Financial news has certainly been a mixed bag recently. Below, take a look at some of the stories making news recently on the international, national, state, and local levels:
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Foreigners Buy Into American Banks
While Americans blissfully buy millions of toxic toys and products from China ( www.magiccoalcity.blogspot.com ), the Chinese are laughing all the way to the bank -- well, actually they're buying the bank!
In an AP news article this morning, Morgan Stanley, the second largest investment bank in America, has written off almost $9 ½ BILLION due to sub-prime loans. (See Indiana's foreclosure rate: www.magiccoalcity.blogspot.com This led to the investment bank taking its first quarterly loss in seventy-three years and to taking a $5 billion infusion from an arm of the Chinese government too.
Morgan Stanley is not alone though. The article goes on to report that a couple of months ago, Bear Stearns took a $1 billion investment from China's government-controlled Citic Securities.
And it's not just the Chinese buying into banks either. Citigroup Inc. received a $7.5 billion capital infusion from the investment arm of our oil-rich friends in the Abu Dhabi government in November.
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Unfortunately, Indiana Makes Top 10
In another AP-written news article, foreclosures are said to be up 68% compared to a year ago: http://biz.yahoo.com/ap/071219/foreclosu...
This hurts you and me both, whether we're getting foreclosed on or not (see www.magiccoalcity.blogspot.com ).
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An Innovative Idea
In nearby Brown County, an Arts Industry Business Incubator opened December 12 in Nashville, according to the Brown County Democrat. The aim of this novel idea is to nurture arts-oriented businesses. Like many traditional business incubators, the businesses will share space and clerical support.
According to the article, the concept is supported by the Brown County Economic Development Commission, Arts Business Development Task Force, and Ball State University.
This is certainly an innovative and "think outside the box" type of idea!
We'll see how it fares in the coming months, but it seems it will dovetail nicely into the image that Nashville has tried to create over the years.
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Our Neighbors Have Good News
Knox County received great news recently!
A press release from Vectren Fuels said they received approval from the Indiana Department of Natural Resources on Friday that they could begin mining operations in Oaktown, Indiana. They have already started site preparation, and they anticipate employing 425 miners with actual coal production in the second quarter of 2009.
Now, that's great employment news this area certainly needs!
Wednesday, December 19, 2007
Thursday, December 13, 2007
Quit Not Quick
I've always been amazed that our school system does not better prepare us to take on life's more costly situations. One such situation is buying a home, and it's arguably our most expensive purchase in life. How I recall, no one ever discussed real estate terms when I was in high school, although it would seem to be an excellent guest speaker opportunity for a Realtor, attorney, or title company employee to share in the classroom.
In any event, while there are many important documents in a real estate transaction, deeds are the most powerful documents in real estate in my opinion because they transfer ownership. When referring to various types of deeds, I've found that it is common to hear someone incorrectly say or write, "quick claim deed." Although it may sound very similar, it is actually called a "quitclaim" deed. It is called a "quitclaim" because it does exactly that: quits a claim to the property it refers to.
Quitclaim deeds transfer the ownership interest or rights in real estate to the recipient without stating what exactly the interest or right actually is in the property. This type of deed also does not provide any warranty of ownership, and that is key.
Commonly, they are used to clear up "clouds" on the title of a property, but can be used to transfer complete ownership -- of course without any warranties. (A "cloud" on the title is any potential lien, encumbrance, or claim that could impair the owner's title to the property, and a "clear title" has no clouds.) It's also common to see them used after a divorce when one of the former couple deeds their share of a property to the former spouse. Sometimes, you'll see them used when people deed property into a trust or a company they own.
By comparison, a warranty deed provides a guarantee that there are no issues in the chain of title (chain of title = way back when the government gave to Owner A, who sold to Owner B, who died and left it to Owner C, who divorced and transferred it to Owner D, who sold to Owner E… and you get the picture.) The seller can provide this guarantee because normally he or she is relying on the previous warranty deed given to them, which contains the same or similar warranties.
Title insurance also allows them to provide this warranty because if something does become an issue in the future, the policy covers the actual loss, subject to the limitations and exclusions listed within it. You'll note that I said "actual" in that last sentence. Just because there is a title issue, it seems most title insurance policies will typically only pay for actual losses.
Title insurance is a whole new topic though!
In any event, while there are many important documents in a real estate transaction, deeds are the most powerful documents in real estate in my opinion because they transfer ownership. When referring to various types of deeds, I've found that it is common to hear someone incorrectly say or write, "quick claim deed." Although it may sound very similar, it is actually called a "quitclaim" deed. It is called a "quitclaim" because it does exactly that: quits a claim to the property it refers to.
Quitclaim deeds transfer the ownership interest or rights in real estate to the recipient without stating what exactly the interest or right actually is in the property. This type of deed also does not provide any warranty of ownership, and that is key.
Commonly, they are used to clear up "clouds" on the title of a property, but can be used to transfer complete ownership -- of course without any warranties. (A "cloud" on the title is any potential lien, encumbrance, or claim that could impair the owner's title to the property, and a "clear title" has no clouds.) It's also common to see them used after a divorce when one of the former couple deeds their share of a property to the former spouse. Sometimes, you'll see them used when people deed property into a trust or a company they own.
By comparison, a warranty deed provides a guarantee that there are no issues in the chain of title (chain of title = way back when the government gave to Owner A, who sold to Owner B, who died and left it to Owner C, who divorced and transferred it to Owner D, who sold to Owner E… and you get the picture.) The seller can provide this guarantee because normally he or she is relying on the previous warranty deed given to them, which contains the same or similar warranties.
Title insurance also allows them to provide this warranty because if something does become an issue in the future, the policy covers the actual loss, subject to the limitations and exclusions listed within it. You'll note that I said "actual" in that last sentence. Just because there is a title issue, it seems most title insurance policies will typically only pay for actual losses.
Title insurance is a whole new topic though!
Wednesday, December 12, 2007
Sweeping Changes to Local Government
Local government will likely see drastic changes soon, as Governor Mitch Daniels asked volunteers to serve on the blue ribbon Indiana Commission for Local Government Reform. Over the past several months these members have been working on examining and developing recommendations, and the commission members recently submitted 27 specific recommendations to streamline local government and reduce costs in their final report.
Of course, changes do not come without hardship, and the Commission acknowledges this. In fact, they say sweeping changes will not be easy and write in their report that their recommendations will be "disruptive, even painful, in the short run". Nonetheless, they also write "We've got to stop governing like this."
Some of their recommendations included:
*Establish a single-person elected county chief executive.
*Consolidate emergency public safety dispatch by county or multi-county region.
*Move the funding of child welfare from counties to the state.
*Reorganize school districts to achieve a minimum student population of 2,000.
*Reorganize library systems by county and provide permanent library service for all citizens.
*Prohibit employees of a local government unit from serving as elected officials within the same local government unit.
To learn more, you can read the entire report here:
http://indianalocalgovreform.iu.edu/asse...
Of course, changes do not come without hardship, and the Commission acknowledges this. In fact, they say sweeping changes will not be easy and write in their report that their recommendations will be "disruptive, even painful, in the short run". Nonetheless, they also write "We've got to stop governing like this."
Some of their recommendations included:
*Establish a single-person elected county chief executive.
*Consolidate emergency public safety dispatch by county or multi-county region.
*Move the funding of child welfare from counties to the state.
*Reorganize school districts to achieve a minimum student population of 2,000.
*Reorganize library systems by county and provide permanent library service for all citizens.
*Prohibit employees of a local government unit from serving as elected officials within the same local government unit.
To learn more, you can read the entire report here:
http://indianalocalgovreform.iu.edu/asse...
Tuesday, December 11, 2007
Indiana Foreclosure Rate: 1 Out of Every 516
The Indianapolis Business Journal reported the other day that 1 out of every 516 Indiana homeowners was in one stage of foreclosure or another in October, ranking the state ninth in the country. They also stated that this figure is up 19.3% from September and 50.7% from a year ago. By comparison, they wrote that Nevada ranked first in the nation with 1 foreclosure for every 154 homeowners.
Monday, December 10, 2007
Court: Be a Man!
As often as we all say that our legal system is broken, this judge's recent court decision may reinstate our faith in it.
In November, the Indiana Court of Appeals ruled that an unwed father must pay back Medicaid for at least 50% of the birthing expenses, according to Indiana statute. Doing so does not violate the father's rights, as he tried to argue unsuccessfully.
The father of the child argued "that I.C. § 31-14-17-1 violates the Equal Protection Clause of the United States Constitution because it requires the father of a child born out-of-wedlock to reimburse the infant's birthing expenses to Medicaid while no similar obligation exists for a married father." (Can you believe he tries to shirk responsibility by using the U.S. Constitution?!)
But it gets even more ridiculous with this excerpt from the case:
"Meneses now claims that he is treated differently from married fathers in that only fathers with children born out-of-wedlock are held responsible for fifty percent of the child's birthing expenses. See I.C. § 31-14-17-1. If unmarried to the mother, a man has no legal obligation to provide any type of support on behalf of the child, until paternity is established; whereas, on the other hand, a familial support obligation is inherently associated with a marriage."
To these futile arguments, the judge wrote in her opinion that requiring men to provide for children born out of wedlock and reimburse medical expenses is a legitimate goal because it requires a man to accept financial responsibility similar to what married men do voluntarily.
For the whole published opinion, please see:
http://www.state.in.us/judiciary/opinion...
In November, the Indiana Court of Appeals ruled that an unwed father must pay back Medicaid for at least 50% of the birthing expenses, according to Indiana statute. Doing so does not violate the father's rights, as he tried to argue unsuccessfully.
The father of the child argued "that I.C. § 31-14-17-1 violates the Equal Protection Clause of the United States Constitution because it requires the father of a child born out-of-wedlock to reimburse the infant's birthing expenses to Medicaid while no similar obligation exists for a married father." (Can you believe he tries to shirk responsibility by using the U.S. Constitution?!)
But it gets even more ridiculous with this excerpt from the case:
"Meneses now claims that he is treated differently from married fathers in that only fathers with children born out-of-wedlock are held responsible for fifty percent of the child's birthing expenses. See I.C. § 31-14-17-1. If unmarried to the mother, a man has no legal obligation to provide any type of support on behalf of the child, until paternity is established; whereas, on the other hand, a familial support obligation is inherently associated with a marriage."
To these futile arguments, the judge wrote in her opinion that requiring men to provide for children born out of wedlock and reimburse medical expenses is a legitimate goal because it requires a man to accept financial responsibility similar to what married men do voluntarily.
For the whole published opinion, please see:
http://www.state.in.us/judiciary/opinion...
Saturday, December 8, 2007
Great Book Suggestions
With this post, I thought I'd list some of the best business and investing books I've found lately.
One of the best on "investments systems" is the "The Richest Man in Babylon" by George S. Clason. It dispenses timeless investment principals and sage wisdom, not the latest investment fad. I'll admit that it isn't the easiest of books to read because of the proverb-style text though.
A great book to prepare for any interviewing situation is "101 Great Answers to the Toughest Interview Questions" by Ron Fry. The title pretty much describes what it is about and how it is written, so just pick up a copy for a lot of superb advice. It's also a great gift for high school and college graduates -- or that seemingly forever unemployed family member that's just holding out for management.
"The Magic of Thinking Big" by David J Schwartz, PhD was written sometime back, and some parts are obviously dated when you start to read it, such as what he considers a wonderful salary for a top-notch salesman. Nonetheless, it's a great book with a very positive attitude, essentially telling its readers that sometimes the only person holding us back is ourselves. There's a lot more to it than that though, and it's such an easy read that you should be able to fly through it in one evening.
One book I like because I can actually put names and faces to the descriptions in this book is "The Cashflow Quadrant" by Robert T. Kiyosaki. In it he describes four different quadrants and who is in each one. I'll warn you that Kiyosaki tends to be wordy and somewhat vague in his series of Rich Dad, Poor Dad books as a whole, but I believe this is one of the best in his series.
Although I don't care for his on-air TV antics, which basically makes it just stupid to watch, Jim Cramer did write a very good book called "Confessions of a Street Addict" about five years ago. I find his intensity is very entertaining, while he gives his readers the real story of how people make money on Wall Street. Before he started pushing noise-making buttons on his show, Mad Money, he was a very successful hedge fund manager with let's call it "psychotic anger management issues".
There you have it: five great books!
One of the best on "investments systems" is the "The Richest Man in Babylon" by George S. Clason. It dispenses timeless investment principals and sage wisdom, not the latest investment fad. I'll admit that it isn't the easiest of books to read because of the proverb-style text though.
A great book to prepare for any interviewing situation is "101 Great Answers to the Toughest Interview Questions" by Ron Fry. The title pretty much describes what it is about and how it is written, so just pick up a copy for a lot of superb advice. It's also a great gift for high school and college graduates -- or that seemingly forever unemployed family member that's just holding out for management.
"The Magic of Thinking Big" by David J Schwartz, PhD was written sometime back, and some parts are obviously dated when you start to read it, such as what he considers a wonderful salary for a top-notch salesman. Nonetheless, it's a great book with a very positive attitude, essentially telling its readers that sometimes the only person holding us back is ourselves. There's a lot more to it than that though, and it's such an easy read that you should be able to fly through it in one evening.
One book I like because I can actually put names and faces to the descriptions in this book is "The Cashflow Quadrant" by Robert T. Kiyosaki. In it he describes four different quadrants and who is in each one. I'll warn you that Kiyosaki tends to be wordy and somewhat vague in his series of Rich Dad, Poor Dad books as a whole, but I believe this is one of the best in his series.
Although I don't care for his on-air TV antics, which basically makes it just stupid to watch, Jim Cramer did write a very good book called "Confessions of a Street Addict" about five years ago. I find his intensity is very entertaining, while he gives his readers the real story of how people make money on Wall Street. Before he started pushing noise-making buttons on his show, Mad Money, he was a very successful hedge fund manager with let's call it "psychotic anger management issues".
There you have it: five great books!
Friday, December 7, 2007
It's Friday, Here's Your 6-Pack!
In the stock market lately, several great names have been at great prices in my opinion.
Companies like Pfizer (PFE), German American (GABC), Cedar Fair (FUN), Kimball International (KBALB), Duke Realty (DRE), and Bank of America (BAC) all have some local ties too. Two are headquartered in nearby Jasper (GABC & KBALB), PFE has a plant in Terre Haute, and DRE is headquartered in Indianapolis. Of course, BAC is everywhere.
All are paying healthy dividends rivaling top-paying CD rates, while having the potential to have a nice run up in the coming years, as soon as everyone figures out if the nation is in a recession or not. Some would even call these picks "defensive" since pharmaceuticals tend to do well when the overall economy isn't, and KBALB has a strong balance sheet to weather some storms too.
Notice that this "6-pack" of stocks is in different industries. (Well, there are two banks I guess, although one is nationwide and the other has a footprint in Southern Indiana only.) This is key because a diversified 6-pack will perform typically as follows: two will perform very well, two will just tread water, and two will lag. You just have to expect and accept that going into it.
Oh, and in case you began reading this thinking you were going to get free beer, you can always try Anheuser-Busch (BUD) as a long-term keeper. After all, they have a great business: when times are good people drink, and when times are bad they drink... they pay a little less in dividends (about 2.5% right now) though.
Companies like Pfizer (PFE), German American (GABC), Cedar Fair (FUN), Kimball International (KBALB), Duke Realty (DRE), and Bank of America (BAC) all have some local ties too. Two are headquartered in nearby Jasper (GABC & KBALB), PFE has a plant in Terre Haute, and DRE is headquartered in Indianapolis. Of course, BAC is everywhere.
All are paying healthy dividends rivaling top-paying CD rates, while having the potential to have a nice run up in the coming years, as soon as everyone figures out if the nation is in a recession or not. Some would even call these picks "defensive" since pharmaceuticals tend to do well when the overall economy isn't, and KBALB has a strong balance sheet to weather some storms too.
Notice that this "6-pack" of stocks is in different industries. (Well, there are two banks I guess, although one is nationwide and the other has a footprint in Southern Indiana only.) This is key because a diversified 6-pack will perform typically as follows: two will perform very well, two will just tread water, and two will lag. You just have to expect and accept that going into it.
Oh, and in case you began reading this thinking you were going to get free beer, you can always try Anheuser-Busch (BUD) as a long-term keeper. After all, they have a great business: when times are good people drink, and when times are bad they drink... they pay a little less in dividends (about 2.5% right now) though.
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