Kansans may be feeling a bit smug in the housing price collapse: “We didn’t go nuts with the mortgage loans.”
Well, not exactly. Some calculations by the First American CoreLogic show that Kansans have an average 73 percent debt to value ratio. That means that of all homes that have mortgages, debt is equal to 73 percent of the value of the average Kansas home. The remainder is the homeowners’ equity, about $10 billion total for all homes in the case of Kansas. It’s a measure of how leveraged (a dirty word these days) we are in Kansas.
What surprised me a bit is that, even though the usual suspects finished worst (Nevada had an 89 percent ratio), Kansas was well above the national average of 66 percent. The company also figured that nearly 15 percent of Kansas homes with a mortgage have negative equity, which means the debt it higher than the home value. That’s a recipe for foreclosure.
That must be in Johnson County because I haven’t heard of much of that here.
Charlotte, N.C., banking behemoth Wachovia tried to stay independent but the Federal Deposit Insurance Corp. said no.
Details of that effort are outlined in a Charlotte Observer story today.
The thing that’s disturbing is that Wachovia’s effort included getting assistance from the FDIC.
The FDIC said no to Wachovia’s plan, but turned around days later and announced that it would provide assistance to Citigroup in its bid to acquire Wachovia.
So, the FDIC said no to Wachovia and yes to Citigroup.
Something just doesn’t seem right about that.
Nobody will ever confuse journalists for mathematicians, but I would like to share a lesson I learned long ago. Possibly eighth grade. Maybe ninth.
You can’t add percentages.
I bring this up because I’ve read numerous times — like here and here and here — about the 15 percent raise in Boeing’s contract offer to the Machinists union. Only one problem: That’s wrong. The raise is closer to 16 percent.
Here’s how the math works. If a Machinist is making $50,000 a year, he’ll get a 5 percent raise in the first year of the contract to increase his annual pay to $52,500. The Machinist will get 3 percent raises in the second and third years to increase his pay to $54,075 and then $55,697.25. A 4 percent raise in the fourth year will boost it to $57,925.14. That’s a raise of 15.85 percent (57,925.14/50,000=1.1585028).
If it were a 15 percent raise, that same Machinist would be making $57,500. Not a big difference, but I think I’d rather have the extra $425.14 (before taxes, of course) at the end of the year.
Just sayin’.