Mortgages

In 2008 the federal government intervene to save mortgage giants Fanny Mae and Freddy Mac. At the time the feds owned 80% of the stock and the price had fallen from a high of $86 in 2001 to less than one dollar in 2008. The feds injected $175 billion to prevent bankruptcy to save both companies. The other 20% that was owned by private companies also benefited from the fed action. One example is Pershing Square Capital. It purchased 210 million shares on the dip at $2 per share. Today the stock is worth $8.50 meaning a profit of $1.7 billion. Other companies like Fairholme Fund, Paulson Company and Carl Ichan also benefited from the fed infusion of cash. Trump is considering privatizing both Fanny Mae and Freddy Mac. There are currently 9 billion outstanding shares selling at $8.50 per share. The feds currently own 80% or 7.2 billion shares valued at $61 billon. In addition, the feds own $90 billion in preferred stock so the buy out would cost $150 billion. This would remove the federal government from the mortgage market. The down payment on a 30-year conventional loan would be 5% and 3% for first time buyers. It is not likely that VA loans would be any different. Both Freddy Mac and Fanny Mae have been under federal conservatorship since 2008. Private companies without the backing of the feds would most likely require higher returns to compensate for higher risk meaning higher mortgage rates. The moral hazard is less when private companies no longer have the backing of the government. They tend to be more cautious in lending. The upside is fewer high risk loans as happened in the 2008 collapse of the mortgage business.

Stalking

On the morning of Dec 4 2024, Luigi Mangione fired three shots at Brian Thompson and killed him. The incident was recorded on closed circuit TV. It shows the shooter manually cycling the gun action after each shot. He will not be charged with murder because the crime was connected with stalking which itself in not inherently a crime of violence under the strict interpretation of the law. He will face charges of stalking.

The Shah

An old adage says the road to hell is paved with good intentions and this often means people with kindness and compassion in their hearts. A recent example is the caring people who saw the migrants crossing the southern border as poor souls running for their lives to a country where all they wanted was freedom to live in peace. While many of these people now have a better life the unexpected consequences have caused undo hardship on many others. This also happened when President Carter realized that the Shah was a dictator, who used authoritarian rule to suppress his people, using the secret police. Being that Carter was a kind hearted soul who believed in freedom, he worked to help the people of Iran to overthrow the Shah. He meant well but little did he know that the Ayatollah Komeini would be worse. The people of Iran have suffered under this dictator in ways even worse than under the Shah. President Jimmy Carter expressed deep regrets over his administration's handling of the 1979 Iranian Revolution and admitted it was a mistake to believe advisors who encouraged actions that contributed to the Shah’s fall. He specifically cited misjudging the strength of the revolution and, in his memoirs, noted that admitting the sick Shah into the U.S. was a mistake, as it allowed for the hostage crisis. All too often people allow their hearts to overrule their heads or to use another adage Cool heads must prevail.

Muslim

When people in the West discuss Muslim countries, they often say that in the past treatment of women has been unacceptable, they often follow up with remarks such as things are improving. Just what that means is not clear but here is one example. When Ayatollah Khomeini took control of Iran in 1979 many things changed to follow the Koran. One of the many things he did was to lower the age of marriage for women to nine. It took years of activism to raise the age again. In 2002, the legal age for girls was raised to 13, although marriages below that age are still allowed with the consent of a guardian and a court's permission. Later, slight increases in the minimum legal age, child marriage (defined as marriage under 18) remains a significant issue in Iran, with thousands of girls under 15 being married annually. To people in the West this is child abuse.

MN ICE

As the situation in Minneapolis unfolds people are getting a clearer understanding of what is happening. It revolves around three laws. The first is free speech and all parties are allowed to express their views without using language that could incite violence. Second is the law that says federal officials may request cooperation from local authorities but they cannot demand cooperation. The third is that local authorities cannot interfere with federal agents. The feds can claim that remarks by the governor caused people to interfere with agents but that is difficult to prove. State officials are smart enough to know just how far they can push without crossing the line. Citizens who interfere are subject to arrest but the same proof is required. A citizen can drive their car into a position that interferes with ICE but they can claim they were just driving by and to prove otherwise would be difficult. When a person is seen on video throwing rocks at federal agents the proof of interference may be easier. Polls show that voters want illegal felony migrants to be deported but less so for migrants whose only crime is crossing the border. Jurisdictions that do not have sanctuary policies, like Florida have higher rates of arrest because local authorities actively collaborate with federal agents. Operation Tidal Wave, is a Florida led initiative in partnership with federal agencies that has resulted in over 10,000 arrests in 2025 alone and 63% of those had prior criminal records. There is another issue that is difficult to quantify but has to do with national politics. Trump supporters want more cooperation between federal and state authorities and anti-Trumpers want less cooperation. As might be expected this is not helping solve the problem.

Repeat offenders

As cities move away from releasing repeat offenders the amount of violent crime is decreasing. It is well known that repeat offenders cause a disproportionate number of crimes. A small group of persistent offenders, sometimes referred to as chronic offenders is responsible for a substantial portion of all crime including over 60% of robbery, burglary and theft cases. This is not the case in homicides where most murders are isolated crimes of passion. This is from Google AI: Many U.S. cities and states are actively shifting towards more aggressive incarceration of repeat offenders, driven by concerns over rising crime, high recidivism rates, and public safety. This marks a shift, or at least a parallel movement, from recent years of reform-focused "decarceration" to a renewed focus on holding chronic offenders accountable.

401 K or pension

The average starting pay for a teacher in MN is $48,000 and the average pay at retirement is $63,000. Since 1990 teacher salaries have increased 2.4% per year. If a teacher starts today at age 25 earning $48,000 and works 37 years to age 62 and gets an annual raise of 2.4%, he will be earning $115,000 per year. Using the current pension multiplier of 1.9% his retirement pay will be $80,000. Teachers contribute 8% of their salary to retirement. The stock market has earned 10% per year for the past 100 years. If it earns 5% then the starting teacher today would have $540,000 in his account and that could purchase a $32,000 pension which is far less than the $80,000 under the current plan. The difference is made up by the state contributing $800,000 to his total. If the market earned ten percent his total would be $16 million which would provide a $96,000 pension with no contributions from the state. This is why pension plans are so dependent on the stock market and why they must be evaluated each year. Some years the state will have to add and some years they won’t. Too many states have adjusted the projected rate of return instead of adjusting the annual contribution and thus most pension plans are underfunded. A large amount of money sitting in a pension plan is too big of a temptation for many politicians. In time these pension plans will be replaced with 401K plans to eliminate the need for annual review but even that is not safe because the federal government has its eyes on 401K plans.