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In the coming months, the environmentally minded can go to Mosaic’s site and invest in portfolio of 20-year loans made to homeowners. (Each individual loan will be scrubbed of identifying information.) Mosaic is offering the loans through a partnership with solar installer RGS Energy.

The interest rate is 4.99 percent as long as homeowners pay down the loan with a 30 percent federal tax credit they’ll receive for installing a solar system. If they keep the tax credit, the rate jumps to 10 percent after 18 months.

“We think a solar loan if structured right can open up the market and make solar more affordable and accessible for more homeowners,” Mosaic co-founder Billy Parish told The Atlantic.

Ah, I see.

So if you spend the money and do not take the tax credit personally the interest rate is 5%, which is still quite high for a secured credit facility (secured by you getting tossed on your ass from your house!) in a world of zero rates and a 10 year that trades at 2.6%.

If, on the other hand, you don't do that and finance the entire amount the interest rate looks like a damned credit card.

Now let's look at the total payments.  Let's assume your "system" costs $20,000.  Note that the "tax credit" (1) may not be able to be carried forward after 2016 and (2) has to be used to pay down the principal.  So let's assume you don't cap out on the tax credit (and thus lose it) and do pay it down (and thus your effective financed amount is $14,000); the total payments would be $22,062.50.  This is probably why it looks attractive; over the 20 years you are only "paying" an effective $2,000 for the financing -- because you stole the rest of the principal from everyone else.

Now let's assume you can't manage to meet your tax bill while doing that.  Then you're ****ed as the system now costs $45,938.22.

That's assuming you don't default, by the way.

If you do you lose your house.

Explodo-loans, irrespective of how they're wrapped and presented to people, ought to be against the law.

H/t: Dmj, who alerted me to this one.

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2014-04-16 08:08 by Karl Denninger
in Editorial , 416 references

Let's cut the ****, shall we?

At Dow 16,000 we still are only 13% higher, peak-to-peak, than where we were before the collapse of 2008.  A full six-and-a-half years later.  Yet the economy, both locally and globally, is in vastly better shape than it was when we took that terrible tumble, down to Dow 6,800 in March 2009.

Americans have cut back on debt, and so have companies.


2013/Q4, 13105115.7, a level last seen in 2006/Q4.  "Cut back"?  Really?  Worse, ex mortgages this is not true at any level; there is $3,733.5 billion in non-mortgage consumer debt outstanding.  That is an all-time high; in Q4/2006 (just before the crash, remember?) that stood at $3,047.2 billion or nearly $700 billion less.

An awful lot of that increase since 2007, incidentally, is student loans -- exactly where it cannot be for sustainable economic progress since the younger generation has to eventually take the reins from us older folks.  This is nothing more than an economic Ponzi scheme with its cheering section led by people like Dennis who refuse to look at and argue from facts.

As for corporate debt it never decreased at all.  It now stands at $1.362 trillion, an all-time high.  In 2007/Q4, when the bubble started to pop, it was $1.098 trillion or approximately 19% less.

 Corporate debt has been refinanced at the lowest rates in 40 years.

True.  But since the truth is that corporations do not pay off their debts in aggregate (just as do not governments, when you look at the Fed Z1) a rate of an effective zero will not go lower; it will eventually, at some point, rise.

When it does how do you refinance an ever-growing debt without going bankrupt?

For businesses, the Internet of Things augurs a new wave of productivity increases.  Imagine the meter man (alright fine, or meter-woman) no longer having to visit each home to check the electric readings when the gadgets themselves zap their results to the utility’s computers.

That's nice.

How does the former meter reader buy his groceries?  

Oh, and before you tell me that deflation is so horrible, would you care to discuss that with Henry Ford's ghost?  He seems to have caused a massive deflation in the price of cars, but by doing so led to a literal explosion in the number of them on the road and the people who could afford to drive them.  

If deflation is so bad how come it did so much good in that instance?  Should you think this is an isolated incident or not applicable to the common economy as a whole perhaps you'd like to talk about computers, The Internet and the deflation in pricing there as well?

So what’s to worry?  This bull is getting old, that’s true, but it’s still a bull, and I’m thinking it still has room to run.

It may.  After all it most-certainly did in house prices in 2006 and in Internet stocks in 1999 and the first few months of 2000.

But you don't make a cogent argument for such a claim when your underlying alleged "facts" are flat-out lies, and determining that you are misrepresenting these facts takes nothing more than a cursory examination of the canonical statement of debt in the economy, that being the Fed's quarterly Z1 report.

Sunlight is an amazing disinfectant.

Update: I give Dennis credit for seeing the light on debt and coming clean on that.  As I like to say, "It is what it is."

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We're better than those damned Russians and their Putin; we have democracy!

Well, maybe not.

Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence. The results provide substantial support for theories of Economic Elite Domination and for theories of Biased Pluralism, but not for theories of Majoritarian Electoral Democracy or Majoritarian Pluralism.

Lots of big words in that paragraph.

Let's distill it down -- the argument presented is that America is really no different than Russia; that actual democratic forces, that is, the expression of will by the people, for the people is a chimera and has no actual effect or impact on policy.

However, the 0.01% do; they set policy and then create a shimmer of "belief" that you actually have a voice.

Just like Russia does.

You think not?  Then explain the following:

  • How is it that it can be illegal, with felony prison time attached, for you to buy a drug manufactured in Mexico and bring it back to the United States for resale?  This prohibition is the only reason that scorpion antivenom sells for $30,000 a vial here and $100 in Mexico, where it is made and where you can buy it over the counter.  Likewise it is the same set of laws that allows Gilead to charge $84,000 for a course of treatment that they sell in other nations for $900 while prohibiting you from buying it for $900 and reselling it here in the US. This sort of conduct would be punished as flat-out unlawful in an actual society that honored the rule of law and the principle that all are equal.  Instead our nation will imprison you should you try to break that monopoly using nothing other than your own money to buy and willing customers to sell said products to.

  • How is it that universities and industry can collude to effectively force attendance at their schools in order to enter various fields instead of simply testing for competence?  Specifically you cannot even sit for a bar exam without attending law school in person, among other fields.  Yet you may have all of the skills necessary to be an attorney and you may have acquired them through various means.  The same is true of many other disciplines.  On top of that both universities and banking interests have managed to reclassify loans for education as "special" and therefore unable to be discharged in bankruptcy, thereby protecting the price of their service.  All of this has served to drive post-secondary educational costs up 600% compared against minimum wage jobs over the last 30 years, rendering it flatly impossible to work your way through school -- a path that used to be available to literally anyone who could pass the coursework.

  • Want to make cars?  You must allow a cartel of middlemen to sell and service them.  Yes, Tesla got a "limited exemption" in some states (but not others), but it only applies to them!  Gee, you don't think the money and influence that Tesla's founder has might be involved in that?  What part of a free market prohibits the entry and exit of various manufacturers of vehicles "at will" with different sales and service economic models, all of which should be competing for market share?

  • How close are we to minting another Hitler or Stalin?  Many think Putin is one.  Better look closer to home; specifically in NYC.  What sort of hubris do you have to have to believe that you're entitled to entry to heaven?  Especially when that same "entitlement" comes from your belief that you should be able to carry a weapon for self-defense and pay others to do so on your behalf (up to and including taking a bullet in the chest in your place) but ordinary people should be barred as a matter of law from doing so and sent to prison if they refuse to consent to being violent crime victims unable to defend themselves from the myriad thugs that are unfortunately present in all societies.  Maybe -- just maybe -- such hubris comes with an expectation that if you succeed in your quest you might be the guy directing who goes into the boxcars -- and ultimately the "showers"?

Take a read of that Princeton paper.  I'm not much of a fan of that particular college, but once in a while even a blind squirrel finds a nut.

Or, in this case, maybe they've identified and called out a whole bunch of nuts.

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Pull the other one, ****ers.

That's the official government "claim"; let's square it against...

A recent survey of 148 insurance brokers shows that ObamaCare is sending premiums rising at the fastest clip in decades.

"For the last, about, five years they've been doing this survey, so this was the largest percentage increase in any quarter since they've been doing (it)," says Scott Gottlieb of the American Enterprise Institute.


"There are specific states with exorbitant increases," says Gottlieb.  "Delaware had 100 percent increase, Florida had a 37 percent increase, Pennsylvania 28 percent increase, California had a 53 percent increase in their premiums."   

Someone is lying.  

Guess who it is....

For extra credit you may hazard a guess as to the odds that the rest of the report so-presented this morning is truthful.

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How often do you sit down and think about this?

If you're a W2 employee, it should be every payday, but it probably isn't.  Indeed, you probably only think about it once a year, when you file your taxes, and then you get it exactly backward when the IRS sends back your money that you foolishly overpaid and let them have free for the entire rest of the year.

If you're an independent (such as myself) then you probably think about it four times a year, because you're making estimated payments.  But in that case most of you probably don't think about it the right way either, because in your quest to not get penalized you intentionally overpay to remain in the "safe harbor" instead of taking your best guess (which can be wrong and if it is will result in a penalty for underpayment.)  You then wind up with either an overpayment that is "refunded" (again, you let the government have the money without paying for its time value) or you let them keep it for two years (applying it against the next year's tax liability.)

Have you ever considered exactly how insane it is that we allow either situation to exist?  In what sort of other environment do we have a circumstance where you are expected to overpay for a good or service -- without being compensated for the other party having free use of your money?

Never would we allow this in auto repairs, new roofs, water heaters or air conditioners.  But we not only tolerate it when it comes to our taxes we actively celebrate when the overpayment is returned to us without interest!

And that's just the first bit of stupidity.

The second is found here, in the GDP tables -- and that materially understates the truth.

Federal government is claimed to be $1,224.7 billion (that is, just over $1.2 trillion) on an annualized basis.  This is an outright fraud; Federal spending alone for FY 2014 will be $3,650 billion or three times the claimed rate from the GDP tables!

That is more than one dollar in five.  Yet that one dollar in five of every dollar spent in America is doled out by 536 people who quite-clearly believe they're better than God himself, to the point that they then employ legions of individuals who are tasked with making sure they can continue to collect those funds -- at gunpoint, should you not willingly turn them over.

Now let's think about exactly what we get for our money.

First and foremost, we get a group of people in DC who believe they don't have to follow the same laws the rest of us do.  They can (and do) drive drunk, hit their spouses, bounce checks ("postal bank" anyone?) and grossly cheat on their taxes.  All of these offenses and more would (and do) land common people like you or I in jail or prison.  Oh sure, not all the time to be certain, but often enough.  When was the last time you saw a Congressperson or Senator wind up actually go to jail for any of the above?  Has it happened?  Well, yeah, once or twice (e.g. Jackson) but the better question is how often does it not happen (that would be "nearly always.")  Further, in what other profession is using your former job as a means of extracting favors from others after you quit legal?  In most professions this would be considered bribery and prosecuted.  In Washington DC it's called lobbying and is not only legal it's arguably the largest "industry" in the city!

Next, we get a group that passes laws and then intentionally and blatantly refuses to enforce them.  Obamacare is just one example that has been in the news of late; arguably the worst is in fact The Federal Reserve Act, a law that specifically lays forth a duty to regulate both money and credit supply so as to prohibit inflation.  This law is in fact exactly correct in that it identifies both money and credit as fungible and imposes the correct duty upon the FOMC.

Congress and the Executive have, however, factually not only permitted but egged on the willful and intentional violation of that law for over 100 years serially by our banks, allegedly regulated by The Fed, and not once has that law been enforced against the banks nor has sanction been applied to The Fed for their willful and intentional refusal to enforce the law despite the fact that they publicly and loudly proclaim their willful and intentional violation of same.

This is why a dollar earned when you're 20 only buys 26 cents worth of product in constant terms when you turn 65.  This is not an accident, it is in fact a stated policy of The Fed in direct and blatant violation of the very statute that enables The Fed to exist.

We, the people of this nation, deserve what we get from our government.  It would be one thing if these abuses were hidden and not blatantly in your face, as one could claim ignorance.  But over the years these rank violations of law and refusal to enforce them equally, including against Congress and the Executive itself, have become so openly brazen that we factually allowed an entire county (Jefferson County, Alabama to be precise) to be robbed through hinky derivative deals that were proved in a court of law to be undertaken in part as a consequence of outright bribery and yet the entities that were beneficiaries of the outcome of those bribes were not prosecuted and the people who live there, totaling roughly a million citizens, are still being forced to pay, in perpetuity, for the outcome of that corruption!

There comes a time when one must concede that a people abused are in fact masochists, for they are openly and notoriously consenting to the gross and outrageous acts that are perpetrated against them.

As we pass Tax Day perhaps it's time to reflect and ask that singular question: Are we there yet?

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