Jazz Hearted Fridays

Going Home by Jonathan Butler

Why buying a house may not be a great investment after all?

By James Altucher - The Altucher Confidential

Altucher 

Editor's Note: The following blog post was written by James Altucher, managing director of Formula Capital, and originally published on his website:  The Altucher Confidential. 

Prior to the existing home sales report this morning, Altucher sat down with Aaron and Henry on Yahoo's Tech Ticker to discuss his financial and personal reasons for not owning a home.

Tell us what you think!

Many people have said to me in the past month, “I’m going to buy a home.” Or, “What do you think of the idea of me buying a home?” I like the second batch of people. They are my friends and it seems like they are sincerely asking for my advice. And I’m going to give it to them. Whether they meant it or not.

I have some stories about owning a home. One of them is here: “What It Feels Like to be Rich” where I describe my complete path into utter depravity and insanity. The other one is still too personal. Its filled with about as much pain as I can fit onto a page. Oh, I have a third one also from when I was growing up. But I don’t want to upset anyone in my family so I’ll leave it out. Oh, I have a fourth story that I just forgot about until this very second. But enough about me. Lets get right to it.

There are many reasons to not buy a home: [By the way, I also put this in the category of Advice I want to tell my daughters, including my other article: 10 reasons not to send your kids to college.]

Financial:

A) Cash Gone. You have to write a big fat check for a downpayment. “But its an investment,” you might say to me. Historically this isn’t true. Housing returned 0.4% per year from from 1890 to 2004. And that’s just housing prices. It forgets all the other stuff I’m going to mention below. Suffice to say, when you write that check, you’re never going to see that money again. Because even when you sell the house later you’re just going to take that money and put it into another downpayment. So if you buy a $400,000 home, just say goodbye to $100,000 that you worked hard for. You can put a little sign on the front lawn: “$100,000 R.I.P.”

B) Closing costs. I forget what they were the last two times I bought a house. But it was about another 2-3% out the window. Lawyers, title insurance, moving costs, antidepressant medicine. It adds up. 2-3%.

C) Maintenance. No matter what, you’re going to fix things. Lots of things. In the lifespan of your house, everything is going to break. Thrice. Get down on your hands and knees and fix it! And then open up your checkbook again. Spend some more money. I rent. My dishwasher doesn’t work. I call the landlord and he fixes it. Or I buy a new one and deduct it from my rent. And some guy from Sears comes and installs it. I do nothing. The Sears repairman and my landlord work for me.

D) Taxes. There’s this myth that you can deduct mortgage payment interest from your taxes. Whatever. That’s a microscopic dot on your tax returns. Whats worse is the taxes you pay. So your kids can get a great education. Whatever.

E) You’re trapped. Lets spell out very clearly why the myth of homeownership became religion in the United States. Its because corporations didn’t want their employees to have many job choices. So they encouraged them to own homes. So they can’t move away and get new jobs. Job salaries is a function of supply and demand. If you can’t move, then your supply of jobs is low. You can’t argue the reverse, since new adults are always competing with you.

F) Ugly. Saying “my house is an investment” forgets the fact that a house has all the qualities of the ugliest type of investment:

Illiquidity. You can’t cash out whenever you want.

High leverage. You have to borrow a lot of money in most cases.

No diversification. For most people, a house is by far the largest part of their portfolio and greatly exceeds the 10% of net worth that any other investment should be.

Homosexuals come out against Apple App that "Cures Homosexuality"

"There's an app for that."

The catchphrase coined by Apple and their advertising gurus to sell iPhones and iPads has become so ubiquitous that it's even been parodied on Sesame Street. Still, few would have ever thought that the tech giant—which, like many other Silicon Valley concerns, boasts a progressive profile on many cultural issues, and extends domestic-partner benefits to gay and lesbian employees—would condone an app that purports to "cure" homosexuality. It would seem an even greater stretch for Apple and company founder and CEO Steve Jobs to make such an application available through its iTunes store.

Yet the app—by a ministry group called Exodus International—is right there, along the thousands of other iPhone apps available to plugged in Apple users. And this appears to be the point at which many of Apple's cultish fans—including plenty of gay activists—are drawing the line. No, they say: There's not actually an app for that.

The Exodus ministry seeks to promote the "ex-gay" movement—promulgating the testimony of people who claim to have been cured of homosexuality through Christ. The target audience for the smart-phone app, its makers say, are "homosexual strugglers." The idea is to teach gay people that they have a choice when it comes to their sexuality, a choice to choose "freedom from homosexuality through the power of Jesus."

Of course, providing a tech platform for a particular spiritual or ideological movement doesn't signify an endorsement of its point of view. At the same time, however, as Gawker's Ryan Tate noted during an earlier controversy over a gay-themed app, "every time Apple approves an app, it implies moral endorsement of the content of that app."

And since average Apple user is younger and more culturally tolerant of homosexuality, word of the Exodus app has sparked a fast-growing protest As of this writing, more than 100,000 people have signed a Change.org petition calling on Apple to abolish it. What's more, some who've purchased it are somewhat baffled by it.

Writes the Atlantic's Nicholas Jackson:

So I downloaded the (free) app, which was launched on March 8. A giant resource bank, the app contains lists of events, videos and news stories that are carefully curated to reflect the mission of Exodus International, which states that individuals can "grow into heterosexuality." Nothing available on the app would lead me to question my homosexuality, but maybe I'm not fictile enough.

Perhaps the time is ripe for a market solution. Surely, engineers for a competing smart phone, like the Droid, are hard at work preparing to launch a more effective and intuitive app curing people of their straightness?

Source: The LookOut on Yahoo News

Obfuscated Libya Endgame has Obama taking heat from all sides....

By Jim O'Sullivan
National Journal

President Obama's decision to send American warplanes into Libya opened the nation's third military theater in the Middle East—and quickly cast the administration onto more battlegrounds at home.

Three days into the first war he's helped to start, Obama finds himself in an increasingly familiar position in relation to the Congress: detached, under fire, and going it largely alone.

American liberals who gravitated to Obama because he was the most plausible anti-war candidate broke sharply with him this weekend for projecting U.S. force into a corner of the world where it's traditionally unwelcome, humanitarian intervention doctrine be damned. Even some congressional Democrats who voted for the Iraq invasion call the Libyan venture "gratuitous" and question Obama's standing. Rep.Dennis Kucinich, D-Ohio, on Monday called the U.S. involvement in Libya an "impeachable offense."

Capitol Hill Republicans, divided for weeks about how to handle Libya, are casting an array of aspersions on Obama's decision; he's been too slow, hasn't adequately consulted Congress, has not developed a clear exit strategy, and not much of an entrance strategy either.

House Speaker John Boehner, R-Ohio, in a statement released during Obama's largely Libya-free speech in Rio de Janeiro on Sunday, hit him over process, saying his administration should "define for the American people, the Congress, and our troops what the mission in Libya is, better explain what America's role is in achieving that mission, and make clear how it will be accomplished. Before any further military commitments are made, the administration must do a better job of communicating to the American people and to Congress about our mission in Libya and how it will be achieved."

(Costs of Libya Operation Already Piling Up)

That, incongruously, aligned the speaker with Rep. Anthony Weiner, D-N.Y., the Brooklyn liberal who backs the bombing campaign but wants Obama to obtain congressional authorization.

Sen. John McCain, R-Ariz., for weeks advocating a no-fly zone, may be adhering to the "too-little, too-late" school-of-thought, saying on CNN's State of the Union on Sunday, "He waited too long. There is no doubt in my mind about it. But now it is what it is. And we need now to support him and the efforts that our military are going to make. And I regret that we didn't act much more quickly and we could have, but that's not the point now."

A party currently defined by its rhetorical commitment to deficit- and debt-reduction is also populated by denizens who argue that we did not commit quickly enough to a military incursion with no known price tag and no concretely defined endgame.

And Sen. Richard Lugar, R-Ind., whose apprehension has matched McCain's eagerness, offered a damning indictment of American intelligence on the ground, one with special resonance in the wake of Iraq. "But we really have not discovered who it is in Libya that we are trying to support," he said on Sunday's Face the Nation.

And, eight years after the birth of "freedom fries," there is a Republican strain outraged that it was the French, long abhorred for not doing enough, who on Saturday had the first planes in-country.

The swiftness and ferocity of the backlash against Obama is an inversion of the reaction at the start of the war in Afghanistan, when the specter of the 2001 terrorist attacks both hushed opposition and isolated it to an easily caricatured anti-war left. Critics of the administration's actions in Libya run no risk of being depicted as unpatriotic or portrayed as disrespectful.

"We used to relish leading the free world. Now, it's almost like leading the free world is an inconvenience," Sen. Lindsey Graham, R-S.C., said on Fox News Sunday—taunting remarks that drew none of the spring-loaded opprobrium that greeted criticism of the commander-in-chief the last time a major U.S. military incursion was launched, President George W. Bush.

If the criticism seems erratic, it is at least in part because the policy itself is nascent and amorphous, a moving target that's tough to pin down. The Pentagon and White House have been meticulous in shying from any rhetoric that could bleed into talk of regime change—to the point that toppling Col. Muammar el-Qaddafi isn't even an explicit U.S. goal—and from any cost-estimate figures.

Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, has carefully put on a short timeline the lifespan of the U.S. control of the operation, calling it a matter of days before command of the coalition is transferred to, presumably, predominantly French and British authority, another sign of how much American ambition abroad was changed by the recent history in Afghanistan and Iraq.

The Pentagon's credit-sharing gave political cover to the Democrats who did get the president's back, notably Senate Majority Leader Harry Reid, D-Nev., who said Saturday, "I support the actions taken today by our allies, with the support of several Arab countries, to prevent the tyrant Muammar Qaddafi from perpetrating further atrocities on the people of Libya. And I support the president's decision to deploy U.S. assets to help those allies to enforce a no-fly zone to protect Libyan civilians as laid out in the United Nations resolution. This U.S. military action was not taken lightly, and it was done in concert with a broad international coalition."

National Journal Political News

Farrakhan warns, advises Obama on Libya

Nation of Islam leader Louis Farrakhan, has blasted President Obama and Secretary of State Hillary Clinton, for their arrogance in meddling in another sovereign nation's affairs and publicly recommending regime change.

He then instructed Americans to look beneath the surface to see who stands to benefit from the unrest....

He refers to the specter of three "imperialist powers, Britain, France and the United States, invading an African country as being troubling and capable of potentially turning some Africans against President Barack Obama", who happens to have deep African roots from his paternal side.

Here is the video (below) and we leave it to you to judge for yourself....

Speaking from both sides of their mouth as usual, Arab league 'criticizes' West's strikes on Libya

TRIPOLI – Western forces pounded Libya's air defenses and patrolled its skies Sunday, but their day-old intervention hit a diplomatic setback as the Arab League chief condemned the "bombardment of civilians."

As European and U.S. forces unleashed warplanes and cruise missiles against Muammar Gaddafi's air defenses and armor, the Libyan leader said the air strikes amounted to terrorism and vowed to fight to the death.

Later, however, an armed forces spokesman appeared at a live televised news conference at 9 pm (1900 GMT) to say the army was ordering all troops to cease fire immediately.

This statement drew no immediate response from western powers, who had blamed Gaddafi's government for breaking a unilateral ceasefire it announced last week.

The military intervention had forced Gaddafi's eastern forces to flee from the outskirts of Benghazi in the face of the allied air attacks.

However, tanks also moved into Misrata, the last rebel-held city in western Libya. Among the densely packed houses full of civilians, they were less vulnerable to attack from the air.

A Libyan government health official said 64 people had been killed in the Western bombardment overnight, but it was impossible to verify the report as government minders refused to take reporters in Tripoli to the sites of the bombings.

Arab League chief Amr Moussa called for an emergency meeting of the group of 22 states to discuss Libya. He requested a report into the bombardment, which he said had "led to the deaths and injuries of many Libyan civilians."

"What is happening in Libya differs from the aim of imposing a no-fly zone, and what we want is the protection of civilians and not the bombardment of more civilians," Egypt's state news agency quoted Moussa as saying.

Arab backing for a no-fly zone provided crucial underpinning for the passage of a U.N. Security Council resolution last week that paved the way for Western action to stop Gaddafi killing civilians as he fights an uprising against his rule.

The intervention is the biggest against an Arab country since the 2003 invasion of Iraq. Withdrawal of Arab support would make it much harder to pursue what some defense analysts say could in any case be a difficult, open-ended campaign with an uncertain outcome.

Britain and the United States rebuffed Moussa's comments.

A senior U.S. official said a U.N. resolution endorsed by Arab states covered "all necessary measures" to protect civilians, "which we made very clear includes, but goes beyond, a no-fly zone."

A British foreign ministry spokesman said the safe enforcement of the no-fly zone required the targeting of Libya's air defense capabilities, but that all missions were carefully planned to avoid civilian casualties.

TANKS SHATTERED

The U.S. Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, said the no-fly zone was effectively in place. But he told CBS the endgame of military action was "very uncertain" and acknowledged it could end in a stalemate with Gaddafi.

Mullen said he had seen no reports of civilian casualties from the Western strikes. But Russia said there had been such casualties and called on Britain, France and the United States to halt the "non-selective use of force."

Libyan state television showed footage from an unidentified hospital of what it called victims of the "colonial enemy." Ten bodies were wrapped up in white and blue bed sheets, and several people were wounded, one of them badly, the television said.

The armed forces spokesman said "the Libyan armed forces ... have issued a command to all military units to safeguard an immediate ceasefire from 9 p.m. (3 p.m. EDT) this evening."

Minutes before he made the announcement, heavy anti-aircraft gunfire boomed above central Tripoli, followed by sustained machinegun fire.

The country announced a unilateral ceasefire last week but Western powers then accused Gaddafi of breaking the truce -- a charge denied by the government.

In a possible attempt to show Libya's softening of its position, Mohamed Sharif, a tribal official, invited people to join a symbolic march from Tripoli to Benghazi.

"And then we could sit down as one family to discuss the affairs of our homeland and the future of Libya in a democratic and peaceful way," he said at the televised news conference.

Western intervention, after weeks of diplomatic wrangling, was welcomed with a mix of apprehension and relief in Benghazi, where the main hospital was filled with men, women and children wounded in Saturday's assault on the city by Gaddafi's forces.

"We salute France, Britain, the United States and the Arab countries for standing with Libya. But we think Gaddafi will take out his anger on civilians. So the West has to hit him hard," said civil servant Khalid al-Ghurfaly, 38.

Outside the eastern city, the advance by Gaddafi's troops was stopped in its tracks with smoldering, shattered tanks and troop carriers littering the main road. The charred bodies of at least 14 government soldiers lay scattered in the desert.

Rebels who have been fighting for a month to end Gaddafi's 41 years in power advanced south from Benghazi toward the strategic junction at Ajdabiyah, which they lost last week.

But in Misrata, east of Tripoli, residents said government tanks and snipers had entered the center of the city after a base outside it had been hit by Western air strikes.

"Two people were killed so far today by snipers. They (snipers) are still on the rooftops. They are backed with four tanks, which have been patrolling the town. It's getting very difficult for people to come out," one Misrata resident, called Sami, told Reuters by telephone.

"There are also boats encircling the port and preventing aid from reaching the town."

Abdelbasset, a spokesman for the rebels in Misrata, told Reuters: "There is fighting between the rebels and Gaddafi's forces. Their tanks are in the center of Misrata ... There are so many casualties we cannot count them."

QATAR SENDING PLANES

French planes fired the first shots of the intervention on Saturday, destroying tanks and armored vehicles near Benghazi. The eastern city is the cradle of the revolt, inspired by Arab uprisings that toppled the leaders of Tunisia and Egypt.

France sent an aircraft carrier toward Libya and its planes were over the country again Sunday, defense officials said. Britain said its planes had targeted Libya's air defenses, mainly around the capital Tripoli.

U.S. and British warships and submarines launched 110 Tomahawk missiles overnight against air defenses around Tripoli and Misrata, U.S. military officials said.

They said U.S. forces and planes were working with Britain, France, Canada and Italy in operation "Odyssey Dawn." Four Danish fighter planes took off from a base in Italy, apparently to join the mission over Libya.

Aircraft from other countries, including Qatar, were also approaching Libya to participate in the operation, Mullen said.

 

Chart shows low tax burden for rich

By Zachary Roth

We hear a lot these days about how government spending has led to a deficit that could pose a major long-term threat if it goes unaddressed. It's true that government has of late grown under both Democratic and Republican presidents. But deficit hawks often sidestep a no-less important trend: In recent decades, tax rates--especially for the rich--have been on the decline by historical standards. Everyone likes getting a tax cut, but it's worth remembering that the shrinking of tax revenue has contributed to the deficit problem, just as spending has.

Via Felix Salmon, a fascinating (and strangely beautiful!) chart, compiled by Stephen Von Worley at the DataPointed blog, drives home that point, and a few others.





What to make of all those swirling lines? The chart shows how tax burdens for different income levels have fluctuated over the last century, adjusted for inflation. Blue areas represent a historically low tax burden for a specific income level, while red areas represent a historically high burden.

So in a nutshell, the chart shows that until around 1940, tax burdens were low for everyone, in historical terms. Then they rose sharply for everyone until about 1970. At that point, the rich and poor began to diverge. Those making around $10,000 to around $50,000 per year enjoyed a comparatively low-tax period in the 70s, but by the early 80s they were taxed slightly higher than the historical average. In the 2000s, their tax rate came back down a bit. By contrast, those making more than roughly $200,000 a year saw a sharp decrease in their tax burden starting in the 80s. That trend has continued to this day.

It's clear, then, that across the board, today's tax rates are low by historical standards--and for the rich they're very low. If the bottom of the chart showed more red and less blue, our deficit problem would be a lot more manageable.

The chart also has implications for another topic we've written about here before--wealth and income inequality. As you can see, no one's taxes today are particularly high by historical standards, but those making $1 million or more per year--that is, roughly the top 1 percent--enjoy the lowest burden, relative to past rates.

At a time when a horde of stats indicates that the gap between rich and poor has widened into chasm--and when Congress and the White House are set to argue again later this year about whether to permanently extend the Bush tax cuts for the rich--it's well worth keeping this bigger picture in mind.


Source: The LookOut @ Yahoo

Republicans say new consumer bureau too powerful.... really?

Consumer Financial Protection Bureau head Elizabeth Warren

WASHINGTON – House Republicans said Wednesday that a new government agency designed to protect consumers from problems with mortgages, credit cards and other lenders has too much power.

They also criticized it for participating in a federal-state effort to force mortgage servicers to change the way they foreclose on troubled homeowners.

Testifying to Congress, the White House official assembling the new Consumer Financial Protection Bureau made no apologies. Elizabeth Warren said the agency was badly needed and might have helped the country avoid the housing problems it has suffered, including abuses in the ways foreclosures have been processed.

"If there had been a consumer agency in place, the problems in mortgage servicing would have been exposed early and fixed while they were still small, long before they became a national scandal," she told the financial institutions subcommittee of the House Financial Services Committee.

The bureau was created by last year's financial markets overhaul law, enacted by President Barack Obama and congressional Democrats over strong GOP opposition. The agency opens its doors on July 21, and Obama has appointed Warren, a Harvard law professor and long-time consumer advocate, to put it together.

Financial Services Chairman Spencer Bachus, R-Ala., said the agency will likely be "the most powerful agency that's ever been created in Washington." He and other Republicans have complained that Congress doesn't control the bureau's budget, that it will be headed by a director and not a bipartisan commission, and that it has strong leeway to decide which financial products it will curb.

"You have a lot of discretion and a lot of power, but I see very little accountability," Bachus said.

"I look at this Congress. We are the voice of the American people," said Rep. Sean Duffy, R-Wis. "And when we don't have any oversight of what you're doing, I see that as incredibly problematic."

GOP lawmakers also challenged the bureau's role in a push by federal agencies and the 50 state attorneys general to force five large U.S. banks to agree to make it easier for struggling homeowners to avoid foreclosure and rework their mortgages.

They complained that the consumer bureau should not be exercising authority until the agency formally comes into existence.

Warren said the agency will play no role in any formal government settlement with the banks. But she said the bureau has been asked to give advice to government officials involved in the effort and has done so, since it will eventually have authority to set mortgage servicing standards.

"We are not only glad to be helpful, we are proud to be helpful," she said.

Warren has stirred strong opposition among Republicans, and Obama is not expected to nominate her as director because her Senate confirmation would be in doubt. He could appoint her to the job during a congressional recess — which would not require Senate approval but would give her the job only through 2012.

Bachus and Rep. Shelley Moore Capito, R-W.Va., introduced a bill Wednesday that would replace the director with a five-person commission with members from both political parties. Hoping to restrict the bureau's power, the House has already voted to limit the bureau's budget to $80 million this year, well below the $143 million Obama wants.

The Democratic-run Senate and Obama are unlikely to accept the spending cut or creation of a commission to run the agency.

The bureau is chiefly designed to give consumers simplified information about financial products and protect them from unfair practices. Priorities Warren considers important include regulating mortgages, credit cards and non-bank financial companies like mortgage brokers, payday lenders and private providers of student loans.

As part of an effort to assuage critics, Warren has met with over 60 members of Congress and dozens of executives of financial institutions, large and small, across the country.

In her prepared testimony, she said the bureau will move next year to a new headquarters across the street from the White House, "to have a very tangible presence for anyone who visits Washington."


Source: AP News

"World's richest man's" wealth jumps 38%

Mexico's Carlos Slim has topped the latest Forbes magazine rich list, as his personal fortune grew (by $20.5bn) to $74bn; again beating Microsoft founder Bill Gates ($56bn) into second place.

More than 200 people joined the billionaires list as their numbers rose to a new record of 1,210, Forbes said including Mark Zuckerberg and Sean Parker.

They are joined by Facebook investors Peter Thiel and Yuri Milner as well as co-founders Eduardo Saverin and Dustin Moskovitz, who is the youngest person on the list at 26.

Ikea founder Ingvar Kamprad was the biggest loser, down $17bn to $6bn.

He fell from eleventh spot to 162 and was unusual amongst the billionaires in seeing his wealth decrease.

The collective wealth of the billionaires on the list also hit a new record of $4.5tn.

The world's largest economy, the US, continues to have the most billionaires, with 413.

Asia, for the first time in a decade, has more billionaires on the list than Europe, with 332 against 300.

China and Russia have 115 and 101 billionaires respectively, with Moscow now home to more billionaires than any other city in the world.

The city has 79 billionaires, and Russia has the most billionaires in Europe. Germany is in second place with 52.

Meanwhile, Europe acquired 50 new billionaires in 2011, taking it to 300 in total, with a collective worth of $1.3 trillion.

Source: Forbes 

Jim Tressel: "Mr. Perfect", not so perfect after all....

Tressel: A hypocrite and a cheat all along

Jim Tressel has been suspended from Ohio State after the university learned that Tressel, the football team's head coach, had withheld information about players violating NCAA rules and continuing to let them play. Jim Tressel issued an apology.

It started in April 2010, when the NCAA was made aware of possible violations by some Ohio State players.

Several players sold Ohio State football memorabilia to tattoo parlor owner, Edward Rife. In exchange for memorabilia such as jerseys and championship rings the players received cash and discounts on tattoos.

Following a federal investigation of Rife, Tressel's lawyer emailed him about the possible violations, naming two specific players who had sold the Buckeyes memorabilia.

Tressel failed to tell university officials about the possible NCAA violation, and then allowed the two players to play the rest of the 2010 season.

On Dec. 7, the university learned of the investigation after the local US Attorney's office contacted them. The university informed the NCAA, and on Dec. 23, five players, including the team's star quarterback, were suspended for five games.

In January, Tressel confirmed that he had known about the memorabilia sales all along.

Having failed to report the sales to the school in a timely manner, Tressel has been suspended for the first two games of the season against Akron and Toledo and fined an additional $250,000, but Ohio State athletic director, Gene Smith, has confirmed that Tressel will be returning as coach.

In a statement, Trussell said, “I am sorry and disappointed this happened. At the time the situation occurred, I thought I was doing the right thing. I understand my responsibility to represent Ohio State and the game of football. I apologize to any and all of the people I have let down.”

Trussell said the right thing to do would have been to talk to the university's legal counsel as soon as he received the email in April, adding that he planned to "grow from this and I’m sincerely saddened by the fact that I let some people down and didn’t do things as well as I could possibly do."

Each of the players involved have been asked to make donations to charity comparable to their profits from the memorabilia sales and the value of their tattoos.

Source: Christian Science Monitor