“The price of anything is the amount of life you exchange for it.” Thoreau
Author Archives: jimgilvin
Atlanta home prices are back to year 2000 levels
According to Michelle Shaw’s article in the AJC: http://bit.ly/ifteKO
“Second-Mortgage Standoffs Stand in Way of Short Sales”
An article in today’s Wall street journal explains one of the big reasons that real estate short sale programs haven’t been very successful. Nearly a third of homes facing foreclosure have second mortgages and the institutions holding the second mortgages have little or no incentive to play nice.
It is clear why commercial banks like J. P. Morgan Chase choose to let homes slip into foreclosure when it suits them. Banks make decisions based on dollars and cents without any hint of moral obligation and Chase is just one example. Of course those same banks expect the public to continue paying for homes that are hundreds of thousands of dollars underwater when it makes no economic sense for the homeowner. Hypocrisy much?
I also find it amusing that Chase Bank is screwing their mortgage customers while spending a fortune to open new branches all over Georgia. Guess they gotta have more screwees to keep making money.
Read the whole article here: http://on.wsj.com/fgiLru
Americans prefer cutting federal services to raising taxes by nearly 2-1
Atlanta Journal article cites a poll which shows Americans want to reduce the deficit by reducing the size of government. read the whole thing here: http://bit.ly/eT1e30
View from a Political Outsider – Georgia’s Transportation Tax
Jim Galloway’s recent Political Insider column in the Atlanta Journal discusses Georgia’s recently rejected “trauma tax” and how that rejection will impact the state’s proposed sales tax increase in 2012. I respect Mr. Galloway. His Political Insider column provides a great deal of insight into the world of Georgia politics… but being an insider has its price.
In the case of tax increases Mr. Galloway’s insider viewpoint prevent hims from seeing the issue from the perspective of the political outsider (otherwise known as a typical voter). As a political outsider perhaps I can help.
Right now there is a failure to communicate in Georgia. The communication failure stems from the fact that too many elected officials aren’t listening to the voters. Instead of listening to voters politicians spend their time listening to each other along with the bureaucrats and lobbyists that surround them. After talking amongst themselves this political class hammers out a mutually acceptable solution to whatever the perceived problem is and unveils it to the public. Of course the solution always involves confiscating millions of dollars from Georgia’s taxpayers so the taxpayers frequently reject the proposed solution once they find out about it. The whole process is a tremendous waste of time and a big part of the reason government rarely solves anything. If more elected officials juat made a point of talking to people outside of their echo chamber a great deal of time and money could be saved and some progress might actually take place.
The recent trauma tax debacle is a perfect example of miscommunication between voters and politicians. I have lived in Georgia for 40 years and I have never once had a person tell me they wanted or needed more trauma centers in the state. But despite the fact that average people didn’t think there was a problem, some hospital lobbying group convinced Georgia’s political class that a problem did exist. Once the lobbyists convinced the politicians there was a problem they all got together and hammered out an agreement that was acceptable to them. As usual the solution called for Georgia’s taxpayers to cough up millions of dollars. So once they were satisfied with their solution the political class went to the people of Georgia. The voters weighed the option of paying millions of dollars to solve a problem they had never heard of or faced and said no. The whole process was a complete waste of time and money that could have been spent on one of the real problems facing Georgians.
A similar process is taking place now in Georgia’s struggle to address transportation infrastructure needs. Both the voters and politicans seem to agree that Georgia needs transportation improvements in this case but the trouble is that the political class and the voters disagree on the solution.
The political class say they could fix the problem if they only had more money. What the political class doesn’t understand is that the voters don’t blame infrastructure needs on a lack of money, the voters place the blame on the political class. Taxes in Georgia are the 16th highest in all of the United States while transportation spending is 49th out 50. See the problem?
But Georgia’s political class won’t accept the fact that they have been the problem. Instead, the politicians and lobbyists sat down together and once again hammered out an agreement acceptable to the politicans and lobbyists. And once again their solution is to raise taxes… billions and billions of dollars in taxes. That solution must have sounded awfully good in their echo chamber because a few months ago the political class unveiled this genius idea to great fanfair and they patted themselves on the back so hard that Atlanta’s chiropractors must have made a fortune.
But the people that will pay for this enormous tax increase are not impressed, they are hurting. They face 10% unemployment while the other 90% are still unsure of the future. More than 12,000 Georgia homes were foreclosed in July. IRA accounts and home prices are going down while grocery and gasoline prices are going up. To make matters worse their federal income taxes are going up in a few weeks and they will have even less money to spend. Georgia voters are hurting and they find it offensive that political insiders have decided taxpayers need to pay billions of dollars more to fund transportation improvements. While transportation improvements might bring jobs to Georgia in a decade or so, the state’s taxpayers would have to cough up billions of dollars that could have gone to pay their mortgage or put food on the table in the meantime.
During Georgia’s recent economic boom transportation issues were a top priority for Georgia taxpayers. Voters pleaded for road improvements but the political class ignored their pleas and spent the money elsewhere. Now that the economy has tanked the roads are no longer the highest priority for voters. Money is the top priority now and the politicans find the shoe on the other foot. So as the political insiders plead for money to improve roads in the current environment I fully expect Georgia’s voters will ignore their pleas in return.
You can read Mr. Galloway’ Political Insider column on ajc.com here: http://bit.ly/gqeLnw
(Added 12/2/10 ) P.S. I forgot to mention that Mr. Galloway conspicuously chose not to allow comments on the column cited above. It is the only recent column which doesn’t permit comments and I don’t ever remember seeing him block comments before. Feel free to draw your own conclusions.
$89 billion to bail out the entire nation of Ireland? Boy those Europeans are really amateurs. The United States will spend $215 billion just to bail out Fannie Mae & Freddie Mac http://fxn.ws/f9aDkm
Atlanta real estate is still struggling to find bottom
AJC reporter Michelle Shaw has a piece in today’s paper which relays the latest grim news about Atlanta’s real estate market. The headline sums it up well, “Metro home prices, sales plunge”.
The article says that single family home sales for October were down 10.6% from last year and that in the first six months of the year foreclosures were 23% of sales in the Atlanta metro area. Ms. Shaw does a good job of painting a realistic picture so you should read the whole thing: http://bit.ly/eBp8FT
Some of the people interviewed even hint that real estate is in a cycle of deflation. Deflation means that buyers are holding off on purchases because they expect prices to fall and then because the buyers are holding out, the sellers are forced to lower prices. Deflation sounds good for buyers but it can be a stubborn, self fulfilling prophecy with devastating long term consequences. At first the lower prices would be good for buyers. But eventually the constant decrease in prices would be devastating to homeowners, banks and businesses. Eventually the new home buyers would find themselves suffering from lower wages that were brought on by the same deflation they had earlier welcomed.
A fear of that deflationary cycle explains why the federal reserve has decided to pump money into the economy even though food, gas and other necessities are already going up in price. Printing more money is going to make inflation worse but the fed seems more concerned about real estate deflation than they are about overall inflation.
Real Estate will rebound. It’s just a matter of time. But the market still has to hit bottom before we can have a real recovery and unfortunately there just isn’t any evidence that we have hit bottom yet.
Liquid Freedom
“Money is just liquid freedom”, I said to my 12 year old son. He didn’t have a clue what I meant. You may not understand what I mean by liquid freedom either so let me explain.
First let’s look at the word liquid. In the world of finance the word liquid is defined as “in cash or readily convertible into cash without significant loss of principal”. So liquid literally means money.
Now that we know the definition of liquid we can look at the word freedom. Freedom is defined as “The power to determine action without restraint.” What a beautiful concept. Every human being has a limited amount of time on this planet and freedom is so precious because it gives us the opportunity to decide how we will spend that time.
Having defined liquid and freedom all we have left to do is combine them: The power to determine action without restraint, converted into cash. That is liquid freedom… the power to determine action without restraint converted into cash.
Want to send mosquito nets to Africa and save a million lives? It’s possible if you have the money. Would you like to brunch on the Champs-Élysées tomorrow? Drive a race car? Travel into space? It’s all possible… with enough money. With money you have the freedom to choose whether you will be playing golf in Scotland tomorrow. Without money the choice is made for you.
So the next time you put a dollar bill in someone’s tip jar just think of it as passing along a little drop of liquid freedom.
Remember, low taxes + low spending = growth
Georgia is one of eight states projected to gain congressional seats after the 2010 census numbers are tallied. Recently, Barbara Hollingsworth of the Washington Examiner wrote an editorial analyzing the tax policies of those eight states compared to the states which are projected to lose representation and guess what? Barbara discovered that people are fleeing states with high taxes and high spending. Surprise, surprise!
The article points out, “The state and local tax burden is nearly a third lower in states with growing populations… As a result, per capita government spending is also lower: $4,008 for states gaining congressional seats, $5,117 for states losing them.” In addition to tax policies Barbara Hollingsworth also points out that many of the states also have right to work laws that entice businesses to relocate from less friendly states. The article isn’t very long and you can read it here: bit.ly/9C6cRd
So we see that relatively low taxes and government spending have a direct correlation to Georgia’s tremendous growth over the past few decades. The majority of voters in Georgia understand this instinctively but I’m not sure the state’s current power structure quite gets it.
You’ve come a long way baby!
There is no way the AJC would have printed this 5 years ago: “U.S. Transportation Secretary Ray LaHood and others’ vision of transit-driven, dense urban communities should wait until we first make headway on reducing regional traffic jams.” It makes so much sense I think Andre Jackson must have slipped a peek at GA Jim lately.
Seriously though, I have taken plenty of shots at the Atlanta Journal Constitution over the years so I do want to acknowledge the change in their coverage the past year or so. The addition of Kyle Wingfield and the subtraction of Cynthia Tucker on the editorial page have made Atlanta’s paper much less predictable and therefore more readable and interesting.
Congratulations AJC! The bad news is that you must be pi**ing off people on both sides of the aisle now. The good news is that they both have to read you to find out whose turn it is.
Read the whole thing here: http://bit.ly/avlcCX