American Dream turning into Nightmare?

"Falling prices trap new homebuyers: Neighbors in a new Garden Grove tract say a developer's plan to slash prices by about $140,000 has left them owing more for their homes than they're now worth." has a rather sad and sobering quote:

Dunn said he's in a financial bind because he's using an exotic mortgage called an Option ARM, an adjustable-rate loan in which the homeowner can pick his monthly payment from a variety of options.

Eventually, he'll be responsible for making full payments of $6,000 a month, he said, adding, "I don't know how we'll be able to pay that."

"It's not just the financial aspect. It's the emotional," Dunn said. "We can't eat, can't sleep. I can't concentrate on work. This is all I think about."

So the American dream of owning a home seems to have turned it into a nightmare, at least for one homeowner. How many nightmares are out there? The hard numbers are not easy to come by but if the following from LA Times is any indicator, our US and world economies are on very shaky ground:

In 2003, only about 8 of every 1,000 people buying a home or refinancing a mortgage in California got a pay option loan, according to San Francisco-based data tracking company First American LoanPerformance.

Last year, 1 in 5 loan applicants got one.

In the first eight months of 2006, even as the real estate market began to weaken amid fears of a downturn, the appeal increased again. Nearly 1 in 3 California loan applicants are now choosing them. The state boasts about 580,000 active pay option mortgages, about half the U.S. total.

That seems like a lot of money at risk. Since L.A. median prices are $500K, California alone could be risking $290 Billion dollars. If the prices drop by half, then $145 Billion dollars of loans could be wiped out. That's just half of the risky loans in the US. And don't forget there are HELOC, fixed rate mortgage and other more traditional loans which could be at risk (esp. if and when the loan holders lose their job, get transferred, divorced, get sick, etc.).

So much for "throwing away the rent money..." ...What a nightmare we all face....

Copyright 2006, DannyHSDad, All Rights Reserved.

Lessons from Iraq: Boomerang effect

"Boomerang Effect" is a sobering insight on what the U.S. (and other nations) troops are learning in the Middle East: how to build IED (Improvised Explosive Devices) which will be handy in the US once the economy turns sour or used in gang/mafia warfare or just another crime spree.

Unfortunately, there is no easy solutions for defending oneself from such offensive, I don't think. At least I'm not sure what to learn, let alone how to prepare my sons....

Copyright, 2006, DannyHSDad, All Rights Reserved.

Mistrust of the People: the boys & girls who cried wolf too many times

"The 9/11 Truth Movement's Dangers: Nation: Dishonest Government Leads To Cynical Theorists" and rightly so.

And if you don't know about this case, take a look at: "Strip-searched by her boss" (or google "Louise Ogborn" and "Donna Summers").

Our trust in "authority" figures is too strong and misguided and so easily lead astray, be it the Iraq war or abusing a teenager working at McDonald's.

The question for us parents is: how to raise our children to be "as shrewd as snakes and as innocent as doves."

Copyright 2006, DannyHSDad, All Rights Reserved.

Unschooler's hope: dropouts who cashes in

"Log on, drop out, cash in: These top techies weren't leery about leaving school" is about geeks who start companies rather than finish college degrees. I like the quote:

Theirs is the stuff of classic Silicon Valley mythology: young people deserting higher learning for high technology to follow in the famous footsteps of Bill Gates, Larry Ellison, Steve Jobs and Michael Dell. These dropouts barely raise an eyebrow in high-tech circles, where their worth is measured in real-world smarts, not Ivy-League degrees.

Why don't they teach this stuff as the norm rather than exception? I think all students should aspire to be independent business owner. I wasn't brought up that way nor was I trained to be an entrepreneur (instead I became a good follower, a good employee).

At least the following quote gives me hope:

Ironically, Google was started in 1998 by Sergey Brin and Larry Page, both Stanford doctoral program dropouts.

considering that I've dropped out of my PhD studies, too...

Copyright 2006, DannyHSDad, All Rights Reserved.