That's a lot of dough

As we prepare to celebrate another happy end of the fiscal fourth quarter, the good folks over at xkcd.com have prepared an awesome infographic reminding us what a dollar is worth.  Click to see an intelligibly-sized image:

Wither posi.net

I first registered the domain name posi.net back in 1995 during the great domain name gold rush. OK, so I was a little late to the party and all the good names were taken, but I was pretty happy to get a short domain name. I also kept the e-mail address kbyanc@posi.net until last year, when the volume of spam overwhelmed the little 233Mhz Soekris box I've been using as my firewall, mail, web, and home file server.

Earlier this year, I stopped renewing my Dynamic DNS service, effectively taking posi.net offline. And this month, after 16 years, I decided not to renew my domain registration.

I never really did much with the posi.net domain -- I mostly just used it to host my open source code repositories and a few toy web sites. I've been slowly working on converting the toy web sites to run on Google App Engine and am thinking of uploading the open source repositories to github. I'm not sure where I'm going to host my resume, but I'm not in any hurry to figure that one out.

We the people

...apparently flunked our high school government classes.

As you probably know, the Obama administration has set up a "We the people" section on the White House web site so as to solicit petitions from the American people. While there are a few well thought-out petitions, the majority just serve to demonstrate that many Americans have no idea how our federal government is designed to work nor what the function of the Executive branch is. For example:

• Amend the Constitution, making the Internet an unalienable right. Newsflash: the president does not have the power to add amendments to the constitution. Not even close. Petition for it all you want, he can't make this happen.
• Void the voting results that took place in Nicaragua this past Sunday 06 of November due to fraud by the FSLN. Seriously? He's the President of the United States. When did Nicaragua become a state?
• Legalize Mixed Martial Arts in New York. The President doesn't pass laws, much less state laws. You too are barking up the wrong tree.
• Re-establish and maintain the separation between investment banks and commercial banks. I'm 100% for the restoration of the Glass-Steagall Act...but the President doesn't pass laws. You need to petition your Congress-critters to get this done, not the Obama administration.
• Bar courts and lawmakers from a "second-class religion" status for minority religions like Wicca and NeoPaganism. He's the President, not Dictator; he can neither tell courts nor lawmakers what to do. Have you not heard of the separation of powers?
  
• Actually take these petitions seriously instead of just using them as an excuse to pretend you are listening. See above. I imagine it is hard to respond to petitions demanding the President to do things he has no legal power to do. Well, respond with something other than "/facepalm", that is.

I'm sure some of the authors of the above petitions would try and defend their misdirected efforts at government participation by pointing out that neither the Senate nor the House of Representatives offers a similar venue for soliciting petitions. That is true, and it is unfortunate. But that doesn't change the fact that the White House cannot act on many of the petitions. And, when some staffer writes a lengthy explanation of what the Executive branch has been doing to try and support your cause, it is doubly unfortunate that you don't seem to comprehend that it is all that he can do to support your cause.

If you want to change the laws, you need to write your Congressman. It isn't the President's job to get your Congressman to vote the way you want.

Ken Burns: The National Parks

We finished watching six of the most inspirational movies I've ever seen: the six part series that is Ken Burns' The National Parks: America's Best Idea. Each part runs at a little over 2 hours long, full of American history set to the most beautiful scenery in the country.

Starting with the founding of the first national parks, with Yosemite and Yellowstone, and continuing through to the present, the series chronicles the American values that led to the creation of the national park system. And, rather than just painting the picture in broad stokes, the series follows the individuals who fought to establish the parks for the common good as well as those who wanted to exploit the land for private gain.

I can't recommend the series enough. Of course, PBS airs them from time to time, but you can also watch them on Netflix (which is what we did). The visuals are breathtaking, the history illuminating, and the issues as topical today as they were 150 years ago.

Ingenious fraud

I just got a SMS from 503-929-3160 with the text

WELLS FARGO ALERT: Your ATM CARD has been DEACTIVATED. Please contact us at: 650-550-9255.

There were 2 tip-offs that this was a fraud: first, the stereotypical use of unnecessary capitalization and, second, the fact that I don't have an account with Wells Fargo.

Out of curiosity, I called the number to be greeted with an automated voice claiming to be the Wells Fargo card activation line and asking me to enter my 16 digit card number. I entered a bogus card number (sixteens ones) and was promptly cut off. Rumor has it that if you enter something with a valid check digit that the automated service will then prompt for your PIN number and then proceed to drain your account empty.

The ingenious part of this scam is that it relies on the fact that there is no way to authenticate who sent a SMS. With online phishing attacks you can look at the URL to confirm that you are dealing with the entity that you expect. In addition, banks and other high-profile web sites get Extended Verification Certificates for their websites to help make it more clear when you are interacting with the real thing. But there is no such thing for text messages: you just see a phone number. How many people know the phone number of their bank and/or have entered it into their phone's address book?

With services like Twilio making it trivial for ne'er-do-wells to extend their phishing attacks out of cyberspace into telephony, I suspect we'll be seeing more of these types of fraud attempts in the future. Of course, savvy people will never trust random text messages, but that still leaves a huge potential target for increasingly sophisticated fraud. God knows I hope my mother doesn't get one of these texts.

Introducing Jamie

Born 4:30am this morning at 20 inches long and 9 pounds. Both he and Mom are doing fine.

The "Keep Houses Unaffordable" Initiative

In a misguided attempt to prop up the "values" of homes, the Federal Government is giving free money to people who bought houses they couldn't afford by extending low- or zero-interest loans with an option to not repay the loan. There are two separate programs: the HUD Emergency Homeowners' Loan Program and the Treasury's Hardest Hit Fund.

As a responsible family that did not overextend ourselves to by a house that we couldn't afford, this is just a slap in the face. I don't begrudge people who bought homes and have now fallen on hard times...although the possibility of job-loss is supposed to factor into the calculation of how much house you can afford. No, I'm irritated because these programs are feel-good attempts to prop up the still-overpriced housing market so that banks don't have to recognize the true value of their mortgage-backed assets. You see, as a lender, banks should care about the borrowers ability to repay. So long as the government is willing to step in and pay when borrowers can't, it just reinforces bad lending practices.

Meanwhile, keeping home prices high is in no way good for us little people. It doesn't help people to have the burden of a home they can't afford hanging like an albatross around their necks. It doesn't help young families (such as my own) buy their first home...in fact, it actively obstructs that. Unless income rises to the point that homes are no longer ridiculously overpriced, which -- with real wages falling for 40 years -- doesn't seem likely, it does nothing to make homes more affordable. And affordability is the real problem with the housing market.

The Robber Barons of the 21st Century

I guess this is old news for subscribers of Rolling Stone, but I just ran across this excellent article they published in 2009 regarding the role the Goldman Sachs plays in the U.S. economy. In contrast to the random sound bites that fill so much of our media, it is well-researched article that it well worth the long read. Here is a link directly to the print version so you don't have to click through the 8 pages.

If, after reading that article, you are left with any doubt regarding Goldman Sachs' rigging of the U.S. economy in favor of themselves (not even their investors...just the bankers!), here is a current article from the Wall Street Journal chronicling their manipulation of the aluminum commodities market.

Folks, deregulation has gone too far. Over the last 25 years, Goldman Sachs has spearheaded the dismantling of the protections put in place in the wake of the Great Depression and look where it has gotten us.

Update 2011/07/04:

The Wall Street Journal has replaced their article with a partial snippet. Here are a few more articles on Goldman Sachs' manipulation of the aluminum commodities market.

I can haz free house?

In case anyone was wondering, I'd like a free house. Shoot, I'm not greedy, I'd settle for just not paying rent for a couple of years. Oh, and some free money too. Thanks!

Personal Exemption

As part of my research while implementing my mortgage estimator I discovered that, in addition to the standard deduction, the federal income tax code includes a personal exemption. Together, these two are intended to prevent subsistence-level income from being taxed. In other words, Congress intended to shelter the lowest rungs of society from taxation.

Now, obviously, the richer you get the less you need the personal exemption...when you make $200,000/year there is no risk of not being able to afford to eat. Accordingly, the IRS phased-out the amount of the personal exemption one could claim on their federal taxes as their income increased. For example, in 2009, the personal exemption was $3,650 but, for couples filing jointly whose adjusted gross income exceeded $372,700 the personal exemption was reduced to $2,433.

It is only a $1,217 difference, which at the maximum marginal tax rate would only amount to a little over $400 per person. Hardly a drop in the bucket for a couple making $372,700/year.

But the personal exemption phaseout was eliminated under President Bush's 2001 tax reforms...effective 2010. Besides ignoring the intent of the personal exemption, were the richest 1% of Americans really hurting for $400?

Fortunately, this is one tax cut for the rich that won't be sticking around: the budget proposals for 2011 restore the personal exemption phaseout. I hope they spent their one-time $400 windfall wisely.

It is hard being rich

As Republican Representative Sean Duffy reminds us, it is hard to live on almost 200 grand a year:


I guess that is why the ultra-rich need to pay a lower tax rate than the rest of us...it must be tough at the top.

Yet Another Mortgage Estimator

The New York Times has a really slick rent-versus-buy calculator; that site has everything you need to compare renting versus taking on a mortgage. I can't recommend it it highly enough.

One thing that the New York Times' calculator confirms is that renting is always better than buying in Silicon Valley. You would need to stay in the same house for about 40 years before it became cheaper than renting for the same period of time.

But "wait!", you say, " you are just throwing your money away when you rent." That is true. But it turns out that housing prices are so high in Silicon Valley, that you actually throw away more money in interest when you take on a mortgage to buy a house (or condo even).

It is at this point someone helpfully adds, "but you can deduct interest from your taxes".

So the questions are:

1. How much money do you "throw away" paying mortgage?
2. And, how much of that do you "get back" from Uncle Sam via the federal mortgage interest deduction tax break?

The first is pretty easy to answer; any loan amortization table will tell you how much interest you pay given a loan amount, interest rate, and number of years you'll be borrowing the money. The second is a little more complicated. Let me explain:

The federal mortgage interest deduction is just that: it allows you to deduct the amount of money you paid in mortgage interest from your income for that year. In other words, it is as if you never made that money. So, if you earn $60,000 in gross income and pay $12,000 in mortgage interest, Uncle Sam will pretend you only earned $48,000 for the sake of calculating your federal income tax.

That wouldn't mean that you get $12,000 off your federal income tax, though; it just reduces the amount of income you have to pay tax on. Meanwhile, you only get to deduct the mortgage interest if you itemize your deductions. This means more work for you in preparing your taxes, but more importantly, it means that you have to give up the "standard deduction". The standard deduction is the amount that everyone is entitled to deduct from their gross income; but you can't take both the standard deduction and an itemized deduction at the same time. So you only want to take an itemized deduction if it would be greater than your standard deduction. For a married couple filing jointly the standard deduction in 2011 will be $11,600.

Going back to the previous example, if you paid $12,000 in mortgage interest you could itemize your deductions and reduce your taxable income by $12,000 or you could not itemize and take the standard deduction of $11,600. With a hypothetical $60,000 of gross income, itemizing would bring your taxable income down to just $48,000 versus $48,400 without itemizing. Obviously, in this case, the itemized deduction leaves less of your money subject to federal tax, so you would want to take that. But it should also be clear that the benefit of the federal mortgage interest deduction is not really $12,000 since, if you didn't have a mortgage, you could still deduct $11,600. So the tax break is really worth the difference between an itemized deduction and the standard deduction...or just $400. But it isn't worth $400 either because it just means that $400 less of your money is taxed; at $60,000 your marginal tax rate would be 15% so the difference in tax is just $400 x 15%, or $60.

That's right, the federal income tax break on $12,000 of mortgage interest is a whopping $60.

The value of the deduction depends on your taxable income and the amount of mortgage interest you pay each year. The amount of mortgage interest you pay goes down as you pay back principle so the value of the tax break also goes down each year.

Anyway, I think you get the idea...calculating the value of the federal mortgage interest deduction isn't trivial. Basically, you have to do your taxes twice, once itemizing to take the mortgage interest deduction and again with the standard deduction, each year, in order to calculate the total value of the tax break.

So I made my own mortgage estimator that approximates the value of the mortgage interest deduction and, factoring that number in, tells you how much money you actually "throw away" on mortgage interest. It also amortizes the after-tax-break interest over the number of months you plan to live in the house, which yields a number comparable to the amount you would "throw away" on rent.

My calculator is here: http://mortgage-estimator.appspot.com/.

The Loan Amount, Interest Rate, and Term fields are used to calculate the amortization table for the mortgage and hopefully are self-explanatory. You can also input the loan amount by entering the Home Price and Down Payment; in which case, how much equity you are putting down is displayed next to the Down Payment as a percentage.

The Gross Income, Filing Status, and Children (actually, dependents) fields are used to estimate your federal tax obligations. The tax estimator is pretty simple; it doesn't know anything about the more obscure deductions nor does it handle investment income, but I believe it is sufficient for its purpose in comparing your hypothetical tax obligation with and without the mortgage deduction.

Finally, the Expected Residency field is an acknowledgement that none of us are likely to live in the same house for the rest of our lives; here you can enter the number of years you expect to live in the home. This is important in the "how much money am I throwing away in interest" calculation because mortgage interest -- like all loan interest -- is front-end loaded. You pay more interest at the beginning of your loan and more principle towards the end. So the fewer years you live in the house before you sell it, the higher your paid interest-to-principle ratio will be.

And now for the minutia:

• All numbers are rounded when they are displayed. So $31.586 will be displayed as $31.59 and $16.134 will be displayed as $16.13; their difference is $15.452 so will be displayed as $15.45 not $15.46. Not that you should expect this estimator to be accurate to the penny anyway.


• The estimator does not currently take into account private mortgage insurance nor FHA loan assistance programs.


• The estimator does not currently take into account state taxes and any possible state-specific home ownership incentives.

More TSA lunacy

As if the TSA's gratuitous strip-searches at the airport weren't enough, they've branched out into train travel too. You know, in case someone gets the bright idea of highjacking a train and running it into a skyscraper. But seriously, groping people as they get off the train? What could the logic possibly be? Certainly not safety: the trip had already concluded incident-free.

We are paying perverts to do nothing of value.

So this is what it has come to? The American taxpayer shells out 8.1 billion dollars a year to get felt up by strangers while our lawmakers fight to kill Big Bird to save 451 million dollars. I'd like to actually meet the people who think paying perverts to feel up law-abiding people after they demonstratively proved they are no threat is a better use of our tax dollars than, well, anything.

Dear Amtrak

Dear Amtrak,

A bus is not a train. If I wanted to take a bus, I'd go to greyhound.com and plan my trip. But I didn't; I went to amtrak.com because I wanted to plan a train trip. To that end, I want:

1. A list of actual train stations, not bus terminals
2. A map of train routes and their transfer points
3. An option on your trip planner to not include bus routes

Look, I'm not stupid; I realize you can't stop in every city. But I don't expect you to. If I'm planning a cruise, I can go to carnival.com, and they provide me a list of departure ports to choose from. They don't claim to service Omaha, Nebraska and, when I choose Omaha, offer a trip that includes a bus to New Orleans. But that is exactly what your retarded web site does when I try to plan a train trip.

So, please Amtrak, don't make it so damn hard to use your service. With the TSA intent on ogling and fondling our wives and children, you've got a great chance to win the business of concerned middle-class citizens. President Obama even threw you a bone in his State of the Union address. But here's a newsflash: while train travel can compensate for being slow by being nostalgic, bus travel is slow, uncomfortable, and generally un-cool.

So quit hiding behind the transport of last resort, the bus, and take a page from the cruise lines: some of us are as interested in the trip as we are in the destination.