Friday Potpourri

A smattering of interesting things.  Well, I think they're interesting.

The yield curve inversion continues to deepen.  The gap between the 2-year and the 5-year bond is now .05% - in the wrong direction.  There's no way there's more inflation risk on a 2-year bond than a 5-year bond, but hey, that's where we are.  Even the 10-year is lower than the 2-year.  This explains why 30-year fixed rates are the same as 3-year ARM rates.

Fantastic post by John Lockwood, REALTOR, in Sacramento, about why your house isn't selling.  His blog is great, and I thoroughly recommend it (we blogroll it on the right-hand side of this page).

Utah football is not my favorite program.  This needs to be said.  But I enjoyed every second of their massive demolition of Georgia Tech yesterday.  That makes 5 straight bowl wins for the Utes, and credit where credit is due.  They know how to pull this stuff off.

Powerline is a political blog, but occasionally they post economic news that is of value, and this is just such an article.  A good economy, while it isn't necessarily good for mortgage rates, is good for the mortgage business, because more money in your pocket means better deals in the market.  Really, it's all about you.

Wednesday was my 15th anniversary, and I have to recommend both marriage and the Melting Pot restaurant in Salt Lake City.  It's a fondue restaurant, and believe you me, we learned some great stuff about fondue done the right way.  Ask for Kourtney as your server.  You won't regret it.

You'll likely never read this, J, but you are still and always the best thing that's ever happened to me.  And so far, the second 15 years is even better than the first 15.  I didn't think that was possible.  It must be you.

Cj

The Yield Curve Inverts

We hope you had a merry Christmas.  We did here.  We are sensible of the fact that one of the reasons we’ve had such a good time this year is that you trust us and refer us to others like yourselves.  Thank you.  It means a great deal to us.

 

So today we have the financial equivalent of a total solar eclipse – an inverted yield curve.  What this means in the concrete is that the yield on the 5-year bond (4.30%) is below the yield on shorter-dated bonds – the 3-year (4.32%) and the 2-year (4.34%).  This is highly unusual, and every time it has happened in the past, it has meant a recession.  It means that those holding longer-term bonds think their risk of inflation is less than those that hold short-term bonds.  This is, in point of fact, impossible.  If you think inflation is going up in the short term that’s bad for both short and long bonds.  If you think it’s going up in the long term, that’s only bad for long bonds, and short-termers don’t care.  In other words, if inflation is going up, it will be bad for long bonds no matter what.  Short bonds are therefore by definition less risky than long bonds.

 

But not today, apparently.

 

The good news for mortgage-holders or mortgage-seekers is that the 30-year fixed loan is back below 6% again.  Again.  The bad news is that short-term mortgages are rising and actually have higher interest rates than the long-term fixed mortgages.  This makes it harder to do the short-term projects like buy-fix-flip and build-flip that have made so many people so much money the last few years.

 

And a word on that.  I have heard from some who are not in the business - and from some who clearly shouldn’t be – that the making of money by buying a distressed property, and re-selling it for a profit is immoral.  After all, the people you buy the house from are themselves in deep financial trouble, and the ones that buy the house from you are typically also not doing all that well (the house is usually not a very big or very nice one).  How could someone bear to make money from such people?

 

Here’s how: all parties in the deal end up better off.  The first owner escapes having a foreclosure (which is far, far worse than a bankruptcy on a credit report), and in some cases ends up having his debt eliminated from the sale, even if the house sells for less than the total amount owing (it happens – we do it fairly often).  The end buyer gets a house that is newly-restored and still probably slightly below the market.  How do these people lose out here?  The answer is that they don’t.  In fact, if not for the middleman, who also earns a profit on the deal, the other two likely wouldn’t get together and both would lose.  If you get rid of the profit for the middleman, as some propose to do, or artificially limit it, as others propose, you decrease the likelihood that the two sides will join, increase the hardship for all parties, and eliminate the incentives for the market to provide services the make everyone wealthy.  It’s a system that works, and the less the regulation of it by third parties, the better it works.

True Meaning of Christmas?!? Bah Humbug!

I’m sick of hearing about the True Meaning of Christmas.

Sorry.

I recognize that I have a non-traditional take on some of these things.  My diatribe on Thanksgiving (Nov. 16) was generally well-received, but I don’t think any of the things I complained about will change very much.  Certainly not enough to notice.

So I write this with a degree of resignation, not seriously thinking that what I have to say will affect the world at large a whole lot.  But then, that isn’t the point.  I don’t write these things for the general population.  I write them for you.  I can’t be sure how many people are reading this blog, but I can be sure that there’s practically nobody here that I don’t personally know, which means I’m among friends as I do this.  Maybe it will mean something to you, as you have meant something to me.

Na.

The Christmas bustle starts sometime in October, since Thanksgiving, as previously mentioned, is not a marketing holiday.  In fact, Thanksgiving is only used by retailers (other than grocery stores, bless them) as a convenient marker for the kickoff of the Rumble in the Aisles, the massive Friday-after-Turkey discount extravaganza that never fails to get Orlando on the map for largest number of people arrested at WalMart.  Click the link if you didn’t hear about this.  There’s even video.

This type of behavior is exactly what the religious types among us bemoan at the Most Wonderful Time of the Year.  It’s a Christmas sale, for crying out loud.  Peace on Earth, people.  But no.  The struggle to get that one more thing seems to drown out the Reason for the Season, and that leads to an unbelievable amount of hand-wringing and sanctimonious preaching from the devout that the Real Meaning of Christmas Has Been Forgotten.  Woe be unto us!

Let’s deal with the reason for the season then, just to get it out of the way.  Christmas, as you might expect if you’ve ever looked at the word, has to do with Christ.  It is, in fact, the Mass of Christ, the celebration of the birth of the Savior of Mankind into the world.  I won’t retell the story, because if you don’t know it, even if you are Jewish, then you’ve lived your whole life on Mars.  Yes, I am fully aware that Christ was not born in December.  I am also, being a Classical Civ major, more than usually quick to remind trivia buffs that the Christmas celebration is in December because of a desire to quash the observance of the feast of the winter solstice, celebrated variously to herald the death and rebirth of Mithras (Sol Invicta!) or, among the Romans, to celebrate the feast of the Saturnalia, both festivals being filled with bacchanalian revelry.

Email chain letters notwithstanding, the candy cane was not invented to help us remember the blood of Christ on a shepherd’s crook, nor is the Christmas tree a Christian symbol of the resurrected Lord (this would be a lot more convincing at Easter, wouldn’t it?), nor is the song the Twelve Days of Christmas some sort of backmasked tribute to the Baby Jesus.  Sometimes candy is just candy.

But debunking all this mythology doesn’t change the fact that Christmas is the celebration of the birth of Christ.  This event really doesn’t need any trappings, boxes or bags to make it important.  The birth of God is going to be significant even if we don’t choose to celebrate it starting three months early.

I once had a discussion with a friend of mine who is a borderline agnostic (raised one religion, now regularly attends no church, but is pretty sure there’s a God).  We were discussing the foreknowledge of God, and how we could be free to choose our own path in this life if there was an omniscient being who already knew what we were going to do.  It occurred to me that if God were not omniscient, if He were not in complete command of the situation, if He were not able to make all things – all things – work together for good for them that believe, that I would have no interest in worshipping Him.  What kind of God is surprised, or even occasionally outmaneuvered?  Wouldn’t you want your God to be better than you are?

Man, I sure would.

Fortunately, God is actually God, and that means that He’s got things pretty well in hand, whatever we do to rain death and destruction and misery down on ourselves.  This would include the birth of His Son, I think.  There is no way He is surprised that the events surrounding His Son’s condescension have spawned a monthlong marketing bonanza that makes the heathen feasts that used to mark the end of the year look like a ladies cotillion.  This has not caught God off guard.  He is still God, and He is still running things.

And He’s smarter than we think.

Yes, we hear from the pulpit over and over how we’ve lost the Spirit of the Season, that Santa Claus has replaced the babe in the manger, how we concern ourselves far more with Decking the Halls than with having an occasional Silent Night to contemplate the birth that makes the holiday happen in the first place.  But do we?

Here’s a line at WalMart at 11pm the week of Christmas.  There are enormous carts filled with magical – truly, folks, magical – goodies of every type and description.  It’s late and it’s a work day and everyone is tired, including the cashier.  Someone fumbles with her purse and the change goes spilling across the floor like candy from a broken jar.  The woman tiredly reaches down and starts chasing the glittering coins, but she isn’t alone.  Everyone in line is on the floor with her, smiling, scooping copper and zinc back into her purse.  Except one man, who reaches across while she’s down there, zips his card through the reader, punches in his PIN, winks at the cashier, and puts the small sacks of her goodies into her cart.  Bends down and scrabbles on the floor with the rest of us.  When the woman stands up her bill is paid and no one will own up to having done it.  The cashier wishes her a Merry Christmas and out the door she goes, bewildered and grateful and tearful.  As are we all.

Tell me you’re going to see that in March.

Here’s something else.  The line is longish, and especially after something like that, people get to talking.  I ask the man in front of me “so, what you got there?”  He smiles and says “my mother has been complaining about her feet the last couple of months, saying that they’re always cold.  So I got this whirlpool-style foot massager that heats the water.”  “That ought to handle it,” I say.  “Yep.  I think it will.”  He goes on to show me, as we shuffle forward, a half-dozen other items in the cart, one for his little girl, some for his twin boys, a couple of little candies for his wife.  It occurs to me, a little at a time, the way the sun rises, that his $230 basket of gifts contains not one thing – not one thing – for himself.  We’ve talked for 15 minutes and he hasn’t said a word about himself.  I don’t even know his name.

There are perhaps 20 people in this line, and there are 4 of these lines in this store, and there are 3700 Wal Marts in the US.  And every single cart is filled with things for people other than the ones doing the buying.  Every purchase is a gift.

I’m sure this happens in August, too.  On some other planet.

If giving to others is the forgetting of oneself, and if the forgetting of oneself is the path to finding oneself, if the surest path to God is the caring for others, then somehow, miracle of miracles, God has contrived it so that the entire hedonistic season points men back to Him.

I like giving gifts.  I spend months planning them.  I like buying things.  I spend as freely as I possibly can, and I’m here to encourage you to do the same.  Don’t be stupid.  But do go all the way.  Give what you truly wish to give and let January deal with the fallout.  Giving with your heart is never – it is NEVER – a bad idea.  If someone nags you about it, smile, be polite, and don’t pay them any attention.  All the preaching and the moralizing probably has its place, too, but honestly, more often than not (and I am, myself, a fairly religious fellow) it seems like the preachers are telling us to stop having fun because they are worried that if they don’t personally put a stop to all this getting and spending that God will be unable to do His thing.  

Wouldn’t you prefer a God that didn’t much need your help?

Well, good news.  You have one.

Merry Christmas.

CPI, and A Rousing Defense of Myself

The Consumer Price Index today registered its largest drop since before the Korean War.  That seems to most people to be indicative of lack of inflationary pressure.  Not to bond traders, of course, who responded by selling.

The economy officially makes zero sense.

Regarding my post yesterday about Scrooge, I got this response from my father, who happens to be playing Fezziwig in Utah’s #1 performance of A Christmas Carol, at the Hale Centre Theater in Salt Lake:

Gordon Jones wrote:
BTW, Scrooge's nephew is Fred, not George.
 
Richard[Wilkins, who plays Scrooge and has for 2o years] read your piece last night.  He says you need to read his notes in the program, but he thought you made some good points.
 
The change of heart for his Scrooge doesn't produce (only) trivial gifts to individuals but support for education to eliminate Ignorance which will attack Want more broadly.
 
g

And here is my response:

I do not recall the support for education in any of the movies I have seen, and since this is a piece about movies, and not Christmas stories in general - I dislike most of those so much that I don't think I could do a piece on them - I don't feel any necessity of dealing with that part of Scrooge's transformation.  If it comes to that, I don't recall any such transformation in the story, either, which I confess I read only once.And really, so what if his change generates support for education?  What is it that he will use for the means of that support?  His time?  Not likely.  And if he did, it would be to the ruination of his other ventures, without doubt.  This is the standard liberal tripe where we'd all be better off if we lived in the mountains contemplating our navels.  What nonsense.  Scrooge will support education, if he chooses, with big chunks of money, ala Leland Stanford.  Great idea.  Fully in support of it.  Can't do it myself.  Which is, of course, the point of the essay.  Scrooge et al are role models without substantial value to the current population, or to any population, as far as I can determine.In fact, and this is the darker side of the issue, I am surrounded by people that have the idea that what they should do is neglect their families so that they can make them comfortable monetarily.  They'll use the money to go on church missions, they say, or to give to the missionary funds, or to donate generously to charitable causes.  In the meantime their actions make it increasingly likely that someone will have to engage in missionary work to their own children, because the example they see has absolutely nothing to do with a testimony of God, and everything to do with the management of the creature.  This attitude makes me angry.  I consider it to be perhaps the most insidious and destructive of all Lucifer’s lies.  And I do believe that movies like this perpetuate those lies.  At first blush, it would seem that A Christmas Carol teaches precisely the opposite lesson, that one should, in fact, spend one's time being concerned about mankind rather than focusing on money.  But does it really?  If we want to emulate Scrooge, how can we, unless we do what Scrooge did?  And then, because time is not fungible, that moment I steal for the office is one I won't get to give my Charlotte.  The office will be there tomorrow.  Charlotte, though, tomorrow's Charlotte, will be married and living in Lima.  She needs Dad now, not once Dad reaches the revenue goal for the 3rd quarter, and she needs not Dad's wallet, but Dad himself.  I will therefore never be Scrooge, for good or for ill.So along comes A Christmas Carol to teach us - perhaps without quite meaning to - that it's okay to spend 50 years as a nasty curmudgeon, because there will always be time to use one's accumulated wealth then for the Advancement of Education, or the Support of the Less Fortunate, or the Serving of God.  But there will not always be time.Cj

Christmas Spirit Without the "Spirits"

Christmastime spawns a certain type of movie. You’ll be familiar with the formula: bad man acts contrary to societally-accepted norms, terrible (humorous, scary…) events transpire, bad man has change of heart and embraces all mankind (his family, his potential family…). It’s a good formula. It taps into very powerful archetypes. It generates good revenue. All of us have done bad things, and most of us want to change and become better.

Here’s my beef. There’s one component that I forgot to mention that appears in almost all of these films: the bad man is rich. After he changes, he is still rich, only now he gets to use his massive riches for the benefit of all mankind and not just for his personal pleasure. This bothers me. I find myself at the end of the movie inspired, moved, and wanting to emulate what the main character has done, but I can’t, because I am not rich. I am changed, but whatever my will, my capacity to act in concert with the hero remains practically nil.

I cite as a chief example the kingpin of all Christmas movies – A Christmas Carol. You know the deal: Ebenezer Scrooge hates Christmas, the spirits scare the bejabbers out of him, and he becomes a benefactor to all mankind. Right on the pattern. But let’s look deeper.

First, Scrooge is spectacularly rich. Why? Because he is a skinflinted cheapskate. But that’s not exactly correct, is it? Scrooge did not acquire the money he has through extortion and blackmail; he got it through judicious investing and the performance of accounting services, and because he and his staff work harder than anyone else. Scrooge and Marley’s is what we would today call a bank. Apparently, it’s a good bank. Scrooge does not donate money to the poor, and holds some fascinating (and quite insensitive) opinions of what should be done with the less fortunate. But we are meant at every turn to despise Scrooge not because he is a cantankerous old fart but because he is a rich cantankerous old fart. There are far less savory characters introduced in the story, including a woman that stole the silk shirt off Scrooge’s dead body, but we aren’t mad at her, because she’s poor. Apparently it’s okay to be a skinflint as long as you don’t get rich by it.

Second, now that he’s a changed man, he can use all this loot to benefit his fellows. This is absolutely great, and what’s more, it’s wonderful fun to watch. This is one of the most common dreams of mankind, to become rich and use those riches to spread happiness and joy. To his credit, Scrooge does that admirably. But remember, folks, Scrooge can do this because he is wealthy beyond the dreams of avarice. His nephew George has a generous heart but an empty wallet, and couldn’t help Tiny Tim even if he were aware of his plight. Scrooge can. However, would Scrooge be able to help Tiny Tim if he had always been like George? Isn’t he able to keep Christmas well “starting today” only because he failed to do so for so long? And how do I emulate this?

Let’s look at the things Scrooge does that give evidence of his change of heart. One, he gives a lad a massive tip for performing a relatively tiny service. Two, he buys a turkey of immense size and sends it anonymously, by cab, in the snow, to the Cratchits. Three, he finds the charity solicitors and tells them he’s going to give them a gigantic sum. Four, he raises Bob Cratchit’s salary. Five, he buys coal. Is there something in here that shows Scrooge’s change of heart that does not involve the use of his money, money which we are meant to feel he shouldn’t have accumulated? I would personally love to do all of the things described for my employees, but I can’t. I just don’t have the resources. If I were to do these things, it would jeopardize the business itself. Okay, I could probably buy coal. I’ll get right on that. And I’m already a good tipper. Somehow, though, this doesn’t satisfy.

Is this the only example of this kind of behavior? Heavens no. How about (just recently) Family Man (rich man finds out he’d rather have a family than money), Two Weeks’ Notice (rich man finds out that he’s happier helping other people than himself), The Santa Clause (rich executive finds out that being Santa is more fun than doing his job well), Sabrina (rich man finds out that mooning around Paris is better for his soul than making beautiful and useful things - and as aside, don’t just see the recent one where Harrison Ford is, well, Harrison Ford, but go back to the original with Humphrey Bogart and the Immortal Audrey Hepburn. Bogart makes a speech about the value and utility of his job that is absolutely marvelous – and one of the best defenses of market capitalism ever captured on film). A majority of lesser Christmas films are just remakes of A Christmas Carol, and follow the same pattern.

Fortunately, there is an antidote.

It’s A Wonderful Life is the greatest Christmas movie of all time, and one of the best five movies ever of any genre. It follows the pattern, make no mistake. A major part of the plot is the change of heart that George Bailey undergoes. To be sure, it isn’t the only part, because like all fantastic movies it has several subplots, but the main thrust of this movie is the pattern – but in negative.

George is a poor man who is poor because he’s spent his entire life giving money and things away to help others. We get to see this against the backdrop of Mr. Potter (oh, Lionel Barrymore!), who is Scrooge without the spirits – and without the ethics. George knows how to keep Christmas well because he has been doing it his entire life. Then the crisis occurs – not to someone else (Tiny Tim, Sabrina, Charlie, a law clerk) – but to himself. And he cannot help himself. He has saved everyone else; himself he cannot save. Momentarily, he becomes bitter. Momentarily, he becomes Ray Kinsella (never noticed before how similar Field of Dreams and Wonderful Life are, did you?), and he’s asking “what’s in it for me?” and getting scant answer.

Clarence (as a delegate for God) gives him an attitude adjustment. It’s gut-wrenching watching George think that everything and everyone he gave his life for is gone, but it serves the required purpose of helping him see that those things are his forever, and going to jail is not the end of the world. His heart is changed, and even though (note the contrast) he can now not do anything to help anyone else, even himself, he is now at peace in a way none of the other protagonists mentioned above can be. They have done nothing; George has nothing left to do.

This is powerful stuff. It solves my problem. George is everyman; he’s not a bigshot, he doesn’t live in Metropolis, he doesn’t have money or fame or super powers. He runs a creaky little company staffed by moderately incompetent relatives and assorted hangers-on. He’s goofy and sentimental and some days a little bitter. Life hasn’t treated him all that well. He’s just doing the best he can with what he has to work with, which isn’t really all that much. But he’s tenacious. He doesn’t give up. He’s resourceful. And though he may have momentarily lost perspective and forgotten a couple of important things, basically he’s as good a man as you could wish to meet. Not later, after he’s been Scrooge for 50 years. Right now.

I can be like that. I don’t have to be rich. I don’t have to be powerful. I can do the things that George does right now, and maybe, if I do, one day I too will find that I am the richest man in town.

Market Drift

The markets are drifting coming into (specifically) the Fed Meeting tomorrow and (generally) the end of the year.  The biggest remaining economic news for the year will relate to the Christmas buying spree and (believe it or not) whether the Fed continues to use the word “measured” in its description of how fast it’s going to raise rates.  For bond traders, apparently the question is not whether the Fed will continue to jack up rates – that’s pretty much a given tomorrow and in January – but whether it will signal that it’s going to keep doing so after that.  If it does so signal, bonds are going to get crushed on Wednesday.  If it signals something else, like that it might be willing to pause and see if raising the Fed rate by almost 4 points in a year and a half is going to cause economic problems, then bonds could do very well all of a sudden.  That would be good for mortgage rates.

In our analysis of our loan pipeline, which we do annually, we discover that despite our best efforts, December has always been the #1 month of the year for loan closings.  This December appears to be no exception.  The holidays do cause significant problems with the timing of closings, because there are two major holidays in a week at the end of December.  For instance, if we want to fund a refinance loan this year we have to close it by the 23rd of December, otherwise the funding will take place on January 3.  Seriously.  This wall-to-wall effort to get these loans done before the end of the year may have an impact on the consistency of this blog.  Just warning you in advance.  It gets sort of nuts here this time of year.

We are still seeing seriously terrific returns on investing in real estate in Utah. We ourselves just finished up our very first investment deal as a Group, and it worked out nicely.  We’re not rich or anything, but we got the same returns our clients have been getting all year, so that was a hopeful sign.  We’re getting ready to do some more.  Wanna come along?

Working on two major essays: the much-touted “I’m Sick Of Hearing About The True Meaning Of Christmas” and another one called “Scrooge Strikes Back”, which somehow isn’t coming together all that well.  This kind of thing happens.  Plus we’re writing everyone a Christmas note in the card we’re sending you.  Hectic, to be sure, just like your life.

But it’s still the Most Wonderful Time of the Year.

You'll Want to See Narnia

I’ve been, I’ve returned, and I’m a better person for it. How many movies can you say that about?

I wrote a truncated review of The Lion, The Witch, and the Wardrobe for imdb.com, which is by far the greatest compendium of movie stuff ever. What follows is an expanded version of that review.

Exactly What It Claims To Be, 8 December 2005
Author: aminuteman from Utah

It could have been overblown, but it wasn't. It could have been "enhanced" or "inspired by", but it wasn't. It could have been excellent. And it is.It's hard for me to separate the movie from the book, the two being so closely mated, and that makes it practically impossible for me to rate this movie, since the book is one of my favorites of all literature. That, and one of my earliest memories is my father lying in the hallway reading this book to me and my brother as we went to sleep. How do you objectively comment on something so close to one's heart?

I was deathly afraid that the movie would try to be something that the book isn't. The Chronicles of Narnia are not the Lord of the Rings trilogy. They are also not the Three Musketeers, or the Legends of King Arthur. They are stories for children, stories that happen to be about the most important thing that has ever occurred, but children's stories nonetheless. The movie preserves this. The animation is excellent but not flawless, and the CGI is good but not top-drawer. This is irrelevant. The story is all there, every bit of it, from Edmund's snottiness all the way to the mice on the Stone Table. The dialogue is not straight from the book, but it's organic to the movie.

A word about the acting. Nearly all the characters are very good, with the possible exception of the two older children, Peter and Susan, played by William Moseley and Anna Popplewell. The latter of the two, I think, is unlikely to get a lot of work. Fortunately, the major bulk of the film is carried by Lucy (Georgie Henley) and Edmund (Skandar Keynes – great, great name), and neither of these two seem to have been tutored in acting. They just are. It’s fun to watch. Aslan (voice of Qui-Gon Jin) is very good, grave and powerful, and the White Witch (Tilda Swinton) is genuinely nasty and wholly believable. Nobody is winning an Oscar, here, and the actors know it, and that allows them to just do the story. It’s refreshing.

I was also afraid that no movie in this day could possibly tell this tale and leave intact the mystery and power of Aslan, as representative of the Christ. No review of this movie could leave out this essential point, I don't believe, for this story is, in its essence, a story about the root of all Christianity. And my fears were not entirely unfounded. There is some skirting of the essential point, but the light touch on it is unlikely to obscure the truth from those who know, while refusing to hit over the head those who would rather not have to face it. In the end, it was dealt with about as well as could be expected.

When Aslan goes to the Stone Table, if you have ever grappled with serious spiritual things, you will beg Him, with tears on your cheeks, not to go. You will see that He knows what he is doing, even if you cannot understand why He does it. That 5 minutes was among the hardest things I have ever had to watch in a movie theater. It was great moviemaking. It was the one piece of the film that simply had to be done correctly. It was.

And I was most afraid that I would leave the theater and find that my childhood memories were overlaid with some sticky Hollywood film that would affect my love for the book itself, that I would see in my head only those images that the movie projected, and that they would alter, perhaps even degrade my love for CS Lewis's immortal classic.

That didn't happen. The movie actually is less a recreation of the book, which after all is only about 85 pages long, so much as it is an homage to it. Faithful it is, to be sure, but also there was a tangible joy in the making of the movie that comes clear through it, a bowing before the great tale mixed with a celebration of it. It does not ignore those that have not read the book, instead it asks them over and over to give the book a try.

For me, the movie was a fitting tribute to the book, preserving its character and power while allowing the characters to live and breathe for a new generation that might not be quite as much at home with the printed page.

For Narnia! Long Live the Lion!

For Narnia! Long Live the Lion!

Just a quick note: we’re off to see The Lion, The Witch, And The Wardrobe, which had darn well better be good. My review will follow, tomorrow. If we can get back. It snowed, you know.

Rates continue to drift slightly higher. We’re back at 6% on the 30 and 5.5% on the 15. The 3-year ARM is coming back into play, though, as bond traders suspect that the Fed may stop raising rates at some point here in the early part of 2006.

I hope you got my missive on credit card payments getting set to double the first of the year. To have gotten it, you’ll have to be on our mailing list. Should you not have gotten it, you can remedy that here, by sending me your address. I’ll post the text tomorrow for all to see.

The much-hyped “Why I’m Sick of Hearing about The True Meaning of Christmas” will appear early next week. I’m polishing it. I rarely do this, but in this case I have something important to say (surprise!) and I don’t want to screw it up.

Smorgasbord of Stuff

Smorgasbord of stuff:

If you, like me, think that trial lawyers and the Consumer Product Safety Commission have made today’s kids into pathetic wusses, you definitely do not want to read about World Against Toys Harming Children (WATCH – what a stupid, stupid acronym)’s 10 Most Dangerous Toys list, but I do think you ought to read Lance Prevert’s Kids Today Are Wimps list of why some of these “dangerous” toys are just nonsense.  Caution: hilarity alert.

Apparently, some people are discovering that a 2500 sq. ft. house on Long Island costs 3x as much as the same house in Daytona, and they’re moving.  Shocker.  Here’s the big story.  Note the part of the article about Los Angeles, which is way overpriced, so people are leaving and moving to Las Vegas.  Las Vegas is now overpriced.  So people are looking for property close by, still warm, and on a major highway.  Voila!  St. George is now the hottest market in Utah.  If you look, you’ll see that we predicted that some 18 months ago.  You have to go to www.thechrisjonesgroup.com and take the link on the left side to get to the archives.  But we did predict it.  Trust me.

My predictions were mostly right on, except that BYU’s furious rally from 18 points down with 8 minutes left failed to overtake the USC Trojans (got to within 1, but couldn’t close it).  Otherwise, everything was right on.  Sorry.

Good News!

The broad consensus of economic indicators is that there is no real inflation and that economy is booming.  There.  Positive news.

The housing market is slowing.  There is lots of data to back this up, but it’s not even necessary if you consider that rates are about a point and a half higher now than they were on the Blessed 14th of June 2003.  Amazingly, this has killed off the refi boom.

Or not.  Lots of people – and this means you, if you got a loan with “bruised” credit – have adjustable rates.  We just picked up a loan from a couple whose rate is going from 7.5 to 9.5 and taking their payment up $300.  We’ll be saving them about $400/mo.  Almost all subprime loans have two-year fixed periods, and two year prepayment penalties.  If you did one with us, we should be contacting you about two months before the payment change.  If you did not do your loan with us, it would be well to call us and we can help you check.  It could save you $5000 a year.  Or more.

Predictions for the weekend:

USC beats UCLA by two touchdowns.  Reggie Bush wins the Heisman (next week).
Texas scores enough points in the first quarter to win the game right there over Colorado.
Alabama beats Auburn in a game that does not feature a touchdown.
The Colts win again.  There starts to be serious talk about challenging the immortal Dolphins’ undefeated season.
BYU beats USC.  Basketball, people.  Basketball.
The Jazz beat Portland.
No political or economic event worth paying any attention to occurs.

Have a great weekend.  Sometime middle of next week comes the long-heralded “I’m Sick of Hearing about The True Meaning of Christmas” post.  Stay tuned.

WalMart, Ikea, and Captain Jack's Custom Furniture

Economic data continues to come in showing that the US economy is roaring along, with virtually no hint of inflation.  This ought to be good for bonds, but it hasn’t been so far.  We’ve lost all of the little run we got in late November, to the point that we had to slap locks down on at least four of our clients before the mandatory lender reprice at about 11am.  All of our lenders did, indeed, raise their rates on the reprice deadline.  But our locks were already in.  By our calculations, our proprietary alert system saved our clients around $40,000 in interest.  Hey, it’s what we do here.

An update on the E-loan fiasco from a couple weeks ago.  Turns out that the appraisal on the house came in about $30,000 lower than the borrower estimated it would (in fairness, it wasn’t just his estimation), meaning that the loan he thought he was going to get from E-loan wasn’t going to work any more.  Were they flexible with this?  No, they were not.  So we’re going to be doing the deal here.

I really like what E-loan is trying to do, I must confess.  There is room for a great deal of competition in the marketplace, and since I am a great believer in markets, I think that the more competition there is, the better it is for practically everyone.  But E-loan is mostly about advertising, not mortgages, and they have several disadvantages when competing with, say, The Chris Jones Group Experience (or any local lender, for that matter).  

One, they will lack expertise.  E-loan brags that they do not have commission-based loan originators.  This is not something to brag about.  In my experience, the best of the best will insist on being paid based on their ability, not their position on the corporate payscale.  If I know that I’m better than the sixteen guys sitting in my cubicle farm, why would I stick around getting paid what they get paid?  Let me assure you, I wouldn’t.  And the best don’t.  They go out and form their own companies, most of them.  At the very least, they go somewhere where their expertise will be rewarded.  E-loan’s pay system sounds like a good thing, but in reality, it means that your loan officer there will be someone I would refuse to hire.

Two, they will lack flexibility in loan design.  Here’s a scenario: you want a piece of furniture that will be distinctive and unique, something nobody else is going to have that expresses something important about you.  You will get it at a) WalMart  b) Ikea or  c) Captain Jack’s Fantastic Custom-Designed Furniture.  Right.  WalMart will be the cheapest, for sure, but what you get there will be the same as what everyone gets.  You want something different, you’re out of luck.  WalMart does not have just one of anything.  Ikea is a good choice – a lot more expensive in exchange for better quality– but they also do not stock just one of anything.  If you want something that matches you and only you, you have to work with someone that knows you.

E-loan is WalMart, folks.  They have 46,000 loan officers who have a matrix on the wall, credit score on the x-axis and LTV on the y.  Match the borrower to the matrix and hey presto! a loan quote.  Yes, that’s going to make it pretty cheap.  My 9-year-old is quite capable of the same “service”.  Unlike getting a mass-produced endtable, however, this kind of quote can cost you tens of thousands in interest.  Your local bank (or large lender) is more like Ikea.  They will cost more than E-loan but you’re going to get a reasonable fit for your situation.  There will even be some things they can do that are better than what anyone else can match.  But when it comes down to it, they will not be able (on most loans) to do something just for you.  There are loans they don’t do.  There is a pricing matrix that they have to stick to.  Bottom line, they work for a large corporation and they have corporate policies they will almost always have to adhere to.

And then there’s the little guy, the boutique lender, the massively inefficient but oh, so personal solo act.  Okay, sometimes trio.  This is The Chris Jones Group Experience.  We take forever talking to you to make sure that what we’re doing with the loan fits what you need to do.  We will slap a lock down on your loan even if we can’t reach you, just because we know that if you do decide to ultimately go through with it, you’ll want the best rate possible.  We will get up at 2am to check the Nikkei Dow to make sure that rates are not going to go haywire on the open in New York.  We will do your loan for free if that’s what we have to do (and this does happen).  We invite you to come eat our food and dance, for crying out loud (Twelfth Night, January 6, 7-9pm), just because we love you.  

But the best part is that, as we saw in the E-loan example, our pricing routinely beats the socks off of the WalMarts of the industry.  Lower overhead, for one thing.  Better understanding of the market, for another.  But mostly, we’re cheaper because we can be, and because quite frankly, we hate to lose.

So our clients don’t, either.