December 16, 2008 at 12:32 pm · Filed under Headlines
There was news out this morning that a security breach in Microsoft’s Internet Explorer can lead to vulnerability to hackers that can access private information such as passwords and banking information. The funny part to me was the answer to the problem was to “avoid using internet explorer until a security patch is released”.
Days like this are exactly why I use Firefox instead of Internet Explorer. Aside from the fact that I am over the Goliath Monopoly that is Microsoft, Firefox is simply a superior product. In my case (I can not speak for all users) it is faster, far more secure, and has all of the familiar usability that you may be used to with Explorer.
You can download Firefox here for free.
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October 1, 2008 at 8:54 am · Filed under Credit Crisis, Headlines, Residential, The Mortgage Market
The senate is putting together a new version of the bill that failed earlier this week.
Reports from Washington are that the senate has been feverishly re-tooling the bailout bill with adjustments that will make it more palatable for the public and more likely to pass through the House of Representatives. Early reports are that an increase in FDIC insurance for bank deposits is being increased for the first time since 1980 from $100,000 per depositor to $250,000. With the national average bank balance being around $5000, this will have little practical affect on consumers. But, it can help small businesses feel more secure, and the overall perception is likely to show that there is more for the common tax payer than the original version.
It is not yet clear what other components have been added or removed, but there is no doubt that the pressure is on Washington to do something based on the reaction of the stock market this week. Also, given an unprecidented amount of discontent towards any bailout plan (some reports say as many as 80% of tax payers are violently opposed to the bill), there is no doubt that those who vote for it should read it carefully as the outcome will likely dictate their fate in November.
I do find it interesting how much the public misunderstands the significance of passing legislation to help this problem. I was listening to talk radio locally here in Pensacola yesterday, and the overall sentiment is still that there is no incentive to the tax payer and that this simply bails out millionaires that made bad decisions. Unfortunately, the actual problem is much more detrimental to the overall economy than most people realize or even understand. For instance, many small businesses rely on credit to run their daily operations. For a car dealer, it is their line of credit that they use to purchase inventory to put on the lot. For the plumber that wins a bid for a large job, they need access to credit lines to purchase inventory to be able to start the job. Given that 80% of all americans work for a small business (defined by a company with 200 or less employees), the amount of layoffs and jobless claims as a result of the business being unable to grow could be more than we have ever seen in this country.
This problem began with the deregulation of mortgages through Congress during the Clinton administration in the late 90′s, and became a widespread problem as banks were forced to make loans to certain low income borrowers or face economic sanctions from the government. It was understood that a percentage of these mortgages would fail at the time that they were originated, but that was understood as the cost of doing business on the part of lending institutions. This is not when Subprime loans were born, but it certainly gave them the steroids to go into the wildly risky direction that they were 3 or 4 years ago. I’m sure you won’t hear much in the news about this because no one in Washington would ever willfully take responsibility for something that had a negative affect on the economy. In fact, most of our elected officials do not understand the financial markets enough to even know that they created the problem. Now that the chickens have come home to roost, it is Congress that has to clean up its mess.
No one wants government intervention less than I do. But, the cost of a lack of action is far greater than the cost of any bill that may be passed.
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September 29, 2008 at 3:03 pm · Filed under Affordable Housing, Headlines, Presidential Election, Residential, The Mortgage Market
Much of the financial market expected the bailout bill to be passed, but the tides have changed.
After non-stop press coverage for almost 2 weeks, and a never ending jockeying for position in front of the camera by the talking heads in Washington, the wall street bailout bill has crashed and burned on the floor of the house of representatives. With nearly a 2 to 1 vote against the bill by Republicans, and 94 Democrats voting against it, clearly the constituents negativity towards this has driven the House to vote down the bill.
Since most people on Main Street don’t understand the magnitude of the credit markets right now, perhaps they will get a better understanding after checking their portfolios at the end of trading today. After expecting a bailout to be passed, the dow plunged down over 700 points after the vote went the wrong way. Analysts are saying that without a bailout package from Washington, the Dow could drop as much as 2500 points before settling on a bottom, which will most certainly affect Main Street. Even worse than the uncertainty in the stock market would be the affect that a freeze in credit would have on small businesses.
I think after seeing the aftermath, there will be another vote, and there will be some sort of bailout proposal passed. The question remains, how long will that take? And, have many casualties will be left on the battlefield before then?
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