Congressional "Consumer Confidence" Index - Fiscal Cliff Economics

Fiscal Cliff - Economics of the U.S. Congress

This is how American politics.. uhm, I mean ECONOMICS works.  Absolutely sickening!  

As I have opined numerous times; people get all worked up up national elections (i.e. Obama vs. Romney) and put their little yard signs out and bumper stickers on in support of one candidate or another, then 5 things happen after each and every national election:

1. the American tax paying public falls alseep for another 4 years during the political "off-season".
2. the American public does not get involved in local and state level politics by and large.
3. by doing #1 & 2 above and totally acquiescing, the American tax paying public allows 545 members of Congress (who actually do run this country) to have total impunity and do whatever the #@&% they want!   
4. the direct and proximate result of #'s 1-3 above is the proliferation of "lobbying" and special interest groups and HUGE campaign donations which take precedent over and "out-trump" the mass populace's best interests.
5. special interest or "lobbying" groups get their needs and interests favorably granted through Congress sneaking legislation favorable to their "constituents" into a completely unrelated Bill as a "rider" or an "addendum".  

You would think that their "constituents" are actually the taxpayers and citizens in their respective Congressional districts who they have a legal, moral and ethical agency and fiduciary duty to represent; but instead, their true "constituents" are actually the special interest lobbying groups who donate huge sums to their political campaigns and self-serving ambitions.    

This is exactly what Congress wants you to do.  Focus all your attention on one person (the President) and turn a blind eye towards them; allowing them to run this country amok any which way they desire or see fit, or which benefits THEM (not us, the taxpayers and true constituents) directly, of course.

Their ethics and behavioir are totally unscrupulous and unconscionable.  If you or I engaged in these same shenanigans, we would be called "sociopaths".  But they are called "Honorable" or "Congressman".    

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Article in today's news:

The 11th-hour deal to avert the so-called fiscal cliff preserved billions of dollars in corporate tax giveaways even as it slashed take-home pay for millions of American workers.

Tucked inside the last-minute fiscal cliff package were more than a dozen tax loopholes, many of which will benefit Wall Street financial firms and some of the nation's biggest corporations. These breaks will cost billions of dollars in the coming year, underscoring the lobbying power of corporate interests.

The deal was less kind to the middle class. Congress permitted a cut in the payroll tax to expire, meaning that the tax burden for the average worker will increase about $1,000 in 2013.

"This shows that the lobbyists are able to get what they want even when everyone else is starving," said Phineas Baxandall, senior analyst for tax and budget policy at the U.S. Public Interest Research Group. "It also shows they are best able to get what they want when no one else is paying attention."

The corporate loopholes were part of a package of so-called tax extenders tacked onto the main bill. The extenders package, first approved by the Senate in early August, mixes popular benefits, like a deduction for teachers who buy classroom supplies, with corporate-friendly carve-outs, such as the "active financing" exception that permits businesses earning interest on overseas lending to defer U.S. taxes on that income indefinitely. There is even a tax break for construction of new racetracks.

The tax extenders were passed for only one year, and they still need to clear another potential hurdle: upcoming negotiations over mandated spending cuts and the debt ceiling. President Barack Obama and congressional leaders have indicated they'd like to see a "grand bargain" on taxes, which would feature lower overall rates but close a slew of loopholes.

The financial services industry, whose leaders had earlier joined a group of other corporate executives pushing for a "fair" solution to the fiscal crisis, is one of the primary beneficiaries of special-interest tax breaks. The active-financing exception, for example, permits banks like Morgan Stanley to avoid the 35 percent U.S. corporate tax rate on interest income from money lent overseas. A handful of other U.S.-based multinational companies with financing arms, such as Ford Motor Co. and General Electric, also use that exemption to lower their tax bills. The two-year cost to taxpayers is an estimated $11.2 billion, according to the congressional Joint Committee on Taxation.

U.S. financial institutions argue that the active-financing exemption is necessary for them to compete in overseas markets with foreign banks that carry a lower tax burden. The loophole was repealed in the Tax Reform Act of 1986, but was reinstated in 1997 as a temporary measure after fierce lobbying by multinational corporations.

The exemption belongs to a small group of boutique corporate tax loopholes that are worth a lot of money to a relative handful of corporations. It even has its own lobbying coalition, the Active Finance Working Group, which serves as a prime example of how important the 20 or so companies that benefit from the exemption consider it. Founded in 2005, the group was quiet during the last few years of the Bush administration, but roared to life again in 2009.

That year, the coalition retained the services of former top Democratic congressional aide-turned-lobbyist Steve Elmendorf, whose firm, Elmendorf Ryan, has earned more than $1.2 million in lobbying fees from the working group in the past four years. Lobbying disclosure reports reveal that the coalition was housed in the same office as Elmendorf Ryan and that the coalition's lobbyists had just one task: protect the active-financing exemption.

In Elmendorf's firm, the Active Finance Working Group has a top-flight team: All eight of the Elmendorf Ryan lobbyists working on the issue in late 2012 were former congressional staffers, most with ties to powerful lawmakers, including to Senate Majority Leader Harry Reid (D-Nev.) and Senate Finance Committee Chairman Max Baucus (D-Mont.).

According to Citizens for Tax Justice, the financial services industry paid an average effective tax rate of 15.5 percent from 2008 to 2010, far lower than that of most other industries.

As part of the fiscal cliff deal, Congress also extended another little-known tax break that benefits large multinationals selling products through overseas affiliates. This "pass-through" exemption permits a U.S.-based company to set up a new corporation in a tax haven like the Cayman Islands and sell it a patent owned by the U.S. parent company. Royalties on overseas licensing of that patent would then route to the tax-sheltered firm, instead of the U.S. parent company. The Joint Committee on Taxation says the two-year cost of extending this shelter is $1.5 billion.

One of the more unusual tax benefits in the fiscal cliff legislation is a longstanding carve-out for racetracks used by NASCAR.

Since 2004, Congress has passed a series of stopgap measures that allow owners of motorsports complexes to accelerate their depreciation expenses. This means that owners can deduct more in expenses, reducing the taxes they must pay.

Track owners and NASCAR together have spent hundreds of thousands of dollars lobbying for the tax benefit over the past five years, according to lobbying disclosure forms. The International Speedway Corp., which owns and manages NASCAR race tracks, has spent more than $1.1 million lobbying Congress since 2008. Over the same period, NASCAR spent more than $300,000 on lobbying efforts, which included a push to "make permanent the depreciation classification."

Supporters in Congress and industry groups have argued that the tax break is necessary to "maintain the current standard expected by our competitors and fans." According to estimates by the Joint Committee on Taxation, the so-called NASCAR loophole will cost taxpayers $46 million this year and an additional $95 million through 2017.

A spokesman for the International Speedway Corp., Charles Talbert, said the industry is simply seeking to preserve a tax designation it has relied on for years. He said in an email that racetracks had always used the accelerated depreciation schedule, but Congress had specifically written it into law after the Internal Revenue Service argued that it was improper in the early 2000s.

Though Congress was willing to sign off on all these business-friendly goodies, legislative leaders couldn't muster enthusiasm for extending the payroll tax holiday, which had cost the federal government $120 billion each year in lost revenue.

As a result, a worker who earns $50,000 a year will now pay at least $80 per month in taxes. The payroll tax increase will affect as many as 160 million people.

CORRECTION: A previous version of this story overstated the cost of the business tax extenders.

When Is the Best Time to Buy Your Airline Ticket?

 
The best time to book your flight is on a Tuesday, at least 8 weeks (2 months) before your intended trip; however, there are also last minute travel deals as well if you are prepared to up and go within days of booking your flight.  

The days of the week that you depart and arrive on also make a big difference. Generally speaking, try to avoid leaving out and returning home on a weekend day.  

The time of day can also be a factor as well. You might find that a "red-eye flight" (leaving at night and arriving in the morning - or conversely leaving at the crack of dawn and arriving at night) may give you a better fare than leaving during the middle of the day.  Be flexible with your days and times if at all possible.

Unless you're booking some last minute travel deal, booking a flight less than 2 full weeks prior to departure will be the most expensive.  Also, remember the "Goldilocks Rule" of air travel; don't book too early and definitely don't book to late.   
 

(this does not constitute an endorsement for Bank of America)

Here are some other tips:

Travel Midweek 

International travel deals are entirely based on availability and since most people travel over the weekend (Friday & Saturday); you will find the cheapest international airfare deals if you travel midweek, usually departing and returning on a Tuesday or Wednesday. 

Spend Saturday night  

Business travelers fly home on the weekend, so most discounted international airfare deals require a Saturday night stay.  So be prepared to spend Saturday at your destination (party time!)  

Don’t book too Early or Too Late  

When it comes to cheap international airfares, you have to follow the Goldilocks rule: Don’t book too early or too late. We all know that an international ticket booked with less than 3 days notice will be very expensive, but it will also be pricy if you book too far in advance. Most airlines start competing for passengers around three to four months before departure; this is known as the “Goldilocks Zone”. Search for your international airfare about three to five months out and you will be in the best position to hit the international airfare deal jackpot.  

Fly Trough the Side Door  

If your desired destination is sold out (too expensive), try flying out of a secondary international airport (Boston vs JFK or San Francisco vs Los Angeles). The same works with your destination airports; If London is sold out (expensive), try Brussels, Amsterdam or even Stuttgart. You can use the savings to book a low cost inter Europe flight to London or you can jump on the Eurostar train from Paris or Brussels.  

Fly Seasonally  

Most budget travelers never fly during high season. They take advantage of the lower airfares and decent weather during the ‘shoulder season’.  Europe’s fall shoulder season starts around September 15^th and extends until the middle of November. It’s spring shoulder season starts in mid February and extends until the end of April. For the cheapest deals to New Zealand and Australia, fly in mid August, their fall and winters are quite mild and still allow you to enjoy the many outdoor adventures available Down Under. For Asia, fly from late September through November to get the lowest airfare deals. South America’s low season is anytime it’s not Christmas, New Year’s, Carnival or a school holiday.  

Use the Multiple Flights Function  

Vayama has a ‘multiple flights’ function on it’s ‘find a flight’ box. It’s a good idea to use it because it may be cheaper to fly into one city and return from another (for example; New York to London, returning from Amsterdam).  Play around with different combinations and save.  

Add a Stopover and Save  

Direct flights (those with one stop) are also cheaper than nonstop flights, particularly when you fly long haul. For example the fares for a New York to Johannesburg flight will be cheaper on airlines that add a stopover (usually in Europe, Africa or the Middle East) versus the nonstop option from New York. The same applies to long haul flights to Asia. One stop in Seoul or Taipei could shave hundreds of dollars off an India trip when compared to nonstop flights.

Realtors Property Resource Program

This is a great program

Oxymoron - Don't Believe Everthing You Hear (Part 2)

"There's no I in TEAM"

Oh really ?!

There's also a M and an E  (ME)

See also:  "All that Glitters is Not Gold"


1 Thessalonians 5:21  But test everything that is said. Hold on to what is good.

Calculating Absorbtion Rate Key to Sucessful Pricing of Home

Telling sellers the price they want to hear may get you the listing, but it won’t sell the home.  Only pricing the listing right will do that. And the right price depends in large part on the current absorption rate in your market. Here’s how you find that:

• First, determine the number of homes closed in your market over a specific period, for example a 12 month period. You can get this data from the MLS.

• Next, divide the number of homes by the number of months in the period — in this case, 12. This calculation gives a per month absorption rate.

• Last, divide the rate into the number of current listings still on the market. This yields the months’ supply of homes.

Six months’ supply is considered a balanced market when the number of listings roughly equals the number of buyers. Numbers over six represent a buyers’ market and those below a sellers’ market.

To assess sales trends, you can also calculate supply over shorter six and three month periods. Price in real estate is mostly a matter of supply and demand, just like in every other industry or business.

Once you have these basic calculations down, you can focus on absorption in particular neighborhoods or price ranges. Showing clients local absorption rates will give sellers the information they need to price their homes to sell. Once they’ve arrived at a price, you can decide whether you want to spend your marketing dollars selling it. If they don’t price it realistically (literally and figuratively - pun intended), then seriously consider taking a pass on the listing and focusing your time, energy and resources where there is a higher probability of a win-win or mutually beneficial working relationship together. See my previous articles entitled;

• "How to Deal With Unreasonable Clients - GET REAL!"

• "Fire Your Bad Clients"
  

Calculations can also be done to assess the the odds (or risks) of selling any one home. Even in a hot seller's market, it’s rare for more than 50 percent of homes to sell. To make this calculation:

• Search the MLS to determine how many transactions have closed in the last six months.

• Divide that number by the number of new listings that came onto the market during the same six months. (Don’t include listings that expired and then were re-listed.)

This equation gives you the percentage of homes entering the market that actually sold. For example, if 100 homes sold and 200 were listed, the odds of selling are 50 percent....

There's Water All Over The Place !! - OMG Who Do We Call ??!!

When you have a plumbing emergency in your home the last thing you want to be running for is the Yellow Pages looking for emergency plumbing services. I learned this lesson well recently when my father had a problem in his house.  

The thin copper refrigerator ice maker water line connection somehow failed or ruptured on the back of his refrigerator where it connects to the back of the refrigerator.  This caused a slow but steady leak that must have started during the day (and was unnoticed by him at the time) and continued through the night until the morning.  When my father woke up in the morning and went downstairs to the kitchen he discovered he was standing on a water soaked kitchen floor, that then leaked through to the lower level basement ceiling.  

Going through the Yellow Pages and calling local plumbing companies for "emergency service" did not get anyone to come over right away or within a few hours.  I got the frantic call from my father and was able to respond and go over to his house by mid morning and locate the main water shut off valve, as well as another separate "artery" water line pipe that fed water into the kitchen and refrigerator ice maker which luckily had been installed with its own separate shut off valve too.  I was able to stop the flow of water dripping and leaking onto the kitchen floor by shutting off the main and feeder water line valves.  

Here is another valuable lesson for any homeowner or renter in the case of a plumbing leak or water line or valve rupture, ALWAYS KNOW IMMEDIATELY WHERE TO FIND YOUR MAIN WATER LINE SHUT OFF VALVE which controls the flow of water from the street main water line into your house.  There is also another one usually located at the curb which your local water authority provider can also shut off.  

While we were waiting for an "emergency plumber" to show up (by this time it was around noon or 1:00 p.m., my father remembered that he had an extended service plan rider, attachment or addendum to his HVAC regular maintenance/service contract which covered plumbing calls as well.  We called this company and they actually showed up in an hour or so of the call (now by 2:00 - 3:00 p.m.) and the first "emergency plumber" contractor had still yet to show up!!  The plumbing contractor confirmed my diagnosis and identification of the problem and the source of the leak.  We were able to turn the main water flow valve back on to restore water to sinks, toilets and showers (and cut off the flow of water to the refrigerator ice maker from the "artery" line valve that I was able to locate and close off).  My father was subsequently able to get a new refrigerator installed (without ice maker line connected or installed) in a few days.

In this situation I learned the value of having an extended service contract addendum or rider to your regular HVAC maintenance/service contract. In this case they did not substantively do anything but confirm my diagnosis of the problem; however, they were there on site in a very short amount of time and well before another "emergency plumber" had responded.  Had I not been around and able to go over to my father's house to help him out, they would have been able to at least stop the flow of water (as I did) and to render further assistance if necessary.

An HVAC regular maintenance/service contract usually provides for the contractor or company to come out twice a year; once in the late Spring before the height of the summer to check on the functioning of your air conditioning components to ensure optimal performance and energy savings for the summer months; and the same once again in fall to check on your electric heat pump or gas furnace heater.  If you have such a regular HVAC service contract, make sure it also covers plumbing "emergencies" or calls as well.  

It is well worth having this as an "insurance" plan so that in the event of such a "geyser" - LOL or unexpected flow of water in your home, you know immediately and instinctively what to do and who to call for service instead of going through your local Yellow Pages and hoping you can get an "emergency" plumber to come out.  

Travel VISA to the USA to Buy Real Property

Here is something very interesting to watch and track; a proposed bill in the United States Congress (S. 1746) that would give foreign investors buying real property (in cash, no mortgage or debt attached to it) a Visa to come to the USA if they purchase a home (or homes) totaling $500,000 USD or more. 

The Bill is called the Visa Improvements to Stimulate International Tourism to the United States of America Act (dubbed, the “VISIT USA Act”).

To track this Bill in the United States Congress, see link below:

http://www.govtrack.us/congress/bill.xpd?bill=s112-1746

Status: This bill is in the first step in the legislative process. Explanation: Introduced bills and resolutions first go to committees that deliberate, investigate, and revise them before they go to general debate. The majority of bills and resolutions never make it out of committee.

Let’s hope this one does get all the way through Congress and enacted into LAW; as it will not only benefit and stimulate the much weakened U.S. economy, but will also provide an opportunity for people from certain countries who are not automatically granted a travel Visa (i.e. Indonesians) under the Visa Waver Program (VWP). This new “VISIT USA Visa” type would be a new category to the list of Visas for Temporary Visitors.

Real Estate Humor - Bubble Burst

Actually the real estate market bubble burst, and the ensuing recession which sprung from it, is no laughing matter if you're an investor; speculator, "flipper", a home owner, real estate broker or agent, mortgage lender or mortgage broker, or other real estate industry service provider.

Like Ancient Greek Literature and the works of Homer in the Iliad and the Odyssey; in the tragedy, we also find irony and humor in it all.... 

Here is a collection of parodies which pretty well sums it all up though....

                                                                  

(Hitler is Briefed & Advised of the Housing Market Bubble Burst)

 

(Hitler is Briefed on the Extent of Foreclosure Fraud)

(Hitler as a Managing Real Estate Broker)

(Crash Test Dummies Discuss Using Equity In Your Home Like an ATM Card to Buy Stuff)

(90's Alternative Rock Parody on the Real Estate Market - Rage Against the Machine)

Update on NoVA Foreclosure Statistics - Good News & Bad News

There’s good news and bad news about foreclosures in the area.

The average price of foreclosed homes across Fairfax County is well above the average price across Virginia and the nation—that’s the good news.

The bad news is that there has been little improvement in the number of foreclosures on the market in Fairfax County in the past year.

Virginia has about 15,000 homes that were bank-owned or in foreclosure, or 1.1% of the United States’ 1.34 million foreclosures. 16% of Virginia’s foreclosures were in Fairfax County. According to RealtyTrac.com, there were 2,431 Fairfax County homes in foreclosure in late March.

Patience and Pricing

The difficulties and stigma attached to buying a foreclosed property (or a negative equity "short sale" property) have been factors that have discouraged many potential and prospective home buyers (and investors) from attempting to buy a foreclosure or "short sale" property in the past. Other favorable market conditions and an overwhelming shift from a once strong Seller's market to a "target rich environment" and an extremely strong Buyer's market led many home buyers to stay clear of foreclosures and short sales.  There was also an assumption that a distressed sale property was trashed and in need of a great deal of repairs or was a "Section 8" type of property.

The stigmatism attached to buying a distressed property is no longer the case. Home buyers are realizing that they can take advantage of some fantastic deals out there and get a property in move-in or "turn-key" condition.  Anyone who bought property around 2004 at the height, apex or zenith of the housing market or at the top of the roller coaster quickly saw their home value drop significantly beginning in 2005 when the bubble began to burst and the sub-prime debacle began to unfold and unravel and homeowners watched as home values plummeted down towards the bottom of the roller coaster. Actually it was like a car being driven off a cliff with a brick to the accelerator pedal. If someone bought with little or no money down, they quickly found themselves without any equity in the property and upside-down on their mortgage; hence the proliferation of "short-sales".  Many people realizing they had an "under-performing asset" on their hands and simply walked away and left the keys on the counter and let the property go into a "strategic foreclosure".  As a result there were and still are many foreclosure properties on the market that are actually in turn-key condition. 

The average price of a foreclosed home in Fairfax County in late March was about $321,000. That’s more than both Virginia and the nation’s average prices, which were $243,772 and $165,321 respectively.  Virginia’s foreclosure situation has seen little movement since this time in 2011, according to the Virginia Housing Development Authority (VHDA). A problem unlikely to change significantly until Virginia sees a drop in unemployment and household debt, and a rise in incomes.

Virginia’s foreclosure prevention website, at www.virginiaforeclosureprevention.com, reports that when foreclosed properties are sold, the borrowers’ loans have been delinquent for about 117 days, or four months.

The hardest part about buying a property that has been foreclosed on is being patient. Frequently, the bank will give a verbal reply or acceptance to an offer, and then send the contract addendums to the buyer later. A verbal reply, however, is not legally binding as the Statute of Frauds requires contracts (or the negotiated terms and conditions and acceptance thereof) for real property to be in writing; so in the time the buyer is waiting for the paperwork from the bank, the bank can legally accept another offer and the prospective buyer may be missing out on other opportunities while waiting on the bank.  If you're a "cut throat" investor or a "low ball" offeror with time and money to play with, that is a waiting game you can afford to play and take a chance on. If, on the other hand, you are a first time home buyer trying to capitalize on highly favorable market conditions with distress properties, you could be engaging in a wait-n-see game or chasing the curve on housing market values while you're dealing with highly problematic distress and foreclosure property contract offers that either don't go through the first time or fall apart subsequently with bank owned property, also known as "REO properties".    

The foreclosed properties that have sold so far this year have been on the market for an average of 65 days, but that number is slightly skewed.  Because it takes the banks a few days to reply or finally accept an offer, they have to keep the property listed in an "active" status in the real estate MLS (Multiple Listing Service) while they do their paperwork although basic terms and conditions have already been agreed to.

The Fairfax County government website has a variety of resources for homeowners facing difficulties paying their mortgage, including a list of Housing and Urban Development (HUD)-approved counseling agencies and information on foreclosure prevention.

Here are some links for Statistics on Home Sales & Market Conditions in Fairfax County and Northern Virginia:

http://www.rbintel.com/statistics/fairfax-county-va

http://nvar.com/market-statistics/housing-market-statistics

http://cra.gmu.edu/

Another good indices of either how strong or weak the housing market is known as the "Absorption Rate" - which means if no new homes came on the market how long or the rate at which it would take to sell or liquidate the current inventory of homes based on current sales statistics data and market trends.