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Tim Kern, Talking Sense

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Location: Anderson, IN, United States

Monday, May 03, 2010

Why all the fuss about Arizona's SB 1070?

I'm astounded at the May Day rallies in support of illegal immigration, both on the streets and in the media.

I do agree with some of the ideas behind these rallies, though. For instance, I agree that the US policy on this has been wrong for decades, and that Mexico's is right. We should clearly do what Mexico does: send Mexican criminals across the border, rather than encourage them to stay.

Friday, March 16, 2007

Mortgage Meltdown?

Nobody Would Do Such a Thing on Purpose!

The smart economics of writing second-tier mortgages

Copyright ©2007 by Tim Kern. All rights reserved.

While listening to one of many radio experts, on another of the Dow’s down days in March, the host asked an expert about the perceived raft of mortgage defaults, estimated at 5%, among so-called second-tier mortgage holders. The guest started to explain that, “Well, no one would do such a thing on purpose,” hinting that such action would be obvious economic suicide.

I wondered. After thinking about this for a while, I arrived at the economists’ answer: “It depends.”

If, as seems to be the case through some empirical telephone-calling, these “second-tier” buyers were moving into predominantly in lower-cost homes, the dollar values of the defaults are low, compared to the dollar values of the better-performing mortgages on the higher priced homes, and on the remaining 95% of the second-tier homes that are performing.

Why would any lender deliberately take over-market risk? Clearly, that’s the case, if lenders (and their investors) are worried. If the returns correlated to the risks, there would be no concern.

So, why take these risks? That depends. The first unknown is the price elasticity of homes, and that would require separate evaluations of higher-priced first homes and second homes (likelier to be purchased by safer borrowers), as well as mid-market homes (one would expect a mix, tending to safer borrowers), and entry-level homes (where one would suppose the most-risky borrowers would live).

What would have to happen, to make loaning relatively small amounts of money to somewhat-riskier groups attractive? Call it a loss-leader for the big mortgage houses. If setting oneself up to lose on 5% of small loans enabled one to collect on 95% of small loans, while pocketing closing costs up front and recovering the homes that, at the time of the loan, may have had 10% equity, then the risk may be worth the stimulation to that market alone.

Further, if easier money allowed purchases of entry-level homes by the marginal borrowers, it would encourage solider borrowers to move out of those homes and up a notch in their home market – equal numbers of bigger loans, with more equity, to better credit risks. With 95% of the entry loans’ performing and more mortgages (with bigger fees) being written on larger homes (backed by better-credit borrowers and higher equity in the homes), the seed money that the 5% are reneging on seems like small potatoes. It’s even smaller, when the higher-dollar, higher-credit-rating loans are considered, in the next step of up-market homes.

Could a case be made for seeding the housing market with a little easy money, money that is quickly recovered in fees, somewhat recovered in sales of repossessions, and totally covered by the performing 95%?

Could a case be made for those losses’ encouraging upmarket loan activity, with higher equity, higher closing costs, higher payments, and a higher ratio of larger, performing loans?

Well, then, it depends on who’s getting worried, and who’s getting flushed out of the market. Gee – is it easier to sell a lower-priced home, or a high-priced one? Is it easier to rent a lower-priced home or a high-priced one? If the debtor in the low-priced home defaults on the mortgage, the lender can repossess the home, pay off any existing equity, and rent the home. There should be plenty of prospective tenants – those people, former renters-turned-home-buyers, are looking to get out of their murderous mortgages and property taxes!

It’s not a gravy train for the lenders, but it’s a long way from disaster, even at this (the worst) level; and the losses there are dwarfed by the performing big-ticket loans that these seedlings made possible.

Oh – and speaking of those property taxes: because the home’s market price likely has fallen, the new owner of the home will likely face lower taxes than the one who defaulted, along with lower mortgage payments.


Saturday, January 20, 2007

EPA, for Example

This is old, but the tactics are used increasingly, by governments and others whose facts are too thin to make a legitimate point: they make an illegitimate point!
This was first published in 1996, by The Independence Institute, run at the time by now-Congressman Tom Tancredo of Colorado, so I am including all of the Institute's references.
EPA Skidding Out of Control
Tim Kern
Opinion Editorial March 6, 1996

The Environmental Protection Agency (EPA) is trying to scare Colorado, and it is resorting to distortions and apocalyptic predictions to make its point. A recent Denver newspaper headline read, "Faster speeds would worsen air, EPA says." The article warned that "nitrogen oxide in the air could increase by as much as 6.6% if speeds are raised on rural highways not already posted at 65 mph."

The claim is nonsense. First, the number of total vehicle miles (TVM) traveled on such roads is small, compared with the number of TVMs traveled overall. The amount of time spent driving those roads is an even smaller percentage of the overall time spent . Also, how many cars on those roads are already ignoring the 55 mph limit, and would not be affected?

Even if the EPA's prediction were correct, the pollution increase would be trivial. For example, the Occupational Safety and Health Administration (OSHA) has a strict standard for prolonged exposure to nitrogen oxide in the workplace: 25 parts per million (ppm). If tailpipe emissions really did raise the current levels 6.6%, the metro air concentration would rise to only 0.0175 ppm - roughly 1/1400th of what OSHA says is safe.

The EPA claims to be concerned about our health. This should include concern over our quality and length of life, as well. Example: A two-hour round-trip commute, during which only half the time is spent at 55 mph, could be shortened by 15 minutes, if the 55 mph segment could be driven at 75 mph. That amounts to more than a week's work in a year. (If your work itself involves driving long distances, you could increase your productivity by a week each month - or more!) If you waste "just" a week each year, that adds up. In ten years, you will have wasted time equivalent to your kid's entire summer vacation. Moving along your personal timeline, would you like to live a few extra months, or would you rather save a few dollars a month on gasoline?

If people are on the road longer each day, this adds to congestion, requiring more roads to be built (or causing more pollution from the traffic jams). While people are driving, they are not able to sleep that additional time; they are less alert, and could be dangerous.

The EPA also says that higher speeds could produce more carbon monoxide (CO), because these emissions increase above 48 mph, according to one study. The EPA then makes a leap of faith and says, "Using the same reasoning, particulate matter (PM) emissions may also increase." PM tailpipe emissions are insignificant compared to PM pollution. The former are small particles of stuff coming from the engine; the latter are visible dust, the "brown cloud" we know too well. PM pollution is mainly caused by traffic - tires slowly disintegrating, cars rolling over sand and gravel, crushing it and flinging it into the air - and traffic effects are not discussed in the EPA papers. PM pollution has almost nothing to do with tailpipe emissions.

The EPA's study says that heavy traffic - heavy trucks and buses - would remain at 55 mph; but its "max-case" figures show dramatic increases in nitrogen oxide from these vehicles, from 32,384 to 45,069 tons per year in Colorado. That's a 39% increase, and it's due to... nothing. No speed increase, no population increase, presumably no emission increase; yet somehow more pollution.

In the past, the EPA, Congress, and the rest of the federal establishment have withheld federal highway funds, and thus dictated all kinds of state issues: speed limits, construction permits, motorcycle helmet laws, seatbelt use laws, child seat standards. The feds' intrusiveness and arrogance chafed citizens and state legislators alike.

The federal bureaucracy, having now lost the battle about how "speed kills" (facts don't support that idea), having lost the battle to control the states through highway-fund blackmail (states have rediscovered the Tenth Amendment), and noticing that the American people put value on their time (and are therefore willing to pay for a little more gasoline), has resorted to that time-honored federal tradition: lying with figures. Who knows what they'll try if that fails!

Tim Kern is Special Projects Coordinator for the Independence Institute, a free-market think tank in Golden, Colorado.

This article, from the Independence Institute staff, fellows and research network, is offered for your use at no charge. Independence Feature Syndicate articles are published for educational purposes only, and the authors speak for themselves. Nothing written here is to be construed as necessarily representing the views of the Independence Institute or as an attempt to influence any election or legislative action.
Please send comments to Editorial Coordinator, Independence Institute, 14142 Denver West Pkwy., suite 185, Golden, CO 80401 Phone 303-279- 6536 (fax) 303-279-4176 (email) webmngr@i2i.org

Monday, August 21, 2006

Ethanol: The Unmentioned Drawbacks

It's tiring to hear just half the story about ethanol as our salvation, and an article in the online aviation publication AvWeb (to which I am a sometime contributor) was another cheerleading exercise. Not being able to keep my mouth shut, I sent the following letter to the editor (and it was published: http://www.avweb.com/news/avmail/193001-1.html).
All the hype about ethanol, so far, has ignored several facts. One (and you finally mentioned it -- AVwebFlash, Aug. 17) is that it's low on energy, requiring 20-30% more fuel to go the same distance. The problem is that, even having mentioned that little drawback, the quick answer your crusaders mentioned is that ethanol is cheaper, so it's a wash. (Not if you need a 30% bigger fuel tank, or have to make extra fuel stops en route, it isn't.)

The power deficit of ethanol is more troubling. We'll need longer runways for takeoff, our MTOWs will probably have to be reduced (and this, while carrying more fuel), and climb performance will suffer.

As your story also mentioned, the U.S. can't supply enough ethanol to meet all its fuel needs. Big deal; we don't produce enough oil to do that, either. What your story failed to mention is that ethanol's prices are kept high by the lobbying efforts of ADM and other agri-giants and their Congress. The U.S. has (up to) a 100% tariff on imported ethanol.

Further, the U.S. subsidizes domestic crop production for ethanol, crowding out natural (market-driven) crop production and raising prices of other crops, while using everybody's tax dollars, again, to help the agri-giants.

If ethanol's so good, let's have it find its own way; and if it's too expensive to become interesting on its own, let's cut the tariff.

Then the biggest problems we'll have to worry about are dramatically reduced range, lower payload, and crummy performance. And the inconvenient fact that most of our existing engines and fuel systems would be grounded.

If it were only about fuel costs ... hey, if we flew 20-30% less, we'd have fuel cost savings, too. Problem solved.

Tuesday, April 18, 2006

Nationalism vs Patriotism

Enough Nonsense! (Response to September 11, written in 2001)

[This editorial was previously published in Aero-News, and reprinted in the Federal Observer. Note: all the cited articles (from ANN) were also authored by Tim Kern. The publisher has a habit of non-attribution of peoples' work.]

~ Federalize everything in sight ~

Politicians are calling for federalization of airport security, saying things like, "Security at airports is handled by people who make less than the McDonald's employees at the terminals they are supposed to protect." That is insulting to the security people, for one thing -- how much they make doesn't necessarily reflect on their intelligence or dedication -- it just reflects on the degree of discretion they can exercise. Secondly, these folks are being beaten up by politicians that think that the security people did something wrong, something which can only be remedied by a bunch more taxpayer expense (shifting the expense from those who use air travel, to those who don't), and federal supervision. Patronage, in other words -- the same program that gave us the great surveillance and intelligence the FBI and CIA and INS used, to identify and track the hijackers -- all the way onto the planes.

~ The airport security people didn't do anything wrong ~

The people who screened the hijackers didn't do anything wrong; they followed the federal and airline guidelines in place at the time, guidelines effective only in disarming people who could have helped short-circuit the hijackings. The hijackers apparently didn't break any laws in the airports, at all. Think about this: if 200 passengers have, say, knives, and five hijackers have knives, who wins? On the other hand, if 200 people have nothing, and five hijackers have knives, who wins?

~ We're getting military involved in airport security ~

Strangely enough, we don't have enough military to patrol the borders and check other ports of entry, to keep illegals from entering the country; but we have plenty of military, to put them in charge of supervising the legal activities of citizens in our airports.

~ We want student pilots to pay for their own background checks ~

This is somehow supposed to make a difference. As we've detailed ("Knee Jerks: Student Pilot Background Check Bill," 09-27-01; "Knee Jerks: Another Anti-Flight-Training Bill," 09-28-01, ANN), some in Congress are saying that student pilots, before they start training, should pay to have their own backgrounds investigated -- by the CIA and FBI, through the FAA. Not only is this impossible to do, an any timely way; but the FAA can already make student pilot applications available to the FBI or CIA whenever the snoop agencies want them. How much should such a background check cost? How much, and what kind, of information, would be assembled? Why finger student pilots? (How about doing to same for, say, truck drivers, or just regular drivers? Does anyone's presumption of innocence still hold? Shouldn't we require this every year or so -- peoples' beliefs could change, you know!) When will we start requiring invasive psychological testing for the military, who could really do damage, if they got out of hand? [If that sounds unreasonable, why, then, would testing civilians --who don't have ready access to sophisticated weapons -- be reasonable?]

~ We're turning the threats around ~

If the purpose of all these new actions by our military and police is to prevent another September 11, we might ask why the facts of September 11 have been perverted. Military base commanders are now closing civilian GA (General Aviation) airports that are "too close for comfort" ("Navy's Duplicity Kills Coastal Airport in Georgia," 09-28-01, ANN). Let's see: the commercial airliners were used to attack civilian targets (the Pentagon was a secondary target, we're told). Therefore, the paranoia goes, non-commercial, small planes will attack military targets. That's '180-degree reasoning,' in the name of seizing more power, and expressing the military's paranoia about being able to protect its submarine bases against C-172s, and allowing politicians like Chicago Mayor Richard M. Daley to kill Meigs Field ahead of schedule (because it's 'too close' to Navy Pier -- Hey, neither the airport nor the pier has moved, Mr. Mayor!).

~ We're asked to give more power to the entities that screwed up ~

Far from asking why the INS and the FBI and the CIA (all of which knew something of the hijackers and their activities) didn't do anything about these terrorists, we are asked to take authority from the airlines and their contracted security firms (which didn't make mistakes in this series of events), and give even more discretion and power to the very entities that screwed up. If the FAA's rules for disarming passengers were insufficient, why blame the security people? If the rules weren't any good, why trust the people who made them up?

~ We want stronger cockpit doors ~

The argument goes, that the cockpit doors need to be hijacker-proof ("ALPA's President Wants Stronger Doors, Even Stun Guns," 09-21-01, ANN). As far as we know, the doors weren't a problem; they were opened during the hijackings because of threats of atrocities, and actual atrocities being carried out in the cabins. They were also opened because the pilots had been trained, again by the FBI and FAA, to submit, rather than to resist, when a hijacking was in progress. If the FAA and FBI were so wrong in their counterintuitive mandates, what makes anyone think they'll be right the next time?

~ We won't arm the flight crews ~

Yes, it's been a law all along, that flight crews could carry heat, if the airlines and FAA would agree on the training they should receive. As soon as this law (14 CFR 108.11) was made well-known, by ANN and others ("Feds: Airline Employees May Pack Heat," 09-18-01, ANN), the FAA said it would continue its policy of not honoring it, and would, in fact, circumvent the very law that could have helped, on September 11 ("FAA To Rescind Federal 'Crew Carry' Rule," 09-21-01, ANN).

As more pilots and rational citizens realized that the pilots were indeed the last line of defense against these types of terrorist activities, a public clamor was made to allow pilots, on a voluntary basis, to defend themselves and their ships ("Duane Woerth: Allow Pilots to Defend Selves, Aircraft -- with Firearms," 09-26-01), a talking-head clamor for 'calm' was heard across the non-aviation media.

The argument against self-protection goes something like this: "Pilots have their hands full with flying the aircraft, and turning them into some kind of 'Flying Wyatt Earp' won't help." First of all, if pilots want to keep flying the airplanes, they may need something stronger than just regulations, as bloodthirsty terrorists break into the cockpits and slit their throats. Secondly, a large percent of our pilots are military-trained, and already understand firearms and their proper use. Third, simply putting out the word that some pilots may be ready and able to defend their ships would be a major deterrent. [Marshal Earp, because his presence meant law and order would prevail, was in very high demand, we might do well to remember... --ed.]

~ We need more Air Marshals ~

That's true. The FAA won't say how many Air Marshals were flying, on a typical day, prior to September 11; only that there was always an Air Marshal presence. Since the FAA can hide behind "security reasons," and not tell us -- or Congress, for that matter -- how many of these off-budget air police there were, it's a safe assumption that the FAA, always crying for more money for its regulators (but never for its engineers and controller training, it seems), was using every available penny of Air Marshal money to fund other things. The mere and obvious fact that the FAA is scrambling now to recruit and train so many new Air Marshals says there couldn't have been many to begin with.

~ If you want to be safe, count on yourself ~

The Air Marshals, had they actually existed, could have gone a long way toward saving planeloads of submissive pilots and disarmed passengers -- but they weren't there, were they?

~ Don't mistake Nationalism for Patriotism ~

Patriotism is founded on understanding the things that make the nation great, and a commitment to them. Things like religious freedom, the sanctity of contracts, the protections against unwarranted searches and seizures -- these are some of the principles on which the United States of America was founded, and these are the things that Patriots support. They love the USA, and will stand for her, because they believe in the things she stands for.

Nationalism, however, is a purely emotional phenomenon. It is a tool of tyrants, and counts on co-opting Patriotism, and perverting it, so that anything that questions the absolute power of the government, is viewed as treason. Nationalism re-labels political opposition, based on principle, based even on the Constitution, as treasonous thought. Nationalism turns free people into slaves in their own countries. Nationalism represents the end goal of centralized, unlimited power -- tyranny -- cloaked in the name of Patriotism. Let's not let our patriotic feelings be stampeded into nationalistic programs.

~ The lesson is clear ~

The culture of submission is suicidal; the only protection you can count on, is what you provide, yourself. For the government, which screwed up in its regulations, its training, its intelligence, and its screening; its procedures, its engineering, and its risk assessment, to say, "Now, we'll protect you," is patently absurd.

Freedom, as they say, isn't free. A free society, if that is what America still wants to be, needs to remain vigilant; independent people cannot delegate their most basic need -- self-protection -- to a bureaucracy.

Monday, March 20, 2006

Finally, a Thank You!

Although the original and my reply were tongue-in-cheek, the exchange proves the adage that many a truth is spoken in jest.

The original Anchorage Daily News editorial ("Thanks, Taxpayers") ran on March 9, 2006: http://www.adn.com/opinion/view/story/7515978p-7427776c.html

My reply was printed on March 18: http://www.adn.com/opinion/letters/story/7542775p-7454257c.html

Here it is, with the adn's cutline:
Having anyone thank a taxpayer departs from business as usual

Regarding your editorial "Thanks, taxpayers" (March 9):
Well, thank you.

Your editorial marks the first time that I, as a taxpayer, have been thanked by any recipient of my hard work.

Usually, those who suck away the lifeblood of the working people are too busy lobbying to get more (or complaining that they're not getting enough) that they don't take the time to give us workers a simple "thank you."

I'm touched, really, even though I no longer live in Alaska (but with that amount of loot available, maybe I'll quit working and move back).

---- Tim Kern
Eagle Lake, Fla.

Monday, March 06, 2006

The Ultimate Victimless Crime

For as long as I can remember, we libertarians and constitutionalists have been railing about "victimless crimes," such as private drug use and prostitution. We always run up against the same arguments: "You should be in the family that's been broken up because of a prostitute's STD," and suchlike.

Explaining that drunk driving is a victimless crime (as long as no one's life or property is actually harmed -- situations where other criminal laws take over) is another losing cause.

How about a completely, totally victimless crime: carrying a concealed weapon? If the weapon is properly concealed, no one is affected by it, in any way. If the weapon is brandished, or used in a threatening way, or if it is actually misused -- then we have laws to handle that.

But why -- with a "crime" that no one would even know about (lacking a search -- or magnetometer), should anyone be concerned?

I would think that, using such a politically-incorrect example, rational civil libertarians could back unrestricted concealed carry. (Irrational opponents, by definition, cannot be reasoned with, and thus must be dismissed. I hate manipulating anyone into an irrational reaction, even if it's favorable to my position. An irrational person's "conviction" is too tenuous, as well as being effectively meaningless.)

Note: I can't tell you how many people I know who have committed this "crime" for years, never once committing any other "crime," and never once displaying their weapons.