This'n'That, December 23rd[MiddleClass;SubPrimes;Mutual Funds]

A Campaign Pomise: "Grow The Government" Have ya heard the latest? biden is going to chair a "middle-class task force." biden said he will be the point person for getting consensus among task force members for a plan to restore the middle class, which, depending on how the group is defined, includes anywhere from a quarter to more than half of Americans. The middle-class task force will include presumed Labor Department Secretary Hilda Solis, presumed Health and Human Services Secretary Tom Daschle and presumed Education Secretary Arne Duncan — all of whom have been nominated — as well as the appointed director of the Office of Management and Budget, Peter Orszag. My guess is that a "plan to restore the middle class" will include enhancing the middle class's numbers, ie wealth re-distribution. They'll tax-the-crap outa anyone who has what they consider a large amount of money in savings, in investments or in earnings. This will re-distribute those poor schmucks from the upper class to the middle class. THERE, I saved the gubmint abuncha money; no need for endless hearings, no need for unnecessary travel, actually, NO NEED FOR BIDEN!!! All it'll take is a stroke of the pen on January 21, assuming that "the royal family" will bask in the glory for the remainder of Inauguration Day. Still Holdin' Those Mutual Funds? I found this on "Investopedia"....................................................... 8 Reasons To Dump A Mutual Fund. 1. Portfolio Rebalancing: Some funds can grow faster than others, causing a portfolio imbalance. Portions of the larger fund should be sold to bring the percentages back in line with personal objectives. 2. Mutual Fund Changes or Mismanagement: Some changes might be- A. The portfolio manager resigns; B. The manager's investment style changes over time; C. An upward trend in expense ratios vs a flat or lower return percentage; D. The fund just grows too large-causing difficulty in buying and selling on the market. 3. Investor Growth: You as an investor, gain more education, knowledge, experience and/or wealth; you might partially outgrow mutual funds and decide to buy individual stocks as a method of diversification. 4. Life Cycle Changes: Statistically, stocks have been the best investments over time. When changes approach like retirement, children's advanced educations, parents' health concerns, etc, a shift away from stocks into safer, more secure investments is warrented. These new investments might be government bonds, high-grade corporate bonds and/or term deposits, whose maturities coincide with the approaching event. 5. Mistakes: Sometimes the investor's due diligence isn't what it should have been, they subsequently own funds that they might never have purchased. The funds might be too risky for them, might be invested in undesirable stocks or the expense ratio might be prohibitively high. There might be an "over-diversification" issue-owning too many funds which are hard to monitor and tend to average out to market performance [less the fees]. 6. Valuation: Shifting out of mutual funds to rebalance your fixed portfilio allocations by using an opportunistic approach like the price-earnings ratio [P/E]. If the P/E ratio has historically averaged 14-16 and rises to the 24-26 level; that's an indicator that valuations are overextended and the risk of a downturn is elevated. 7. Something Better Comes Along: Investing Guru Sir John Templeton advised selling when something better comes along. These "something betters" might be A. New funds that come to market with innovative investment approaches; B. Over time, it might appear that other fund managers are outperforming your fund manager. 8. Tax Reduction: Mutual funds that are held in taxable accounts might have suffered significant losses over the current tax year. If they're sold during the current tax year they will provide capital losses that are used to offset taxable capital gains and thus reduce the tax liability. Getting To The Bottom Of The "Housing Scam" The Community Reinvestment Act is an Act of Congress enacted in 1977 with the intention of encouraging depository institutions to help meet the credit needs of surrounding communities (particularly low and moderate income neighborhoods). The CRA requires federal regulators to assess the record of each bank or thrift in helping to fulfill its obligations to the community. This record will then be used in evaluating applications for future approval of bank mergers, charters, acquisitions, branch openings and deposit facilities. In other words, banks and other lending institutions were blackmailed by the Democrat Congress to "roll-over-and-play-dead" when it came to writing mortgages to less-than-creditworthy individuals. Either the institutions wrote the questionable mortgages or the congress would thwart any business progress they attempted. In the Clinton regime the lending standards of CRA were lowered further. In the revised version of the act, the lenders were told that proof of income, source of down payment and credit history of a person would no longer be required for qualifying criteria. Boston Federal Reserve made sure that the banks end up giving loans to people with poor credit records. The lending institutions were threatened with dire consequences if they refused sanctioning home loans to poor credit holders. ACORN, which is a community activist group, put pressure on lenders to issue loans to unqualified buyers. Obama was a community activist and lawyer at a time and he sued Fannie Mae to lessen the need for obtaining mortgages. That explains why the lenders were compelled to dish out loans to the high-risk buyers. To make sure that the lending entities do not get burdened with the bad loans they sold these loans to Freddie Mac and Fannie Mae. Both of them are government-sponsored enterprise, publicly owned. The Department of Housing andUrban Destruction encouraged Fanny and Freddie to purchase more loans. Freddie and Fannie were also insisting lenders to sanction more home loans. The real estate agents, developers and loan officers were too willing to comply as they all laughed their way to the banks at the end. With the sub-prime market augmenting, the investment banks stepped in to make use of the opportunity. Their weapon was buying the Mortgage Backed Securities. The chain of loan and mortgage backed securities was going on well until the estate market began sliding. The danger of this money making spree was not unknown to all. Bill Clinton could sense that Fannie and Freddie were going out of control. But the Democrats did not allow him to interrupt. Bush also echoed the same concern during his tenure but the Congress did not cooperate with him either. The irony lies in the fact while some of the Democrats played a major role in causing this financial debacle they are blaming the Republicans for it. The Democrats blocked legislation in 2005 that could have prevented this slump. Til Nex'time.............