GOP Set to Begin Chipping Away at Mortgage Giants .

Original Post: http://online.wsj.com/article/SB10001424052748703327404576195101304444260.html?mod=WSJ_RealEstate_LeftTopNews

By NICK TIMIRAOS for WSJ.com,  MARCH 14, 2011

Republican lawmakers are preparing this week to introduce a series of legislative proposals to gradually reduce the role of Fannie Mae and Freddie Mac.


The effort represents a tactical shift from the comprehensive approach for a speedier wind-down of the mortgage-finance giants that Republicans backed during last year's negotiations on the Dodd-Frank Act.

Reuters

Rep. Scott Garrett, (R., N.J.), wants a new tack on Fannie and Freddie.


That legislation would have started cutting the government's ties to the mortgage giants or begin winding them down in two years. The bill's sponsor, Rep. Jeb Hensarling (R., Texas), has said he still plans to reintroduce his legislation later this year, and leading House Republicans say they are still committed to the goal of winding down Fannie and Freddie and handing their role over to the private sector.


The decision to take a piecemeal approach with individual bills reflects the challenge in forging a political consensus—even among Republicans—around overhauling the nation's housing-finance infrastructure. And as the housing market continues to be vulnerable, deep caution greets any proposal that might pass on higher borrowing costs to consumers.


If Republicans advance individual bills, that could offer more opportunities for cooperation with the White House than if they advance a single bill outlining a more immediate wind-down of Fannie and Freddie.


Rep. Scott Garrett (R., N.J.), who heads the House subcommittee on capital markets, plans to unveil some of those bills on Tuesday. One measure would accelerate the wind-down of the firms' combined $1.5 trillion mortgage portfolios, which are already set to decline by 10% annually. Other bills would eliminate the firms' federal affordable-housing goals and gradually raise the guarantee fees that Fannie and Freddie charge lenders, a decision now made by the firms and their federal regulator.


Some of these ideas were embraced by the White House in its "white paper" released last month.on the future of housing finance For example, the White House advocated raising guarantee fees to help bring private capital back to the mortgage market. The Obama administration has said it hopes to have legislation addressing Fannie and Freddie within the next two years, but it hasn't provided a more specific timetable for any overhaul.


The moves also come amid a long-standing political fight. Democrats faced heavy criticism last year from Republicans for excluding Fannie Mae and Freddie Mac from their sweeping financial-regulatory overhaul. Now, with Republicans controlling the House of Representatives, Democrats are tagging that position as posturing.


"The Republicans have pretended for a while that they knew what to do," said Rep. Barney Frank (D., Mass.). "Now that they have to govern, they're not sure." Mr. Frank says the Republican leadership "doesn't have the votes" for a more immediate overhaul. In a statement, a spokesman for Mr. Garrett said he is committed to "protecting taxpayers and getting private capital off the sidelines."


Republicans say individual bills have a better chance at forcing the Democratic-led Senate to take up Fannie and Freddie. GOP lawmakers say they're concerned the impetus for overhaul could weaken as the housing market settles out and the memory of Fannie and Freddie's collapse fades. That view was echoed by Treasury Secretary Timothy Geithner at a hearing earlierthis month.


"What we're trying to do as a team here is figure out the best strategy to get the ball moving," said Rep. Randy Neugebauer (R., Texas). One key question is whether "you can get a comprehensive bill passed," he said. "Part of being in leadership is making sure when you bring policy ideas forward, that you've got the ... votes to pass it."


Last month's White House proposal called for gradually phasing out Fannie and Freddie and offered three options for what might follow them. The first option, which is supported by many conservative Republicans, would provide no loan guarantees to protect mortgage investors beyond those made by existing agencies such as the Federal Housing Administration.


The second option would create some type of government backstop that would kick in only in market emergencies. The third would create new federal loan guarantees to replace some of the roles played by Fannie and Freddie and enjoys support from a cross section of consumer groups and the real-estate and banking industries. Many Democrats, and some Republicans, have indicated their preference for such a model.


Winding down Fannie and Freddie will be tricky: They guarantee around $5 trillion of mortgages and, together with federal agencies, are responsible for backing around nine in 10 new mortgages. Any of the options are likely to raise borrowing costs, and that could make lawmakers reluctant to taking action now given the fragility of the housing market, says Brian Gardner, a policy analyst at Keefe Bruyette & Woods. He says there's little chance that Congress and the White House will agree on a bill before the 2012 election.


Republicans have argued that a fully private mortgage market will leave taxpayers less exposed to mortgage losses. "There's more market discipline in the system," said Mr. Neugebauer. "People are going to be paying more attention to the underlying mortgages."


Others say the risks assumed by Fannie and Freddie could simply move into the federally-insured banking sector or federal loan agencies and that taxpayers would still be exposed to losses in a crisis. "It looks like it's a more private solution, but it may not be in the end," Mr. Geithner said at a House hearing earlier this month.


Write to Nick Timiraos at nick.timiraos@wsj.com

Apple Ipad 2 vs. Motorola Xoom: Which Wins As A Business Tool?

Original Post: http://blogs.forbes.com/marcwebertobias/2011/03/14/apple-ipad-2-vs-motorola-xoom-which-wins-as-a-business-tool/
by Marc Weber Tobias -the Travelgeek- for Forbes.com Mar. 14 2011 - 1:31 pm

If you are a Travelgeek you either have or are considering one of the latest tablet computers. A lot has been written on this topic, so my focus is on the utility and value of these devices for the pro business traveler. Is it worth the investment?


Before the iPad or the new iPad2, manufacturers attempts at a tablet PC were a dismal failure. The original tablets were too heavy, too slow, the displays were hard to read in portrait mode, and they had poor battery life. While the concept was obviously a good one; the execution in terms of hardware and software was seriously lacking. That all changed with advances in technology and the debut of the iPad, which was a sleek, light, hand held computer with a brilliant display. It was everything the original PC tablet tried to be, and more.

In the past year, the tablet market has begun to mature and bring forth serious contenders to the iPad. On February 24, 2011 Motorola released its much-touted Xoom, which is the latest and perhaps the most sophisticated entrant into the tablet wars. It is so elegant and advanced that it won a well-deserved design award at CES in January. A tablet has become the “thing” to have. Do you really need one? Read on.

The Tablet concept

The iPad 2 and the Xoom, side by side. The iPad is thinner than the Xoom but has a slightly smaller screen than its rival.

The iPad 2 and the Xoom, side by side. The iPad is thinner than the Xoom but has a slightly smaller screen than its rival.

I exploit technology to help me to stay connected wherever I am in the world. I am out of the U.S. a great deal of the time and thus heavily rely on communications-related techno-tools. Of course, I bought the iPad 3G when it was first released in May, 2010. There is no question that anything Apple makes is incredibly well designed and engineered, and reeks of imagination. They have figured out how to integrate technology with the latest electronics, combined with sleek plastic and metals to make addictive products that have shaped America and the world during the past thirty years.

Apple’s ability to develop and market revolutionary technology does not, however, mean that these devices are the best choice for business travelers. While apple can take credit for “the tablet,’ there is now serious competition, both from a technical and ergonometric perspective, which may cause many business adapters to look beyond the high technology seductiveness of these products and carefully consider their real utility for getting work done. As the “new” adage goes, ‘all that glitters in the tech world may not be the same gold for everyone.”

The iPod and iPhone clearly set the standard in the industry for mp3 music players and then Smartphones. The iPhone even eclipsed the Blackberry for much of the consumer market. The RIM device had been the gold standard until Apple created the first real Smartphone. But then came the iPad with communications capabilities; a big brother to the iPhone, but with without the actual phone.

America is built on a combination of technology, inventiveness, and clever design, so it was inevitable that the iPad success would spawn perhaps a hundred other tablets in a broad price range and configurations. They are the logical extension of Netbooks, which were the rage prior to the introduction of the tablet. For me, I dismissed Netbooks as a gimmick and a fad because I reasoned very quickly that my full-featured 12” laptop weighed the same and had far more functionality. Weight, size, computing power and communications capabilities for me were the critical factors. Netbooks were marginal in their attributes as a business and travel tool.

While the iPad has been an incredibly successful product, I continue to ask myself “what is it?” After almost a year, I have a better answer, but the real question is if I really need it or any other tablet-like device, versus my smart phone. While iPad 2 sales this past weekend exceeded those of the iPad, I suspect that the buyers were, for the most part, not business users. An examination of the Piper Jaffray stats may tend to support this theory.

In this article, I will explore why you may want to invest in and use a tablet computer for a variety of functions as a professional business traveler. Forget all the hype by Apple, Samsung, Blackberry and Motorola about why these are “magical and revolutionary products” or similar claims. The real questions to ask are “what will it do for me, and is it worth the money?” More importantly, you might want to consider just how much clutter it will add to your travel bag, and what do you have to do to make it work the way you need it to in order to justify its investment.

The iPad and Xoom tablets sell for between $500 and $800, based upon configuration and service contracts with the various carriers. So, they are not exactly an inexpensive device, but depending upon your application, may be well worth the expenditure in terms of productivity and enjoyment.

My main focus in choosing which gizmos to carry when I travel, (either domestically or internationally) is their utility, first and foremost. As I am detailing in my travel-technology-security book, virtually all of my techno-tools must enhance my ability to communicate, organize, receive information, and allow me to be more productive. If added benefits are derived, such as for entertainment or leisure, that is a bonus but not the prime reason for adopting any technology, gizmo, operating system, or program. Price is only one factor and rarely determines whether I add a new tech-tool to my arsenal.

A year after purchasing my iPad I am still assessing its true utility in my world. Apple started a revolution with their tablet and created an entire new personal mode of computing. Ironically, there are now many knock-offs of the concept and some like the Xoom are incredibly powerful devices. But the most important question still remains: do you really need the thing?

The Tablet: what is it?

A tablet computer is a smaller version of your laptop without a hard keyboard. They have a slower processor, less internal memory, smaller screen, and less powerful operating system. While you can perform most of the same basic functions as your laptop, they are obviously a scaled-down version. Most are designed for very specific and mobile-related tasks: email, reading documents, web browsing, movies, games, watching videos, listening to music, reading books and a number of other applications.

Tablets run on their own operating systems, with thousands of applications to do just about anything. But the OS that runs on a PC for either Windows or Mac is not the same as for your tablet. In reality, most tablets are little more than a Smartphone with a large screen and longer operating time because of the size of the battery. But they can be a lot more than a Smartphone as well.

I identify four tiers of mobile computing and telecommunications devices: Smartphones, Netbooks, tablets, and notebook computers. If you dismiss Netbooks as a short-lived fad, you are left with three types of devices which share many of the same characteristics and capabilities, but are fine-tuned to specific applications. Most “real” tablets today are running at least 1Ghz or dual-core processors, as are the their smaller Smartphone counterparts, so they are very fast and have incredible capabilities.

Operating systems

The organization of the Settings menu is different than the Apple iPad and may be more logical

There are three primary operating systems to choose from: Apple, Android, and Blackberry. Windows also has a tablet but it is not yet in the mainstream and has not been considered for this article. The main competition is between Apple and Android (Google). In my view, Android will ultimately win the operating systems war, but for the consumer, it is really largely irrelevant and one of personal preference. Apple and Android perform essentially the same tasks: how they are organized and executed spells the difference between the systems and devices.

Why do I believe that Android will prevail? It is because almost all of our lives are now wrapped around Google and its incredible data search and access capabilities. Apple, in my view, cannot compete with what Google can offer to Smartphone and tablet users: an amazing array of instant information from anywhere in the world which has been integrated into the functionality of a tablet or Smartphone through its Android operating system.

Android has been adopted by scores of hardware manufacturers for Smartphones and tablets. It is a maturing platform and has already surpassed Apple as to implementation around the world. That is not to diminish the capabilities of the iPhone or iPad, nor its 100,000+ applications that are available, or its incredible hardware. But the Apple OS for tablets is limited to one hardware manufacturer.

The organization of the Settings menu is different than the Apple iPad and may be more logical.

For organization and options, I prefer Android, but they both accomplish almost the same results, just in different ways. My Xoom seems to run faster than the iPad 2, and has a dual-core processor that runs Honeycomb 3.0, the latest Google-Android operating system which is specifically optimized for a tablet. The graphical user interface is very cool and extremely easy to use, but so is Apple, so it is personal preference as to which you are more comfortable with. The new iPad has a 1Ghz processor, but the clock speed has been slowed down to avoid excessive temperatures.

If you are presently utilizing an Apple for your computer or phone, then you may want to stick with what you know, and buy an iPad. The same rule applies for the Android. When I travel, I have a Droid-x, an Android Pro dual-mode phone, and a Samsung Nexus S for use with local SIM cards. The Xoom runs on Android so everything is compatible between my phones and tablet. The neat thing is that once you buy an application, either on Apple or Android, you can download it to all devices. This is another reason not to switch operating systems between phones and tablets.

I dislike the strict controls that Apple has placed on its applications, lack of access to internal memory within the iPad, failure to implement Flash Video, and the requirement that everything be routed through iTunes. I understand the logic in such controls, and to some extent this approach may provide for a more secure and reliable operating environment for the consumer. But I also like the capabilities of Android over both Apple and Blackberry as to versatility and options. Android is an open system and allows more flexibility but may require more expertise. If the operating system is “rooted” which means gaining access at the programming level, then the device can be totally controlled, Apps can be run that are outside of the Android market, and the tablet can perform really neat functions.

The Apple operating system, at least initially, is much more intuitive than Android. To demonstrate this, I just bought my mother a Verizon iPhone. In a later article, I will explore the use of smart phones for the elderly. My mom is totally non-technical but has figured out how to use her iPhone (which is no small feat). I don’t think she would have the same comfort level with Android, either in a phone or tablet.

For ten years, I was a confirmed Blackberry user (and addict) on two different mobile networks. Last summer, when the Motorola Droid-x was introduced, I switched after having suffered through almost two years of the Blackberry Storm nightmare Part I and II, and the constant denials by Research in Motion that there were any problems with the device. Just for the record, my Droids do everything that my Blackberries did, only faster, better, easier, and more reliably. Once you use a smart phone with a four-inch screen, you will never go back to anything smaller, especially the mini-display on most Blackberries. And then if you start using a tablet, with a ten-inch display, you have reached technical nirvana.

I came to realize that Blackberry produces a great mobile email machine; making it work as a smart phone was almost an afterthought. As innovative as the folks at RIM may be, and even with their new Version 6 operating system and Torch-modified version of the Storm, the phones are still primarily for corporate and personal email. For me, the rest is trying to make something of a device that works best for integrated email. I don’t think that its devices are as smart or as capable as the Droid or iPhone.

Xoom v. iPad: hardware and software

The Xoom has a great 10.1” display at a 1280 x 800 resolution. It is brilliant, and slightly larger than the iPad’s 1024 x 768, although the reality is that both are excellent. I tested each displays in bright sunlight, side by side, and there is little difference. Physically, both devices are about the same size when in their protective cases, although the new iPad is much thinner than the Xoom. (Quick aside: I have a forty-year history with Motorola, which essentially invented cellular and its core technology in the seventies. My experience began when Marty Cooper, senior Motorola VP and the father of cellular, wrote the forward for my Police Communications textbook in 1973. So I’m glad to see Motorola back from the abyss of lost market share and the Iridium satellite disaster in the 1990s. It has clearly got its act together with the Droid platform, new phones and the Xoom tablet.)

The pixel density is slightly better on the Xoom display, reportedly at 149.45 PPI versus the iPad at 132 PPI. There appears to be a little less eye-strain with the Xoom display in portrait mode as compared to the iPad.

The Xoom is a CDMA + WiFi device. The iPad has GSM + WiFi and CDMA + WiFi models. That means the iPad can be used anywhere in the world on GSM networks; the CDMA version will only work in those countries that utilize CDMA, which are about forty in number. CDMA is not the predominant international protocol and has really poor coverage except in limited geographic areas. International roaming is possible on CDMA, but it is nothing like GSM. Verizon, which has the best coverage in the United States, is a CDMA network which is the reason that Apple introduced the iPad CDMA version.

The Xoom will not function on any system other than Verizon, unless Motorola reaches a deal with Sprint, which is also a CDMA carrier. In contrast, the iPad GSM version will operate on T-Mobile and AT&T in the U.S. and virtually everywhere internationally. All tablets have Wifi, so in some respects the choice of wireless carrier does not matter if you understand how to optimize connectivity. The new iPad is not a 4G device, which may be a definite negative. There is some talk that an Apple Pro tablet may be released with the iPhone 5, but at this point, this is speculative. Although the Xoom (with a free hardware and software upgrade) will operate on the 4G LTE network later this year, Verizon did not know when the upgrade would be available.

The Xoom has the capability for 32GB of internal memory for use as a backup drive, to store video or images, or any other files. Just plug into the micro-USB port and you can do what you like, just like any other external hard drive. In the future, it will be expandable to another 32GB of Micro-SD memory when the device is upgraded to 4G. While the iPad also has up to 64GB internal memory, I cannot use it except through iTunes, which is really limiting and prevents you from storing many kinds of data on the device. The bottom line: you cannot realistically use the iPad as an external hard drive.

External Bluetooth keyboards are available for both devices. This allows for the tablet to be used for an email machine or browser with a minimum of weight. Each unit, with case and keyboard, weigh in at about one and a half pounds. This is not a bad alternative to a laptop for limited use. Battery life on both the iPad and Xoom appear to be about the same, around ten hours, but this is also dependent on several factors, including display brightness, which draws the most current. Again, both devices are about equal for battery life if communications services are turned off. In suspend mode, both devices will stay alive for several weeks without a recharge.

The charging system for the Xoom is non-standard and employs a tiny coaxial-type connector with a 12VDC input. This is convenient for vehicle charging, but requires you to carry a separate and unique charger. I would imagine that Kensington will make a power supply tip to be available sometime in the future for the Xoom, just like the iPad. Apple devices are standardized with one charging connector and five-volt system, which is compatible with all USB power supplies. The Motorola Zoom is not compatible with USB supplies. All of my devices run on mini or micro-USB, so this is a definite disadvantage. I try to standardize everything on one connector type so I don’t have to carry multiple power adapters.

There are two internal cameras on the Xoom; a 5mp rear-facing, and a lower resolution front-facing one for video chat. The iPad 2 has the same configuration. Front-facing cameras will allow for video conferencing on both devices. Presently, the iPad allows video communications by using its “Face time” or Skype application between iPads and iPhones and desktops. Video conferencing software will be available from Skype to support enhanced communications services on 4G for the Xoom in the near future, but presently there is no software to allow video chat on Skype; only on Google Talk.

Ports, Controls, and audio

Controls on the Xoom and iPad are about equal. Each has volume up and down and escape/on/off. There are four primary ports on the Xoom: micro-USB, HDMI out, and audio in/out for a headphone or earphone/microphone combination for VoIP calls, and power. There are two speakers and stereo audio channels for excellent sound rendition. The iPad only supports single channel audio and one speaker.

Chirs Perra is a technician for the Apple dealer in Sioux Falls, South Dakota. He spoke about the iPad 2 with Marc Tobias the day after its release

Chirs Perra is a technician for the Apple dealer in Sioux Falls, South Dakota. He spoke about the iPad 2 with Marc Tobias the day after its release.

Special thanks to I interviewed Chris Perra, a technician at MacPros, the local Apple store in Sioux Falls. We discussed the attributes of the iPad 2.

Conclusion

The Motorola Xoom and the Apple iPad are very similar with regard to basic hardware design and functionality. Where they differ is in display size and definition, operating systems, frequency bands (CDMA v. GSM) and their capability for international roaming. Most significantly, the Xoom will allow 4G high-speed connections, where it appears the iPad will not. The real distinction between different tablets is with the applications they will run, and how they do it.

In Part II, I will discuss how I use my tablets and their real utility.

A European's Warning to America

The perils of following us toward greater regulation, higher taxes and centralized power.
Text By DANIEL HANNAN

On a U.S. talk-radio show recently, I was asked what I thought about the notion that Barack Obama had been born in Kenya. "Pah!" I replied. "Your president was plainly born in Brussels."

American conservatives have struggled to press the president's policies into a meaningful narrative. Is he a socialist? No, at least not in the sense of wanting the state to own key industries. Is he a straightforward New Deal big spender, in the model of FDR and LBJ? Not exactly.

My guess is that, if anything, Obama would verbalize his ideology using the same vocabulary that Eurocrats do. He would say he wants a fairer America, a more tolerant America, a less arrogant America, a more engaged America. When you prize away the cliché, what these phrases amount to are higher taxes, less patriotism, a bigger role for state bureaucracies, and a transfer of sovereignty to global institutions.

He is not pursuing a set of random initiatives but a program of comprehensive Europeanization: European health care, European welfare, European carbon taxes, European day care, European college education, even a European foreign policy, based on engagement with supranational technocracies, nuclear disarmament and a reluctance to deploy forces overseas.

No previous president has offered such uncritical support for European integration. On his very first trip to Europe as president, Mr. Obama declared, "In my view, there is no Old Europe or New Europe. There is a united Europe."

Barbara Kelley

I don't doubt the sincerity of those Americans who want to copy the European model. A few may be snobs who wear their euro-enthusiasm as a badge of sophistication. But most genuinely believe that making their country less American and more like the rest of the world would make it more comfortable and peaceable.

All right, growth would be slower, but the quality of life might improve. All right, taxes would be higher, but workers need no longer fear sickness or unemployment. All right, the U.S. would no longer be the world's superpower, but perhaps that would make it more popular. Is a European future truly so terrible?

Yes. I have been an elected member of the European Parliament for 11 years. I have seen firsthand what the European political model means.

The critical difference between the American and European unions has to do with the location of power. The U.S. was founded on what we might loosely call the Jeffersonian ideal: the notion that decisions should be taken as closely as possible to the people they affect. The European Union was based on precisely the opposite ideal. Article One of its foundational treaty commits its nations to establish "an ever-closer union."

From that distinction, much follows. The U.S. has evolved a series of unique institutions designed to limit the power of the state: recall mechanisms, ballot initiatives, balanced budget rules, open primaries, localism, states' rights, term limits, the direct election of public officials from the sheriff to the school board. The EU places supreme power in the hands of 27 unelected Commissioners invulnerable to public opinion.

The will of the people is generally seen by Eurocrats as an obstacle to overcome, not a reason to change direction. When France, the Netherlands and Ireland voted against the European Constitution, the referendum results were swatted aside and the document adopted regardless. For, in Brussels, the ruling doctrine—that the nation-state must be transcended—is seen as more important than freedom, democracy or the rule of law.

This doctrine has had several malign consequences. For example, it has made the assimilation of immigrants far more difficult. Whereas the U.S. is based around the idea that anyone who buys into American values can become American, the EU clings to the notion that national identities are anachronistic and dangerous. Unsurprisingly, some newcomers, finding their adopted countries scorned, have turned to other, less apologetic identities.

The single worst aspect of Europeanization is its impact on the economy. Many Americans, and many Europeans, have a collective memory of how Europe managed to combine economic growth with social justice. Like most folk memories, the idea of a European economic miracle has some basis in fact. Between 1945 and 1974, Western Europe did outperform the U.S. Europe happened to enjoy perfect conditions for rapid growth. Infrastructure had been destroyed during the war, but an educated, industrious and disciplined work force remained.

Human nature being what it is, few European leaders attributed their success to the fact that they were recovering from an artificial low. They convinced themselves, rather, that they were responsible for their countries' growth rates. Their genius, they thought, lay in having hit upon a European "third way" between the excesses of American capitalism and the totalitarianism of Soviet communism.

We can now see where that road leads: to burgeoning bureaucracy, more spending, higher taxes, slower growth and rising unemployment. But an entire political class has grown up believing not just in the economic superiority of euro-corporatism but in its moral superiority. After all, if the American system were better—if people could thrive without government supervision—there would be less need for politicians. As Upton Sinclair once observed, "It is difficult to get a man to understand something when his job depends on not understanding it."

Nonetheless, the economic data are pitilessly clear. For the past 40 years, Europeans have fallen further and further behind Americans in their standard of living. Europe also has become accustomed to a high level of structural unemployment. Only now, as the U.S. applies a European-style economic strategy based on fiscal stimulus, nationalization, bailouts, quantitative easing and the regulation of private-sector remuneration, has the rate of unemployment in the U.S. leaped to European levels.

Why is a European politician urging America to avoid Europeanization? As a Briton, I see the American republic as a repository of our traditional freedoms. The doctrines rooted in the common law, in the Magna Carta, and in the Bill of Rights found their fullest and most sublime expression in the old courthouse of Philadelphia. Britain, as a result of its unhappy membership in the European Union, has now surrendered a large part of its birthright. But our freedoms live on in America.

Which brings me to my country's present tragedy. The fears that the American patriot leaders had about a Hanoverian tyranny were exaggerated. The United Kingdom did not develop into an absolutist state. Power continued to pass from the Crown to the House of Commons.

Until now. Nearly two and a half centuries after the Declaration of Independence, the grievances it adumbrated are belatedly coming true. Colossal sums are being commandeered by the government in order to fund bailouts and nationalizations without any proper parliamentary authorization. Legislation happens increasingly through what are called standing orders, a device that allows ministers to make laws without parliamentary consent—often for the purpose of implementing EU standards.

How aptly the British people might today apply the ringing phrases of the Declaration of Independence against their own rulers, who have "combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws."

So you can imagine how I feel when I see the U.S. making the same mistakes that Britain has made: expanding its government, regulating private commerce, centralizing its jurisdiction, breaking the link between taxation and representation, abandoning its sovereignty.

You deserve better, cousins. And we expect better.

Mr. Hannan is a member of the European Parliament. This essay is adapted from the Encounter Books Broadside, "Why America Must Not Follow Europe."

For Housing Values, Is Bigger Better?

Original Post: http://online.wsj.com/article/SB10001424052748703597804576194772974777088.html?mod=WSJ_RealEstate_LeftTopNews

By JUNE FLETCHER


Q. I have been thinking about downsizing my home to save money. But I'm wondering if that's smart from an investment standpoint. Will a smaller house hold its value as well as a larger one?

--Montclair, N.J.

A. If the small house is in the same general vicinity as the larger one, probably not. That's because, all other things being equal, people will almost always equate size with status. Moreover, as the effects of the economic downturn linger on, spare bedrooms become more critical as unemployed adult children move back into the family home, perhaps joined by grandparents whose 401(k)s have shrunk.

In fact, the downturn already seems to have hurt the value of smaller homes relative to larger ones. Leesburg, Va., economic consultant Tom Lawler pointed out in his March 10 market commentary that "as has been the case since at least the end of last year's homebuyer tax credit, the prices of smaller homes showed more weakness than the prices of larger homes."

Smaller homes also start out at a relative disadvantage to larger ones because they often cost more per square foot. That's because every house needs certain high-ticket items, like a heating, air conditioning and ventilation system, at least one bathroom and a kitchen. As a house gets bigger, the incremental cost for these pricey items lessens.

However, when it comes to value, size isn't the only consideration. Shape matters too. Because a single-story house requires a bigger roof and foundation than a multistory one with the same square footage, it usually will cost more per square foot. The quality of materials, height of walls, level of trim, number and shape of windows and difficulty of construction all factor in, too. So it's possible for a jewel-box rambler with coffered or vaulted ceilings, bow or bay windows, top-of-the-line kitchen and tumbled marble floors to be more expensive than a big boxy Colonial nearby with only builder-grade fixtures and finishes.

And, of course, many external factors also impact the value of a home, including lot size; the age of the community and its amenities, like neighborhood tennis courts and swimming pools; views; proximity to urban attractions and public transportation; and even landscaping.

How important all of these things is largely a matter of personal taste, as well as what stage you've reached in life. So don't get too hung up on cost-per-square-foot comparisons. Let your lifestyle and your budget dictate the type of home you live in.

However, if you only are considering new homes, keep in mind that they are expected to shrink in the near future, as builders scramble to compete with cheap foreclosures. A recent survey of 238 builders and designers by the National Association of Home Builders showed that 74% expect new homes to be smaller by 2015, with homes averaging 2,152 square feet or about 10% less than those built in 2010.

Write to June Fletcher at fletcher.june@gmail.com

Kitchen Designs That Make Home Cooking Fun

The recession prompted Americans to cook at home more to save money, but they may continue to do so even as the economy improves. That could change the look of our kitchens. Amy Hoak reports on the latest trends from the International Builders' Show.

Why 2011 May Be the End of the Housing Crash

Simon Constable explains to Kelsey Hubbard how rising affordability of housing will be a key to a turnaround. Plus how to invest in housing without buying a home.

Seven Ways to Beat Inflation

Original Post: http://blogs.forbes.com/baldwin/2011/03/01/seven-ways-to-beat-inflation/
William Baldwin Mar. 1 2011 - 8:40 am for Forbes.com

Non-fiat money; image via Wikipedia

The cost of living could double over the next decade or two. What are you going to do about it?


If you are young and still in the workforce, your best defense is your talent. Wages tend to keep up with inflation, at least over long periods. If you are retired, you’ve got only your balance sheet to lean on.

In this report I’ll look at seven strategic moves for combating the Consumer Price Index. Companion pieces will take up fixed-income investing (with six inflation-fighting ideas) and how to own commodities (five ways).

In all, there are 18 inflation fighters you should know about. That doesn’t mean you should adopt them all. Some are too speculative or expensive for everyday use. One, in the commodity section, goes in the category of Downright Stupid.

Inflation is, deservedly, retirees’ second biggest source of anxiety (after health). They are old enough to remember the 1970s, when the prices of everything went through the roof. Everything except bonds, that is. Bond portfolios were massacred.

It’s something I think about every day. I own a lot of bonds.

Officially, inflation is quite tame at the moment, which is how the Federal Reserve justifies its printing press (now running off fiat money at the rate of $20,000 a second). Chairman Ben S. Bernanke reassures us that prices aren’t going up much, if you don’t count food or energy.

This reminds me of a classic remark from a long since diselected mayor of Washington, D.C.: Our crime rate isn’t all that bad, he said, if you don’t count the murders.

Here are seven strategies for beating inflation. In all likelihood, you already have some of these in place. You don’t have to be terrified by the CPI.

Own real estate

Over long periods, home prices more than keep up with the price of living. The real price gain (appreciation net of inflation) has averaged something like 1% a year over the past century.

The suburban home I grew up in appreciated at a 6% annual rate between the time my parents bought it in 1953 and its recent sale. This, despite the recent real estate crash and despite the fact that the house was poorly maintained. After inflation: 3% a year.

The housing crash isn’t quite over, but I think we’re pretty close to a bottom. I’m pretty confident that if the CPI triples in the next 20 years, home prices will at least triple.

Your strategy here, if you just retired, would be to postpone downsizing. It’s a reasonable alternative to more-complicated inflation fighting strategies, especially if you have other reasons for staying put.

Own stocks

A stock is a share in a business that probably owns at least some hard assets and has some prospects for increasing its prices as the dollar falls in value.

To be sure, a surge in inflation can hurt stocks for a while. Stocks got killed after the 1973 Arab oil embargo sent the CPI on an upward spiral. But over long periods, stocks beat inflation. Over the past century they have earned 6% a year, above and beyond inflation, when you include dividends.

Owning shares enabled investors to survive inflation in Brazil and Mexico. It has enabled U.S. investors to survive the Great Inflation that began in 1971, when the dollar was unhinged from gold. Since then prices have more than quintupled. Nonetheless, U.S. stocks have delivered a real annual total return in the past 40 years near their 6% long-run average.

At the moment, U.S. stocks are richly priced in relation to corporate earnings, so I expect only 5% a year, net of inflation, over the next 40 years. Still, stocks’ resilience to CPI creep makes them an important part of a retiree’s portfolio.

Put at least a third of your investable assets in equities. Put in more if you don’t own a home. Put in more if you have enough slack in your budget to tolerate some wild swings in your net worth.

The cheap, easy way to own stocks is through an exchange traded fund or open-end mutual fund tracking an index. Index funds for the S&P 500 cost 0.1% of assets per year, or thereabouts.

Own resource funds

You get a concentrated dose of inflation hedging by owning shares in companies that dig stuff out of the ground.

The T. Rowe Price New Era Fund has delivered handsome returns over the past decade by owning resource sector companies like Schlumberger, Cameron International and Freeport-McMoran Copper & Gold. This fund is very affordable, at a fee of 0.67% of assets annually.

Cheaper still, but without the active management, are two exchange traded funds from Vanguard, covering the materials and energy sectors. The portfolio of the materials fund (ticker: VAW) starts with Freeport-McMoran, Du Pont and Dow. The energy ETF (ticker: VDE) has Exxon Mobil, Schlumberger and Chevron as its largest positions. Both of these funds cost 0.24% annually.

If you are putting in $100,000 or more, you can get either of these Vanguard sector funds in the open end (mutual fund) format. The open end funds have no sales loads but penalize short-term holders with a 2% redemption fee. The expense ratio is the same.

Whatever their net worth, investors desiring Vanguard sector funds in their taxable accounts are better off with the ETFs. You can trade in and out of an ETF as often as you like, incurring only your online brokerage fee ($9 or less) and a bid/ask spread (a few pennies a share). With this flexibility you can harvest tax losses.

Vanguard also has a Precious Metals fund. This one is not available as an ETF. It has one of those sanctimonious redemption fees that get in the way of loss harvesting.

Own resource stocks

You don’t have to pay a fund company to hold stocks for you. Hold them yourself. You’ll eliminate that management fee. Instead of putting $100,000 into a fund, copycat ten of its positions at $10,000 each. Savings: $240 to $670 a year.

Your transaction costs for à la carte investing won’t be much higher than for the ETFs, and indeed may be a bit lower. Shares of big companies like Exxon trade at narrower bid/ask spreads than do the ETFs that hold them.

Include in your mix energy, fertilizer, gold and timber companies. For gold exposure, Newmont Mining is the obvious choice, but you’ll find some intriguing, if flaky, alternatives by taking a peek at Vanguard’s Precious Metals sector fund.

Weyerhaeuser is the big timber holder. It is now converting into a real estate investment trust in order to eliminate corporate taxes.

Buy REITs

Apart from some timber companies (see preceding paragraph), the REIT industry consists primarily of landlords. REITs own office buildings, malls, apartments, warehouses and storage cubicles. The inflation hedge: Landlords jack up rents to match the cost of living.

Tread lightly here. REIT prices have doubled in the past two years. That means your dividend yield is half what it was. It also means that, even if your dividend keeps up with the cost of living, your share price will struggle to do so.

Delay Social Security

Are you (a) in good health and (b) financially comfortable? If so, then it may make sense for you to delay starting your Social Security payments. By doing so you earn a fatter monthly check, and this check is inflation-protected.

Whether it’s best to start drawing at 62 or 66 or 70 is a complicated question. Often, it makes sense in a two-earner couple for one member to start at 66 and the other at 70. Read more about the strategy here.

I’ll add one point to the usual actuarial analysis. Social Security is a bankrupt Ponzi scheme. One way to make it more solvent would be to reduce the inflation escalator for prosperous retirees. This outcome is not highly likely, but it’s more likely than any reform that involves confiscating benefits already paid.

By not taking $100,000 in benefits from 66 to 69 you buy an inflation-indexed annuity starting at age 70. You thought you were buying a CPI-indexed supplemental annuity. After you start collecting it turns into a CPI-1% indexed supplemental annuity. You might have been better off taking the 100K and investing in the stock market.

In short, if you are on the fence, and you are what President Obama considers rich, start at 66 rather than 70.

Owe money

If you are retired, your mortgage should be paid off. But if you are younger it may make sense to owe money. To the extent you owe money you get a windfall from unexpected inflation. That’s because you pay off your creditor with cheapened dollars.

Suppose you are 40 and owe $500,000 on your fixed-rate mortgage. And suppose you have $500,000 in a tax-sheltered retirement account, invested in Ginnie Mae funds. In these circumstances, you can sleep at night. Inflation can’t hurt you very much.

Why? A run-up in inflation will raise interest rates and that will cause your Ginnie Maes to lose value. But it will also, over time, make your home’s value higher than it would otherwise have been, while your mortgage debt remains frozen. So you’ll wind up with more home equity than you otherwise would have had.

I’m not advocating willy-nilly borrowing, only a holistic approach to your balance sheet. If you are young and mortgage heavy, you are not as vulnerable to inflation as you may think. You can lighten up on the timber and gold stocks.

Dr. Doom: Buy Housing Now

Airtime: Mon. Feb. 28 2011 12:45 PM ET

Marc Faber, editor of "The Bloom, Boom & Doom Report", explains why now is the time snap up real estate deals.

Ranch has key selling point: Steve McQueen

Original Post: http://www.inman.com/news/2011/02/28/ranch-has-key-selling-point-steve-mcqueen

House Profile: Iconic star's hideaway is on the market

By Mary Umberger, Monday, February 28, 2011. Inman News™

Editor's note: Inman News will be profiling a series of homes with interesting stories and backstories to tell. Got a house story to share? Send an e-mail to press@inman.com.

Steve McQueen. Flickr image courtesy of classic film scans.

The "King of Cool" apparently found a measure of peace in Santa Paula, Calif., where he could stash his collection of cars, planes, and motorcycles, and the locals didn't seem to think it was such a big deal that a legendary movie star was living in their midst.

Steve McQueen had largely turned away from Hollywood when he settled in the town, about 75 miles northwest of Los Angeles, in 1979. Drawn there, according to biographers, by the town's reputation as the vintage-plane capital of America, the tough-boy icon purchased a nearby 15.5-acre ranch (see slide show below) with an 1892 cottage and a 4,500-square-foot hangar that he stuffed with dirt bikes, Indian motorcycles and rare sports cars.

McQueen, who became one of the world's highest-paid actors in the 1960s, honed an image of toughness in such noted films as "Bullitt," "The Great Escape," and "The Cincinnati Kid."

But he started turning down most roles in the 1970s, focusing instead on auto and motorcycle racing and traveling the back roads of the West. He purchased two vintage Stearman biplanes and persuaded a Santa Paula local to become his flight instructor.

"He married his third wife, Barbara Minty, in the living room of the house at the ranch," said David Kean, the Los Angeles real estate agent who's currently marketing the property for sale. McQueen and the former model wed in January 1980, not long after the couple moved into the house.

McQueen's time at the ranch was to be brief. Diagnosed with mesothelioma, a cancer related to exposure to asbestos, shortly before they were married, he spent his last months there and in Mexico seeking medical treatment.

He died of complications from surgery in Ciudad Juarez, Mexico, in November 1980, at 50.

A memorial service for the actor was held at a pond on the Santa Paula property, Kean said.

"He loved to ride his dune buggy around the ranch," Kean said. "The airplane hangar on the property was full of his cars and motorcycles."

They're gone now, having been auctioned in Las Vegas in 1984. But other McQueen touches remain, Kean said.

Although a subsequent owner installed a kitchen/family room addition and planted a vineyard, "everything else is as McQueen left it," Kean said.

"He collected old pull-chain toilets from old bus stations, and had them installed in the house," Kean said. "He tried to make everything of the period that the house was built."

The property declined, turning into "kind of a mud pit" in the years after McQueen died, Kean said. The current owners bought the place about seven years ago, spruced it up, and established a now-flourishing vineyard that produces 5,000 to 7,000 bottles a year, he said.

"My idea would be to make a deal with the McQueen estate, and buy the property and work in the McQueen rights," he said. "They could produce wine and export it to Asia -- McQueen is a folk hero in Asia."

The McQueen name apparently has retained its luster: In 2007 Forbes magazine listed him as No. 10 among 13 "top-earning dead celebrities," with the licensing of his name having earned $6 million in the prior year.

The magazine said at the time that McQueen's image of hard driving and fast living, which earned him the nickname "King of Cool," had found appeal with a new generation, 40 years after the release of "Bullitt," arguably his best-known film.

Actor Ashton Kutcher and David Beckham, among others, have said they regard McQueen as a personal style icon.

Indeed, Keen said, it's been mostly Hollywood-types who have visited the Santa Paula ranch as a candidate for a second home, drawn by the McQueen connection and the isolation of the property.

"McQueen liked the town because people left him alone," and that attitude appears unchanged, Kean said. "I've had celebrities (who came to see the ranch) go into the town, have lunch, and nobody bothers them."

But no sale so far, Kean said.

Even for a Beverly Hills buyer, the $1.095 million asking price for the three-bedroom home (down from the original $1.95 million, and now listed as a short sale) gives pause.

"In this economy, even my wealthiest clients are tightening their wallets," he said. "One client said his net worth had dropped from $1 billion to $600 million and he's nervous about it. They see the loss, they don't see what they have."

Still, he said, some actors "who I think may want that McQueen image" have been interested in the place.

"They want the fantasy of the ranch, but they get overwhelmed" by the idea of maintaining its acreage and horse facilities, he said. "It's a fun fantasy, but not everyone wants the reality."

What $48 Million Will Buy You in Aspen

Love to ski and have $48.5 million burning a hole in your pocket? Then a fabulous mansion in Aspen adjacent to the ski slopes that just hit the market might be perfect for you. Candace Jackson has details.

Homebuilders Report Profits Despite Tough Market

Original Post: http://blogs.forbes.com/heatherstruck/2011/02/23/homebuilders-report-profits-amid-still-tough-market/
By Heather Struck for Forbes.com Feb. 23 2011 - 10:10 am

The Department of Commerce said Wednesday that real GDP declined by 2.4% by metropolitan area in 2009, after a 0.4% decline in 2008. The drop in production appeared in 292 of 366 MSAs, reflecting the slow-down in manufacturing and construction, that took place that year.


Meanwhile, luxury builders Meritage Homes and Toll Brothers are beating the Standard & Poor’s Supercomposite Homebuilding Index this year to date, reflecting a gradual recovery out of 2009’s near stand-still for the housing market. Meritage has returned 14.6% this year and Toll Brothers has returned 9.3% compared with 2.9% for the S&P homebuilding index. Shares of Meritage were down slightly Wednesday by 0.3%, while Toll Brothers shares saw a 2.5% gain.

Toll Brothers reported a profit for its first quarter ending January 31, with net income at $3.4 million, or 2 cents per share, compared with a loss of $40.8 million, or 25 cents per share, in the year-ago period. The profit beat the 7 cents per share loss that analysts were expecting for the quarter. The Pennsylvania-based company also reported net revenue of $334 million, up from $326 million the year before.

The average price of homes sold increased to $586,000 from $548,154 a year earlier, while the number of new homes sold grew by 4%. The company ended the first quarter with more units in its backlog of 1,472, but a 2% decrease in value at $825.2 million.

Toll Brothers’ CEO Douglas C. Yearley, Jr., said that, “The market is still tough; the home buyer is still wary. Although our customers recognize that this is perhaps the best time to buy in many years, so far the market is not generating the positive momentum that creates urgency among buyers.”

Home improvement stores are also improved in their last quarter. Lowe’s reported a 39% increase in its fourth quarter profit, boosted by higher-than-expected sales for the quarter. The announcement came after Home Depot, the larger company by revenue, said on Tuesday that its fourth quarter profit increased by 72% from the year-ago period.

Lowe’s reported a profit of $285 million, or 21 cents per share, and revenue up 3% at $10.5 billion for the quarter ending January 28. Analysts polled by Thomson Reuters were expecting profit of 18 cents per share on revenue of $10.4 billion.

Home Depot’s fourth quarter profit soared to $587 million, or 36 cents per share, on revenue of $15.1 billion, beating analysts’ expectations for net profit of 31 cents per share on revenue of $14.8 million. The company said same store-sales growth in the U.S. helped it beat the consensus.

Markets opened Wednesday lower than its previous day’s close, still pressured by rising oil prices and political heat created by protests in the Middle East. The Dow Jones industrial average was down 41 points at 10 am at 12,171, the Nasdaq was down 9 points at 2,747 and the S&P 500 was down 2 points at 1,312.

Homes That Help You Take Aging in Stride

More homes are being built with "universal design" features that will help boomers stay in their homes as they age. But these features no longer evoke a hospital room -- and they're appealing to a younger demographic, too. Amy Hoak reports.

KB Homes Takes On Foreclosures

For Sale By Owner: Not a Good Move Right Now?

Original Post: http://realestate.aol.com/blog/2011/02/18/for-sale-by-owner-not-a-good-move-right-now/

By Barbara Correa Posted Feb 18th 2011 3:32PM

Do you really need a real estate agent to sell your house? Fans of the For Sale by Owner (FSBO) approach say no. But here is a cautionary tale about the potential pitfalls of going the For Sale by Owner route.


Matthew Peters and his wife, Fiona, had two FSBO home sales under their belt, so they naturally opted for the do-it-yourself strategy the third time around as well.

The average seller looking to unload a home automatically assumes the first stop is securing a trustworthy real estate agent to market and sell the property. But for an adventurous few, the idea of saving that 5 to 6 percent broker commission is just too tempting.

The Peterses were in that small percentage. The couple had been renting out their two-bedroom ranch in Madison, Wisc., for about three years when they finally found a buyer last year willing to pay the $191,000 asking price.

Then the trouble began.

The couple planning to buy the Peterses' home was anxious to move -- the lease was ending on their rental -- so they asked if they could come in three days prior to closing. With a loan commitment letter in hand, the Peterses opened their house to the new family. That's when the trouble started.

According to Matthew Peters, their would-be buyers promptly charged roomfuls of new furniture, even two flat-screen TVs, to the point that they compromised their credit score and the bank canceled their loan. The worst was yet to come.

Soon, Peters learned that the ideal family he thought he'd been dealing with were actually his See photos of homes for sale in your area and across the country on AOL Real Estateworst nightmare, and now they were living in his house. "The house that we kept so tidy and spent thousands getting ready for a sale was now a disaster area,'' says Peters. "They ruined some of the floors, kids drew on the walls, they punched holes in the walls. They had a troubled teen that kicked in a door, the lawn was ruined from the above-ground pool they put in. We started getting complaints from neighbors.''

The family was now renting, and in addition to trashing of the house, they were constantly late with the rent. Peters continued to show the house to prospective buyers, but in its junked condition, it was a hard sell. Finally, after six months, Peters evicted his tenants for nonpayment. He spent two full days cleaning and hired some contractors to fix a series of broken items.

Then he ran into a little luck. One day, a man called about the house, saying his 70-something mother was looking for a single story place in the neighborhood and could pay cash. The house closed 10 days later. The two parties ended up splitting the fee to the buyers' broker, each paying around $5,000.

Peters, who is now renting, says if he had it to do all over again, he would definitely hire a sales agent. "We thought we were going to cash in not having to pay the broker commission,'' he says. "One thing people don't factor in is the time. I probably spent dozens of hours on showings.''

Still interested in trying it yourself? Check out these factoids:

• FSBO sellers declined in 2010, from 14 percent of overall home sales in 2003 and 2004 to just 9 percent in 2010.

• Another 32 percent of FSBO sellers sold to a relative, friend or neighbor.

• Before listing your own home, you need access to good current data about sales prices, market times, and activity. Be familiar with the process and know the requirements for your state. Some sellers believe that because they are not licensed, laws and regulations do not apply to them. Know the law, or hire someone who does.

• You will need to invest time to market the property and be available to show your home and respond to any inquiries.

• If the property is priced to reflect true market value and it is placed in the multiple listing service, nothing will stop it from selling.

• Most FSBOs often wind up paying at least half of the brokerage fee to the broker who produces a buyer.

Source: RISMedia

A Luxury Stucco House With Unique Features

Architect Robert Bartels built a rustic cottage as a retirement home in Rowayton, Conn. The 2,550-square-foot stucco house has generous open spaces, a den with a clock tower and a unique stairwell hatch inspired by the Paris metro. It's on the market for just under $2 million.

Room for Rent at the Mansion

The mortgage crisis is hitting multimillion-dollar homeowners especially hard and some of them are renting out rooms in their mansions in an effort to raise cash. Alyssa Abkowitz explains.

Steve Jobs Has Months To Live? American Cancer Society Cries Foul

Original Post: http://blogs.forbes.com/matthewherper/2011/02/17/steve-jobs-has-months-to-live-american-cancer-society-cries-foul/

Feb. 17 2011 - 2:55 pm By MATTHEW HERPER for Forbes.com

The National Enquirer has reported that Steve Jobs has only six weeks to live based the paper’s analysis of photographs that purportedly show the Apple founder. Hogwash.

Even if the photographs are real, the estimate of how much time Jobs has left, or any speculation about his condition, is baseless. You don’t have to take my word on that – you can listen to Otis Brawley, Chief Medical Officer of the American Cancer Society and a noted oncologist.

“Based on a photograph or even based of a videotape of someone giving a presentation on stage, it is impossible to make an estimation of someone’s life expectancy,” says Brawley. What’s more, he says, it’s not even really possible to make those kinds of estimates after a real exam. “I can’t look at someone’s picture and immediately say they’re sick,” says Brawley.

Nor would extreme weight loss necessarily mean a bad prognosis if Jobs is being treated, Brawley says. Wasting occurs among people who are undergoing chemotherapy – even if the patient is going to get better. And it’s also not always possible to tell wasting from weight loss due to dieting or exercise, either.

Brawley says he has some experience with supermarket tabloids. He was once quoted in one making a prognosis about Dirty Dancing star Patrick Swayze’s cancer. Later on, he says, another ACS official was quoted by the tab saying exactly the same thing about Senator Edward Kennedy.

As I’ve written before, because we all know that Jobs is sick, new information doesn’t tell us much about whether he will get well. There’s no excuse that hanging on every bit of Jobs news is material to Apple. It’s just evidence of our fascination with celebrity.

Why LinkedIn is More Valuable than Facebook

Original Post: http://blogs.forbes.com/ciocentral/2011/02/16/why-linkedin-is-more-valuable-than-facebook/
Feb. 16 2011 - 12:07 am Posted by Bruno Aziza

Image via CrunchBase

Investors started the year excited, then disappointed, about the potential of a Facebook IPO and a $50B valuation. But fortunately, the upcoming LinkedIn IPO and its $2B valuation gives them an opportunity to get in the game and cash in on the much talked-about “social network” trend.

The LinkedIn IPO is indeed exciting, but if you are an executive, you should spend more than just your money on LinkedIn – you should spend time understanding how the social network works, and how its model can help you build better applications for your organization.

LinkedIn offers many practices that organizations should follow when building internal applications. In this post, I’ll focus on two: how LinkedIn thinks about productivity, and its approach to data.

“Time In App”

Most productivity applications measure success by the number of hours its users spend in it. For example, we know that Facebook represents about 12% of your internet time. According to Nielsen Research, internet users spend close to 5X more time on Facebook than YouTube. So Facebook wins, right? Wrong! While “time in app” might appear to be a great gauge for stickiness, LinkedIn’s CEO argues that it might not be the right measurement (see Jeff Wiener’s explanation at the O’Reilly Web 2.0 conference here).

While Facebook’s drive towards advertising dollars might justify the importance of the ‘time in app’ metric (you might have noticed Facebook’s recent advertising addition to your photos?) – LinkedIn focuses on productivity for its members (LinkedIn makes money via ads, but member services and enterprise hiring services are also part of its business model).

What does this mean to you: Your company’s application model is more similar to LinkedIn than to Facebook. Don’t be drawn to the overly satisfying measurement of “time in app” unless your business model is driven by ads; your company gets more value by optimizing your employees’ time.

If you are looking for inspiration on how to change the culture of measurement inside your organization, I highly recommend looking up Zappos’ CEO Tony Hsieh’s work in call centers. In this video, Tony explains how a longer resolution time is better than a shorter one (his book, “Delivering Happiness” tops the customer service and management charts on Amazon).

“Mi Data es Su Data”

Facebook is not particularly regarded for its ability to give its members value back on their own data. While it’s very easy to get data into Facebook, it’s very difficult to get data out and in a meaningful way. Simply charting your friends’ geographical spread is difficult (join the Facebook Data Team page to stay appraised of the latest). Beyond suggesting new friends, Facebook does little to share back with the community the incredible insights it gathers about its users.

LinkedIn’s approach to data is quite different. The LinkedIn Analytics team has been hard at work understanding your data trail, and they are not shy to share these analytics with you. My favorites include LinkedIn’s “Signal,” “Career Explorer,” “InMaps” or “Skills” which launched most recently.

Each application exemplifies LinkedIn’s drive to fulfill its vision – better connecting business people, through analytics. The above applications showcase that, by using clever algorithms, members can be presented with insights that anticipate their questions and connect with others more efficiently.

What does this mean to you: Your organization is sitting on latent data that, if used, can return incredible value to your employees and bottom line. Think through the data your applications hold and the tasks that could be automated or suggested. Take a look at LinkedIn’s Career Explorer. You can use it to explore the future of your career based on the paths of others. Along the way, Career Explorer suggests relevant information to make your exploration more useful. Imagine if you could build something similar inside your organization. Say your employee wants to launch a new product and your application suggests what the path to launch will look like; who’s encountered similar issues or the knowledge base articles they should read? Wouldn’t that be useful? Career Explorer exhibits the characteristic of the best analytical applications. They don’t just provide insights, they allow you to visualize a possible future and prompt you to act on it.

As I argued in my recent keynote at Predictive Analytics World, our world is becoming more analytical. And in this regard, LinkedIn is light years ahead of Facebook.

Where does your organization stand?

Does Buying a Rental as an Investment Make Sense? .

By JUNE FLETCHER

FEBRUARY 11, 2011

Q. Since so many people have lost their homes to foreclosures and can't get credit, I expect that it's a good time to buy a rental investment place. But I'm also worried that property prices may fall further. Do you think this would be a wise way to spend my money?

A. It all depends. If you're able to obtain a property that's deeply discounted from its current market value, can achieve positive cash flow and can handle the out-of-pocket expenses that inevitably arise when you're a landlord, then it could be a good deal.

But first ask yourself these questions: Do you mind panicked calls at 3 a.m. to deal with stopped-up showers or heat pumps that are on the fritz? Do you have a cushion of cash to tide you over during vacant periods and cover costs like advertising and vetting tenants? Can you afford to put down a hefty down payment to obtain financing? And do you plan to own for a few years so you can benefit from the boost in equity you'll get as you pay down the mortgage, even if it takes a while for home prices to rise again?

If the answer to all of these questions is yes, then you can go shopping. Ask the current owners for copies of all rental receipts, as well as all bills, including utilities, water and sewer, property management and taxes.

Then you'll have to do some figuring so you can compare the income potential of your targeted properties.

First, for each property, take annual rental income and deduct the average vacancy rate for your area, which in Chicago was 9.5% in the fourth quarter of 2010, according to the U.S. Census Bureau. Then deduct all of the operating expenses; this will give you your net operating income or NOI.

Once you get this figure, you can divide it by the purchase price to get the capitalization, or cap, rate. This is a useful figure to have when you're comparing properties, since those with higher cap rates will bring you better returns.

You'll also want to calculate the cash flow by deducting your annual mortgage payment from your NOI.

From that you can calculate the cash-on-cash return for the first year of ownership. Figure out your cash outlay by adding up closing costs, down payment and any expenses for necessary maintenance that was not done by the former owner. Divide your cash flow by your cash outlay and you'll have your cash-on-cash return, which is expressed as a percentage.

This figure can help you decide which property is the most lucrative, and also to compare the yield of a property with that of other kinds of investments, like Treasuries and stocks.

Write to June Fletcher at fletcher.june@gmail.com

Johnny Mac Trick Shot Quarterback

Home Affordability Returns to Pre-Bubble Levels .

By NICK TIMIRAOS for the Wall Street Journal

FEBRUARY 8, 2011, 8:53 P.M. ET

Home affordability returned to pre-bubble levels in a growing number of U.S. markets over the past year as price declines laid the groundwork for a housing recovery.

Bloomberg News

Rows of houses stand in Las Vegas, Nevada, U.S., as seen in this aerial photo taken on Tuesday, Sept. 22, 2009.


Data provided by Moody's Analytics track the ratio of median home prices to annual household incomes in 74 markets. By that measure, housing affordability at the end of September had returned to or surpassed the average reached between 1989-2003 in 47 of those markets. Most economists believe the housing boom took off in 2003.

During the boom, lax lending and speculation pushed house-price inflation far beyond the modest rise in household income. Nationally, the ratio of home prices to annual household income reached a peak of 2.3 in late 2005. But by last September, it had fallen to 1.6, matching the lowest level in the 35 years the data have been collected and well below the historical average of 1.9 between 1989 and 2003.

"Based on incomes, this is as affordable as it gets," said Mark Zandi, chief economist at Moody's Analytics. "If you can get a loan, these are pretty good times to buy."

But the bad news is that those price declines are leaving more borrowers underwater, or in homes worth less than the amount owed.

Many economists and housing analysts expect an additional decline of 5% to 10% before prices reach bottom later this year or early next year. Housing demand remains weak because buyers are skittish about the economy and lending standards are tight.

Markets that now appear to be undervalued include Detroit, Las Vegas, Atlanta and Phoenix. Even in such markets, high rates of foreclosure and underwater borrowers should keep downward pressure on prices. "They're undervalued, but they're going to get even more undervalued," said Mr. Zandi.

Measuring home prices relative to income is not the only way economists calculate housing affordability. They also examine the relationship between house prices and rents. Measured by the price-to-rent ratio—the price of a typical home divided by the annual cost of renting that home—prices are fairly valued, or undervalued, in around 20 markets. Nationally, the price-to-rent ratio stood at 14.85 at the end of September, above the 1989-2003 average of 12. The data suggest pockets of the country have further to fall.

Home prices still remain overvalued by both measures in several markets, including Seattle, Charlotte, New York and Portland, Ore.

Based on rents, "it's still not a slam dunk to buy" in those markets, said Mr. Zandi. He said markets appeared most overvalued in the Pacific Northwest, which was among the last regions to enter the housing downturn. Historical measures also showed prices were still high along the Northeast corridor from Baltimore to Boston.

The cost of owning a home looked less affordable based on rents than on incomes in part because rents also fell through 2009 and the first half of 2010. As rents rise, that could tip the scale back in favor of owning in some areas.

Of the 74 housing markets, Baltimore appeared to be the most overvalued. By contrast, prices in Cleveland, the most undervalued market, have returned to 1991 levels based on the price-to-rent ratio.

Historical measures comparing rents and incomes with home prices provide a useful gauge of affordability, but can be imperfect at measuring how close different markets are to recovering from a bubble. After a severe housing downturn, home prices rarely stop falling once they reach equilibrium.

Some areas will stay undervalued for years as they deal with a glut of foreclosures and weak demand. Historical trends show housing could remain undervalued in many markets for six to seven years, seconomists at Capital Economics.

"It's become cheaper to buy than to rent" in Phoenix, said Jon Mirmelli, a real-estate investor in Scottsdale, Ariz., who is renting out foreclosed homes. "But the question is: Can you qualify for a loan?"

Meanwhile, some areas that appeared overvalued relative to historic norms, such as Washington, D.C., may not completely return to pre-crisis levels thanks to structural changes in the economy that support higher prices.

Write to Nick Timiraos at nick.timiraos@wsj.com

Super Quiz Bowl

CNBC's Darren Rovell tests NFL players on their knowledge of financial news.

Historic Luxury House on the Hudson River

For art dealer Graham Arader, it was love at first sight when he came across "Pretty Penny," a 19th-century home in New York's Rockland County. He paid about $6 million for the house, but the family has rarely spent time there. WSJ's Sushil Cheema reports.

Playing to Hedge Funds, a Trophy Rises in Midtown

Original Post: http://www.nytimes.com/2011/02/02/realestate/commercial/02rents.html?_r=1&ref=realestate

By ALISON GREGOR New York Times. Published: February 1, 2011

Tina Fineberg for The New York Times

With leases above $100 a square foot, 510 Madison Avenue is starting to live up to its high-rent aspirations.

 

When the developer Harry Macklowe contemplated building a boutique office tower with unparalleled amenities at 510 Madison Avenue in the late 2000s, he expected it would be filled with hedge funds and other financial sector tenants who would pay rents well above $100 per square foot.

Tina Fineberg for The New York Times

An interior view of the building.

But the economy slumped in late 2008, and Mr. Macklowe found himself fighting to maintain ownership of 510 Madison, at 53rd Street, where just one company had signed a lease.


He lost that ownership battle to Boston Properties last September. Now, a series of leases signed at 510 Madison late last year for well north of $100 a square foot signifies a turnaround for the building — and may presage a recovery of Manhattan’s overall high-end office market, brokers said.

“Boston Properties had the vision to buy the building at a time in the market five months ago when even then people were very cautious about $100 rents,” said Paul Amrich, an executive vice president of the commercial brokerage CB Richard Ellis, which is representing 510 Madison. “But they knew the trophy status of the building and the location of the building would prove that we would get to those rents again.”

While there were a total of 91 office leasing deals signed in dozens of Midtown buildings for $100 or more per square foot at the height of the office market in 2008, that number plummeted to just 18 deals in 2009, according to data from the commercial brokerage Jones Lang LaSalle.

The tally for 2010 is about the same, with a total of 19 deals signed in eight buildings, including three at 510 Madison.

But many of those deals took place late in the year, reducing the inventory of available space by 23 percent in buildings that Jones Lang LaSalle considers “trophy” properties — and potentially capable of capturing rents of $100 or more per square foot. Those 52 Midtown buildings tend to be located around the Plaza Hotel on Fifth Avenue, in what is known as the Plaza district, and many have views of Central Park.

They may seem more like country clubs than workaday office buildings, with grand lobbies and elevators, tight security and amenities like upscale restaurants to attract financial companies for whom image and high profit margins go hand in hand.

Those 52 buildings had a vacancy rate of 10.1 percent, compared with 13 percent in 2009, and are poised to outperform the office market in general this year, said Cynthia Wasserberger, a managing director of Jones Lang LaSalle.

Much of that has to do with the recovery of the financial sector and its endless race to trade up into more prestigious office space, she said. With office rents still well below their 2008 peak, landlords are still offering concessions to offset the cost of moving. That may encourage financial tenants looking to upgrade, Ms. Wasserberger said.

“It sounds kind of funny to say tenants would be taking advantage of a $100 rent,” she said, “But a lot of tenants with leases up for expiration may find it justifiable to say, ‘I’d rather lock in today at $100 a foot, knowing this building was leasing at $150 or $180 a foot in 2008, so it’s a relative bargain.’ ”

Several towers were developed or rehabilitated in the market frenzy to achieve steep rents, but 510 Madison is the only new office building in the Plaza district.

“It’s an extremely central and rare location to be able to build a brand-new building,” Mr. Amrich said. “That alone sets us apart.”

While 510 Madison’s Central Park views are limited to the top floors on the northwest side, the tower, which was designed by Mr. Macklowe, SLCE Architects and Moed de Armas & Shannon Architects, has column-free interior space, which allows financial companies to create trading floors, as well as 10-foot ceilings with floor-to-ceiling windows in a glass facade.

Newer buildings can be built with amenities that draw financial companies. For instance, 510 Madison will have a top-notch fitness club with a 50-foot pool, a large landscaped and furnished terrace, a private dining area for tenants and their clients and a generator that can provide power in a blackout.

Boston Properties paid $287 million for the 350,000-square-foot office tower and acquired a junior loan on the property for $22.5 million. Besides the three leases signed in 2010 with Senator Investment Group, Chieftain Capital Management and Valinor Capital Partners, Boston Properties also managed to retain the Jay Goldman & Company hedge fund, which Mr. Macklowe signed in 2007 at $135 a foot, at the same rent but on a higher floor. Floors 25 through 28 have been leased, with the exception of 6,000 square feet still available on the 27th floor, Mr. Amrich said.

The hedge funds, private equity groups and wealth management firms that typically seek expensive space tend to be smaller companies, requiring perhaps 5,000 to 25,000 square feet as opposed to 100,000 square feet or more, Ms. Wasserberger said. For that reason, if 510 Madison continues to lease as anticipated, it may account for many more leasing deals of $100 or more per square foot in 2011.

“If the numbers were 19 deals in 2010, I bet we see closer to 40 in 2011,” she said. “The reason is 510 Madison is now open for business. It’s a 30-story building, and those are going to be some partial- and single- and double-floor tenants, so that could account for a sizable number of deals.”

Of course, the higher the floor the higher the rent, brokers said.

“There’s always that premium for the tower view,” said Alan Desino, an executive managing director of the commercial brokerage Colliers International. “Is there a building right now anywhere in Manhattan that on the base floor you’re going to pay $100 a foot? Probably not.”

A large part of 510 Madison’s allure is its location in the Plaza district. Another banner office tower developed speculatively, 11 Times Square, was also hoping for $100-per-foot rents, but its location on Eighth Avenue near the Port Authority of New York and New Jersey has been a detractor, Mr. Desino said. So far, the law firm Proskauer Rose is the building’s lone large tenant.

Still, the right kind of building — for example One Bryant Park on Avenue of the Americas, known as the Bank of America tower — delivered at the right time can create a desirable submarket around it, even driving up rents in neighboring buildings, he said.

“One Bryant Park is a phenomenal building,” Mr. Desino said. “Just due to the efficiency and space you have floor-to-ceiling and, let’s face it, the views are phenomenal. It’s been able to achieve $100 rents in an area that, three years ago, I would have said, not a chance.”

One Bryant Park also happens to be certified by the United States Green Building Council, as does 11 Times Square, and 510 Madison is pursuing that certification. A recent study by the CoStar Group, a real estate information company in Washington, showed landlords could achieve an average premium on rents of 5 to 10 percent nationally if a building was certified as environmentally friendly.


Even if it does not guarantee higher rents, that certification carries a certain cachet, said Christopher Macke, a senior real estate strategist at the CoStar Group. “Maybe you don’t get the premium rent, but you get the tenant, and the other guy doesn’t,” he said. “Put another way, in a green building, you have a higher absorption rate than one that’s not green.”

A version of this article appeared in print on February 2, 2011, on page B6 of the New York edition.