Monday, May 03, 2010

How Much Does Society Owe to People Who Don't Pay Their Debts?

Without defending the cockamamie system of determining credit scores (in which even a default and foreclosure can end up dinging your credit history only a little bit more than a late payment on a store credit card), one thing needs to be clear: The purpose of a credit report is not to decide whether your problems are your own fault or whether you're a good person. It's to give lenders a sense of the probability that if they lend you money, you will pay it back according to the terms you agreed to before God, country and family. The loan modification's federal imprimatur does not change the fact that you are getting away with not honoring the terms of your agreement.

Leave aside that preventing a proven bad borrower from going further into debt is probably the best thing you can do for that person. Exactly how "fair" is it to the vast majority of borrowers, who make their payments on time and on the money, to allow bad borrowers to make consequence-free changes to their mortgages? The credit consequence of deadbeating is already minor considering the gravity of a mortgage default. Debt forgiven under a loan mod is already going untaxed. Hundreds of thousands of mortgage scofflaws are already enjoying years of payment-free living just because banks don't want to foreclose. Should there be no penalty at all for going bad on a loan?

More.

Hold the VAT -- Taxpayers May Prefer Spending Cuts.

The Obama Democrats' stealth strategy for increasing the size and scope of the federal government is well under way, despite huge voter backlash. Federal spending has been increased from a 30-year average of 21 percent of gross domestic product to 25 percent, and a bipartisan commission tasked with reducing the deficit may recommend tax increases. Presidential economic adviser Paul Volcker has already called for a value added tax, a form of national sales tax, and presidential press secretary Robert Gibbs has declined to rule it out.

The assumption in some quarters is that a tax increase is inevitable and that the public won't allow any significant decrease in public spending. But there's reason to question that assumption.

Obamacare’s Danger Signs

Not one of its major programs has gotten started, and already the wheels are starting to come off of Obamacare. The administration’s own actuary reported on Thursday that millions of people could lose their health insurance, that health-care costs will rise faster than they would have if the law hadn’t passed, and that the overhaul will mean that people will have a harder and harder time finding physicians to see them.

The White House is trying to spin the new report from Medicare’s chief actuary Richard Foster as only half bad because it concludes that, while costs will increase, only 23 million people will remain uninsured (instead of 24 million previously estimated).

Read the whole thing.

Six Reasons Why the Capital Gains Tax Should Be Abolished

Five Myths About Green Energy.

1. Solar and wind power are the greenest of them all.

Unfortunately, solar and wind technologies require huge amounts of land to deliver relatively small amounts of energy, disrupting natural habitats. Even an aging natural gas well producing 60,000 cubic feet per day generates more than 20 times the watts per square meter of a wind turbine. A nuclear power plant cranks out about 56 watts per square meter, eight times as much as is derived from solar photovoltaic installations. The real estate that wind and solar energy demand led the Nature Conservancy to issue a report last year critical of "energy sprawl," including tens of thousands of miles of high-voltage transmission lines needed to carry electricity from wind and solar installations to distant cities.

Nor does wind energy substantially reduce CO2 emissions. Since the wind doesn't always blow, utilities must use gas- or coal-fired generators to offset wind's unreliability. The result is minimal -- or no -- carbon dioxide reduction.

Denmark, the poster child for wind energy boosters, more than doubled its production of wind energy between 1999 and 2007. Yet data from Energinet.dk, the operator of Denmark's natural gas and electricity grids, show that carbon dioxide emissions from electricity generation in 2007 were at about the same level as they were back in 1990, before the country began its frenzied construction of turbines. Denmark has done a good job of keeping its overall carbon dioxide emissions flat, but that is in large part because of near-zero population growth and exorbitant energy taxes, not wind energy. And through 2017, the Danes foresee no decrease in carbon dioxide emissions from electricity generation.

More.