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[quote=harvey][quote=Jazzman]All said and done, the USSR was enormously successful in some respects. It created a super power, a huge industrial complex, an enviable space program and a secret service that out-foxed even British intelligence.[/quote]

And the USA and Western Europe did all that much better.

Your point?

Anyway, this conversation was a response to a claim above that “we actually are more socialist than capitalist.”

I say that’s not true. And I’m not hearing any arguments to the contrary. The verbal gymnastics around the definition of socialism and CAr’s predictable self-certification of intellectual superiority are not compelling.[/quote]

Our economy is $16.3 Trillion in 2014, government spending at all levels is $6.6 Trillion.

In California, we are centrally dictating the ratio of electricity to be generate by ” green” sources.

We regulate safety standards, car fuel economy fleet standards,, provide free education, have extensive safety nets, regulate air quality, water quality, labor laws, minimum wages, we extensively regulate most start up businesses that are doing it above board (go open a restaurant to see the regulations), we have building codes, plenty of places with rent control, public utility commissions to set rates and terms for utilities, etc..

We are far from a free market capitalist society which I’m sure you’re quite aware was my point but instead want to argue semantics. Yes we still privatize a lot of profits and have significant wealth gap but we’ve massively tempered the capitalism we run with socialist ideals.

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[quote=plm]It still seems to me the earlier you make extra principal payments the less interest you pay and the sooner you pay off the mortgage. Kind of like 401K but in reverse. The sooner you put money in the 401K the longer you have for it to grow before you retire.[/quote]

Except with a house the 401k is already funded to $400k on loan, the investment is already made. The choice is between a new investment or buying out the loan in today’s dollar at 2.75% with return phased out 15 years instead of dollars fifteen years from now. That’s the stinger on principal repayment, the return isn’t realized until the loan is paid off and then it’s in future dollars.

Prepayment doesn’t change your cash flow, minimally changes the interest payment in the near term and delays the return until the end of the loan.

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[quote=scaredyclassic]except the principal does go down. so you get that little bit extra edge.[/quote]

No. In both scenarios you pay $400k in principal. It’s your choice if you want that in the form of 180 $2700 payments or a $22,700 payment with 167 $2700 payments

You still make a $2700 payment every month until the 169th payment in both scenarios.

For future refis, yes the balance is now $20k smaller. But if you think you will refi lower why would you prepay to finance less and get even less savings from refi-ing

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Yea, in the current environment with a hypo $400k 2.75% 15 yr. you could make an additional $20 principal payment on the first put and shortening the life to 14 years. You essential trade that $20k for twelve fewer $2700 monthly payments fifteen years from now That’s $32,400 nominal. Purchasing power over the last fifteen years basically a wash. Investments in QQQ or DJIA from 2000 to today, well QQQ is about even so a loser in the scenario, DJIA about even with the savings. Shift the analysis 12 months post 9/11 and $20K in QQQ blows the savings out of the water

So it depends, if you expect the low inflation to continue for fifteen years the a prepayment will be on par with the cost differences in the future. If the inflation doesn’t remain negligible, then the future purchase power loss favors not prepaying.

Essentially continuing a mortgage turns you place into a long term fixed rental were you’re responsible for maintenance but get all upside or downside capital appreciation

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[quote=Hobie][quote=harvey]Don’t get confused by strategies involving paying early in the loan term vs. late in the loan term, etc. They are flawed.[/quote]

I’d like it if you expand on this.[/quote]

As he pointed out earlier, it has to do with a dollar today is not the same as a dollar 15 years from now. The issue is the total interest paid and the strategies don’t reflect that and use nominal dollars. A nominal dollar is just a dollar is a dollar.

To understand the flaw with that you need to consider inflation over the long term.

To see it, pretend you actually took your loan out in 2000. You could have done strategies then to pay off the loan early or late or something else. But to understand the flaw you need inflation. It’s tame now and was then too but back then gas was cheap. Beef was cheap. Homes were cheap. How cheap? Well gas in October 2000 was $1.82 a gallon. Today after falling precipitously from recent highs is just under $3 a gallon. Beef in 2000 had experienced a run up, ground beef was $1.70 a lb, today the usda reported average is $4.12/lb. and you know the story on home prices.

So that $50 back then would have bought 27 gallons of gas and today would buy 16 gallons. Similar with beef, the $50 prepaid would have bought 30 pounds of ground beef today will probably buy about 12 pounds

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If you’re that risk averse, paying off may be best, hence the nothing better question. I totally get it, besides, a paid off primary is often a core step to financial independence and being able to say stuff the rat race.

That said, depending on their tax brackets, risk tolerance, being very conservative, structure a tax exempt Cali muni bond holding and use proceeds to pay off the loan at a future date. Maybe try and pick up some LA DWP bonds at 5% yield or SLO water bonds at the same rate.

A lot depends on their tax situation, if the mortgage write off doesn’t apply or they don’t have wage/ short term income to shelter, there is no tax advantage o carrying it.

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So what you’re saying is you can’t find a better use for money than 2.75% interest?

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[quote=Jazzman][quote=FlyerInHi]Isn’t life on the spaceship enterprise like communism?[/quote]
I often wondered that. No government to speak of but a federation so presumably a world government. No medium of exchange except roles (jobs/careers) for the betterment and furtherment of humanity. A clear leadership hierarchy and legal system so although we evolved away from capital markets, presumably because we used up all resources, we still can’t agree on many moral questions. Racial problems continue but are inter-planetary, and social commentary is the same as it is now. So we haven’t evolved much expect in respect of markets and the medium of exchange. Maybe a stronger, more united, global sense of purpose. Cosmic communism.[/quote]

The original Star Trek and Federation had currency, specifically Federation Credits. See episode “”The Trouble with Tribbles”. The Also ran several mining operations see “”The Empath” and “Devil in the Dark”. All part of the original series. Also including Dr McCoy quipping “I’m a doctor not a coal miner”

Leading one to conclude, wage disparity, social hierarchy in employment, money and even dirty fuel sources are alive and well I the Star Trek utopia.

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What’s needed and what’s politically feasible are two different things.

Step 1 stop promoting and graduating students that aren’t at grade level. Yes this will likely increase the drop out rate but that will just highlight what the real problem level is.

The state just elimininsted the graduation testing as a failure. The true failure is the graduation testing would just make the failure of many schools blatantly obvious. We can’t have that can we so instead we just give them a diploma call testing a failure and end testing.

We won’t even have agreement on that.

Second may be to recognize counter to the education complex that college education isn’t for everyone and possibly building a more German-like system were some go college prep and some prep for trades.

That in turn involves lifting the lower rungs of the Economic ladder thru meaningful wage laws and applicable labor enforcement.

Frankly I don’t think it’s solvable until we address the mass consumption dependency of our economy and our indulgent dependence on 99 cent per pound grapes and $5 disposable t-shirts from China, and cash base house cleaners no employment questions asked.

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[quote=FlyerInHi]What if the families won’t do shit? What if those families created insolent little monsters?[/quote]

That’s basically the union fight over LAUSDs charter plan. Families that give a rip will self select into the charters leaving those the don’t care, don’t know better or can’t self select into charters behind essentially leaving the non charter public LAUSD schools as juvenile detention without the court sentence

I disagree blogstar. Some succeeding is not indication of everyone else wasting, although many do. Herjovic and Cuban have both succeeded greatly, many others have not. Everyone else who hasn’t hasn’t wasted their opportunity, many have, many took a perceived safer path, and many just failed in the trying some because they didn’t have it and some because they just didn’t get a little bit of luck when they needed it

Sure some may waste it, but the system is all too willing to let them waste it. Really you want to blame the kid and parents when LAUSD gives them a graduation diploma and they can’t add three two digit numbers?

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[quote=Blogstar]More people waste the opportunity, and bring it down for others, than are wasted by it.[/quote]

I suspect it’s not true. I seriously wonder if you took kids from The Preuss School, or La Jolla High and put them in some of the poor schools in LAUSD, if they wouldn’t fail miserably.

I don’t mean lock step move everybody, I mean like say a dozen of them out of their school and put them in the other, like George Washington Prep in LAUSD. Sure, they’d graduate, maybe even be top of their class, but I wonder how many would sink to the level of the school. Especially if you stripped all the outside tutoring and kumon away from them.

I’ve had that discussion about Irvine being “good” are the schools good or are the results more influenced by the average Irvinite kid receiving over 50% more instruction time when you factor in Kumon, academic bootcamps, SAT prep, tutoring etc.

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[quote=spdrun]Are cops in schools allowed to be armed?[/quote]
From Sept 2014 news.
[quote]
Los Angeles Unified School District police officials are considering whether they need the armored vehicle and grenade launchers they received from the U.S. military, CBS Los Angeles reported.

But officials are relinquishing some of the weaponry after civil rights and education groups urged the Defense Department to end the program, according to The Los Angeles Times.

L.A. Unified is one of at least 22 school systems in eight states that receive the military-grade equipment, the newspaper reports.[/quote]

Armed you ask? LOL,

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Schools are stuck in a catch 22. Our PC environment won’t let you flush bad apples from the system and each body in a seat is funding dollars.

I’m cynical, individual teachers may be in it for the kids, but the districts and unions in the public school system are all about the dollars.

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Student slams principal to floor

Cafeteria brawl Sacramento area school, yadda yadda, stuff like this happened when we were kids too, there just weren’t cameras in everybody’s pocket to record it.

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[quote=Rich Toscano]Yeah, the dept of numbers thing looks like it’s using real rents, whereas Case Shiller is nominal, so you can’t compare them. For rents I use the BLS numbers, which you can find for SD by poking around here:

http://www.bls.gov/cpi/

(I use rent of primary residence). This isn’t completely up to date so I use Zillow stats to fill in the blank for the most recent period. But I use CPI rent as the main thing.[/quote]

Thanks that makes sense.

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