Somebody shoot this preppy, spoiled, brat suburbanite for me, please.
And like, um, like I just think, that um, like, we should, um like, maybe, just uh, require that uh, like people should have to take a, like um, test to um like, see if they like, um, are smart enough to like be, uh, able to vote.
And you people wonder how Obama got elected.
Monday, July 27, 2009
Leftists Hate Math
A KEY and VITAL aspect to my philosophy of politics is that leftists/liberals hate math. The reason why is that math is not only difficult (therefore avoid it and major in journalism and gtget your masters in aromatherapy), but it also has a tendency to make things "right" or "wrong." Prove things to be "true" or "false." And otherwise provide empirical evidence that socialism doesn't work.
Ergo they avoid it like the plague.
But Steve sent me this article which reminded me again of the reality of the labor market.
Thanks Steve!
Ergo they avoid it like the plague.
But Steve sent me this article which reminded me again of the reality of the labor market.
Thanks Steve!
Uncle Jay for President 2012
Seriously, he would make a grand candidate...and by comparison with Obama he'd be godlike.
Saturday, July 25, 2009
Henry Gates
Richard, is a young black friend of mine.
I call him black because he is too proud, too upstanding, and just too damn much of a man to suffer the politically correct term of "African American."
He is like Lawrence, a common caller to my radio show of yore who happened to be black too, and he was proud of it. He, on my show, adamantly insisted he was not an "African American" but was a damn proud black man. God bless him.
In either case, both men stood on their own ground based on their own accomplishments and gave TRUE, GENUINE pride and honor to those who call themselves black.
But this schmuck, is just that, a schmuck. And though I know that I risk being called a racist, and that my black friends risk being called an "Uncle Tom" we all agree that this Henry Gates Jr is the epitome of schumkiness. Not because he's acting like an ass. Not because he's acting like a hypersensitive putz looking for the next excuse to claim victimhood like the "Reverends" Hackson and Sharpton. But because he disgraces those true and honorable people who happen to have the same hue/pigmentation of skin that he does, but share nothing of his cowardly and childishly morality.
I have said it before and I will say it again.
I befriend all people of all stipes and the reason you're my friend has nothing to do with the color of your skin or your ethnicity, but your quality and caliber of your person. And this putz, this vermin that falsely postures himself as a "representative" of black people while acting like a complete ass only belies the fact he's in it for himself and nothing as noble as bring about true and genuine progress to those of different colors.
It's also a damn good reason not to send your kids to Harvard, let alone hire any idiotic worthless Blue Blood moron that came from that decrepit school.
I call him black because he is too proud, too upstanding, and just too damn much of a man to suffer the politically correct term of "African American."
He is like Lawrence, a common caller to my radio show of yore who happened to be black too, and he was proud of it. He, on my show, adamantly insisted he was not an "African American" but was a damn proud black man. God bless him.
In either case, both men stood on their own ground based on their own accomplishments and gave TRUE, GENUINE pride and honor to those who call themselves black.
But this schmuck, is just that, a schmuck. And though I know that I risk being called a racist, and that my black friends risk being called an "Uncle Tom" we all agree that this Henry Gates Jr is the epitome of schumkiness. Not because he's acting like an ass. Not because he's acting like a hypersensitive putz looking for the next excuse to claim victimhood like the "Reverends" Hackson and Sharpton. But because he disgraces those true and honorable people who happen to have the same hue/pigmentation of skin that he does, but share nothing of his cowardly and childishly morality.
I have said it before and I will say it again.
I befriend all people of all stipes and the reason you're my friend has nothing to do with the color of your skin or your ethnicity, but your quality and caliber of your person. And this putz, this vermin that falsely postures himself as a "representative" of black people while acting like a complete ass only belies the fact he's in it for himself and nothing as noble as bring about true and genuine progress to those of different colors.
It's also a damn good reason not to send your kids to Harvard, let alone hire any idiotic worthless Blue Blood moron that came from that decrepit school.
Different Types of Recession
An outstanding review of the different types of recession.
Notice the V - recession is where you let free markets correct on their own and the recovery is the quickest.
The L recession unfortunately is what we'll have.
The S - Recession though is a very nice idea.
Notice the V - recession is where you let free markets correct on their own and the recovery is the quickest.
The L recession unfortunately is what we'll have.
The S - Recession though is a very nice idea.
While on Vacation
My girlfriend likes to sleep in late, and since we're on vacation, I figured I'd run some morning errands and get things situated before we start another big day. This way no time is wasted, my beloved can sleep in, but when it's time to get up, there's nothing to do, but GO and DO!
Today we are going to climb Battle Mountain, about a 4,500 hill really, but it's a good morning workout to begin the day with. I spent part of the morning tracking a place to climb it, part of the morning putting in a new air filter on the car, part of the morning getting supplies, and part of the morning getting my girlfriend coffee.
I return to our cabin and what do I see?
My girlfriend watching You Tube videos on the laptop whilst STILL in bed.
Middle of the world's most beautiful country, mountains galore to climb, tons of streams to fish and she's watching You Tube videos.
I said, "you're watching You Tube videos?"
Sheepishly she replies, "yes" and then giggles at me.
God bless her.
Today we are going to climb Battle Mountain, about a 4,500 hill really, but it's a good morning workout to begin the day with. I spent part of the morning tracking a place to climb it, part of the morning putting in a new air filter on the car, part of the morning getting supplies, and part of the morning getting my girlfriend coffee.
I return to our cabin and what do I see?
My girlfriend watching You Tube videos on the laptop whilst STILL in bed.
Middle of the world's most beautiful country, mountains galore to climb, tons of streams to fish and she's watching You Tube videos.
I said, "you're watching You Tube videos?"
Sheepishly she replies, "yes" and then giggles at me.
God bless her.
Friday, July 24, 2009
This is Our President?
Have a beer? You're kidding me?
Don't you have more important issues to tend to?
Wednesday, July 22, 2009
The Captain's Great Expedition!
Howdy All!
Your beloved captain is off! Off to the blessed land of South Dakota for 6 weeks. 6 blessed weeks of...
ADVENTURE!
EXPEDITION!
EXPLORATION!
and as one reader wrote me...
EXCELLENT PLUMMAGE DURING THE STURGIS RALLY!
Yes, what trials and tribulations await the Captain!?
In any case, starting tomorrow our beloved guest writers will be chipping in as I will be in arguably the remotest parts of the country hunting down fossils, venturing where humans haven't in 500 years, catching MUCHO fish, and bagging peaks.
Also, we filmed the seminar last night and it went very well.
The video in its entirety is about 20 hours 10 minutes. A "professional" version will be compiled which will only be 30 minutes to an hour. I will be putting together a full You Tube version, unless it is too cumbersome, in which case I will just burn it to DVD and for shipping, handling and some profit priced in for myself, will be selling it (it won't be that expensive).
In any case I will miss all you guys, but will be checking in intermittently to see how youse are all doing.
The Captain
Your beloved captain is off! Off to the blessed land of South Dakota for 6 weeks. 6 blessed weeks of...
ADVENTURE!
EXPEDITION!
EXPLORATION!
and as one reader wrote me...
EXCELLENT PLUMMAGE DURING THE STURGIS RALLY!
Yes, what trials and tribulations await the Captain!?
In any case, starting tomorrow our beloved guest writers will be chipping in as I will be in arguably the remotest parts of the country hunting down fossils, venturing where humans haven't in 500 years, catching MUCHO fish, and bagging peaks.
Also, we filmed the seminar last night and it went very well.
The video in its entirety is about 20 hours 10 minutes. A "professional" version will be compiled which will only be 30 minutes to an hour. I will be putting together a full You Tube version, unless it is too cumbersome, in which case I will just burn it to DVD and for shipping, handling and some profit priced in for myself, will be selling it (it won't be that expensive).
In any case I will miss all you guys, but will be checking in intermittently to see how youse are all doing.
The Captain
Tuesday, July 21, 2009
We Don't Spend Enough on Health Care
Given Obama's socialist agenda to spend more on health care, may I point out, we already spend more than most nations in terms of BOTH private AND GOVERNMENT SPENDING?
It begs the question to all liberals out there, "HOW MUCH IS ENOUGH?"
It begs the question to all liberals out there, "HOW MUCH IS ENOUGH?"
Mike Castle
Looks like Mike will pay just like Norm Coleman did for being a politician and NOT a statesman.
Get's interesting around the 4 minute mark.
ht to Kate
Monday, July 20, 2009
The Captain's 6 Week Vacation
I have a 6 week vacation planned.
The reason I have a six week vacation planned is;
1. I do not have children.
2. I am self-employed and instead of answering to some PHB, middle aged moron who maintains the status quo, I've set up a nice little operation that is above all other things, EFFICIENT, and permits me to take this 6 week vacation instead of the paltry (gee-thanks-master) 2 week vacation most other people seem to slave themselves over
3. I spend less than I make, don't buy new cars or clothes, and more or less have rejected the consumption mentality that has driven most other Americans into debt, and thusly have a small, but positive cash flow that affords me this lifestyle and opportunities as such
4. Obama and the socialists in congress has made it economically not worth my while to work more.
5. I deserve every second of it because of how much I've worked in the past 20 years and instead of mommy and daddy paying my way through a 2 week vacation in Europe when I was 19, I'm putting myself out to the Badlands, Black Hills and Big Horns in the South Dakota Wyoming way and will not be in any rush to do anything but fossil hunt, mountain climb, rock climb, fish and explore.
Regardless, as I will be gone for quite some time and out in the middle of nowhere, I will not be making as many posts between July 23rd and August 31st. I will still be making the occasional post, but not as much.
HOWEVER, do not fear!
I have high trained and DEPUTIZED Cappy Cap guest writing economists that will help pick up the slack.
Our very own and beloved Prisoner of War in California, The Major (who is an actual, real, official economist) will be writing for your reading pleasure, as well as an associate of mine, who will remain anonymous.
Understand their writing does not necessarily reflect my own beliefs, but for the most part probably will.
In any case, grant them the same honor and privileges as you do me. I will be moderating comments though as always to keep the trolls out, not to mention the daily moronic commentary I get from rabid leftists that want to believe their journalism degree will somehow save the world.
The reason I have a six week vacation planned is;
1. I do not have children.
2. I am self-employed and instead of answering to some PHB, middle aged moron who maintains the status quo, I've set up a nice little operation that is above all other things, EFFICIENT, and permits me to take this 6 week vacation instead of the paltry (gee-thanks-master) 2 week vacation most other people seem to slave themselves over
3. I spend less than I make, don't buy new cars or clothes, and more or less have rejected the consumption mentality that has driven most other Americans into debt, and thusly have a small, but positive cash flow that affords me this lifestyle and opportunities as such
4. Obama and the socialists in congress has made it economically not worth my while to work more.
5. I deserve every second of it because of how much I've worked in the past 20 years and instead of mommy and daddy paying my way through a 2 week vacation in Europe when I was 19, I'm putting myself out to the Badlands, Black Hills and Big Horns in the South Dakota Wyoming way and will not be in any rush to do anything but fossil hunt, mountain climb, rock climb, fish and explore.
Regardless, as I will be gone for quite some time and out in the middle of nowhere, I will not be making as many posts between July 23rd and August 31st. I will still be making the occasional post, but not as much.
HOWEVER, do not fear!
I have high trained and DEPUTIZED Cappy Cap guest writing economists that will help pick up the slack.
Our very own and beloved Prisoner of War in California, The Major (who is an actual, real, official economist) will be writing for your reading pleasure, as well as an associate of mine, who will remain anonymous.
Understand their writing does not necessarily reflect my own beliefs, but for the most part probably will.
In any case, grant them the same honor and privileges as you do me. I will be moderating comments though as always to keep the trolls out, not to mention the daily moronic commentary I get from rabid leftists that want to believe their journalism degree will somehow save the world.
Saturday, July 18, 2009
How to Argue Against Socialism and Defend Capitalism
Hi All,
I have finalized a date and a location for the seminar. It will be THIS TUESDAY, July 21st from 5-745PM.
Unfortunately only folks within driving distance of Minneapolis will be able to attend conveniently, but for those of you still interested, we will be filming it and putting it up on the internet (assuming we can put 2 hours worth of seminar on the internet).
There are only 30 spaces available so please let me know if you want to attend by e-mailing me at
CAPTcapitalism@yahoo.com
I will then send those interested the location and details.
Please do dress up a little bit as we will be filming this and I think it's going on the local public access cable show or something.
El Cap-i-tan
I have finalized a date and a location for the seminar. It will be THIS TUESDAY, July 21st from 5-745PM.
Unfortunately only folks within driving distance of Minneapolis will be able to attend conveniently, but for those of you still interested, we will be filming it and putting it up on the internet (assuming we can put 2 hours worth of seminar on the internet).
There are only 30 spaces available so please let me know if you want to attend by e-mailing me at
CAPTcapitalism@yahoo.com
I will then send those interested the location and details.
Please do dress up a little bit as we will be filming this and I think it's going on the local public access cable show or something.
El Cap-i-tan
Associated Bank
I came up with a brilliant idea.
Since bankers were corrupt and would always try their best to get loans, no matter how bad, approved, and this would run contrary to the job of credit analysts whose job it is to guard the bank's capital and prevent bad loans from going through, I would outsource the underwriting process to an independent third part.
I called it "Independent Analytics."
I then drove around the Twin Cities metro, gave them my presentation about the merits of outsourcing their underwriting to me, and presumably the staff of analysts I would hire to handle all the demand.
Of course there was no interest because "they" knew what was best for the company and keeping the underwriting process in house and under the influence of commission driven bankers. Besides which they were fully "banking" on a bailout.
However, there was one bank where the gray haired, middle aged man assured me that they did not need my services, not because it wasn't a good idea, but because they had seen this housing bubble coming a mile away and their analysts were good, fine analysts.
Associated Bank.
Well, like many other banks, turns out "they" were not special and "they" had just as many bad loans as the next bank.
So to the middle-aged dumbass at Associated Bank (and perhaps any shareholders that are listening) allow me this one question;
"If you had hired the services of Independent Analytics, would you be in this situation?"
I didn't think so.
Since bankers were corrupt and would always try their best to get loans, no matter how bad, approved, and this would run contrary to the job of credit analysts whose job it is to guard the bank's capital and prevent bad loans from going through, I would outsource the underwriting process to an independent third part.
I called it "Independent Analytics."
I then drove around the Twin Cities metro, gave them my presentation about the merits of outsourcing their underwriting to me, and presumably the staff of analysts I would hire to handle all the demand.
Of course there was no interest because "they" knew what was best for the company and keeping the underwriting process in house and under the influence of commission driven bankers. Besides which they were fully "banking" on a bailout.
However, there was one bank where the gray haired, middle aged man assured me that they did not need my services, not because it wasn't a good idea, but because they had seen this housing bubble coming a mile away and their analysts were good, fine analysts.
Associated Bank.
Well, like many other banks, turns out "they" were not special and "they" had just as many bad loans as the next bank.
So to the middle-aged dumbass at Associated Bank (and perhaps any shareholders that are listening) allow me this one question;
"If you had hired the services of Independent Analytics, would you be in this situation?"
I didn't think so.
Friday, July 17, 2009
Monthly "Obscene Profit Break"
Hi All,
It is once again the monthly time to push my wares and services so that I, your beloved Captain, may continue to put food on the table, pay the mortgage, and go fossil hunting in South Dakota.
Yes there is of course the book you may buy, however, more importantly are my online classes, which have sustained about a 40% drop in enrollment. Obviously due to the economy, however, what better time than a RECESSION to take a class on finance and economics? Regardless, the drop in enrollment is really actually hurting me financially, so if you know anybody interested in taking a class on either investing in stocks or just a damn fine class on personal financial management, send them my way.
You may also help the Captain by just making a donation. You don't get anything but warm fuzzies from this. Of course, if you are a super rich person and want to make a donation of an amount that would sayyyyy, pay off my mortgage? Imagine the lifetime of super warm fuzzies that would generate. It would also make Natasha very happy, and who wouldn't want Natasha to be happy?
What will also make Natasha happy is just buying some "stuff." "Stuff" of the capitalist nature. Not much up there, but hey, if you need a neato shirt or a neato coffee mug
Finally, you can just mention the Captain to family, friends...enemies... or people you're just indifferent about.
It is once again the monthly time to push my wares and services so that I, your beloved Captain, may continue to put food on the table, pay the mortgage, and go fossil hunting in South Dakota.
Yes there is of course the book you may buy, however, more importantly are my online classes, which have sustained about a 40% drop in enrollment. Obviously due to the economy, however, what better time than a RECESSION to take a class on finance and economics? Regardless, the drop in enrollment is really actually hurting me financially, so if you know anybody interested in taking a class on either investing in stocks or just a damn fine class on personal financial management, send them my way.
You may also help the Captain by just making a donation. You don't get anything but warm fuzzies from this. Of course, if you are a super rich person and want to make a donation of an amount that would sayyyyy, pay off my mortgage? Imagine the lifetime of super warm fuzzies that would generate. It would also make Natasha very happy, and who wouldn't want Natasha to be happy?
What will also make Natasha happy is just buying some "stuff." "Stuff" of the capitalist nature. Not much up there, but hey, if you need a neato shirt or a neato coffee mug
Finally, you can just mention the Captain to family, friends...enemies... or people you're just indifferent about.
Thursday, July 16, 2009
The Department of Walking
I was listening to Garage Logic and this just needed to be pointed out:
-Holy "My Nephew Needs a Job" Batman. A WALK AMBASSADOR???? Seriously, what worthless individual with a worthless degree is going to get that job? How much you want to bet he's related to somebody on the city council? Any takers?
Never move or invest in Minneapolis. Seriously. Just don't bother investing or living here. The voting population is so liberal and so damn ignorant of basic public finances, that you may as well live in North Korea. You will see Minneapolis become a colder version of Detroit before your days are over, please be an observer, not a participant.
The City of Minneapolis now effectively has a department of WALKING.
Apparently the citizens of Minneapolis are so stupid they need a GOVERNMENT PROGRAM TO TEACH THEM HOW TO WALK OR BIKE! Here is the PDF file in its entirety, but allow me to point out three major things.
1. The goals or objective of this program only betray it for it's true purpose: to employ otherwise unemployable people.
"BUILD A CULTURE OF COURTESY, ACCEPTANCE AND SAFETY FOR ALL MODE SHARES????"
"LONG TERM COMMITTED STAKEHOLDERS????"
"SOCIAL NORM WHERE WALKING AND BIKING ARE PART OF EVERYDAY ROUTINES?"
How, precisely is the government supposed to do this? Is this not just done naturally? And when it is -10 degrees outside with 13 inches of snow, HOW DOES WALKING/BIKING BECOME A PART OF AN EVERYDAY ROUTINE?
2. WALK AMBASSADORS/CLASSES ON WALKING
-Holy "My Nephew Needs a Job" Batman. A WALK AMBASSADOR???? Seriously, what worthless individual with a worthless degree is going to get that job? How much you want to bet he's related to somebody on the city council? Any takers?
- CLASSES ON WALKING??????? Wha, huh, fra?????
3. You combine this BS with the $200,000 used to get Minneapolis Citizens to drink tap water and the $50,000 per drinking fountain program, AND THE CITY COUNCIL, ALONG WITH THE IDIOTIC VOTERS OF MINNEAPOLIS WONDER WHY THERE'S A BUDGET CRUNCH!?
So look, let me put it to you this way folks.
Never move or invest in Minneapolis. Seriously. Just don't bother investing or living here. The voting population is so liberal and so damn ignorant of basic public finances, that you may as well live in North Korea. You will see Minneapolis become a colder version of Detroit before your days are over, please be an observer, not a participant.
Wednesday, July 15, 2009
Tuesday, July 14, 2009
Appraisers Are Preventing a Recovery
As you all know, I am not one who has a vested interest in inflating property values. Matter of fact, I was sounding the alarms when I saw bogus "name your price appraisals" come across my desk whenst I was in the banking industry.
However, today the pendulum has swung to the other side and not just the other side, but to just as much of the extreme as when prices were outrageously high. For when I had my house appraised recently, not only did it come in below what I was expecting, but so low that I literally laughed at it. Not only because I would never sell it for that, not only because the LAND alone (in my humble opinion) was worth more, but because the rental income I generate alone would be 50% MORE than what a mortgage would be to finance it 100% for that price.
So let me explain to you what is going on.
First of all you must understand that the appraising industry which is a VITAL part of this economy (as it conveys price information to the market about the largest single asset people own - THEIR HOMES) is occupied by nothing more than 100%, grade A, morons.
First they would whore themselves out to whoever would pay them the most to "deliver" the price the borrower or the bank needed for the deal to go through back during the bubble days.
Now they're just engaging in CYA.
So you're not dealing with brilliant people, you're just dealing with people who go where the money is.
Second, because of their stupidity the problem is that they're not doing their job and that is ACCURATELY APPRAISING PROPERTY. The problem this presents is that it stunts or at least mutes part of the "stimulus" plan in that while (presumably) all this TARP money and bailout money was to be used to help provide low interest rate loans so the masses could refinance at lower rates and thus improve their personal finances, it's never loaned out because why????
Oops! Sorry, your house appraisal came in too low. We can't refinance.
(Never mind that in some cases if the banks don't refinance they'll end up foreclosing and repossessing a house that is less than what is owed to them and it would be in their best interest to refinance, but, eh, banks are even more moronic than the appraisers)
Regardless, the whole point is that while people would like to refinance, they would like to save money, and we would like to get this economy back on the road again, the appraisers effectively prevent this with their insanely low appraisals.
Now I know why this is happening, for whilst my days as a credit analyst, part of my job was to audit these appraisals. And to understand why your house is "worth" only 50% of what it was before and why you were shot down for the loan and the bank is now going to repossess a presumably worthless property, you must understand the three appraisal techniques.
First there is the cost approach. This basically states the value of the home is the amount it costs to build it.
Then there is the income approach. This is like a "discounted cash flow" approach to valuing property. It theorizes if it was rented out what kind of value would those cash flows give the property.
Then there is the all important "sales comparison" approach. This takes sales of similar properties in similar areas and then applies similar prices to your property.
And that is the approach where the problem lies.
For you see, appraisers take RECENT sales. The problem this presents is that "What if you were in a bubble?" Or conversely, "What if you were in the worst housing market ever?" When housing, and the mortgages used to finance it, are presumably long term assets.
Understand the problem this presents when trying to value properties.
If you valued on property based on the sales approach 3 years ago, it would be overvalued.
If you valued it today (I'm getting the feeling) it would be undervalued due to the majority of sales being foreclosures.
But the bank has typically a 30 year mortgage on it, and you would plan to live in the home for more than 5 years.
This means the value of a home shouldn't be based on the current, minute to minute market fluctuations in home prices, but rather a long term rolling average.
But, of course, again, try to tell that to appraisers or explain that to banks. And you'll see why we have to bail out the banking industry and while the appraisal industry, vital as it may be to our entire financial system and economy, is nothing but a bunch of lemmings.
However, today the pendulum has swung to the other side and not just the other side, but to just as much of the extreme as when prices were outrageously high. For when I had my house appraised recently, not only did it come in below what I was expecting, but so low that I literally laughed at it. Not only because I would never sell it for that, not only because the LAND alone (in my humble opinion) was worth more, but because the rental income I generate alone would be 50% MORE than what a mortgage would be to finance it 100% for that price.
So let me explain to you what is going on.
First of all you must understand that the appraising industry which is a VITAL part of this economy (as it conveys price information to the market about the largest single asset people own - THEIR HOMES) is occupied by nothing more than 100%, grade A, morons.
First they would whore themselves out to whoever would pay them the most to "deliver" the price the borrower or the bank needed for the deal to go through back during the bubble days.
Now they're just engaging in CYA.
So you're not dealing with brilliant people, you're just dealing with people who go where the money is.
Second, because of their stupidity the problem is that they're not doing their job and that is ACCURATELY APPRAISING PROPERTY. The problem this presents is that it stunts or at least mutes part of the "stimulus" plan in that while (presumably) all this TARP money and bailout money was to be used to help provide low interest rate loans so the masses could refinance at lower rates and thus improve their personal finances, it's never loaned out because why????
Oops! Sorry, your house appraisal came in too low. We can't refinance.
(Never mind that in some cases if the banks don't refinance they'll end up foreclosing and repossessing a house that is less than what is owed to them and it would be in their best interest to refinance, but, eh, banks are even more moronic than the appraisers)
Regardless, the whole point is that while people would like to refinance, they would like to save money, and we would like to get this economy back on the road again, the appraisers effectively prevent this with their insanely low appraisals.
Now I know why this is happening, for whilst my days as a credit analyst, part of my job was to audit these appraisals. And to understand why your house is "worth" only 50% of what it was before and why you were shot down for the loan and the bank is now going to repossess a presumably worthless property, you must understand the three appraisal techniques.
First there is the cost approach. This basically states the value of the home is the amount it costs to build it.
Then there is the income approach. This is like a "discounted cash flow" approach to valuing property. It theorizes if it was rented out what kind of value would those cash flows give the property.
Then there is the all important "sales comparison" approach. This takes sales of similar properties in similar areas and then applies similar prices to your property.
And that is the approach where the problem lies.
For you see, appraisers take RECENT sales. The problem this presents is that "What if you were in a bubble?" Or conversely, "What if you were in the worst housing market ever?" When housing, and the mortgages used to finance it, are presumably long term assets.
Understand the problem this presents when trying to value properties.
If you valued on property based on the sales approach 3 years ago, it would be overvalued.
If you valued it today (I'm getting the feeling) it would be undervalued due to the majority of sales being foreclosures.
But the bank has typically a 30 year mortgage on it, and you would plan to live in the home for more than 5 years.
This means the value of a home shouldn't be based on the current, minute to minute market fluctuations in home prices, but rather a long term rolling average.
But, of course, again, try to tell that to appraisers or explain that to banks. And you'll see why we have to bail out the banking industry and while the appraisal industry, vital as it may be to our entire financial system and economy, is nothing but a bunch of lemmings.
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