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Location: John Diemer Elementary School playground, Overland Park, Kansas
Year: 1974
I sat just a stone’s throw away from the monkey bars, eagerly awaiting the outcome of a meeting between Mike Schmidt and Brent Searing. The outcome of this meeting would have huge ramifications on my life in almost every aspect: social status, standing, whether I was cool or not and on the cutting edge of culture. I could see that the discussion was heated – often animated – as they debated my application into the fan club that they had just started a month earlier . . . in which they were the only two members.
I was tense, eager knowing that I needed this. I couldn’t even imagine the ramifications if I was denied entry. They even had customized club t-shirts. I wanted one to wear at least three times a week at school to reveal my new status.
The topic of Mike and Brent’s discussion? My entry into the Elton John fan club.
My eagerness, angst, and perhaps panic is quite similar to the state of the union we live in today.
The government, Congress, and the Treasury Department have us convinced that unless they dole out billions or even trillions of dollars, the economy will collapse. We’re now a good 5 months into the bailout funds (TARP) in which the government has poured money into ailing banks in order to stop the financial bleeding. The Federal Reserve has also gotten into the act by cutting the federal funds rate to almost nothing in hopes of injecting money into the economy.
On top of that, other industries and corporations are getting in line for this money, trying to convince anyone listening that if they don’t get this money, catastrophe looms.
On a side note, when I was 10 years-old I begged my mom to let me go to the Glenwood Theatres to see the R rated Billy Jack. I used the same persuasive measures that today’s powers that be are using:
“Everyone I know has seen this movie! Billy Jack beats up everyone and he is so cool, mom!” or “You are the worst mom in the world and my life is ruined if I can’t see this movie!”
The powers that be are concerned about the economy and the lack of confidence. They all agree that money in the economy is a good thing in order to keep capital flowing with investment and spending. However: one must remember that government has no money other than what it taxes from the populace. Government does not create wealth.
So if more money in the economy is a good thing, there could be different approaches. If the main concern is bailing out banks and corporations who’ve made erroneous decisions at the expense of good banks and the taxpayer, there has to be a better way. If simply spending money like there is no tomorrow is the answer, than why not increase the bailout to say $10 trillion? Because in the history of the world, no government program or spending spree has ever led to a prosperous economy.
If cash flow is so important to all these industries, why not simply cut the corporate tax rates to nothing? Boom: more money. Instantly. The United States has some of the highest corporate tax rates of all industrialized nations. Cut the capital gains tax in the same way. This, of course, is a tax on investment. You want more investment, give people and companies an easy way to invest and realize gains right away. None of what I am proposing is remotely radical. These ideals are what this country was founded on and why the US economy grew at such an exponential rate during its first 150 years.
In my 1974 mind set, I would have eagerly thought that all this bailout money was necessary. I had to see Billy Jack, and by all means nothing was more important than the Elton John fan club. He was in the Pinball Wizard in the movie Tommy! Did I even know what that movie was and who The Who were? Not a clue, but I did know that all the older kids talked about The Who and that 5 years earlier (in 1969) they actually played a concert at my sister’s high school, Shawnee Mission South. (I have to admit that I was too afraid to actually see the movie because Tina Turner, who played The Acid Queen, scared the living daylights out of me at the time.)
As Mike Schmidt and Brent Searing approached me from the monkey bars on to the kick ball field, they informed me that they weren’t accepting any new applications at this time and that the fan club was too important to them to let me in.
I was devastated. No t-shirt, no social standing, no coolness.
Sometimes in life it’s actually good not to get what we think we need. (I did get to see Billy Jack, though – and I was right. He was the baddest man on the planet!) I look back and think what life would be like if I had to admit that I was a proud member of the Elton John fan club. Would I have become an ardent fan through my teens? Does that mean that for Halloween my Junior year I would have dressed up as Elton John instead of Keith Richards? Think of the ramifications!
Just as the market should be left to sort things out, my life was left in the same way. Fonzie immediately replaced Billy Jack and any desire to care about Elton John (whew). Instead of having a bedroom adorned with posters of Elton wearing his large sunglasses, I had Fonzie posters giving the thumbs up. This, of course, put me on the right track to recovery.
The 80’s lead into my infamous mullet hair cut like Scott Baio’s from Charles in Charge, accentuated with attire from Miami Vice. Yes, I was on a roll!
As years go by, I am always amazed at how technology makes our lives easier. In the mid 90’s, the Internet was a pipe dream – but now we can’t live without it, and many of us use our cell phones to go online. It’s a far cry from my first car phone. I bought it for emergency use only, and it was the size of my shoe.
Recently in my own home, where technology is lagging a bit, we found it necessary to get a DVR. Needless to say, I was getting tired of watching the Mickey Mouse Club House, The Wiggles, Batman, and Sesame Street. Okay, I actually like Batman, but couldn’t let my boys dominate the TV.
I was looking forward to watching Scrubs, The Office, and Alf at my leisure. But my wife controls the DVR in the bedroom, so I’ve been stuck watching Oprah, Suze Orman, Keeping Up with the Kardashians, and The Bachelor/Bachelorette shows. That aside, I can’t believe the Bachelorette picked the snowboarder! Are you kidding me? I was shocked.
Unbelievable! What’s most upsetting is that I actually cared. I’m busted, I watched it, and I got into it. I was looking forward to watching old favorites like Stripes, Animal House, and The Godfather, and instead I’m stuck wondering why DeAnna Pappas dumped Graham!
Okay, now to real issues, such as the recent actions of the Federal Reserve. The initial purpose of the Fed was to maintain a balanced money supply to stabilize the economy and keep inflation in check. The Fed, with what appears to be the backing of the masses, is set to bail out every institution who’s made bad decisions – all at the expense of the taxpayer. In other words, Big Brother is going to save us from ourselves. The last time this happened was in the late 1970’s, when interest rates and inflation were in double digits.
The knee jerk reaction is to correct a wrong immediately. To use my new favorite show as a metaphor, let’s get The Bachelorette to choose again and make sure she does it right this time. Congress and the Fed are now proposing more oversight into the mortgage/housing market to protect us. What they fail to realize is that the market has already made the changes, no longer offering the risky products that created the current problems.
The Fed is not fixing the problem; they’re simply throwing money at the problem in hopes of sustaining the institutions that are in trouble and averting a crisis. In other words, these banks and institutions are getting a Do-Over.
Yes. A Do-Over. A Do-Over happens when you don’t succeed the first time, and then pretend your first effort didn’t count. I can vividly remember instituting the Do-Over rule as a child, when the following were legitimate reasons for Do-Overs:
Playing golf and wanting to keep your score under 100 (I was a great golfer back then).
Being the first one out in Dodge Ball in 3rd grade; blindsided by Lisa Steimer. Definite Do-Over. (This is just an example, it didn’t necessarily happen…).
Taking a Do-Over in Monopoly when playing your younger sister, after just missing a landing on Boardwalk and Park Place.
Playing H-O-R-S-E and missing the last shot because someone screamed to distract you.
And as time moves on, Do-Overs just fade away:
1. That lay up I missed sophomore year cost us the Sectional win, resulting in our Varsity coach losing his job.
No Do-Over.
2. Cubs v. Marlins in the 2003 NLCS. Steve Bartman gets in the way of a foul ball leading to the Cubs losing the game, series, and century – further extending their drought.
No Do-Over.
3. The 2005 Chicago White Sox, game four of the World Series…Oops, never mind, they actually won the World Series.
Today’s market is incredibly efficient, yet the government feels the need to step in with taxpayer funds. But prolonging this issue with a weaker dollar, inflationary pressure, and higher taxes is much worse.
The Fed is decreasing the value of the dollar by pumping money into the economy in the form of useless rate cuts, causing higher gas prices and inflation. If taking some action simply for the sake of doing something regardless of the result is what is needed, then there’s no benefit. It may be political suicide to do nothing and let the market correct itself, yet that’s exactly what has happened over the past few months. Sub-prime lending is all but gone. Stated Income and No Income Verification loans are scrutinized and very rare.
After careful consideration and countless hours watching bad TV, here’s a list of the worst five spin offs of all time:
5. Three’s a Crowd
Are you kidding me? After all those years John Ritter never hooks up with his roommates, but gets married, and I’m supposed to watch that?
4. Laverne & Shirley
The move to LA was the last straw. It wasn’t funny when they tripped over everything in the Milwaukee setting, and got even worse in LA.
3. Joey from Friends
It’s as if NBC didn’t care what this show did. They just hoped that the people who didn’t want Friends to end would tune in.
2. Joanie Loves Chachi
Happy Days is now 0 for 2. One of the most painful shows to watch, especially when their music careers took off and they were singing in front of 4 people in the show.
1. Enos from Dukes of Hazard
As a young adolescent, I can’t begin to describe my disappointment in the cancellation of Daisy Duke – and her replacement with this forgettable accident. I expected an apology from CBS.
I understand that stating such opinions based on taste may cause controversy. Please feel free to call me at 773.413.6256 or email dean@perlmortgage.com with your list of Top 5 worst spin offs. I’ll list them in the next newsletter.
Back in 2nd grade, our teacher Ms. Williamson at John Diemer elementary in Overland Park, Kansas would pass out “purple tokens” for good behavior. Five of these tokens would equal a cherished and highly sought-after “gold nugget.”
If a certain row of students acquired an excess of this valued currency, we were rewarded with extra recess time or an extra long drink of water. In 2nd grade, what more could one ask for?
Back in 1972, dodge ball was still the game of choice and my friend Mike Seligson and I relished every opportunity to drill Robbie Lapin. Thus was our youth, and how we were so easily manipulated. I can’t boast that I was always rewarded and that we ever really received any extra time for good behavior, so we had to make due with limited time and Robbie Lapin, a good friend of ours, was spared.
It’s been quite a while since my last writing, and things have changed a bit. My youngest son Kosta turned 1 in November and Michael, now 3 1⁄2, is obsessed with Buzz “Life” Year, Batman, and Star Wars, and even claims to be Luke Skywalker at times and runs around the house fighting off the evil Darth “Skater.” Well, Ms. Williamson’s behavior manipulation has come in handy with disciplining my two boys.
“Michael, did you just sit on Kosta? No Star Wars tonight.”
“Michael, you’re such a good boy for helping Kosta eat. Let’s play with your Batman and Superman action figures.”
All this is trivial and juvenile of course, almost like the government’s new so-called Stimulus Package. As young adolescent children, we’ve come into the good graces of our government and a few chosen will receive refund checks of $600. But of course this is taxable, so the money they’ll give the fortunate few will therefore be taxed.
If the concept of giving more money back to the taxpayer is perceived as good for the economy, then the more logical step would be for said taxpayer to be allowed to keep more of the money they earn in the form of a substantial tax cut. Who knows, maybe you know what to do with your hard earned money better than the government does?
The biggest challenge facing today’s economy is a lack of confidence in the mortgage industry and the need for liquidity to maintain Wall Street firms. The recent Fed rate cut aimed to inject money into the economy, thereby strengthening it and keeping the Wall Street firms afloat.
In times of panic, this may be necessary. However, this kind of reactionary maneuver could be harmful in the long run. Too many rate cuts could be inflationary and therefore damaging. Bailing out all firms that have made bad investments could create a risk-free environment where companies no longer take responsibility for bad decisions. The financial burden will then fall on the taxpayers.
“Michael, did you just hit Kosta? OK, here is an ice cream sandwich, just don’t do it again.”
If Ms. Williamson had taken this approach, poor Robbie Lapin would have been pelted endlessly.
The market has already responded with changes that may prevent another mortgage crisis. Underwriting guidelines have changed drastically, and banks are becoming more thorough in reviewing their loan portfolios. It takes adhering to a firm position to produce positive long term results.
In other words, the right thing to do is sometimes the most difficult. We can always take examples from our own experiences.
Here at PERL Mortgage, things are still rocking. A record year: four Loan Officers, yes four, made Mortgage Originator Magazine’s Top 200 in the country!!! In a market where everyone thinks the mortgage industry is crashing, PERL is shining.
Oh, and by the way, Michael and Kosta insisted that I tell you that I was one of those four. Thanks to all for your support and referrals!
Hype, hype, and more hype.
We simply can’t seem to get away from all this hype in our current culture. With everything we’re told, it’s amazing that our society ever existed before all this was heaped upon us:
• Amazing low prices!!!
• No Costs!!!
• Useless guarantee!!!
• Is Sanjaya the next Mick Jagger?
• Madonna loses southern accent! Now she’s British!
• Will Grey’s Anatomy change TV forever???
I have to admit that I don’t know much about Grey’s Anatomy because my wife usually kicks me out of the room for commenting on the show.
I could learn more about life from The Simpsons than Grey’s Anatomy.
So what stands the test of time? Do you remember things of the past that were intended to shock and awe? They had all the hype, but in reality, the Emperor had no clothes…
The DeLorean: If not for Back to the Future, would anyone know about this tin can?
The Bachelor, Average Joe: Can you believe Adam chose that New York girl?? (I admit it, I watched it too).
Brittany, Christina, and that whole Mickey Mouse Club.
The CBS Evening News: Need I say more?
This endless list permeates every aspect of our lives.
So what does this have to do with mortgages? If you’ve listened to the radio lately, you’ve heard every company advertising their great low payment programs and low costs. You’ve driven down expressways wearing sunglasses so the glare from hollow guarantees on billboards doesn’t blind you.
It’s everywhere.
But when the dust settles, PERL Mortgage will have been around from the beginning. PERL re- mains, without the hype, one of the Midwest’s largest and most successful lenders. Doing business the old fashioned way: with hard work, honesty and integrity.
No silly ads, no overblown hype. PERL is your lender for life.
The year, 1979 just after Steve Dahl’s Disco Demolition at Comiskey Park, confirming that rock ‘n roll was here to stay. So as a young 14 year old my future looked bright. Van Halen came out with their hit “Dance the Night Away,” and The Cars came out with “Let’s Go.” Both songs were in reference to the joys of living the freestyle life, partying every night with a different girl. I was set, with high school on the horizon; I was ready to live the night life, baby and dance the night away.
Freshman year came around and all the girls that I wanted never acknowledged my existence. They of course were dating seniors. So I was le with geing a six pack of Stroh’s at Poker Jack’s Liquor Store, (Yes, When I was a Freshman I could buy beer!) and heading to the forest preserve with some friends convincing ourselves that this is what we really wanted to do anyway and discussing whether Led Zeppelin’s Stairway to Heaven was the greatest song of all time. What the heck is that song about anyway? All that was le in the night was geing home and watching late night cable and R rated movies about adolescents like me who were living the good life and dating all the prey girls.
I felt betrayed. All the promise, all the wild times, all the fun — where were they?
I was 6’2” back then weighing in at 175lbs, with a huge head, and wavy feathered back hair ala Keith Partridge. I had it all! Why was rock ‘n roll promising me so much when in reality nothing was there for me? Then it hit me my junior year. It was only rock ‘n roll…but I liked it. Never were more profound words ever written. Thank you Mick and Keith and the Rolling Stones! So what does this have to do with mortgages; everything. Have you heard or seen all these ads from all these mortgage companies guaranteeing or promising the most amazing rates or programs ever? Then you get to the closing table and reality sets in. I can just hear David Lee Roth singing the ads.
Just like it took the world’s Greatest Rock ‘n Roll Band to put things in perspective, it will take Chicago’s Greatest Mortgage Company, Perl Mortgage to secure your funding. As the liner notes read…Perl Mortgage, Your Lender for Life…It’s just that easy.
I know, they’re only mortgage loans, but we like them.
Can it be?
Is the picture telling the truth? It must be. The Chicago Cubs have officially become Sox fans! I never thought I would live to see the day where the North Side-South Side rivalry would be mended. Even more surprising it was done by the White Sox. Even Michael Vlamis, pictured in his Sox jacket, is excited. This was his reaction when the White Sox disposed of the Angels to clinch the American League Pennant. Now the Sox are headed to the World Series!!!
Aside from the Michael Jordan era, which was an aberration for this city, Chicago is more used to events like the 2003 Cubs, and the 1987 and the 1988 Bears for highlights in its history. And while it’s tough to beat the Super Bowl Shuffle, the World Series certainly steals the show. All four White Sox starters have pitched complete game wins in the ALCS which has not been done since 1844 when the Decatur White Stockings trounced the Albany Redlegs.
So what lies ahead for Chicago’s premier baseball team? My pick; Sox take the series in 5 games…6 at most.
Mortgage Notes
Quick and Easy! Remember the old days, or how things are still done at other places? Perl Mortgage offers our quick and easy program. Getting a mortgage is easier than ever. Ditch those pay stubs and those W-2’s and fill in the loan application over the phone…all in ten min- utes. The hassle of digging up old bank statements, pay stubs, and other bothersome documents don’t apply at Perl. We have taken control of the loan process and get your loan approved on your time and make the closing stress free.
Economic Outlook
Mr. Greenspan is a very persistent man. When will he ever learn? Yes, once again the Fed has raised the federal funds rate, blah, blah, blah, and the market still does not care. But don’t worry Mr. Greenspan; we all know that you are there. The bigger picture in all this that at some point these actions will level off, and the final result after at least ten rate hikes is that mortgage rates are still very competitive.
This has helped the housing market stay strong and unemployment is at its lowest in four years. With all the past year’s actions, rates at Perl Mortgage are still low, and business is still strong which means the purchase market is going strong.
Mortgage Notes
Remember the old days, or how things are still done at other lenders? Did you waste a lot of time digging up old bank statements, pay stubs, and other bothersome docu- ments? Perl Mortgage offers a quick and easy mortgage program. Getting a mortgage is easier than ever! Ditch those pay stubs and W-2’s and simply fill out a loan application with me over the phone in ten minutes.
We have taken control of the loan process and just made life a whole lot easier. Perl Mortgage values you as a customer and strives everyday to be your lender for life.
Six months ago, if you were betting money on who knew where interest rates were headed, would you have bet on Alan Greenspan, chairman of the Federal Reserve Board, or on Dean Vlamis, your “Lender for Life”? To the 1% who bet on me, thank you and enjoy your winnings!
Rates have once again come down, in spite of Chairman Greenspan’s repeated attempts to do the contrary. The Federal Reserve’s actions should be lauded, because after all, they are trying to keep inflation in check. Anyone old enough to remember the Carter Administration can appreciate the perils of inflation.
What does this mean for the Real Estate market? Plenty. The economy is still growing, with GDP coming in at 3.4% in the last quarter and job growth remains steady. Low rates combined with a strong economy can keep the purchase market going strong.
The market news came to head this past Friday as the government released the monthly unemployment figures. Job creation was up 78,000, but far less than the 200,000 the experts predicted. This led to a roller coaster day in both the bond market and mortgage backed securities. However, to claim that the soft employment numbers make for a slowing economy is not looking at the big picture. One must also consider the strong GDP numbers, home sales and construction to know that perhaps Wall Street over estimated itself. In a nut shell, things look good!
My next prediction…The White Sox will win their division, and the penant!
Since June of 2004 the Fed- eral Reserve Board Chair- man has harped, huffed and puffed about how inter-
est rates should be rising. For most of the past eight months the markets were ignoring him and rates remained low.
The markets are always right. Well, last month Mr. Greenspan pondered that he didn’t understand why rates were still so low. Now Alan Greenspan knows as well as the next person that the market is always right. In the last month rates have come up in lieu of Mr. Greenspan’s merciless pounding.
Now in reality, Alan Greenspan is a strict monetarist, who fears inflation. With the end of his tenure nearing, he wants to make sure that there is no threat of inflation. Therefore, in the short term rates have risen, causing some to speculate for the ump- teenth time in the past year that rates are skyrocketing. Be still. Rates may rise a bit in the short term, but in a few months things will level off and mortgage rates will remain relatively low. Please note; that this only applies for mortgage rates at Perl Mortgage, using other lend- ers can be highly risky.
Happy New Year to all!
First and foremost a very big thank you to all who made 2004 a prosperous and enjoyable year. I have now been back at Perl Mortgage for a year. Wow, time flies when you are enjoying work. Thank you to all. Let’s take a look at what we can expect for 2005. All things considered, the US economy still looks strong. Housing Starts, New Home Purchases and Consumer Confidence have all been up, in spite of the war and other uncertainties.
Interest rates are still low, regardless of the Federal Reserve’s repeated rate in- creases. *Note to all the naysayers about interest rates: The Federal Reserve has raised rates for fear of inflation which is caused by a strong economy, which is good news for everyone. If you still think rates are too high, it is obvious you have not been working with Dean Vlamis at Perl Mortgage!
All economic indicators point to a strong job growth for 2005 with GDP remaining constant. As a recap, 2004 grew at a 4.2% GDP with the economy adding jobs every month. It has taken some time, but we have come out of the recession and are heading for a strong expansion.
Mortgage Notes Perl Mortgage is a full service lender. From application to underwriting, funding to closing, your client’s loan starts and stays with us. Your client no longer needs to sit through long hand written applications and wait for approval. Perl Mortgage works with your clients to make the process smooth and stress free. No hassle. No waiting. No nonsense. Perl Mortgage. It’s just that easy.
New Construction/Conversion Condos: Many issues arise when buyers want to purchase in a new construction/conversion condo. This is especially true when they are the first in, or one of the firsts in, and the pre sale on the project is low. Some lenders refuse to even look at such a building. Perl Mortgage has stepped up with programs that can help your clients be the first in, regardless of the pre sale. On many of our developments, we have warranted the project, thus enabling the buyer to qualify for a wide array of mortgage products.
Contact me for details.
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PERL Mortgage is an Illinois residential mortgage licensee (MB0004358) and equal housing lender.