning. But that meaning is the opposite of the one intended. The lights of our cities and monuments are a symbol of human achievement, of what mankind has accomplished in rising from the cave to the skyscraper. Earth Hour presents the disturbing spectacle of people celebrating those lights being extinguished. Its call for people to renounce energy and to rejoice at darkened skyscrapers makes its real meaning unmistakably clear: Earth Hour symbolizes the renunciation of industrial civilization.

If you don't want to celebrate lights and progress being extinguished, what's the alternative? Is there another celebration we can participate in? One that promotes progress rather than regress?

How about Human Achievement Hour.

This week CEI announced the creation of Human Achievement Hour (HAH) to be celebrated at 8:30pm on March 28th 2009 (the same time and date of Earth Hour).

Our press release described ways people might celebrate the achievements of humanity such as eating diner, seeing a film, driving around, keeping the heat on in your home—all things that Earth Hour celebrators, presumably, should be refraining from. In the cheekiest manner, we claimed that anyone not foregoing the use of electricity in that hour is, by default, celebrating the achievements of human beings.

If you're reading this, you have a choice. You can either celebrate the destruction of innovation, the extinguishment of progress, and moving backwards, or you can celebrate progress, achievement, and moving forward.

Either way, please celebrate responsibly. :-)

Global Warming Research Results...

David Holzmann (Holzmann & Associates) — Thu, 26 Feb 2009 02:50:14 -0600

Or maybe not.

It's being reported that Al Gore gave his ever-evolving Global Warming Scare Presentation to the American Association for the Advancement of Science (AAAS) recently. But only after questions were (finally) raised about one of his new slides is he pulling that slide (a version of that graph shows up in the presentation video linked above at about minute 7.)

It seems he misrepresented the data. One of the most interesting things, to me, about the misrepresentation is this: he claims the graph shows the change in number of disasters. But what the graph shows is the change in the number of reported disasters.

Why is that important? Doesn't that sound a bit like quibbling over nothing?

Well, it is important, and it's not just quibbling. Here are two reasons:

1) Disaster reporting has improved drastically in the last 30-40 years as compared to 100 years ago. (Global travel and communications have improved exponentially.)

And

2) Incentives to report disasters have increase dramatically in recent years. (Look at all the humanitarian aid that's being dispersed in recent years.)

(See here. Note especially comments 18 and 19 with regard to reason #1, and comment 22 - from CRED!! (that is, the people who created the graph in the first place) - reaffirming #1 and pointing out #2 as well as other potential explanations - ALL of which would indicate AGW (Anthropogenic Global Warming) has little to nothing to do with what the graph shows.)

I wonder... how many people are easily "snowed" by such shoddy and/or careless presentations?

Isn't this, at least in part, one of the kinds of things that has led us to the current economically challenging times we're currently facing? What I mean is, isn't this the kind of thing politicians have been doing for years to protect their lobbying buddies? And isn't this the kind of thing unscrupulous Lenders have done to push high-risk loans on unsuspecting borrowers? And isn't this the kind of thing unscrupulous borrowers have done to get past the lending criteria of ethical Lenders?

When people lie about their data, "stuff" happens. And while for the moment those who lie seem to "get away with it" and benefit - at least in the short term - most often, they (and a whole lot of other people) ultimately have a high price to pay for their deception.

What's Your Bank's Ranking? Zombie, Walking Wounded, Risky but Proud, or Hidden Gem?

David Holzmann (Holzmann & Associates) — Thu, 19 Feb 2009 15:05:43 -0600

I thought this article was interesting: The Top 12 U.S. Banks: From Zombies to Hidden Gems. Is yours one of these?

Some highlights:

[The] designations, or labels, consist of:

* Zombies: Institutions kept alive only by TARP funding. These subtract value from the economy and should be put out of their misery through controlled liquidation, with the healthy parts being salvaged.

* Walking Wounded: These banks may need a little bit more help, but are currently operating adequately on their own. One caveat: An intensification of economic downturn could push some of them into "zombie" status - or even bankruptcy.

* Risky but Proud: These banks have relatively high risks, because of acquisitions or their business models, but are operating at full blast and can hold their heads high for their success in dealing with 2008’s enormous difficulties.

* Hidden Gems: These banks have conquered 2008’s difficulties, taken care of their bad debt problems, and still managed to make a substantial profit. Short of a repeat of what U.S. banks had to deal with from 1929-1933, as part of the Great Depression, these financial institutions should continue to operate in the black.

The 12 largest US banks rate as follows (see the article for details on why each received its respective rating):

1. Bank of America Corp. (BAC) - Zombie:

2. JPMorgan Chase & Co. (JPM) - Risky but Proud:

3. Citigroup Inc. (C) - Zombie:

4. Wells Fargo & Co. (WFC) - Risky but Proud:

5. PNC Financial Services (PNC) - Risky but Proud:

6. U.S. Bancorp (USB) - Hidden Gem:

7. The Bank of New York Mellon Corp. (BK) - Hidden Gem:

8. SunTrust Banks Inc. (STI) - Walking Wounded:

9. State Street Corp. (STT) - Hidden Gem:

10. Capital One Financial Corp. (COF) - Walking Wounded:

11. BB&T Corp. (BBT) - Hidden Gem:

12. Regions Financial Corp. (RF) - Walking Wounded:

Did you count? Did you notice? How many of those fell into each category?

7 are doing just fine

3 look weak and might just need a little help

2 are only alive due to life-support

With regard to public policy, it’s very difficult to justify $1.5 trillion of taxpayers' money being used to buy assets from these banks... particularly when it's future taxpayers' money.

Apart from the two dogs, all these banks have shown themselves perfectly capable of handling the difficult parts of their asset portfolios. That means that setting up a separate state bureaucracy to manage them, instead. is just asking for a high-cost taxpayer rip-off.

Unless it’s proposed to devote $1.5 trillion of taxpayer money to the apparently hopeless task of sorting out Bank of America and Citigroup, the true need is much smaller, with the remaining $315 billion from the original TARP program probably being more than ample for the other U.S. banks.

The most likely near-term need would appear to be capital injections into one or two of the weaker members of this Group of 12. As for the true bow-wows, the best solution from a public-policy and taxpayer-protection viewpoint would be to allow Bank of America and Citigroup to slide into Chapter 11 re-organization, with the ultimate objective being a breakup and sell-off of the worthwhile pieces, while holding back the relatively modest amounts of government financing or Federal Reserve money that might be needed to staunch any blood-letting that their bankruptcy caused.

So, where does your bank fall? And what do you think should be done with regard to the banking industry?

Ripped Off? Maybe Not...

David Holzmann (Holzmann & Associates) — Fri, 13 Feb 2009 14:33:42 -0600

It's amazing to me how often people rant about how they've been ripped off by one company or another.

Case in point: Yesterday's "Consumer File" column by Greg Dawson.

It seems he got a letter from a reader suspecting that she'd been "ripped off" by a big-box discount store. Her story as related by Greg:

About two years ago [she] bought a "flat TV" at [a particular discount store] for $400. She did not bother to ask but was "under the impression" that it was digital. "To my shocking surprise, I discovered during a 'test' by one of the local stations - I do not have cable or satellite - that my television is in fact analog. I am thoroughly ticked!!! I spent over $400 for the TV, thinking I was getting the latest technology, and now I will have to get a converter box or cable/satellite. Have I been ripped off? What remedies do I have with the manufacturer?"

As some of the commenters pointed out, two years ago most people weren't concerned about digital TV coming, so most people wouldn't have bothered to ask, nor would they have been "under the impression." It would have been of no concern.

Speaking from personal experience, I learned just over 10 years ago that DTV was coming. At the time I was working for a company that represented a wireless microphone manufacturer. And my job was to educate wireless mic dealers about the coming of DTV, how it would impact wireless mics, and how this particular manufacturer had already dealt with the situation and as ready to help those who didn't have compatible mics make the transition.

Yet, even though I've known about this for so long, and been one of the educators on DTV, when we got a "new" TV 2-3 years ago, I didn't care about DTV's impact. I didn't assume it was digital. I didn't ask if it was digital. Despite knowing all about it, the I don't think the thought even crossed my mind.

If I was buying a TV today, yeah, the thought would not only cross my mind, it would be of paramount importance. I'd make SURE it was digital. And then (and only then) would I be justified in getting "thoroughly ticked" if it turned out not to be DTV compatible.

So, Greg's responses to the questions,

Q: Have I been ripped off?

A: Are you kidding?

Q: What remedies do I have with the manufacturer?

A: Nada.

are spot on.

Ripped off comes when products and/or services have been misrepresented in one way or another. If you fail to ask, or fail to even think of asking about a product or service, that's not a misrepresentation, and you're not being ripped off. If you think there may be some area of ignorance on your part - that is, you know that you don't know something but you don't know what that something is - then do a little research and ask the experts what you should be looking for and what you should know.

As I've been writing this, I just realized one other important detail... she bought the TV at a big-box discount store. That's not the kind of place where you get service, nor will you likely find knowledgable experts there... at least not for the products on the steel shelves. One of the ways they can keep their prices lower is because they don't have to pay for expertise. Shop there, and the saying is exceedingly apropos: Buyer Beware!

They didn't rip her off. She just shopped for the best price without bothering to learn what it was she was getting for that price.

Have you had someone accuse you of ripping them off? If they weren't, what could you have done to have avoided that perception? Or were they just completely unreasonable?

Conversely, have you ever felt like you've been ripped off, and discovered that you may not have been? What changed your perspective? And what could the seller/service-provider have done to have avoided the initial impression?

Working With Big(ger) Businesses and Organizations

David Holzmann (Holzmann & Associates) — Thu, 12 Feb 2009 22:25:57 -0600

Do you have business with any Big(ger) Businesses or Organizations? By that, I mean businesses or Organizations that not only have an Executive or three, but also a Board of Directors?

Are you a CEO or other Executive for a Big(ger) Business or Organization?

Or do you serve on the Board of Directors for a Big(ger) Business or other Organization?

Many Business Owners get invited to serve on Boards. But if that's you, you're used to running things, not governing via policy through the CEO (for profit) or Executive Director (not for profit). The role of being a Director is often deeply misunderstood by most of those who serve on Boards.

If you answered yes to any one of those questions above, I think you will find this article helpful, if not eye-opening.

It will likely help you Executives better-understand the mindset of many on your Board.

As for Directors who serve on Boards, perhaps it will shed some light on your involvement.

Finally, for those who are doing business with such businesses, perhaps it will help you understand what you're dealing with, and give you some insight(s) into how you might better approach such an organization.

After you read it, I'd like to hear what you have to say.

How Big Is A Trillion?

David Holzmann (Holzmann & Associates) — Thu, 12 Feb 2009 21:31:12 -0600

I just saw a website today that's called "The MegaPenny Project." The site's objective is to try to illustrate very large numbers using a very common item: pennies.

Their images are very helpful, in and of themselves. But the descriptions that go along with them bring the images to life.

Here, for example is a link to the first of two pages illustrating what a Trillion pennies would look like.

Change the pennies to dollars, and that's how much this new stimulus package will cost our country by the time all is said and done.

Assumptions Are Devious Things - Change I Can Believe In

David Holzmann (Holzmann & Associates) — Wed, 11 Feb 2009 20:31:36 -0600

I started this thought in a previous blog post. It's finally time to say what else I intended to say.

You may recall, I pointed out that in the Q&A about the Economic Stimulus Payments handed out last year, there was an assumption. The assumption was: The only way to stimulate the economy is to print more money.

We're still running under the same assumption with the just-passed-and-waiting-for-the-president-to-sign-it Economic Stimulus Bill (or as others prefer to call it: Deficit Protection Act.) The big difference is that the one from last year was "only" $150+ Billion whereas this new one is more than 5 times bigger.

Oh boy! They're printing 5 times more money!

But that just means that we've got 5 times as much more deficit than the last $150B created... all while not stimulating the economy.

The "Change We Can Believe In" seems to be to follow the advice: If you're in debt over your head, just dig the hole faster and eventually you'll be out.

As any intelligent person knows - the only way to get out of debt is to stop digging that hole.

In this case that means, stop printing more money, stop spending so much money, and find a way to get money to flow into the country.

Now there is an awful lot of money that was here in America, but is no longer. Whose money is it? And why did it go elsewhere?

It's money invested in businesses. And it went overseas to avoid our punitive tax system.

How much is there? I've seen several figures. So, rather than quoting just one, I'll say every figure is well above $10 Trillion.

Would you like to see that with all the zeros? Here it is: $10,000,000,000,000.00+

You realize, don't you, that that represents more than 10 times as much money as the government is about to print.

What if we could change things so that that money came streaming back into the USA? What if there was a plan to eliminate the punitive taxation on all these companies? Do you think that might entice them to bring their money, and jobs, back here?

Do you think that might really stimulate the economy?

You bet it would.

And there is just such a plan.

It's been introduced to the House every year for quite some time. And it's getting more and more traction every year. But the majority of the politicians - especially the entrenched power-mongers - are loathe to seriously consider it, much less enact it. The reason? It would strip them of a very significant amount of their power and control... and allow us to move back toward the free market economy we were set up to be.

It wouldn't cost us anywhere near $1T, and it would bring in a whole lotta money - some in the short term, more in the long term. It would free up existing businesses here to refocus their effort on business issues rather than tax-compliance issues. And it would help out individual citizens, and the environment as well...

It would make April 15th "just another (hopefully beautiful) Spring day."

It would encourage recycling/reusing goods.

It would encourage saving. (If people had SAVINGS to tap into, what would that do for home sales?)

It would allow everyone to see their FULL paycheck.

It would remove all tax-burden from those in poverty - and progressively increase taxes the more one spends on new goods and services.

And it would include EVERYONE who spends any money here in the USA on new goods and services in the tax roles, without any invasion of financial privacy. (It's really no one else's business how much anyone makes. And we should never have allowed the government to voyeuristically spy on our finances like it does.)

Now that's Change I Can Believe In!

Economic Stimulus Payment... what did you do with yours?

David Holzmann (Holzmann & Associates) — Sat, 07 Feb 2009 14:30:23 -0600

This past year, taxpayers received an Economic Stimulus Payment. This was a very exciting new program that someone explained using the Q and A format:

Q. What is an Economic Stimulus Payment?

A. It is money that the federal government will send to taxpayers.

Q. Where will the government get this money?

A. From taxpayers.

Q. So the government is giving me back my own money?

A. No, they are borrowing it from China. Your children are expected to repay the Chinese.

Q. What is the purpose of this payment?

A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy.

Q. But isn't that stimulating the economy of China?

A. Shut up.

Below is some helpful advice on how to best help the US economy by spending your stimulus check wisely:

If you spend that money at Wal-Mart, all the money will go to China .

If you spend it on gasoline it will go to Hugo Chavez, the Arabs, and Al Queda.

If you purchase a computer it will go to Taiwan.

If you purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala (unless you buy organic.)

If you buy a car it will go to Japan and Korea.

If you purchase prescription drugs it will go to India.

If you purchase heroin it will go to the Taliban in Afghanistan.

If you give it to a charitable cause, it will go to Nigeria.

And none of it will help the American economy.

We need to keep that money here in America. You can keep the money in America by spending it at yard sales, going to a baseball game, or spend it on prostitutes, domestic beer, or tattoos, since those are the only businesses still in the US.

(For those of you who just wanted a "funny" - that was it. Hope you enjoyed it! The rest of this is more serious financial and (some) political commentary.)

Obviously this is rather overstated. But it makes a some good points: So long as we're increasing debt, we're not creating wealth. And it does make a difference where money is spent. (If you spend your money with local businesses that produce products locally, you will help stimulate your local economy.)

Now we know, with 20-20 hindsight, that those Economic Stimulus Payments didn't stimulate the economy.

Why not? And what DID happen with most of the money from the Economic Stimulus Payments?

It was primarily used to pay down debt. (That's primarily what we did with ours. But we also tend to buy from local shops to support the local economy rather than always going to Big Box stores that use our money to support other areas of the world, and where the prices are sometimes cheaper, the quality is typically the same or worse, and the service is most-often considerably worse.)

Paying down debt is good for the economy of the debtor. But it doesn't create cashflow... at least not when it's incremental debt reduction.

And paying down debt by borrowing more money isn't really reducing the debt. It's merely moving the debt elsewhere, to be paid off at another time.

Looking back at the first Q in the Q&A above, there's an assumption. The stated goal is to "stimulate the economy." That can either mean improve cashflow and/or create wealth. Either way, the assumption is that the only way to stimulate the economy is to print more money. Is that a valid assumption?

Make no mistake: When the government prints more money without an equivalent increase in the value of the total economy, that's not much different than increasing debt. It's actually "just" decreasing the value of every dollar - both those printed and those already in circulation.

Now, if the value of our money was still tied to the value of Gold, and we had enough Gold reserves to match the value of all the money that was printed... and if money was printed as a result of an increase in the value of the Gold reserves, that would be an entirely different matter. But that's a lot of "ifs" and we need to deal with the way things are, not the way they used to be. And we haven't had our money tied to the value of Gold for quite some time now. It's time to Move On.

So, we ran with the assumption that printing more money would stimulate the economy. And it failed. It neither increased the cashflow nor created any wealth.

Now we've got a new administration, with "Change" as the new directive. The House and Senate are essentially the same - at least in terms of who the leaders are and what party controls each. (The big difference there is that the same party that was in control last year has quite a bit more power this year, due to a larger majority.)

So, what's the new direction? Keep running with the assumption that printing more money will stimulate the economy. But instead of merely printing a "mere" $152 Billion, the new administration will print approximately 500% more money - roughly $1,000 Billion (also referred to as $1 Trillion). The thinking is, that if running fast in the wrong direction didn't work, we should rush to speed up. Maybe by going 5 times faster the wrong direction will become the right direction.

The problem isn't with how or where to distribute this newly printed (devaluing) money. No, the problem is with printing the money in the first place.

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This is getting too long... so I'll continue later with another post. Meanwhile, I hope you enjoyed the little bit of fun at the top. And I'd love to hear how YOU spent your Economic Stimulus Payment.