WE HAVE MET THE ENEMY......

..........AND HE IS US. That old expression came from the comic strip known as Pogo which was a popular satire piece over 30 years ago. Never has it been more appropriate than in our current energy and political environment. Part of the reason for the Middle East crisis is our addiction to foreign oil. In importing so much high cost oil from the middle east, we are providing the funds for our enemies to continue to attack us. Not only do we have to bear the cost of our own military action, we are paying for that of the terrorists as well. What else could we do? We could certainly exploit our own sources of petroleum by drilling in locations presently forbidden. While this will have some environmental consequences, these could be managed. We do things every day that have environmental consequences and total elimination of these is impossible. All of those unsightly windmills supposed to be a clean source of electricity take a huge toll on the bird population. We view the use of nuclear generated electricity with disdain because of the environmental consequences but some European countries derive as much as 40% of their electricity from nuclear power. One of the biggest culprits in the whole picture are speculators who drive up futures prices, increasing the cost of raw material to refiners who pass those costs to the consumer. The bottom line is that we have plenty of options for generating energy that are less ambitious than converting our entire fleet of automobiles to ethanol. If you are upset about the ups and downs of gasoline prices, don't blame those "evil oil companies" or the president. Its much more complex than that and you might just take a look in the bathroom mirror. There are a number of things we can do as consumers and investors to keep energy prices from getting out of hand. By looking to blame others for our plight, we ignore the possibilities that are within our own control.

Its been a busy week for us since our return to Texas for the winter. My "fishin' buddy" from across the lake died, the rain sank my boat and overwhelmed our septic system, and I am inundated with leaves which are just now starting to fall. The one bit of good news is that the defendant in the jury trial I served on received 508 years for molesting 20 boys. That is one less person able to run free and harm our children.

GREETINGS FROM NEW MEXICO

Here we are in Raton New Mexico. I am at the Holiday Inn express, using my laptop on their high speed internet to check the markets, e-mail and make a quick post. I am on my way to Texas but I still am able to manage my money and that of clients. Some people complain that the current generation will be the first to not have a standard of living equal to their parents. I guess I'm part of the parent generation that they don't think they will have a standard of living equal to. When I was 30 something, you couldn't have a computer equal to this one without several rooms of climate control space, a card punching machine, and hundreds of thousands of dollars to purchase the computer and peripheral equipment. You couldn't buy a cell phone because they weren't invented yet. Likewise microwave ovens and GPS devices. Of course, it was easier to figure out how to use a Royal typewriter than this damn thing. At least I knew how to get it to make a new paragraph. I will be in Texas off and on throughout the winter and I will be able to manage our money and communicate with you. Even if I can't figure out how to make a paragraph on this blog.

PET PEEVES

High on my list of pet peeves are mortgage advertisements. Have you noticed the large number of ads telling you its time to refinance your ARM mortgage to a fixed rate? Weren't these the same guys who advised you to get the ARM mortgage in the first place? Granted, we have seen a number of borrowers who probably should refinance their adjustable rate loan but many of them can't afford the higher payments of a fixed rate or the closing costs necessary to obtain the new loan. The fact is, the only way they could get into the home the wanted was with the aid of a higher risk adjustable mortgage. While we did encourage some borrowers to incur adjustable mortgages, we spent a lot of time making sure they were familiar with the risks and had an exit strategy in place in case rates escalated. We never used ARMs to help borrowers purchase homes they couldn't afford. Speaking of closing costs, do you see those ads that offer no closing cost loans and tell borrowers how they are getting ripped off by unethical lenders who charge enormous closing costs. They promote their no-cost loans as "The biggest no-brainer in the history of Earth." Could that statement be a huge exaggeration? What they fail to mention is that their no-cost loans bear interest at 1-2% higher than closing cost loans. Virtually any lender can offer these no cost loans. The key is that borrowers need to be informed of the trade-off between rates and closing costs. This allows them to choose the combination that fits their situation. There is no "one size fits all" mortgage. The bottom line is that the most important factor in the mortgage lending process is choosing the loan that fits your needs. The lowest rate in town could be the wrong deal for you if it is not the right product. Call our office if you have a question in this area.

SNOWBIRD READY TO FLY.

It's turned cold in Colorado. The low temperature overnight was 35. I'm ready to go back to our Texas lake house as soon as I can take care of some real estate details here. We bought our lake house almost 11 years ago and the main question now is how long we should continue our "back and forth" lifestyle. Seems like when you are looking for something it is always at the other house. Betty had to fly back there at the beginning of summer to get our income tax files so we could file our taxes here in Colorado. One thing I can tell anyone not yet retired looking to buy a "vacation home" now before prices increase, is that there is no hurry. In some years we only spent two weeks at the lake house. We could have had two weeks in Maui for what that cost. There is no hurry. Although I thought we got a great deal, my perception of a what a great deal was changed after I became more familiar with the market in that area. Another thing is not to count too much on rental income. After you put your furniture and personal possessions in the property, you lose your appetite for letting strangers come in. We have yet to receive the first dollar in rental income from that house. Obviously, the benefits of owning that second home are not financial. My main benefit is my wife's enjoyment of the woods and waters that surround the property. I couldn't sell it if I wanted to. Will Rogers said, "There are two theories on how to argue with a woman........Neither works!

BUY WHEN THERE IS BLOOD IN THE STREETS

That is a horrible title but a common saying in the investment arena, particularly in real estate. In Colorado, there is a high foreclosure rate and a number of homeowners have become reluctant investors because they can't sell their houses. The supply definitely exceeds the damand. I have become a reluctant investor recently because I had to take over a property, I loaned money on a few months ago. When I inspected my new acquisition I was discouraged. The interior was a mess; however, that is something I can fix. The biggest problem is the exterior and, since it is a condominium, that can only be done by the property owners association which is something I have little control over. The homeowner dues are high, the association insolvent and many, if not most, property owners are delinquent in their dues. There are a whole host of foreclosures in the community. if this isn't blood in the streets, I can't imagine what is. You can buy these units for $50-70 per square foot and it may get worse before it gets better. Its a great location, near shopping and light rail and I am tempted to put together a group to buy more units. The key to success is being able to buy enough units to get control of the homeowner association so you can put money into the exterior. The luxury apartments across the street are renting for $1.50 per square foot per month. These units would provide a good return on investment at much lower rents. The question is: Am I ambitious enough to attack such a major undertaking? I doubt it but I will do some more research before reaching a decision. I'll keep you informed.