After the Bust

The lines are being drawn for the Senate battle on Mr. Obama’s health plan.  I know that the government systems that I have seen overseas provided inferior quality, inferior to what most of us have come to expect from our system.  On the other hand, I have seen my health insurance increase to the point where it makes my mortgage payment look reasonable.

So part of the question is, do you want to continue down the path that you are on, with private health insurance companies taking huge profits and increasing premiums to the point of absurdity, or should things change?

The war of words going on in the press today has pitted the greedy insurance companies against inept politicians.  The insurance company representatives, usually highly paid Doctors, keep telling us that the government will turn out to be worse than they are.  I think that is rich, don’t fall for government control of the health care system because they will screw you worse than we have . . great defense guys. 

While there are some individuals who are lucky enough to have lifetime coverage, most of us will hit a point where we can no longer afford it.  I have read that you need $ 200,000 to $ 300,000 in savings just to pay health insurance premiums if you want to retire.  That means if you are not one of the lucky few who have paid lifetime coverage or who can pay the discussed premiums from savings you will also suffer the same fate, health insurance cancellation.

Personally I don’t think the argument that doctors will leave the industry in droves because they won’t be able to get rich is a farce.  If you provided even a portion of the excess that is going to insurance company profits you could increase what doctors received, and then maybe they could make more decisions based on what is best for patients and not on what is best for the Big Bucks Insurance Company profits.

I hate to see more government intrusion into the health care market, but if you talk to people who think the government is there as a last resort to help them, for example veterans or helpless elderly individuals, you will find that they are shunned if they can’t pay monster premiums.  Many people are fooled into thinking that existing programs help people when the help is minimal or non-existent.

The question, do you need health insurance, can more easily be answered with a resounding no than an impossible to achieve coverage yes.  If you can see in the relatively short term future that health insurance premiums, that now cost a typical family at or above $ 8,000 per year, may become unaffordable.  Then there really isn’t much decision making with regard to the changes being presented.

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Three dollar a gallon gas is not a welcome sight at the pump, not when unemployment is nearly 12% and home prices are falling at 2% per month.  On top of everything else, we here in Las Vegas just got hit with a fat 7% electricty rate increase.  When you live in the desert and the temperature at times hits 115 degrees you don’t have a lot of choices about paying for power, you either pay or suffer the physical pain. 

Looking to the short term future I would say that things are going to get worse before they get better, and I consider myself to be a relatively optimistic person.  Las Vegas is seeing double digit decreases in sales tax income, visitor volumes are consistently down and have you checked to see just how far room rates have fallen?  You can stay in the Wynn Resort or the Belaggio this Summer for less that it costs to stay in a Ramada Inn in upper Michigan. 

I guess that the bargains are the upside to all of this insanity.  Fewer travelers means that you can play “lets make a deal” on a wide range of travel products and services.  Almost every cruise line has a major discounts going on their cabins and on their on-board credits.  The discounts are much larger for 2010 cruises than they were even for 2009.

I have seen flight / auto trip combo packages to Ireland that include airfare from NYC for $ 249!  That’s a bargain price even for those of us who are suffering through these slow times.

Local Las Vegas restaurants have joined in the discounting frenzy by offering $ 50 dining coupons at discounts of 20% to 50% off, and if you have shunned the shows like The Beatles or Jersey Boys, its time to take a second look.  Like everthing else, there are some great deals around.

Its not much of a silver lining, but maybe some of the bargain discounts will get you a vacation or a dinner that you thought you couldn’t afford.

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I read an article by Martin D. Weiss, PhD entitled “California Collapsing” on the Internet, it is located at http://www.moneyandmarkets.com/california-collapsing-34271 and it is an eye opening report.  I knew there were some serious problems going on in the state but an 11.5% unemployment rate and a $ 24.3 billion dollar budget deficit were surprising numbers to discover.

With a mind numbing budget crisis, crushing debt, high unemployment, commercial real estate defaults increasing and a new wave of mortgage resets with 50% to 80% defaults likely in the home mortgage market, it is going to be a rough ride in the short-term future and in Dr. Weiss’s opinion there is ” a very HIGH probability that California will default.”

It has been my opinion that we would inflate our way out of our massive debt, but a default by a major state like California would solve their problem and possibly others much quicker.  Sure it would devastate a lot of people’s lives, but the government has already decided that a California bail out is not as important as the Wall Street bail outs since it has repeatedly turned California down flat after several requests for additional funds.

I have not been in favor of any bail-outs, so the near trillion dollars that was set aside for them has always seemed more than a bit unfair.  Many have asked, why bail out Wall Street and not states?  The default of a huge state government would bring with it an extremely bad precedent that may be followed by a number of smaller defaults.  I expect that the default of California would bring a number of other defaults, a virtual “house of cards,” that would be even worse for the general public than that which came from the Chrysler failure.

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Just when we needed the government to recognize that their involvement in the private sector caused the current banking crisis and the subsequent recession, due to political pressure that caused funding to flow through Freddie Mac and Fannie Mae like it was water, we now have them meddling in the valuation business.

Nevada’s establishment of new Broker Price Opinion (BPO) rules that take effect on July 1, 2009 will allow about 20,000 real estate agents to express “price opinions” upon which decisions will be based by buyers, sellers, lienholders and third parties “making decisions or performing due diligence related to the potential listing, offering, sale, exchange, option, lease or acquisition price of a parcel of real property.”  In other words, for almost any purpose besides an application for a new loan.

One might ask, “are there any special qualifications required of an agent beyond the 1 or 2 weeks of real estate training required of agents for licensing to express such opinions?”  The answer would be no.  One might also ask, “is there any penalty for unqualified agents expressing opinions that are in error, and that may cost buyers, sellers, lienholders and others thousands or millions of dollars in losses?”  Again the answer would be no.

So what the Nevada State government has done with this law is allow the entry of thousands of untrained individuals into the valuation business at a time when valuing real property has become more difficult than it has been in the last 10 years.  Who exactly has this law been written to protect?

I have been a real estate broker for over 30 years and in 1991, after our country’s first financial fiasco with Savings & Loans, appraiser licensing was adopted based on a federal mandate.  The appraisal business has come a long way since then, and appraisers are so much better qualified than agents with regard to the valuation process that the professions have parted ways.  By allowing any real estate agent to act as a value expert is a giant leap backward.  

One wonders if this new law and its timing has anything to do with the fact that appraiser’s have not been willing to provide market value opinions high enough to support higher listings and the upward pressure on prices (see “Realtors Say Low Appraisals Sinking Deals“).

For those party’s buying “broker price opinion” products from real estate agents in Nevada, I guess the government has set up a situation for you where its “let the buyer beware.”  An army of unqualified real estate agents will be giving you a chance to purchase their opinion, but if it’s inaccurate you only have yourself to blame.

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As many of you are already aware David Letterman and his CBS handlers took their shot at pumping up Letterman and his show’s ratings by performing a rape “joke” about Sara Palin’s daughter the other day. It was one in a series of vile and condescending Palin comments that Mr. Letterman has made of late. After being called on the “joke” he subsequently made an excuse that he did not know that Sara Palin was accompanied by her 14-year old daughter and not her 18-year old daughter. The excuse was insincere, if Mr. Letterman and CBS did not know who was with Mrs. Palin they should have known before doing the “joke.” Personally I don’t think the “joke” was appropriate even if it had been directed at the older Palin daughter.

Thirty years of being a comedian means that you have been privileged, it doesn’t give you license to destroy personal lives to increase your popularity. I’m sure that everyone important at Mr. Letterman’s CBS Show sat down in a big office and decided that the Letterman Show and Mr. Letterman himself would survive the firestorm that would follow the “joke.” Negative publicity is better than no publicity, isn’t that the saying? . . . the end justifies the means? I’m sure that it was all about ratings and garnering the biggest share of the audience in a competitive late night time slot.

Personally I think it was one of those low blows that will follow Mr. Letterman to the end of his days. When you become so desperate for continued fame that you will do anything for it, you won’t be remembered for being a great entertainer, great entertainers don’t have to viciously attack others to remain popular.

I hope that Mr. Letterman has ignited a fire under a big enough group of public protestors that he feels the heat from his sponsors. Since money is apparently the only thing that he cares about, maybe the loss of a sponsor or two will ring his bell.

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The auto industry in earlier times employed over 600,000 individuals and after the bust there may remain a force of only about 40,000 employed.  What does that mean for Michigan?  The State is looking at huge budget problems trying to meet the tax shortfall that will be created by the job losses.  Police, schools and emergency services may be hit hard.  Healthcare will suffer, retail sales will plumet, property values already down will become frozen and drop futher and a wide array of support jobs will vanish as the “multiplier effect” that comes into play when core jobs are created works in reverse as auto jobs are lost.

The liquidation of well over a million vehicles, in what has been a poor market for vehicle sales, will negatively impact Ford and foreign manufacturers.  Some have predicted that the sell off will cause massive layoffs as production is decreased, and that prices may increase on other vehicles in response to the disruption.

While no one knows just how bad things will get, it is clear that even under some of the most optomistic scenarios Michigan will be suffering over the next several years, and Michigan’s losses affect us all.  The black hole that will be created by primary and secondary job loss in Michigan will ripple through the State and adjoining states.  The job losses from the closure of hundreds of dealerships will hit many more states at a time when job retention is critical. 

There will be more waves in time as iron ore mining, steel, aluminum and parts manufacturing plants are hit.  Regardless of your ideology regarding the necessity for the market to allow such failures, expect the adjustment process will be painful for many.

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Here is my rant for the day, just a few things that I had to say about general misconceptions or bad assumptions, take something from them or leave them, I don’t care.

1. The Doctor’s First Priority is to Save You;  You can find out the hard way, like I have, that the doc is interested in doing things the “acceptable” way and all others are not considered.  The perfect example of this is the treatment of c-diff, a nasty intestinal super bug that takes over when you have killed everything else in your gut by taking strong antibiotics.  The doc says there is no way to replace your bugs and he would rather you die than be treated with an “experimental” method.  The fact of the matter is that doctors wear blinders, and you had better take the responsibility of finding out about alternate treatments, because they won’t be suggested to you.

2. Lawyers Represent You;  Sure in some wacked-out sense I guess they do.  Fact of the matter is that they are “officers of the court” and they understand that they live and die in the legal system.  I have been sold out by a number of attorneys over the years, they simply will not act as they are directed to by their clients.  Lawyers actually believe that whatever they decide to do on your behalf was in your best interest.  The greed and corruption that goes on within the legal system is so far from the ideals that people believe in that you have to be a fool to think that they are one in the same.

3. Things Will Always get Better; well maybe they will, and maybe they won’t, of course the real question that most people want answered is “will things get better for me in my lifetime?”  If you look back through time you see some good times and lots of bad, so it just depends if you are lucky enough to have lived during a period of good times.  Good times are also relative to the individual who is living them, I’m sure that there were some people who prospered during the great depression.

4. The Government Will Take Care of You; I think that this misconception is being tested of late, since many people are realizing that the government may be able to print a lot of money, but it can’t really solve many problems with it.  A billion here a trillion there and what do you get?  Usually just a whole lot of nothing.  If you want to find out about what the government will do for you, start calling Veterans or people over 65 who are dealing with the health care system to survive.  Sorry to burst your bubble, but they simply will not be there when you need them.

5. You Will Receive Equal Treatment; Yes, when you reach the planet Krypton and they are preparing your body as food you will receive equal treatment.  Besides that possibility, your treatment as an equal here on earth is unlikely.  Sure you may be able to force someone to consider you as a player, you are drawing breath and you did pay the entry fee, but don’t think for a moment that you are receiving equal treatment, its a myth.

6. Luck Counts; Sure it does, but almost insignificantly.  If your only way out of your problem, whatever it may be, is to hope that you will get lucky, that things will change for you, you are well along the path toward failure.

7. Life is Fair; No, it is not.  People with quality food, shelter, drugs, health care and support systems live longer and likely enjoy their lives more than those without these things.  There will always be a battle between those who have and the have nots.  As we have seen in the past, even governments that claim that their sole purpose is the equal distribution of weath have failed. 

Don’t think for a minute that I don’t appreciate my own situation, that’s just another bad assumption on your part.  I just don’t think that some people have had time to pull back the curtains and see that there are “Wizards” behind them and that they are as biased and falible as any other humans who makes decisions.

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Can you see what is on the horizon, looks like $11 a pack cigarettes, higher unemployment, higher gas prices,  the implemenation of a large value added tax (VAT)  increases and all while we are struggling to get through one of the most difficult time in years.  Many have already succumbed to living with increased stress.

I don’t have to tell you how bad stress is for you physical and mental health.  There are hundreds of articles and books already written about strees and the negative effects that it can have on your life.  Stress can make your life much more difficult, and ultimately it can bring you down.

Watching television and listing to radio doesn’t help, most of the popular shows take one side or the other, telling us how much better change will be or saying that we are headed into deep water with the changes proposed.

While I don’t think “don’t worry, be happy” is an entirely appropriate direction, I do think that simplifying ones life is a good idea.  Getting rid of excess baggage in our lives like expensive, gas eating toys is not a bad idea.  Do you really need that second boat or camping trailer?  How long has it been since you got on those ATV’s or motorcycles?

How about making a serious run at your boss regarding working from home?  Even a day or two a week would cut commute time, gas expenses, clothing costs and generally make you life less stressful.  If not, how about trying to get the work week shortened to four 9 hour days?  It takes an effort, but if you can find ways to increase the quality of your life by managing your time better, you will likely decrease your stress.

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