But the real i,pact on me is yet to be determined. How are mortgage rates going to react to this? I’m guessing that they are going to be a little crazy (increasing and decreasing all over the place for about a month) before heading noticibly downward after that. The takeover should result in greater stability in the mortgage market, hopefully increasing the amount of credit available and reducing rates. If rates do drop, it can only help me in my house hunting =)

But this post is not about the Clintons. I’m disappointed with the handling of the credit crunch and the related housing crisis. The amount of taxpayer money that has been devoted to bailing out people and companies is insane. Instead of teaching people a lesson and hoping the understand that they can’t over extend themselves the government is just bailing them out. It is setting an unhealthy precedent that the government will rescue the common man; the common man who got a mortgage he can’t afford with no money down, and has a huge credit card bill and continues to buy big screen TVs. What obligation do I have to bail out stupid people that can’t manage their own finances?

Whatever party wins, taxes will go up. Why is my hard earned money going to go to help someone else? What benefit will u get out of helping someone stay in their house a little longer? I’m looking to buy a house I want the prices to crash.

Beyond this whole thing is everyone’s wonderful approach to social security. We all know that it won’t be around forever. But instead of dealing with it, everyone continues to turn a blind eye to it. I know, for a fact, that every penny I am paying in social security tax I will never see again. No candidate is willing to deal with this problem. I hate to say this, because I hate all of his other policies, but the only person to actually come up with a workable idea was President Bush. His plan was to privatize social security and allows us to invest our own money how we saw fit. Unfortunately too many people were against it and it did not happen.

I digress. The point of this post is that I am unhappy as a democrat. As a result I have to start searching for a political affiliation more in line with my ideas. Beyond that, I’ve for nothing else for now.

This works fine and dandy as long as you are valuing something in the United States. But with emerging markets such a hot topic now, what rate should you use in those cases? The best way to approach this scenario, is to apply a premium to a risk free rate. This premium is the default risk of the country as a whole. For example, you take the 10 year treasury yield and add to it the default risk of the country, and that would be the risk free rate for that country.

H ow do you figure out what premium to add? That is also straightforward to figure out. Almost every country is going to have some sort of bonds/debt outstanding. The yield on a ten year bond (same maturity as the risk free rate), or what ever the closest bond is to ten year, is your premium. This yield signifies how risky the country’s government is; this yield is the rate you need to achieve to invest in that country. By adding it to the US risk free rate you get the risk free rate for the country.

The risk free rate is very important. It is the lowest rate you should demand for any investment you make. Since all investments carry some risk with them, your investment return has to be greater than the risk free rate. The amount it has to be greater than is the topic for the next post.

I actually called one of the merchants that charged my account, and they hung up on me. I told the CSR that I wanted to get some information on a charge made with my credit card that I didn’t authorize. She said that she could look it up in the system if I gave her a phone number. I clearly don’t know what number was given to this company when my card was used, and when I tried to explain it, she hung up on me.

Either way, my card is now canceled; I should get a new one in the mail in the next few days, along with an affidavit where I can mark off the fraudulent charges. So, hopefully it should all be over shortly.