Pills

Bloomberg News reports that stock for the company Vivus has jumped because it appears that the FDA could approve its new diet pill as early as next year. www.bloomberg.com/news/2010-10-29/vivus-gains-on The pill acts on the centers of the brain that control feelings of hunger. With one third of the United States considered obese, it’s no wonder the stock has jumped. As a business model, it’s kind of like being able to buy stock in water.

I’m reminded of the Steve Martin line, “I’d do anything to be thin – anything, that is, except eating healthy and dieting.” Without the annoying need to eat right and be somewhat less than stationary, I too would sign on to be thin. I hope now that this hurdle of obesity has been crossed, Vivus will start making a pill that will work on the part of women’s brains that would make men appear handsome. In which case, (being newly handsome and thin) minor issues like peace in the Middle East and world economy might be considered. Or not. I probably wouldn’t care that much either way.


By Myron Gushlak

Diamond in the Rough

Peter A Diamond, who just won the Nobel Prize for Economics has been called unqualified to serve on the Board of Governors of the Federal Reserve. Diamond was an Obama nominee, and there are those who feel his winning of the Nobel constitutes a bit of politicizing by the Nobel Committee. It’s hard to say, the criteria for winning is never discussed. Diamond is considered an expert on taxation, social security, pensions, Medicare, labor markets and behavioral economics. Ben Bernanke was one of his students. Republican senator Richard Shelby of Alabama is his primary opponent. www.allgov.com/Top_Stories/ViewNews/Nobel_Prize_ Earlier this year, Shelby held up the nominations of 70 prospective appointees trying to convince the Obama administration to award a $35 billion defense contract to his state. Rarely at a loss for words, I find I don’t even know what to say about that.


By Myron Gushlak

Mediation

Mortgage mediation sounds like such a good idea, particularly in a state like Nevada where one out of every 84 households in the state received a foreclosure notice in August, four and a half times the national average. www.nytimes.com/2010/09/19/business/19gret.html

The mortgage mediation bill passed in Nevada is forward thinking and more effective than the Federal government’s home mortgage modification program. The trouble is, after a promising beginning, it doesn’t really work. Lenders are coming to mediation hearings without the necessary documentation or without fulfilling other requirements spelled out in the program. It is their version of simply saying, “No! We don’t want to.” Lawyers who protest the banker’s ability to bargain in good faith find themselves outside of the process. In the words of New York columnist Don Marquis, “The chief obstacle to the progress of the human race is the human race.”


By Myron Gushlak

Mortgage Loans

The Wall Street Journal reports that a growing number of people are opting for 15 year mortgages rather than the more conventional 30 year term. During all of 2009, almost twenty percent of all borrowers chose the shorter term. www.wsj.com/article/SB100014 While this is driven by historically low interest rates, and is obviously a strategy that can only be utilized by someone with a few extra bucks each month and equity built into their home, perhaps there is more to it than meets the eye. According to Bob Walters, the chief economist of Quicken loans, this is an indication of a different psychology about debt. In recent decades, a common strategy was to take on the largest mortgage one could handle and use some of that money for other investments. The trend nowadays is to get rid of the personal debt as quickly as possible. After the past two year’s events, it’s one of those things that sound so logical, it’s hard to remember the counter-argument.

By Myron Gushlak

TV News

A couple of weeks ago, I wrote about the apparent disinterest in the war. It got me to thinking, what exactly are we interested in? I went to the latest Tyndall report which monitors ABC,CBS, and NBC news. 70% of all Americans still get their news from television. The war in Afghanistan dominated foreign news coverage in 2009, but that is a relative thing. www.ipsnorthamerica.net/news.php?idnews All foreign related news accounted for 3,750 minutes, which is only one quarter of all news coverage aired on those three networks. News about Europe, East Asia (with the exception of North Korea), Latin America and Africa were virtually non-existent.
Michael Jackson’s death got more coverage than Iraq, Somali pirates, India, the Chinese economy or global warming. And unless I miss my mark completely, 2010 will have spent more time on Lebron James and Tiger Woods than those five 2009 runner-ups combined. It is easy to forget that what is reported to us is already the result of an editorial opinion.


By Myron Gushlak

The War

Has there ever been a country at war more disinterested than the United States? One had to go all the way to page nine in last Sunday’s New York Times before there was even a mention of it, and that was about a six inch article about casualties. www.nytimes.com A couple of weeks ago there was a relative deluge about an upcoming US offensive, but it came and went. I don’t even know if it was successful nor could I find on the internet what the battle was called. In fact, I couldn’t name one battle of the entire war.

I know that recently, the war in Afghanistan became the longest war in the nation’s history. There was no public outrage, no mass marches on Washington. Is it because we have a volunteer army? I’m sure if I had a family member enlisted, I would be more aware of what was going on, but that only further illustrates my point. I don’t know what to make of all of it. Are we not informed because we’ve proven we don’t care and the media outlets are well tuned to what we read or watch? Or is the lack of information more thought out and perhaps more sinister than that? I ‘m looking forward to the next decade so I can read about what exactly took place over there in history books.

By Myron Gushlak

Mortgages

I remain fascinated by the Fannie Mae/Freddie Mac train that is continuing at break neck pace to God knows where. These quasi government agencies took over a foreclosed property about every ninety seconds over the past three months. www.nytimes.com/2010/06/20/business/20foreclose.htm

They now own 163,828 homes across the United States. Most of the properties are being “bought” from bankrupted owners and are being resold at bargain prices. The American taxpayer at some point, will make up the difference. While there is little to be gained from the old “what if?” game, it is hard not to wonder what the current landscape might be if FDR didn’t initiate this “tool” to help Americans buy their own homes in the first place, or if it wasn’t dolled up by the Eisenhower or Lyndon Johnson administrations. It remains responsible for the vast majority of home ownership in the US because it essentially “guaranteed” local banks that their local mortgage loans would be made whole in the event of foreclosure.

We accept home mortgages as a necessary part of the modern landscape, and we forget that mortgages are not accepted as readily around the world. Is Syria, for example, mortgages are unheard of, yet home ownership is possible for the average contractor or business owner. My intention is not to hold Syria up as a model country by any means, but just to illustrate how deeply entrenched the idea of government backed mortgages is in the US. Americans accept the notion of a mortgage as though the idea came directly from the mouth of God. I just wonder what life might be like if the government never got into the business to begin with.


By Myron Gushlak

Fannie and Freddie are Lurking

One thing you hear little about in the news is the Fannie Mae/Freddie Mac situation. No one, it seems, wants to even talk about the problem. The combined debt of both government backed organizations is equal to 46% of the total national debt. www.hnn.us/articles/1849.html Fannie Mae was created by FDR in 1938 after the collapse of the national housing market. LBJ privatized Fannie Mae in order to remove the debt from the national budget. Freddie Mac was added in 1970. It makes one wonder what might have happened if the government did nothing at all. Somewhere along the way, and I’m not certain when it occurred, there was a definite shift in the expectations of home buyers. Our parents and grandparents bought a house, and paid it off hoping to leave it to their children with a value that approximated what they paid for it. Today’s home buyers see their homes as an investment, one that should increase two or three times in value before the mortgage is paid and the house is left to an estate. Certainly, this was not FDR’s intention. I don’t think, however, that people are too eager to return to the “good old days.”

By Myron Gushlak

Caveat Emptor

Lest you think that the shenanigans that caused the recent financial crisis were restricted to fat cat bankers and mortgage brokers, (www.businessweek.com/magazine/content/08) I’d like to share a story. A friend of mine in New Jersey; I’ll call him Stan, owns a few convenience stores From time to time people walk in and offer him merchandise that doesn’t always come through normal channels or with a receipt. One day recently he was offered a truck full of eggs, which came from a man who bought them from a man who bought them from another man. Turns out, however, that the eggs were bad, and Stan had to throw them away. The next time he saw this “salesman”, he complained that the eggs he had bought were all rotten. The salesman looked at Stan the way you might look at someone who tells you the car with four flat tires has a bumpy ride, and said with a perfectly straight face, “Stan, those weren’t eating eggs. They were selling eggs.” Word to the wise – make sure your house is a “living-in” house, and not just a selling house.

By Myron Gushlak

Still Number One

Multi trillion dollar deficits be damned, the credit rating of the USA remains AAA. There is a “warning” attached to this rating that the deficit must be addressed or the recovery must come quicker than expected, (www.nytimes.com/2010/02/07/weekinreview/07sanger) but the perception of the USA as a credit worthy investment is remarkable. The news last week that Greece, Spain and Portugal may default on some of their obligations caused more of a ripple in the world’s markets than the down turn of the American economy.
The USA has never defaulted on a loan, and the world is betting they won’t end that record in the near future. There is no longer talk about when Japan might overtake the US as the world’s biggest economy. The talk now is when China might overtake Japan for the number two spot. It is another sign that things are never as bad as they seem in low times nor never as good as they seem in high times.

By Myron Gushlak

Text Me

Perhaps you missed a new phenomenon in the wake of the Haiti earthquake. It is hard to find something positive to say about such a disaster, but $22 million dollars was donated to the relief effort in just five days through the use of text messaging.
(www.pbs.org/newshour/bb/science/jan-june10/haiti4_01-18.html) That amount of money is staggering, and is a huge component of a charitable wave that eclipses the response to the tsunami of the past decade.

Robert Lowe, a Red Cross spokesman said, “I need a better word than unprecedented or amazing to describe what’s happened with the text-message program.” What we’re seeing here is a virtual earthquake in the charitable donation business comparable to the earthquake it rallies around. Every now and then something happens that really hits you over the head with the message that we really are in a new age. Unlike a lot of those messages, this one happens to be beneficial.

By Myron Gushlak

Business Opportunity

Is there any finer example of entrepreneurial-ship than the recent developments in China regarding Google? It seems that the censorship restrictions placed on the internet by the Chinese government, known in China as the “Great Firewall” (www.nytimes.com/2010/01/16/technology/internet/16vpn.html) has opened up a fantastic business opportunity for those who wish to help the Chinese circumvent the wall. This has created a booming market for software companies, which are capitalizing on the growing desire of China’s Internet users to “fanqiang,” or scale the wall, to visit Web sites like Facebook, YouTube and Twitter.

I find this kind of news extremely uplifting amid the tumult of bad news. While governments go to war, dispute boundaries, and fight over shares of natural resources, people are communicating without borders. The jury is still out on whether that’s a good thing. In fact, many juries are out, including in Iran, where the government there is also unable to stem the free flow of information. The early twenty-first century will certainly come to be known as “The Internet Age”.


By Myron Gushlak

A Decade Ago

The top stories ten years ago, in 1999, were the Elian Gonzalez repatriation story and the Y2K scare. www.cbsnews.com/stories/1999/12/27/world/main143365.shtml That same year, AT&T made a commitment to broadband, though few knew what that meant, and it was the year of the Euro, with eleven European countries switching currencies. It was, of course, pre 9/11, pre Iraq war, pre Afghanistan, pre financial meltdown and pre “Great Recession.” It’s hard to believe that many people will ever look back on this current decade as nostalgically as we now look back at the 1990’s.

In 2000, after George W was elected president of the US, The Onion had a headline story that in the wake of what has followed seems more prescient than satirical. For those who are not religiously addicted to The Onion, it is a weekly satirical “newspaper” available both on-line and on many street corners in Manhattan that pokes fun at modern society and political events. www.theonion.com/content/index The headline back in those innocent days read: “George Bush: Our Long Nightmare decade of Peace and Prosperity is Finally Over.” Some things just aren’t as funny as time marches on.


By Myron Gushlak