My professor says that he thought it’d be impossible for a person to realistically be able to afford a 300,000 mortgage payment on a janitors pay.  Actually, in hindsight we all recognize how the janitor was able to purchase a home that normally would have been outside his financial grasp, and accordingly what may be the root cause to the rapid inflation of property values.  That is, the complete and total lack of government regulation led to investment banks creating complicated financial derivatives that allowed mortgage lenders to offer programs such as the famous “NINA” program which refers to a Fannie Mae 1003 mortgage application in which a loan applicant does not have to state nor disclose any income or any assets in consideration for the loan.  Hindsight is clearly 20/20, we all now know that the janitor had purchased the property using a Negatively Amortizing Loan ( a Neg-Am loan is a loan in which you have a 1% payment option which actually defers your interest and makes your payment incredibly low, at the expense of actually increasing your loan amount with the deferred interest.)  Of course, the rationale of the janitor was that he didn’t care if he owed more on his loan by the end of the year because “obviously” even he could see that property values were accelerating so fast that the appreciation far outweighed any potential investment costs.

In fact, he was not basing this on pure speculation but on actual stories of people making about one hundred thousand dollars (if not more) in investment properties that they had just acquired not 6 months ago.  Localized superheated micro-bubbles were created around pre-construction condo projects where talk and speculation lead potential investors to abandon any regard at all for common sense and supply/demand principles and snap up purchase contracts at a premium from buyers who had just purchased the pre-construction property.  Typically developers would hold several rounds of offerings where blocks of units for the pre-construction condos would be sold at a specific discount to market and those contracts already held intrinsic value due to the expected future valuations of those properties. Accordingly it makes perfect sense for those at the back of the line, those who had the ability to purchase a condo but only at the lowest discount level to market to abandon their spot in line altogether and “skip the line” and purchase a contract for a premium from someone who had first pick at lower contract prices.  Those who did sell their contracts to others walked off with handsome profits and no risk, which in my opinion were investors whom were also gambling and operating under the greater fool theory.

People who purchased the contracts themselves were blinded by a dizzying amount of talk and speculation.  They arrived at these future property values entirely in their minds and on the basis of a loose interpretation of what other properties were selling for and what they themselves dreamt of possibly profiting.  A dangerous combination of powerfully addictive psychological influences namely : Greed, and what I like to call “mental masturbation.”

People’s heads all over were filling with visions of riches and potential profits “just 6 months to a year down the line”, ironically fueled by actual stories of profits.

Moral of the story, if you like the professor find yourself at a dinner party, and all you hear about is “real estate this” and “real estate that”, and it just seems like no matter where you turn all you hear is “real estate” and you just can’t get away from some one that is talking about a particular segment or investment, then you know you’ve arrived at the top.

It’s impossible for everyone to make money at the same time, a perfect example is the stock market, there are two parties to any transaction and for you to make money on a particular stock transaction, the person at the other end of the transaction has to lose money.  Your gain reflects anothers loss, even if its only opportunity cost.

For more on bubbles and the next coming bubble, you owe it to yourself to read and thoroughly understand this article

http://www.harpers.org/archive/2008/02/0081908

How is it possible that in 3 months my fico score increased significantly?

It’s possible if you consider that the same credit card companies that just a year or two ago were overflowed with borrowers and thus seeking to turn away those with low credit scores are now drowning in debt and seeking new cash flows agressively.  In essence: New borrowers with new debt that can afford to make new payments creating the cash flows that these companies desperately seek to be able to continue day to day operations.  The difference is that this time only small amounts of credit would have been extended to them, as credit card companies are slashing the credit limit’s of even their best consumers.

That just goes to show you that credit scoring can be changed on a whim by FICO to accomodate these credit card companies which are actually the ones that use credit scores to rate consumers.

My credit scores have been steadily increasing, sure, this could also be due to the fact that im doing well as well as the fact that I’m rapidly paying down my one credit card balance.  But come on?

My middle score is now 646
my scores are TU - 656 , Equifax (the hardest of them all) 646 , and Experian 630.

I do not doubt that soon (in another quarter or so) my credit score will exceed 680.  It is ironic because now that I think about it, why have I been trying to increase and fix my credit this entire time?  So I could run out and charge up a bunch of new debt?  Folks, that was yesteryears mentality.  The Debt Party is finally over and the fireworks were spectacular, but please, don’t kick a dead horse.  Let it die gracefully.

I now realize that the two biggest factors responsible for it (my credit score) getting as bad as it did are simple :  irresponsible and de-regulated lending along side my own lack of personal responsibility.

It is also de-facto knowledge that credit card companies often extend huge lines of credit to the weakest borrowers, because they are the ones who are most certainly likely to get into trouble, allowing credit card companies to charge what is really the basis of their huge profits: Fee’s.  Fee’s are the most profitable part of a credit card companys’ operations because they represent 100% profit.

The End result is that the financial system has lost my faith completely.  And ultimately, it is not my loss, it is essentially their loss.

Because I don’t need them.

I can choose not to buy all the crap that I bought before this time around again ( I know, dangerous thinking), and by changing my budget and saving instead of spending, I can live a real life, debt free.
I am fortunate, I suppose there are others whose income does not permit them to make ends meet, but I do not think that represents the majority of people in the US.

The de-regulation of financial markets and companies has left egg on the face of not only the companies who caused it (the debacle) by over extending credit, but also on consumers who were bamboozled into cheap credit even to their own detriment.  In my honest opinion, credit should be extended to an individual based on his or her ability to repay, you know, the way it has always been before this whole fiasco.

I do not doubt that the majority of the US population has gotten way in over their heads due to credit companies extending way more credit to consumers than they could possibly ever afford.  You could argue that it is not the governments job to tell us how much credit we can afford, sure this is true.  We couldn’t possibly put all the blame on the government, after all, Caveat Emptor.  Consider though that no type of education is provided in schools period related to anything even remotely related to finances or credit cards.  We strictly regulate driver licenses because we want to make sure that people getting behind the wheel of an automobile have at least passed a minimal standard for competency, but we put our kids into the drivers seat in what is the vehicle of their own financial future without so much as even a warning.

Lesson Learned.

The sad fact is that what we choose to do with our discretionary income has a huge impact on our own future, and irresponsible lending provides a dangerous outlet that quickly fleeces consumers out of this income.

The Point, my credit score may be extremely high, but I already cut up all my credit cards.

The Definition of insanity is to do the same thing over and over again and each time expect different results.

I do not see any of these credit card companies winning me over ever again in the future causing me to open up a new line of credit with my new hard fought credit score.  In fact, the frustrations of dealing with the credit reporting agencies in my futile attempts to remove what little negative trade lines on my credit report remain are indeed still fresh in my mind.

“Screw me once, shame on you.
Screw me twice, shame on me.”

They have lost my faith completely, and I doubt I will ever return to owning a credit card.

Many people also feel the same way I do, and thus the reason why consumer spending will stay down for a long time to come.

It’s Eddie Barzoon’s fault:

Eddie Barzoon, I nursed him through 2 divorces, a cocaine rehab, and a pregnant receptionist! God’s Creature right? God’s special creature? .. and I warned him , I warned him every step of the way. Watching him bounce around like a game, like a wind up toy, like 250 pounds of self serving GREED on wheels. The next 1000 years is right around the corner, and Eddie Barzoon, take a good look, because he’s the poster child for the next millennium.

You, sharpen the human appetite to where it can split atoms with its desire, you build egos the size of cathedrals, fiber optically connect the world to every eager impulse, grease even the dullest dreams, with these dollar green gold plated fantasy’s, until every human becomes an aspiring emperor, becomes his own God! Where do we go from there?

And as we are scrambling from one deal to the next, who’s got his eye on the planet? As the air thickens, the water sours, even the Bee’s honey takes on the metallic taste of radioactivity, and it just keeps coming, faster and faster, there is no chance to think, to prepare, its buy futures, sell futures, when there is no future!!!

We got a run away train boy, we got a billion Eddie Barzoons all jogging into the future, every one of them getting ready to rape Gods ex-planet, lick their fingers clean, as they reach out to their pristine cybernetic keyboards to total up their billable hours.

And then it hits home! You gotta pay your own way Eddie, it’s a little late in the game to buy out now! Your Bellys too full, your body is sore, your eyes are bloodshot, and you’re screaming for someone to help! But guess what? There’s no one there!

Your all alone Eddie, your Gods special little creature. Maybe its true, maybe God threw the dice once too often, maybe he let us all down.

The implications to this seem small, but it just goes to show you that in reality, EVERYONE HAS A PRICE.

This also comes on the heels of the recent battle with MIT Students who were prevented from giving a speech at a well known hacker convention called DEFCON in Las Vegas on how easy and insecure it is to duplicate and hack the entire Boston Subway Card System.

Luckily the judge ruled against the MBTA (Massachusetts Bay Transport Authority), but the ruling didn’t come until after the conference was already over, effectively censoring the students from giving a public speech.

Read Bruce Schneier’s Article about it on Wired.com Here.

Watch a video where Adam Savage himself, Co-Host of Mythbusters describes what happened.

I too soon found out what this means, as I have a Chase credit card with a regular balance and a cash advance balance. My cash advance balance is about $400.00, and on my statement i noticed they were charging me 20.99% for this balance, compared to 8.99% for my regular what they call “purchase balance”.

So I called Credit Card Services which is 800 945 2006 You cannot dial 0, if you do not enter the last 4 digits or press any key like 0, they will then ask you for your entire 16 digit account number or the last 4 of your social security. I did not enter anything and Spoke with a “Sheila”.

Sheila informed me that you cannot send a payment directly to your cash advance balance, I told her that this was predatory lending and that I would like to speak to a manager.

I was transferred to a David Porter, he also informed me that on the card holder agreement it specifically states that you agree that chase will apply the payments in whatever order they wish and that they usually apply payments to the lowest interest balance first.

Meaning that I would have to pay off several thousands of dollars on the regular purchase balance before they would apply any payments i sent to pay off the cash advance balance of $400.00 which is being billed at 20.99 Percent Interest.

I think this is predatory lending and I think it is unfair for Chase to abuse their customers by denying them the opportunity to have their payments applied to whatever balances they should so desire.

Well like most other things I bitch and moan about, it doesnt seem like im alone, new legislation and this article in BusinessWeek show how debt-strapped consumers are lashing back against these big banks to do whatever they want and unfairly bill you without giving you an opportunity to pay back whatever debt you want first.

So lets say i make you two loans, one at 10% and one at 20%. Wouldnt it make sense for you to pay off the higher interest rate loan as fast as possible? Of course it does, but me being chase tell you NO WAY: you have to pay me the 10% interest rate loan first, then i will let you pay off the 20% interest rate loan. Doesn’t seem fair now does it?

Now it may not be up to the credit card companies anymore, according to the new rule changes proposed by the federal reserve board, these unfair practices may be coming to an end.

They received OVER 50,000 comments and suggestions from frustrated individuals sick and tired of being abused by these racketeering organizations. Thanks President Bush, I hope you rot in hell. You are no Christian, no god could absolve you of all the damage you have directly or indirectly caused to the majority of the people in America. It wasn’t enough to steal the election, you had to screw everyone over too. Of course, I should have seen it coming.

Some one with some common sense exposes the hypocrisy that is religion.

How does one human being say with certainty that they are right and their own god is the real god over another?

I mean, “for christ’s sake”, westerners all believe in jesus christ. Then you’ve got the jews, the muslims, so on and so forth. Hey Christians, all these other guys believe that your god is not the real god, they’re god is the real god.

Every time i get involved with religion I kick myself, I always end up feeling like I’ve been reeled into some kind of mass hysteria. I get sucked into the outward friendliness, the warm comfortable feeling, but once i show a little resistance, the ugly side of people comes out. They don’t want to be around you or talk to you unless you fully become a part of what they believe in, they’re particular religion. Lest you infect them with non-godliness. They are so afraid of “god’s wrath” if they should so leave their religion, that it’s almost like a cult. Why can’t you just live your life normally.

Well, Bill Maher has finally done it, his new movie Religulous will be out in theaters October third.

The Wikipedia Page on the movie states that in the movie Bill goes around talking to different people of different religions.

Perhaps this will expose people who are so deeply ingrained in their “cult” of choice to other religions and viewpoints.

I often think that religious people think that non-religious people can’t do the right thing just because its the right thing to do. My christian friends all tell me I LOVE MY SINS TO MUCH and thats why i dont accept CHRIST. Give me a freaking break. I was ten times the sinner in my younger years than I am today, that’s because I grew up.

Aside from that, I love it how they judge me, almost as if because they are in their little Christian CULT, they are no longer sinners or somehow are deserving or should separate themselves from those who are not.

I for one think this is the kind of ASS Backwards, racist, prejudiced thinking that CULTS use to remove cult members from contact with their family. They do this because the family might convince them otherwise.

I mean seriously, Christianity teaches you that there is NOTHING GOOD inside you. I tend to think quite the opposite, i think human beings can and often do show compassion, caring.

We even have negative labels for people that don’t show these kinds of emotions. You know what brings out what we label as “the worst” in people, poverty: the need for survival. People say money is the root of evil, well if thats true, then the real evil is those who have most of the money. Those people would be the vatican, the church, Oil companies, governments, powerful families like the Bush’s, the ahmadinejad’s of the world.

We don’t need RELIGION to figure out how to live our lives or to figure out who we are. If we do, then we are regressing into a RETARD 3rd world country mentality which is why the middle east is the CLUSTER FUCK that it is, because these die hard religions are used to control the population.

Meanwhile George Bush and Bin Laden’s dad take pictures shaking hands as they get richer and richer.

Wake up America, your moral bullshit is what is tearing this country apart. Imagine what would happen if we had an intelligent president instead of the retard right wing “christian” we have now.

“All those pathetically eager acid freaks who thought they could buy Peace and Understanding for three bucks a hit. But their loss and failure is ours, too. What Leary took down with him was the central illusion of a whole life-style that he helped to create . . . a generation of permanent cripples, failed seekers, who never understood the essential old mystic fallacy of the Acid Culture: the desperate assumption that somebody—or at least some force—is tending the Light at the end of the tunnel. This is the same cruel and paradoxically benevolent bullshit that has kept the Catholic Church going for so many centuries. It is also the military ethic . . . a blind faith in some higher and wiser ‘authority.’ The Pope, The General, The Prime Minister . . . all the way up to ‘God.’” The Late and Great Dr. Hunter S. Thompson

Do yourself a favor and even if you don’t agree with me, go see this movie. You might learn something.