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Why does anyone tolerate this sort of intentional and, it appears, knowing misdirection and worse?

Nine reasons to love your mortgage?  I'll give you the first one, it probably is the cheapest way for you to borrow.  But the others?  Well, let's look.

2. It's a negative bond. 

That's bad, not good!  Why would you want a negative bond?  That this clownface nearly led with this reason is all you ought to need to know to go find him, warm up the tar and find the bag of feathers.

3. It leverages your entire financial life.

How is that good?  Oh yes, he does note that leverage multiplies both losses and gains, but then he makes a statement that while factually true is radically misleading -- while a brokerage can call a margin loan that is underwater, your bank can't on a mortgage.  

That doesn't matter, however, because the loss is still yours, and what's even worse is that you get to pay interest on lost money and you're locked in and forced to do so.  There is a ying for every yang; your brokerage will typically call your margin loan at the point it goes into negative equity -- while you've then lost everything you had in the account the bleeding stops there.  With a mortgage this is demonstrably not true!  If you put 5% or 10% down and the house goes down in value by more than that amount you are now paying interest on lost funds and unless you have the deficiency you cannot sell because you cannot extinguish the note, so the loss is yours on both a present and continuing basis, not the bank's!

4. It's a backup source of emergency money.  

No it's not, really.  If you have a job and other assets you can sell the assets or borrow against them.  If you lose your job getting a home equity line will be virtually impossible.  Further, see #3 -- increasing your leverage is always dangerous and with a mortgage due to the relative illiquid nature of real estate the risk is very-much tilted toward you.

5. It makes inflation your friend.

The hell it does.  The payments on a fixed-rate mortgage may stay the same but the value of the home does not if rates rise because the buyer has to finance with today's rates, not yesterday's.  There is no free lunch -- the premise of "inflation being your friend" is a false one, stoked with a 30-year trend of decreasing interest rates.  We're at the lower boundary for that and any pickup in inflation is either going to result in no benefit in that regard or worse, higher rates that destroy value and render your mortgage "upside down."

6. It lets you profit from falling interest rates.

Yes, but not really as this guy suggests.  Refinancing resets the amortization clock and since most of your payment in the first few years on a mortgage goes to interest doing this, even at lower rates, is a huge lose for you if you have a number of years into the original mortgage.  So the truth is that this only helps you if you just got the loan, where the clock reset doesn't hurt much.  Where falling rates do help is that they make it possible to finance more house with the same payment, and this tends to drive up prices.  Now tell me -- which is more likely over the next 20 years -- lower or higher rates?

7. It's an effective way to build wealth.

No, it's not.  As noted the actual appreciation in price barely outstrips inflation.  The problem with "forced savings" is that it's a chimera; you cannot both have forced savings and a home equity line, for example, nor can you have forced savings and constant refinancing.  So which is it, *******?

8. It's your default investment.

And a poor one at that.  Next.

9. Paying it off can drastically reduce your cost of living.  

Well, yes.  And not having it in the first place can do so sooner.  This is particularly true when you consider that the average $200,000 mortgage costs you nearly $150,000 more in interest (assuming a 30 year, 4% loan.)  People will often claim that due to inflation the "real cost" is much lower, but that's false; the problem with the claim is that most of the interest cost is front-loaded due to how amortized loans work (that is, the early years are mostly interest) and you lose the purchasing power immediately, along with the inability to invest those funds in something productive.  And no, that's not necessarily a bubbly thing like the stock market either!

So all-in Jonathan has 1 out of 9, with the other 8 reasons to "love" your mortgage really being reasons to hate it instead, along with pelting him with rotten tomatoes wherever you may see him for trying to goad you into destroying your financial life.

PS: Once you're out of the plane you will discover that "parachute" you were handed is in fact a knapsack.  

Bon voyage.

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In short, what does it mean?

NEW YORK -- BlackBerry said Tuesday that it will acquire Secusmart, a German mobile security company. The purchase highlights how BlackBerry is doubling down on the enterprise as well as mobile security.

The two companies have been partners since 2009. The plan is for Secusmart, known recently for its anti-eavesdropping software, to become a core component of BlackBerry's security portfolio and enterprise mobility management pitch.

This company has a very cool little implementation -- it's basically an AES encryption chip (hardware-based) along with an authentication chip built into a standard micro-SD card envelope.  When plugged in you wind up with an authenticated crypto system that is then accessible over the SD interface, allowing encryption of voice.

One of the issues for mobile handsets is that current ARM processors prior to ARMv8 do not support hardware crypto.  Voice traffic requires fairly high performance in order to work reliably, so hardware acceleration is a must.

This also offloads the potential for contamination of the system crypto into the card, compartmentalizing that risk (and, if a problem is found, allowing fixing it without trashing the underlying device!)

I like it, in short.  This makes BlackBerry the only company with a demonstrably secure path forward for not only data communications but voice and SMS, and brings forward the potential for carrier-independent and cross-carrier secure transport in both government and enterprise environments.  

With a bit of work that capability might even be extensible to consumer users as well.

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Time for this one...


I've known this for quite a while, and in fact have alerted (in an oblique way) to the risk when I wrote on 10/4/2013 about Android apps and the permission screen -- and how Android intentionally hides certain very dangerous security permissions on a secondary screen when asking if it's ok to install something.

Now that the nasty is out in the open there's no reason to mince my words any more.

The majority of devices running Google's Android operating system are susceptible to hacks that allow malicious apps to bypass a key security sandbox so they can steal user credentials, read e-mail, and access payment histories and other sensitive data, researchers have warned.

Not the majority.  Basically all.

All Android apps have to be "signed" with a cryptographic key.  That's good.  I have one that I self-generated and use for testing and development purposes.

The problem comes with the fact that Android has a (relatively short) list of "super signatures" that allow access to places you should not be able to go.  Those signatures are there for what could be argued are legitimate purpose, such as a MDM component that needs to be able to run around your system with effective impunity.

Think of it as a "SUID" bit of sorts -- there are certain applications that have "super user" capability even on a non-rooted device, and when they use it you're not prompted.  This is different than when you root your device; in that case you can tell your phone to warn you that privilege escalation is being requested and give you the option to say "No!"

This particular back-door privilege escalation is of the same sort as Apple's IOS one, in that it doesn't require you to grant permission for it.  Adobe Flash uses it as a means to shim itself into an app so you can display flash content, but it never has to ask you if this is ok first -- it's given the permission by virtue of what the app is.

That's very dangerous -- if there's a bug in that application your data can be left at risk.

In this case what Google did, however, is much worse: Android fails to verify that the cryptographic signature that claims to be for one of those trusted apps really came from the actual legitimate source of said application.

How would you know this, in general, if it was being done correctly?  Each of these "real" apps with this set of super privilege has a certificate signed by a certifying authority.  Just like your driver license has certain validating components to it such as a holographic picture embedded in it a cryptographic signature has validation features in it as well.

If you go to via https, you see the little lock.  If you click that lock and then drill down you will see a certification path down to that certificate; each of the certificates up the chain has signed the one under it.  So long as all of those signatures are good the certificate claiming that I am "" is known (as long as the cryptography is not compromised) to be valid.

This assumes you actually check the chain all the way back up to the root in the certificate store, and Android does not!

What that allows me to do is present a trivial forgery of any application, and since certain app names and sources are "white listed" and automatically allow that app super permissions, if you are tricked into installing one of those with a forged certificate you're ****ed.

How do you get tricked into installing it?  Google Play has historically been full of fake apps!  For example, when BBM was being introduced for Android there were dozens of fake BBM applications released on Google Play.  What was in them?  I don't know exactly, but that they were fakes was easily determined -- if you looked.  Yes, Google claims to be looking for such forgeries -- but if they are and detecting them before they allow them to be accessed by the public how did all the fake BBM apps wind up in the Play Store?  Google could check certificate validation (and might) in the Play Store before releasing an app, but given their clear and very publicly-discernible record with the fake BBM apps.....

In short I don't believe Google's claims in regard to their curation of apps prior to their visibility to the world.

So what happens if you install one of these trojan horses, either through an "App Store" or otherwise?

Your phone's security is instantly and permanently compromised.  Once installed the app can rename and hide itself, preventing you from removing it.  Worse, it's entirely possible for an application that is running with elevated permissions of this sort to remount your root partition on the phone read/write and then insert itself into the NVRAM of the device.

For most Android devices this means that the malware will survive even if you hard reset the phone in the future because Android, in general, does not keep a separate copy of the original firmware from which it can reload itself -- a hard reset simply formats the data partition.  Anything that manages to get into the system partition stays and will remain active, even across a hard reset!  The only way to get rid of the spyware if you get bit by this is to use something like ODIN (if your device is a Samsung) to re-flash the entire device from scratch -- which is not software that a user typically has access to.

There is one defense against this sort of persistent risk available -- the base load can be engineered to have zero free space (in which case you can't write anything more into there as there's no room for it.)  There are a few stock device loads I'm aware of that are built this way -- but not many.

If you get bit by this, and your device's load isn't protected against this risk it takes only seconds for a rogue app to permanently destroy your device's security.

I think you can understand why I didn't let loose everything I discovered at the time I started talking about this.... but now that it's in the open, well.....

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There's an interesting op-ed on Fox News...

I ask all Americans to picture the following scenario:

Al Qaeda builds cells in Mexico and takes control of the Coahuila region which borders Texas. The United States closes border crossings to prevent Al Qaeda from its stated goal: smuggling weapons to use to destroy America. Significant international pressure mounts to re-open the border crossings and the United States permits humanitarian aid to pass through while looking out for any terror-related materials. America monitors the Gulf of Mexico to insure that weapons would not arrive in Coahuila via the sea.

Despite these efforts, weapons flow from Guatemala to Mexico, enabling the terrorists to send them to Coahuila with ease. U.S. intelligence is aware of the stockpiles of missiles in Coahuila, but the missiles are stored in very dense residential areas and any attempt to destroy them could lead to significant civilian casualties. The citizens along the southern border of Texas are advised that a threat exists and are given instructions in case of an attack. But all assumptions were that Al Qaeda would not have the nerve to attack.

And then it happens. A missile is shot from Piedras Negras, Mexico, to Eagle Pass, Texas.  The 5-mile distance means that the 30,000 residents of Eagle Pass have only seconds to find shelter. Air raid sirens blare at 8:00 a.m. as the children in the 15 Eagle Pass elementary schools, two junior high schools, and two high schools are riding their bikes and walking into their school buildings.

Sound scary?

Welcome to Israel.

But "Al Qaeda" is "Hamas,”  "Coahuila" is "Gaza," and "Eagle Pass" is the Israeli town of "Sderot."

Given the deep commitment of the American government to the security of its citizens, America would, no doubt, react with force. The residents of Piedras Negras would be warned to evacuate and the U.S.  Air Force would fire at any area possibly housing the missiles and their launchers. And I have no doubt that the U.S.  would go after other potential threats, including  the stockpile of missiles in Ciudad Acuna, which threatens Del Rio, Texas, a mere 6 miles away.  This would be done despite the fact that the terrorists surround their missiles with innocent women and children as human shields. 

Oh really?

We'd bomb Mexico and then invade?


I think you give us too much credit.

You see, it was about 13 years ago that a bunch of Saudi-linked people came into this country under false pretense.  They then hijacked a number of airliners and used them as bombs, murdering 3,000 Americans, most of them innocent civilians.

To this day the US Government has blacked out and considered classified what is known about where they came from and who funded them.  We know good and damn well exactly what happened and who was behind it, including how that attack was funded and who assisted with the logistics, but the report on that act of terror redacted those portions and to this day, more than 10 years later, we not only haven't taken retributive action for that act of war (not terrorism) against the responsible parties (an act far greater than Hamas has inflicted on Israel!) we haven't even taken economic action against the responsible nation-state either!

So before you tell us that we should hold Israel to the "same" standard you might want to consider exactly how pussified this nation has become, and what this nation's people tolerate -- because under that standard Israel gets no quarter for what they're doing at all.  You see, our standard, as defined by what happened on 9/11 and then what didn't happen to the people to whom that attack was conclusively linked is rather different than the scenario you laid out in your OpEd.

I didn't say I agreed with that inaction and intentional obfuscation by our government, by the way. I was pretty damn sure where the trail led after 9/11 in short order and my view of the best and proper response was and is pretty much the same as yours: "Drop that ****er -- twice." (credit Crimson Tide)

Incidentally that nation (Mexico) you named in your scenario?  It has sent somewhere around 11 million illegal invaders into our nation and we not only refuse to deport them we also haven't acted against that country -- indeed, we have allowed our corporations to offshore operations there and granted them special trade status in exchange for their citizens illegally invading our land!

And no, I don't support that either.

But I'm in the tiny minority in this nation among our people, and the proof thereof is that neither Democrat or Republican administration has been forced to release said documentation or do anything about the source of those attacks 13 years after the fact.  Indeed, we still sell them weapons!

You're barking up the wrong tree dude; what we once had in this country with regard to our view of acts of war against our nation and her people on December 7th, 1941 is no longer here, and those who claim otherwise (such as that Boehner) are lying sacks of crap.  

Trust them at your risk -- I sure as hell don't and I live here, not there!

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There has been much strum and furor over the proliferation of "tax inversion" strategies undertaken by corporations in the last few months.

Broadly, a tax inversion is a transaction where a US and foreign corporation "merge", with the US corporation taking a loan from the foreign unit.  This effectively shifts the income to the foreign nation since interest is tax deductible in the United States (and taxable as income in the other country), but since the firms are in fact one (the foreign one having merged with the US one) the result is to preference where taxes are paid.

The screaming coming from Jackoff Lew of Treasury on these is amusing but not surprising, nor is the fact that the complaints from the government are at their core dishonest.

The real problem is a fundamental distortion that the United States government adopted a long time ago on purpose to preference uneconomic actions for the purpose of goosing systemic leverage. 

As I have repeatedly pointed out over the last seven-plus years the fundamental economic outcomes we experience can be viewed through the lens of a few charts quite succinctly -- and accurately.

First, total systemic debt from all sources:

Note the rise in this debt -- from about $5 trillion in 1980 to nearly $60 trillion today, while GDP went from $2.8 trillion to ~$17 trillion.

In other words, debt increased about 13x over 30 years while GDP increased 6x.

Since all money in modern systems is in fact debt this means that purchasing power, adjusted for economic output, fell by 50%.  This tells you on an irrefutable basis that roughly half of all the debt taken on during that period was uneconomic -- that is, absent some sort of distortion or stupidity by the person doing so, it wouldn't have happened.

What has our government done?  It has taken on a huge amount of uneconomic debt itself -- there is $12.57 trillion worth outstanding now (not including intergovernmental debt such as Social Security and Medicare) as opposed to $660 billion in 1980, an expansion of 52.5 times, or 4x that of the economy as a whole!

This is the direct cause of the destruction of the middle and lower class income in this country as it is a direct devaluation of purchasing power, intentionally undertaken.  It is not The Fed that did this, it is Congress and the Executive!

And how do we know this is the result?  Because we can easily look at the delta in GDP and that in debt:

Since every dollar of debt taken on is immediately spent to find the actual GDP produced absent this uneconomic activity you must subtract the delta in debt back out of the gross GDP delta.  When you do so you find that we've been digging a bigger and bigger hole on essentially continual basis since 1980!

Then, to add to the insult of the Federal Government's own conduct they have also provided incentives for others to also engage in uneconomic transactions through the tax code by allowing the expensing of interest against revenues!

That's nuts; the only reason to borrow is when the expected benefit of doing so (e.g. by expanding your plant, equipment and personnel) exceeds the cost of the money including the interest.  By making the interest top-line deductible you remove the return on investment consideration entirely from the calculation!

Well Jackoff Lew and Maobama, what the hell do you expect people people to do when you diddle the damned tax code so as to provide incentives for uneconomic behavior, whether that be through a "mortgage interest" deduction or one for corporate spending funded by debt?

There is nothing illegal or wrong about a company or person who structures their finances around the intentional acts that the government provides incentives for!

If you want to stop "inversions" then remove interest as a deduction, top-line or otherwise, across the board from the tax code.  If someone is going to borrow, no matter whether it is a person or business, they should only do so if the economic benefits of the transaction, including the interest expenses, exceed the costs.

Of course if this change was to be made then the entire pyramid of pulled-forward asset prices and consumption would instantly collapse, as would the so-called "GDP" funded by this stupidity.  That is, of course, the argument against doing so.

The problem with that argument is that as I have also repeatedly pointed out due to the nature of compounding you must borrow at an exponentially-increasing rate to keep up said uneconomic transaction streams over time, and there is no such thing as an exponentially-increasing series that can continue indefinitely on a planet of finite size and mass.

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