This blog is not going to debate the positives or negatives about the Health Care Reform Bill. I'm not going to give you my views either way (although I'm sure you can figure them out). Instead, this blog is to help educate people and take away their crutch so they have to think for themselves. Once we start thinking for ourselves, we will become a better society.

For the past few months we've heard non-stop news about the anger of people over our Health Care reform. They say that the reform is Socialist, Communist and even Marxist. Before someone just regurgitates what the talking heads on Fox News tell them, they should learn the meaning of the words. If they do, they might be able to articulate their issues and have a decent, civilized conversation about their views.

The big, overarching theme about the Health Care reform is that it's too much government. It's our government telling us what we can and can't do. It's them controlling our health care. Key phrases to remember for the rest of this blog: "too much government" and "controlling our health care."

Now, let's define Marxism, Socialism, and Communism; all of which are a different degree of Socialism.

Marxism is comprised of three main characteristics. First, it requires no government; no controlling body. If something needs to be done, someone or some group steps in (not directed by a controlling government) and does it for the greater good. Secondly, there is no private ownership of anything. If there is something needed, you just take it. Finally, there is no religion in Marxism. Marxists belie that religion was created by the uber rich to keep the masses happy about a meager existence.

Socialism is similar to Marxism for the masses but one big exception: government. There is a government that owns everything while the masses own nothing. Because the masses own nothing, they are expected to do whatever is necessary for the greater good. Socialism is a stepping stone to Marxism because after the masses have been "trained" to do everything for the greater good, the government dissolves and leaves the society in a Marxist state.

Communism was initially Marxism. However, Marxism was a Utopia that could never be achieved and Communism became known as a failed, corrupt, uber-socialist society.

Every Socialist society has some industries that the government has taken from the private sector. Every government (yes, even the US) has some degree of socialism because there are some things that the private sector just can't do.

This blog is not to look at why these societies ultimately fail (think: human nature, corruption and lazy people) but rather why the Health Care Reform cannot be labeled as any of these. Fist, people are saying there is "too much government" in the Bill. If that's the case, it cannot be Marxist because Marxism has no government. Secondly, people are saying that the government is taking over health Care with this Bill. This is false. The government is not controlling the industry, just requiring people to buy something controlled by the private sector. That takes out Socialism and Communism.  Finally, all forms of Socialism would make health care free.  This bill does not make health care free.  We will still be paying our own money to a private insurance company.  Want to know the real, dirty secret that the Republicans aren't telling you? The Health Care Bill is the best thing to happen to Capitalism! Capitalism is defined as a society where the private sector makes money without government interference. So you can't call the Bill Capitalism because government is interfering. But, what is the ultimate goal of a company in a Capitalist society? To have every man, woman and child as your customer so that you can make the most money possible. Isn't that what we've achieved here?

I'm not even aware of a term for a government supplying a private industry with every possible client they can have. But, I can assure you that throwing around terms like Socialism, Communism and Marxism to describe the Health Care Reform Bill will make you look stupid.

Lastly, let's not forget that the government is not taking over health care. They are not providing a "Public Option." Even if they were, that wouldn't be socialism because they aren't taking over the industry but instead, creating competition within the private sector. So please, don't walk around saying that you don't want your health care to be run like the DMV. If anything, read this article about why it would probably be more efficient if it were run like the DMV.


There are volumes of books that make up the definition of the three types of societies I have summurized above. If you are using them to describe the Health Care Reform Bill, you obviously don't read referrences or look up definitions. Instead, you will just take my word for it blindly. But, just in case you've made it this far and want to read more, here are some wikipedia links:
Marxism
Communism
Socialism

Starting in July, you can trade in your old "clunker" for a new car and receive a $3500 or even $4500 voucher. The purpose of this bill is to put more fuel efficient vehicles on the road and get rid of guzzlers. It sounds like a good idea but their oversites have failed to make it a great idea and therefore have failed completely.

What would have made it better?

• Why just improve gas mileage? Why not improve emissions too? A car from 1990 has a higher emissions standard than a 2010 model. Why not get rid of the 1990 car and get a cleaner burning car on the road?
• Why not use this as a time to help stimulate the economy and help the failing car manufactures? Since it’s the US tax dollars that are paying for the vouchers, why not have given an extra bonus for buying a GM, Ford or Chrysler?

There are so many problems with the implementation that the program is worthless. First, you have to trade in your old car for a new one that improves the combined fuel economy by at least 2 MPG for light duty trucks and 4 MPG for passenger cars. If you improve your truck or car by 5 or 10 MPG, respectively, you will get the full $4,500 voucher. Why is the 2/4/5/10 MPG a problem? Because, in 2008, they changed the way they rate MPGs of cars. Starting in 2008 the EPA changed the rating to be at a faster speed, faster acceleration, air conditioner on and colder outside temperatures. This means that the new car ratings are more accurate but what it really means is that the MPG rating for your "clunker" is going to be inflated and makes it almost impossible to achieve the improvements needed for the voucher.

My dad has a 1993 GMC Sonoma truck. It’s considered a light-duty truck and therefore requires a 2/5 MPG improvement for the vouchers. The best way to describe his 16 year old truck is to call it a clunker. The EPA says it gets a combined 18 MPG. In order for him to qualify for the $3,500 voucher, he will have to buy a vehicle that gets 20MPG or better. Good luck finding that in a truck. After calling the NHTSA, they recommended he buy a sedan or a hybrid truck. Get real! A GMC Sierra Hybrid starts at $39,365 and it’s rated at 21/22 MPG for a combined 21 MPG. The non-hybrid GMC Sierra starts at $20,350 and is rated at 15/21 MPG for a combined 18 MPG. That means a 3 MPG improvement costs $20,000. The improvement in emissions and gas mileage are virtually nil. The improvement over a 18 MPG GMC Sierra and his 1993 GMC Sonoma are a real 3 MPG improvement (real, not over inflated EPA ratings) and a huge improvement in emissions.

The government is not encouraging my dad to buy a new truck. Therefore they are not:

• Getting rid of a large polluting vehicle
• Improving real gas mileage
• Stimulating the economy.  For a bankrupt American car manufacture!

-FAIL-

I grew up in a heavy Republican area (Orange County, CA) and even though my parents were Democrats, I felt I was a Republican.  At 18 I registered Republican and spent the next 8ish years listening to the radio shows and laughing at the Clinton era gaffs.  I believed that giving the free market freedom to grow itself is the best policy; less government regulation meant a prospering economy.  I believed that "giving tax breaks to the rich" was fine because it meant a small government.  After the war in Iraq started and after President Bush's continued failed policies, I registered a democrat.  I was so excited about this election, I sincerely felt that I would change back my party affliation.  That the "Social Republican" would sway back to the "Pro-business Republican".  I like McCain and thought he could actually move the party away from pushing their religious ideals on the country.  Make "less government" mean "less government" and not "more government in our personal lives".  More...

We put $300,000 down on our house.  It has depreciated about $100,000.  I have lost $100,000 and the bank hasn't lost anything.  I can't write down my loan for the depreciation because the loan is still less than the house.  The people the government is looking to bail out didn't put any money down and their house depreciated $100,000.  If they go to find a new loan, the bank will have to take the $100,000 hit and nothing happens to the home "owner". 

No one knows when the housing market will stop it's downward spiral so investors and the market have no idea how much they will actually lose.  The bailout is designed so that the government will buy these bad loans from the lenders.  The lenders will sale them at a loss but they will get rid of them so they can finally put a number to their loss and it will make the street a little less jittery.  The government is going to then work with the "owners" to lower the principal on the house and lower their rates.  Remember, the government is me and you; it's our tax dollars that are just being erased by dropping the principal of the mortgage.  The owners now owe less on their house and I still owe the same.  They get a better rate and mine stays the same.  This isn't fair to any tax payer and it sends the wrong message to our kids: if you screw up, the government will bail you out. 

The market is bad and people losing their houses is not acceptable so we have to do something.  Read my idea to help after the jump. More...

".25%, interest only mortgage.  Only $105/month on $500,000".

Get real people!

The whole mortgage "crisis" upsets me to no end.  People are upset because they were taken advantage of, lenders are going under because people can't afford their loans any more, the media is in a frenzy and of course, the government wants to bail everyone out.  Well, not everyone.  Let me explain. 

My wife and I bought our house in August of 2006, just as the market started to decline in Orange County, California.  We sold our previous house and put every penny of equity in to the new house to keep our loan reasonable.  Both houses were mortgaged with a 30-year fixed loan.  When we signed the loan docs for our current house the escrow lady actually had to do a double-take that we had a fixed rate loan.  She said she hadn't seen one in ages.  Well, we signed the docs and didn't look back.  Our first house was at 5.875% and the new one was at 6.375% - ouch!  We knew we could afford it for the next 30 years and didn't have any risk that it would go higher.  While we were signing the loan docs for our second home with over 30% down, the people that bought our first house were signing a 0% down, interest only loan.  We were paying under $2000 a month for the first house that the new owners were paying over $4000 a month in an ARM!  The market was already coming down and with only paying interest on the loan they had to be delusional to think this was a good idea.

Less than 18 months later, the housing market has turned upside down. The people that have our house are trying to sell it at a loss of almost 30%!  When I say "the people" I actually mean "the bank".  Foreclosures are up all around the country where people just got in over their heads.  Our current house is worth about 10% less than what we bought it  for.  We are currently trying to refinance at a lower rate while keeping our 30 year fixed.  We can keep affording to pay what we have been for the last 18 months for the next 28 years but, if we can get a smart, lower rate then it would be criminal to not look.

Today Hillary Clinton proposed that we use $30 billion of tax payers money to help fend off foreclosures.  That means they will be helping the people who can't afford what they bought and the lenders that allowed them to borrow the money.  Why should my money go to help either of them?  I've already lost $70,000 in my house, how much more do I have to bleed for these people?  Has anyone else noticed that no one will put any blame on the people that accepted the loans?  It is always the lenders fault.  In my experience, it takes two to tango!  Just because a lender's marketing team slapped lipstick on a pig and called a negative ammoritization loan an "option ARM" doesn't mean that it isn't a pig!  These "option ARMs" actually gave the option to the borrow on how much they wanted to pay each month.  They could pay the full interest or just partial.  If they picked partial, the next month cost more because they tacked the unpaid interest on to the principal.   Remember, the people that took these loans were pretty dim bulbs, so if they get a mortgage bill that says "you can pay us $4000, $2500 or $1000 this month" which do you think they picked?  The next month the $1000 turned in to $1100 or more and eventually they get to the point that they can't even afford to pay only partial interest.  They then whine and complain that they were taken advantage of; that the lenders didn't disclose that they would pay more each month or that a 3 year ARM loan would turn in to a variable rate after... wait for it... yup, 3 years!

Banks are tired of foreclosing and are now working with people to give them better rates on the mortgages and to write off the lost value of the house.  Let's assume that someone  "bought" a house for $700,000 and, after paying an option ARM for 2 years owe $720,000 on the house that is currently worth $600,000.  They can't afford to make the payments and instead of foreclosing on them, the banks gives them a new mortgage for only $600,000 at a fixed rate that they can hopefully afford.  The bank takes a $100,000 loss on the property and the "owners" lose absolutely nothing!  Since I have a fixed rate loan, I'm the only one that lost money on my house.  The bank hasn't lost a penny!  We pay in full every month a week early.  Here's the part that angers me the most: the banks will deal with the people that signed these "exotic" loans to give them a better rate but, they won't drop my rate at all.  They don't even see that keeping us at a lower rate instead of making us go elsewhere will help their portfolio.  This is a case where the banks have not given enough power to the people on the phone to see the same vision of producing a better portfolio for the share holders.  Lowering the cost of the loan above only buys them a little time until they foreclose (and waste my tax dollars).  Lowering our interest rate gives them a guaranteed 30 year paycheck.  Instead, they would like me to go elsewhere with my loan!

Let's go back to the quote at the top: ".25%, interest only mortgage.  Only $105/month on $500,000".   I just can't make this stuff up people.  I wish I had my camera on me because this was an actual sign on the back of a truck that I followed a bit on the way home... today!  With everything going on, people are still selling these loans and people are still buying them!

Who's to blame?  The banks (and marketing departments) that allowed these loans, the people that signed the loan docs or the schooling systems for failing both of these people and letting them out in to the real world without any common sense or morals?  I think it's all of them.

This is a touchy blog because a lot of my friends are going to be hurt by this crisis soon.  For the last 2 years I've been telling all my friends and family that didn't own a house to go rent something and wait until Dec. 2009 to start looking for a house.  For the ones that did own something, I've been telling them to decide where they want to live for the next 10 years and either sell their place to get there or stay put; they were going to lose money no matter where they live so get somewhere they you want (and can afford) for a long time.  I really hope my friends don't get burned in this mortgage meltdown!

Here are my suggestions if the government starts to bail people out:

1. Don't help out anyone that has signed loan papers since August, 2007.  If they put themselves in a bad position after that date, they don't deserve my tax dollars.
2. If someone signed an "option ARM" and choose to pay any option other than the maximum payment for more than 50% of the time, don't help them.
3. Don't allow the lenders to put a foreclosed house up for sale for less than 2% of the last sold comparable house.  This punishes their horrible tatics and it protects the value of the houses around the foreclosed house.  If they break this rule, they lose any help the government offers and the difference between the 2% and what they sale for should be levied as a fine to be used to subsidize my property tax.
4. Fine any company that offers an interest only, no money down loan or any other "exotic" loan.  The fine should subsidize the tax payers money to bail everyone out.