Is the Truth Black, White or Grey?

Many mixed signals are coming from Wall Street. Every day we get peppered with positive and negative reports. On one channel we get that unemployment is increasing (bad) then another channel reports that the unemployment "trend" is improving (good). I turned on the radio and heard that mortgage rates are the lowest that they have been since 1963 (good), but home foreclosures outpace new home sales (bad). Oil giant British Petroleum capped the gushing oil well in the Gulf (good), but the Gulf Coast may take centuries to recover ecologically (bad). I guess it is how you see things that make you either smile or frown.

For home buyers or home sellers the recent drop in property values can be seen in two perspectives as well. If you are a homeowner selling the home you have lived in for years then you are probably thinking "Why didn't we sell years ago when values where higher". The other perspective could be "Look at how cheap homes are now! When we sell we can buy a bigger home cheaper than what we owe on this home". Home buyers are pummeled with decisions. The shear volume of properties that are hitting the market daily is overwhelming. For a home buyer, in this crazy market, it is hard to hit the bulls eye when the target keeps moving.

Fact is that value is very subjective. Each human is in a slightly different space and sees value proportionate to their interests. Mixed signals, whether they come from Wall Street or Main Street, are a way of life. I was told long ago to never believe anything you hear and only half of what you see. Most feel that news is presented with some form of bias and we must go with our gut and find the truth out for ourselves. Bad news sells newspapers and over-dramatization is the norm. We are taught that truth is black or white, but in today's media, truth is somewhere in the grey.

Eliminate Mortgage Interest Tax Deduction?

I have read recently that in an effort to increase government revenue the Obama Administration is considering eliminating the mortgage interest tax deduction. I can only imagine what a quagmire government cash flows must be in from funding such colossal projects as the 2008 banking crisis, the ongoing and escalating expense of the Afghanistan war, Haiti relief efforts and now the Gulf oil spill. Trying to understand the myriad of government economics would take a brain much larger than mine. Given that there are big brains on government payrolls I am sure there must be better ideas on the plate that nixing the mortgage interest tax deduction. What are they thinking? Hasn't the real estate industry had enough impact? Even the consideration of such drastic measures would deliver a knock out punch to an industry barely hanging on to the ropes.

In an effort to better understand the "Robin Hood" mindset of taxing the rich and giving to the poor, what would elimination of the tax credit render the average American? If you had a $200,000 mortgage and were claiming $10,000 a year in mortgage interest deduction you would now pay taxes on $10,000 of income that was shielded by the deduction. If you were in the 25% income tax bracket you would have to pay $2,500 additional in taxes per year ($208 per month). In a down economy with national unemployment just under 10% how is that going to stimulate consumer confidence? Talk about a regressive tax. This would kill the economy, unfairly burden the homeowner and hurt everyone employed by or associated with the housing sector.

Might I suggest a more progressive attack. If you want to go after the rich (I mean the really rich) start by taxing capital gains more aggressively. Then go for the ultra rich by taxing drug and oil companies. How about manufactures who produce products that damage our water, air and soil like tobacco, plastics and pesticides. How about a tax on the fast food industry that create products that produce high blood pressure, cholesterol and diabetes. Leave the homeowner alone. Yes, Robin Hood would be very proud of all that.

Why We Drill Offshore and Pay $3.00 for Gas

It is a very sad moment when you suddenly realize that we are all just being led down the chute like pigs in the poke. As individuals we like to feel that our contributions helps the world somehow and what we do everyday matters. Then you read an article that sets you back a few feet and makes you question what really is the big picture? Who is really running the show? Is our world run by a planet of individuals or is it run by governments and corporations back slapping, cigar filled, back-room hand shake deals.

We have all been led to believe that the world of goods and services runs on a system of supply and demand. Prices for these goods and services are determined by how much we demand and how much is available (ie, higher prices if what we demand is a scarce resource). Then you find out that prices of something that everyone on the planet demands is not calibrated that way. Maybe the world as we know it is not as we know it. Maybe governments and corporations have back-door agreements that artificially fix prices so that they can benefit financially while the rest of us suffer.

Imagine how much better we would be economically if gas prices were allowed to be a true supply/demand market price. How much better would your bank account look if it only cost $25 to fill your gas tank instead of $60? How much lower would your power bill be? How much would air fares go down? Fact is gas prices have a HUGE impact on us all and not just at the gas pump. High gas prices ripple through the economy like waves, effecting everything in its path. Though there are other artificially priced industries due to government subsidies, tariffs, fines and taxes, none that impact us as much in the pocket as gasoline. The article below says it all. Time to squeal...

http://www.usgs.gov/newsroom/article.asp?ID=1911