Friday, September 30, 2011

There is no reason to be upset with BofA for its new debit-card fees.

The ATM Debit-card fee is transparent and easy to understand.  This is far preferable to the spate of fees (such as overdraft insurance charges) that were opaque and confounding.  If Bank of America wants to charge for a service, they should be free to do so. 

Will the private market step in?

Conforming loan limits in San Berardino and Riverside Counties in California will drop from $500,000 to $417,000 tomorrow; in LA and Orange Counties it will drop from $729,750 to $625,500. 

So we have a natural experiment in "crowding in."  Will the private lending sector fill the gaps?

Austerity is a problem, but so is fear

Paul Krugman this morning argues that fear of fear is phony.  He is almost certainly correct that fear is not the number one problem at the moment--if I had to pick a number one issue, it would be austerity measures at the state and local levels of government.  Tracy Gordon of Brookings has a nice picture:

 Cuts in state and local government jobs (police officers, school teachers, firefighters, DMV workers) are putting a drag on employment growth.  Moreover, this picture understates the problem, because total compensation to many state and local workers has been cut.

But I do think fear is part of the problem, at least in one sector of the economy.  It seems to me that there are business opportunities in lending that are going unanswered.  The pendulum for underwriting has swung so far to caution that according to the Flow of Funds Accounts, net lending declined in the second quart of 2011.  More specifically, net bank lending dropped by $181 billion on an annualized basis in the first quarter and by $129 billion in the second quarter.  Net lending is the difference between volume of new loans and volume of repayment of old loans. I do find it plausible that one of the sources of the tight lending environment is a fear of regulators.

One more point.  if it weren't for lending by the monetary authority, net lending in the second quarter would have fallen by $860 billion on an annualized basis.

My friend (and co-author) Andy Reschovsky wins Steve Gold award

It was nice to read about it this morning:

University of Wisconsin–Madison economist Andrew Reschovsky will be honored in November with the 2011 Steve Gold Award, which recognizes a person who has made a significant contribution to public financial management in the field of intergovernmental relations and state and local finance.
The Association for Public Policy Analysis and Management, the National Conference of State Legislatures and the National Tax Association give the award each year in memory of Steve Gold, an active member of all three organizations whose career and life tragically were shortened by illness.
"I knew Steve Gold, which makes receiving this award even more meaningful," says Reschovsky, a professor of public affairs and applied economics in UW–Madison's La Follette School of Public Affairs. "As a public finance economist, Steve believed his role was to communicate to policymakers about research and analysis. His emphasis on the link between scholarship and practice and on policy-oriented work on public finance has very much influenced my career."

Thursday, September 29, 2011

Feeling Blessed


Dining Room Plan- Backordered!

I have procrastinated long enough on getting our dining room put together so I spent some time yesterday looking for a rug and drapes for the room.  We've been in our house for over a year, and when I finally decided on drapes and was ready to pull the trigger on ordering them, I realized they aren't available for shipping until NOVEMBER 7!  Ug!  I want them now!  But if I've waited this long, does it really matter?  I'm going to look a little more and decide on something this weekend.  

Here are the ones I originally wanted, Concorde Medallion Panel from Ballard Designs (Indigo).

But, I also really love Kristen's (6th Street Design School) living room drapes, which are made from this fabric. I could order it and have them made??  The blue seems more vibrant, which I really like.  

I'm thinking a trip to the fabric store is in order for the weekend to help me decide!

Wednesday, September 28, 2011

Boston Fed President Eric Rosengren on the need to facilitate refinances (h/t Kurt Paulsen)

He says at a meeting in Stockholm:

There are several proposals that attempt to facilitate refinancing for homeowners who have been negatively impacted by the drop in housing prices. These proposals do face hurdles, including how to address private mortgage insurance and second liens. However, a program that made it possible for many homeowners to refinance, even if they were upside down, would likely provide significant reductions in mortgage payments to individuals who are likely to have a relatively high propensity to consume. Clearly getting more money into the hands of homeowners who would spend it could help to fuel GDP growth. This would reduce one of the impediments to a more significant effect from the monetary policy actions taken to date.

I hasten to add that there is already a government program to allow underwater borrowers to refinance, the Home Affordable Refinance Program (HARP). This program allows underwater borrowers with Fannie Mae or Freddie Mac loans to refinance at lower rates. Unfortunately, the program has helped fewer borrowers than was originally hoped. Fed Governor Betsy Duke outlined some of the potential reasons why, in the talk I mentioned earlier. They include loan-level price adjustments (LLPAs) that raise interest rates for many borrowers and thereby reduce the benefit of refinancing; originator worries about “buybacks” forced on them by Fannie Mae and Freddie Mac; junior lien-holder resistance to re-subordinating their loans; and mortgage insurance policies.

The Federal Housing Finance Agency (FHFA) is now investigating whether there are ways to enhance the program to benefit more borrowers.[Footnote 15] As this work proceeds, I hope the FHFA considers dropping or reducing LLPAs in cases when a GSE loan is refinanced into another GSE loan. Such a refinance actually reduces the GSE’s credit risk (they already guarantee the existing mortgage and the homeowner will be able to take advantage of lower rates, freeing up cash flow).

Am I posting this because I agree with it?  Yes. 

Tuesday, September 27, 2011

Our Kitchen (From Inspiration to Reality)

When we decided that we were going to build a home, I started scouring blogs and design magazines for inspiration.  I recently came across two magazine articles that I had torn out and showed to our builder as the inspiration for our current kitchen.  I can't remember which magazines they came from, but I'm thinking Traditional Home and Kitchens & Baths.

Based largely on these photos, our kitchen was born!

Here's a peek:


Tuesday at our house

It's Tuesday and my to-do list is a mile long today.  My baby's got a cold, my allergies are going crazy, the clean laundry is sitting in laundry baskets getting nice and wrinkled, and the kitchen is a mess!  But it's okay, that's life.  Thankfully, we have a beautiful kitchen and nice clothes to wear!  The doctor said James is fine and will get better soon.


Here's to your Tuesday and looking forward to the weekend already!

Monday, September 26, 2011

Hard Choices

Los Angeles (and other large cities) have food deserts--places with limited access to fresh, healthful, relatively inexpensive food.  Low-income people living in food deserts are at a particular disadvantage, because they can't afford cars, and therefore often do not have access to supermarkets. A common hypothesis is that poor kids eat unhealthy food because they don't have access to healthy food.  (I think this is only partially true--kids also eat unhealthy food because they like it.  For that matter, I still love McDonald's fries, I just try to limit my intake, and am in part able to because I have access to better alternatives).

Tesco's Fresh and Easy, a chain that develops and operates small grocery stores that feature fresh fruit and vegetables at reasonable prices, has decided on a business strategy of locating in food deserts.  This is potentially a great thing for kids who live in these places (especially if Fresh and Easy can figure out how to take WIC vouchers).  But this begs the question of how they are able to sustain such a business model.  Two answers present themselves--they are a non-union shop, and they rely heavily on automation.  Specifically, Fresh and Easy features self check-out, and so the store doesn't have to hire checkers.   Self check-out also makes it hard for Fresh and Easy to accept paper certificates, such as WIC vouchers, as payment.

So the cost of Fresh and Easy is that it may drive down wages for grocery workers a bit, and it may reduce employment for grocery workers.  The benefit is that it gives low-income children access to reasonably priced, good quality, fresh foods.  My personal social welfare function says to me that feeding kids inexpensively and well dominates most other considerations, but let's not pretend that there isn't a trade-off.

Michio Kaku on CERN's Challenge to Relativity

In this morning's WSJ:

Reputations may rise and fall. But in the end, this is a victory for science. No theory is carved in stone. Science is merciless when it comes to testing all theories over and over, at any time, in any place. Unlike religion or politics, science is ultimately decided by experiments, done repeatedly in every form. There are no sacred cows. In science, 100 authorities count for nothing. Experiment counts for everything.

Sunday, September 25, 2011

Our Fall Mantle

As much as I loved summer this year, I've finally embraced the idea that fall is here and changed out our  summer mantle from sand and shells to a fall mantle with pumpkins and pinecones!  Since we don't have a fireplace, our mantle is a console table that sits in our  entryway-anything works, right?!  I love bringing in those warm fall colors to signal that it's time to get cozy!

I started with a piece of burlap that I cut into a runner, added some Target mercury glass candlesticks and votives, mini pumpkins from Hobby Lobby and pinecones that I added some sheen to with gold spray paint. 

Are you welcoming fall in your home?

I'm linking up with The Lettered Cottage and you can too!

Thursday, September 22, 2011

"For Now" Decor

The curved staircase just off of our living room is kind of a focal point in our house.  I've got some ideas on how I'd like to decorate it-- simply with a round rug and table and a big, leafy green plant.

But, until I find the rug and table, we've got a "for now" situation happening.  I shopped our house and found a pair of our dining chairs, one of our former coffee tables and a silver Target vase with some Pottery Barn botanicals to fill in the space.

And come Christmas!, our tree will go there, so we probably won't be making any permanent changes until then.

A reminder: Ronald Reagan raised capital gains taxes

The Tax Reform Act of 1986 actually did two things that required the affluent to pay higher taxes: it raised the effective tax rate on long-term capital gains from 20 to 28 percent, and it eliminated the ability to write passive losses against ordinary income.  This meant that after 1986, Warren Buffett's taxes would have been at least as high as his secretary's.  

Wednesday, September 21, 2011

James' Halloween Costume

Given James' recent fascination with the kid show Yo Gabba Gabba, we decided he could be DJ Lance Rock for Halloween.  We got the costume last weekend and I think he's going to be adorable! 

Last year, when James was just a tiny baby, I posted about these costumes- I still think they are so cute!  Do you dress up for Halloween?  I haven't in ages, but while we were shopping for James' outfits, I saw some really fun adult ones too.  

Tuesday, September 20, 2011

Read Taylor Branch's Atlantic Piece on the NCAA

Let me pull out two paragraphs from the powerful story:

Educators are in thrall to their athletic departments because of these television riches and because they respect the political furies that can burst from a locker room. “There’s fear,” Friday told me when I visited him on the University of North Carolina campus in Chapel Hill last fall. As we spoke, two giant construction cranes towered nearby over the university’s Kenan Stadium, working on the latest $77 million renovation. (The University of Michigan spent almost four times that much to expand its Big House.) Friday insisted that for the networks, paying huge sums to universities was a bargain. “We do every little thing for them,” he said. “We furnish the theater, the actors, the lights, the music, and the audience for a drama measured neatly in time slots. They bring the camera and turn it on.” Friday, a weathered idealist at 91, laments the control universities have ceded in pursuit of this money. If television wants to broadcast football from here on a Thursday night, he said, “we shut down the university at 3 o’clock to accommodate the crowds.” He longed for a campus identity more centered in an academic mission.


“Scholarship athletes are already paid,” declared the Knight Commission members, “in the most meaningful way possible: with a free education.” This evasion by prominent educators severed my last reluctant, emotional tie with imposed amateurism. I found it worse than self-serving. It echoes masters who once claimed that heavenly salvation would outweigh earthly injustice to slaves. In the era when our college sports first arose, colonial powers were turning the whole world upside down to define their own interests as all-inclusive and benevolent. Just so, the NCAA calls it heinous exploitation to pay college athletes a fair portion of what they earn.
I love college athletics (I am thrilled that I have gotten to attend three Rose Bowls in which Wisconsin played) and admire many college athletes.  I not only envy their athletic prowess, I am amazed at the varsity athlete who can manage a B average in a difficult major while playing a sport.

But the NCAA system gives these athletes a raw deal.  Among other things, the system makes it difficult for athletes in revenue generating sports to get a real college experience--practice and games can leave students too tired to focus on class (yes, I know some athletes have no interest in class to begin with, but in my experience they are a distinct minority).  If the "pay" is supposed to be an education, the least we as colleges and universities can do is make sure athletes get one.

Sunday, September 18, 2011

Fall is in the Air

You know fall is in the air when Starbuck's puts out their specialty fall drinks.  Or is that just how I know it's fall??!!   Maybe it's because our leaves don't really change colors and our temperature barely drops.  Anyhow, this weekend I tasted Starbuck's new

It is Yumminess!!  I love the little bits of sea salt you taste throughout the drink.

Being curious, I looked up the nutritional info (or the info that tells you how fattening their stuff is) and it's not bad enough to keep me from ordering it once in a while.  I got the tall without whipped cream:

If you go with nonfat milk, you'll save 30 calories and 4 fat grams- not that you need to be worrying about that while enjoying your tasty beverage.  Your $4 tasty beverage!  Ouch!

What signals fall to you?  Do you even like Starbuck's- don't answer that Amanda!! Ha!  For those SB drinkers, I'm always curious what your order is??

Saturday, September 17, 2011

Allowing underwater borrowers to refinance could improve investors' Sharpe Ratio

Consider borrowers with 6 percent 30-year mortgages that are 20 percent underwater.  Assume that the probability that any one borrower will default in any one month is .2 percent, and that the cost of default to the lender conditional on default is 50 percent.  Assume that at the end of five years, any remaining long balance is paid off).  A security containing such mortgages will have an IRR of 4.83 percent (I am happy to share the spreadsheet for the details.

Now let us convert the borrowers into people with 4 percent mortgages with 20 year terms.  The payment from such mortgages will be essentially the same as before, and the mortgage balance will be paid off more quickly.  The good news for investors is that this lowers the probability of default; the bad news is that it reduces the yield before default.  Assuming default probabilities in any one month go down to .1 percent, the IRR for investors goes down to 3.45 percent.  This seems like a bad deal for investors, except that they will have more certainty about their cash flows; the standard deviation of their investment falls.  Because default is binomial, we can calculate that the variance of returns will be p*(expected loss)*(1-p*expected loss).  The variance of not refinancing is thus .0099 and of refinancing is .004975, which translate into standard deviations of .1 and .07.  Because the riskless rate is currrently zero, when we substitute into the Sharpe formula, we find

Sharpe no refinance = .048/.1; Sharpe refinance = .0345/.07. 

This is about .5 in both cases, suggesting that investors are getting the same risk adjusted return whether refinancing becomes easy of not, assuming the assumptions are correct.  I am not saying they are; I am saying that in making policy we need to think about these sorts of implications.



Thursday, September 15, 2011

Missoni SOLD OUT!

Remember this post about the Missoni line at Target?

Ug! Can you believe that after all that hype that the Houston Targets sold out of the entire line of Missoni goods within the first hour of the store being open?

My sis-n-law called me the day the sale started from the store and told me there was nothing left!  The employees told her that people were lined up outside before the store opened and when they got inside, started grabbing everything in sight.  And the employees said the other Houston stores were the same way!

I sure hope they restock- I haven't even had a chance to check it out!  Did that happen in your city?  Or did you score anything great?

Tuesday, September 13, 2011

Organized Bathroom Drawers

Over the weekend, I spent some time (only took about an hour) organizing my bathroom drawers. They were what I call "semi-organized" before, with similar things grouped together, but I needed to throw some old things out and group them better.  I use my favorite "Linus" clear drawer dividers from The Container Store.

The top "go-to" drawer needed the most help.  Things were just thrown in there and the makeup I never use was stored there too.

It was great to go go through my nail polish and get rid of the old, icky ones and see what colors I have.

After organizing everything, I had a whole extra drawer free, so now nail stuff gets to be by itself.
The hair clips and and bands have been relocated to a new drawer.

How many hair brushes and curling irons does one person need?  I put the ones I use most in one drawer and the others in the drawer below.

James loves to pull the curlers out of the bottom drawer and play with them while I get ready in the morning.

It's so nice to open my nice, newly organized drawers!!  Been organizing anything lately at your house?!

If the Walt Disney Company ran LA Metro...

People would pay $80 a day to leave their cars in a garage, and then walk from one mode of rail transit to another.  And the rail trips would leave you where you started.

Sunday, September 11, 2011

My "Eat Clean" Meals

My weight loss journey has hit many plateaus, but not surprisingly, I've always seen the biggest improvements when I've eaten a really "clean" diet.  For me, that means finding something high protein that I can eat for breakfast, lunch, and dinner for about 5 days straight, then switch to something else.  And when I'm eating really healthy, I'm also more likely to workout.  Conversely, if I'm in a "bad" eating rut, I'm not likely to be hitting the gym.

I'm no dietician or nutritionist and only know what has worked for me.  Some of you read my story about losing the baby-weight and asked for more info on my diet, so here goes.  AND, I love this Eat-Clean Cookbook.

Picture 1: James 2 weeks old

Picture 2:  James 17 months old (photo shot at bootcamp!)

First, I'll let you know that my goal was to build muscle and get lean, with Jamie Eason as one of my inspirational goals.  I like her shape, although she is a fitness model who is way leaner and more muscular than I'd like to be.  She is about my height though, 5'2 (I'm a shorty at 5'1).

To obtain the kind of shape she is in, you have to eat a super-strict diet, and I've never been that disciplined.  I still eat Mexican food, ice cream, iced mochas from Starbucks, and drink wine, (but all in moderation).

Although I don't really count calories, Jamie provides a formula for you to use if you are trying to lose weight.


Here's what I typically do.  I try to eat approximately 100 grams of protein per day, broken into about 5 small meals. I love my Starbuck's iced mochas in the afternoon, but will get an iced tea instead if I'm trying to watch my calories.

I usually work out in the evening, so when I get home and am hungry, I'll have bacon and eggs.  Sometimes, for breakfast, I'll eat oatmeal with skim milk, raisins, cinnamon, and sliced almonds, then drink the protein shake later in the day.

For me, the easiest thing to do is find a few healthy meals I know I like and eat them over and over.  Boring for sure, but since getting high-protein meals in is key, it works best for me.  I might eat one of the meals for a week, then switch to something else.  Of course, I "splurge" on cheeseburgers or nachos or something every so often too.

My three "go-to" meals are:



  • Extra lean ground turkey (1 package)

  • Low sodium black beans (1 can)

  • Brown rice (1 cup)

  • Taco Bell low sodium seasoning

I make the rice in a saucepan while I brown the turkey meat.  Then I add the seasoning and black beans to the meat.  Combine the cooked rice into the meat and top with low fat sour cream, low fat cheese, salsa, and sometimes I crunch up a couple of tortilla chips on top.  (James actually loves this too).



  • Chicken tenders (or chicken breast)

  • Salad mix (I buy prewashed in a bag)

  • Bangkok Padang Peanut Sauce (found in the regular grocery store in the Asian aisle)

  • Lime juice

  • Sliced almonds

I cook a package of chicken tenders and portion them out for 2 tenders per salad.  I usually mix a couple tablespoons of the peanut sauce with a tiny bit of lowfat peanut butter because the sauce is kinda spicy and I want to mellow it out.  I add a squeeze of lime and toss in the salad and chicken, topping with some sliced almonds for crunch.




* 2 lbs ground turkey (or chicken)

* 3 egg whites

* 1 cup quick cooking oats

* 1/2 tsp ground cumin

* 1/2 tsp dried thyme

* 2 tsp dry yellow mustard

* 2 tsp black pepper

* 2 tsp chipotle pepper spice

* 1 tsp salt

* 2 tbsp garlic powder (2 cloves minced)

* 1 small onion (finely chopped)

* 2 celery stalks (finely chopped)

(I make several batches of the seasoning mix at once since I have all the ingredients out).  I also usually eat them with a side of frozen steamed veggies.  


1. Preheat oven to 375 degrees.

2. Spray muffin pan with canola or olive oil.

3. Mix all your ingredients together in one large bowl.

4. Roll the mixture into balls and place in muffin pan. Muffins should be about the size of a racquetball.

5. Bake for 40 minutes.

Makes 12 muffins.

Here's a video showing Jamie Eason cooking these- she calls them turkey meatloaf muffins.

I hope this helps!  I'm always curious how long it took other women to lose their "baby" weight too, I think it helps knowing that for many of us, it takes a loooong time!

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Also, my ULTIMATE WORKOUT PLAYLIST (60 songs) is on my healthy lifestyle blog, Honey We're Healthy

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Friday, September 9, 2011

Jim Follain has a proposal for empirical macro

He writes:

First, let’s do more research to help reduce the uncertainty regarding the fiscal situation we face and the new, modern and more complex economy in which we live. This step will involve de-emphasizing a number of metrics underlying macroeconomics built around national totals, such as national income, GDP and the aggregate unemployment rate. Instead, we are wise to take a more geographically granular view of our economy that measures regional, state and local economic activity and adapts policies specific to these areas. Focusing upon the national aggregate or the national average masks the extraordinary variation among markets in this country and, indeed, can even make it harder to identify seriously stressful events until it’s too late. This is difficult to do, but c’est la vie.

Ready for Fall?

Seeing images like these makes me ready for fall.  And we've been blessed with cooler temperatures and less humidity that feels fantastic!  I've been working on switching out our summer decor with some fall inspired decor- just need to finish snapping some pics so I can show you!

photo: tumblr via justine taylor