Want to know what "Libor" has to do with your home loan?

Don't know? Don't care? What the hell is it? You should care. Libor is the global rate out of London that many interest rates are pegged to. There's been some teeth grinding, perhaps even a kerfuffle in London and the Big Apple over whether the rate has been set correctly. The punch line is that you're okay, it seems as though it turned out in the consumer's favor. At least THIS time. BUT, what we love is that Businessweek took the time to explain Libor - a publication after our own heart. Check out their quick explanation here and never feel confused by your loan terms again.

Is this the U.S.' Plan to Prevent the Next Wall Street Meltdown?

Saying "credit rating company" is about as exciting for most as saying calculus. But, YOU CARE, about this story. Think of it this way - the US government is thinking that those companies that make their money putting a ranking on investments (and we're specifically talking about the investments that have been at the center of the mortgage mess, credit crisis, pick your heartburn metaphor) should reconsider how they fill out their score card. We linked to a story last week in the Wall Street Journal related to this, and today the WSJ's Scannell and Luchetti have what we think is the story Wall Street is talking about because people there know this matters. You should be too. Read their story because changing the scorecard will either a) help investors better understand the health of the body they are putting their money into, or b) you if agree with the opposition it may slow the market down because change would be "cosmetic" and/or confusing. Either way, this is gonna be a battle going forward. We think the real issue is, just like with accounting firms, the beauty contest. Do you really want the subject of the rating getting a say in who does the rating?

The Link: Gas and Land Values

Gas and land. Don't think they're linked? Think again. If, say, you live in the suburbs and commute into the city how do you feel about your gas guzzler today? The New York Times' Thomas Friedman has a interesting food for thought column on our collective relationship with gas usage. What he has driven at in past columns is the ultimate relationship between dollars paid for gas, and US foreign policy with those who produce oil (Petroauthoritarians is his term). Read his column today and note that he visited his Toyota dealership to trade in his old hybrid for a new one and was interested to see the number of unsold SUVs on the lot. We'd like to point out his dealership is in Bethesda, MD - a Washington, DC suburb. If hybrids are looking REALLY good these days (and they are), then we say what about living in the city? One of the authors of this website walks to work, the other takes the metro or the bus. Homes prices have fallen to be sure, but as we've pointed out the percentage depends on the market. Those markets best insulated? If you've been reading this site then you've seen our links to stories showing that the insulated markets have been the "urban core" of cities. We can't help but think that the more expensive commutes get, the better our homes in the city look. Still don't think that gas and land aren't linked?

You Missed this Piece on Memorial Day

Most of you likely were not reading the Monday morning papers and web like you normally do because it was Memorial Day - that's understandable. But, you what you missed was a very important article by the Washington Post's media reporter Howard Kurtz. Howie's article is about the how the Post's six recent Pulitzers are going hand in hand with the amazing numbers of buyouts at the paper. Why do you care about the paper's brain drain? You care because websites like this one don't send reporters to Iraq, Afghanistan, and China. You care because the real story here is that undergrad and grad student set are less and less likely to get their news from papers like the Washington Post. Click here and read his first hand piece. (Full disclosure I've worked with Howie over the years during my time at CNN).

Op-Ed: Life on a Different "Dawn Patrol"

By Christian Hudson

Originally published in the Santa Cruz Sentinel: 05/25/08

Dawn patrol. Just to mention those words creates a mental picture for any surfer. If you're a local, then yours is probably like mine: foggy, glassy, uncrowded and so quiet you can identify the set through the fog because there is no sound other than the ocean folding over on itself.

In recent years, I've surfed the dawn alone, but that wasn't always the case. I never surfed the dawn alone in high school because of my buddy Kent "Cranberry" Crandall, or if you are in his Army Reserve unit then that's Sgt. Crandall.

I don't surf much with Cranberry anymore both because of geography and the pace of life. You see, he's still surfing, but after 9/11, like many Americans, he wanted to do something -- so he signed up for the Army Reserves. Or, as I've come to think of it, along with the National Guard, the Silent Service.

The difference between citizen soldiers like Cranberry and my friends who either make the military a career, work at the State Department, or even at the countless nonprofit democracy and relief organizations that ride shotgun to U.S. foreign policy is the way in which we as a society honor and support them.

Think about it this way, when you are at a party people feel like it is appropriate to ask the classic Washington D.C. question: "what do you do?" That's an easy answer if serving is your job. But if you are Cranberry, the answer is, "I'm an engineer." He and others like him don't get that basic appreciative feedback that the relief worker or Navy pilot would get in the same situation.

In fact, if you dug a little deeper you might discover that he put his life on hold for a different type of dawn patrol in Iraq for 15 months, tasked with Iraqi outreach while driving a machine-gun-mounted armor vehicle.

So what if you discover during conversation that's what he did while his wife was back home with their new baby. Would you feel awkward pressing questions that might touch an emotional wound? Would you, instead, remain silent and shift the topic?

That's why Cranberry and his buddies are the Silent Service.

The other difference is the career merry-go-round that reservists ride until the music stops and it's time for deployment.

Cranberry's music is about to stop again, and he'll return to doing dawn patrol Iraq style. That means a year away from his career, wife, daughter and friends. Can you imagine a 40-50 percent pay cut to serve your country for a year? Kinda hard on the mortgage, not to mention your 401k.

Consider this. Cranberry's daughter should be ready for college in about 15 years. If this year's deployment means foregoing his maximum 401k contribution $15,500, which at a conservative 7 percent rate over 15 years turns in $42,764.99. And on top of that, consider his prior year in Iraq at the same amount and rate, and tack on two extra years of growth. Well, that's $48,961.64. All together now ... combined that's $91,726.63 that Cranberry in theory is giving up to serve his country. Seems like his daughter's college education to me.

The Pentagon gets that there's a strain, but with Iraq and Afghanistan needs what to do? When I called over to the Pentagon to figure out how many times Cranberry could go back to Iraq, the public affairs officer pointed out that just last month deployment time for the reserves was cut to 12-month stints.

What that works out to for a reservist with say a five-year commitment is a year deployed, then a year and a half to two years home, then another year deployed, then home again for good. Of course, there's also an asterisk. That means if you have a skill that is in high demand, and they can't fill it another way, you might not be home again for good.

That's why this Memorial Day we might consider honoring those who are currently turning their lives upside down.

And maybe you'll think about Cranberry's dawn patrol next time you are paddling out.

Christian Hudson is a former Santa Cruz resident and a veteran journalist now practicing finance and real estate law in Washington, D.C.

Credit Rating Agency Beauty Contest

For those that we talk to it will be no surprise that the Wall Street Journal's story about investment banks and bond insurers shopping for credit raters caught our eye this morning. Give a high five to Aaron Lucchetti for reporting that banks and insurers have actually asked firms to switch analysts - i.e. they get they guy/gal who will give them the shiniest star.

We Hear, We Hear, We Hear....

...that newly minted Congresswoman Jackie Speier (D-CA), who just won the special election to replace the late Rep. Tom Lantos (D-CA), is likely going to be named to the House Financial Services Committee today. Why do you care? Because that is creating angst for financial industry types. Rep. Speier is likely to push for legislation out of the Committee that will put her fellow Democrats in a bind. Meaning - legislation that if Democrats support then they will loose their K Street fundraising donations, but if they ignore will then hurt them back home in their districts. Example? Think about things like privacy legislation. Popular with voters but not so popular if you are on Wall Street.

Rep. Speier put the House on notice that she's come to shake things up when in her inaugural House speech she spoke passionately about Iraq. A new member's inaugural speech is generally filled with platitudes about cooperation, but Speier spoke her mind. Result: Some Republicans walked out.

Financial Services Chairman Barney Frank, who recently won accolades for his fairness on the Committee, will have a new ball to juggle to be certain.

We'll look forward to watching her and the Committee.

Countrywide Email Furor

The LA Times has the best coverage of the Countrywide email story. We won't slow you down with commentary, click the LA Times story HERE, and then check out their real estate blog L.A. Land with follow up analysis HERE.

Pension Funds' Fuzzy Math Just in Time for Boomer Retirement

The New York Times has a terrific piece on how public pension funds are reaching for the Zantac because their numbers are not adding up. The funds are pointing to their consultants. At issue is whether those folks who are responsible for analyzing risk also have too much pressure to make the fund sound rosy. Check out Mary Williams Walsh's piece, "Actuaries Scrutinized on Pensions". We have two thoughts: 1) Perfect, just in time for the Baby Boomers to retire, and 2) hmmmm, doesn't this also sound like some similar hurdles that the big accounting firms face?

If the market is down, why can't I find a deal on a house?

The greatest frustration I hear from home buyers is: I hear the market is down, yet when I go look at the prices it doesn't seem like it. That's because prices both vary market to market and even within markets. Fortunately, papers on both coasts are at your service today. The Wall Street Journal does an excellent job of explaining this via New York, Boston, San Francisco and Los Angeles in today's "Where Home Prices Are Holding Up" by Jeff Opdyke. Because this UCLA Bruin agrees with the WSJ's note that LA has "no real urban core" (although it has soul) we suggest clicking over to the LA Times' Real Estate blog L.A. Land by Peter Viles. Who just happens to be breaking down the median prices for homes out in LA today.

Don't let the mixed signals confuse you

First you have CNNMoney.com running an AP article "Economists See Credit Crisis Nearing End" backing up the headline but noting that it may still take a bit, and ending with the suggestion that the Federal Reserve will have to raise rates in 2009 to beat back inflation. While over at the Wall Street Journal you have an equally interesting piece "This Stock-Market Rally Is a Keeper ... or a Tease" quoting analysts from Lehman and Goldman worrying whether the summer will be a rebate injected bounce followed by another dip.

Don't get frustrated just yet because you are going to have many more articles that are - on the one hand, on the other - oriented. This is because no one REALLY knows what is going to happen. That's why Fed Chairman Ben Bernanke talked about the "fragility" of the markets last week.

An unscientific poll of weekend cocktail and bbq chatter in DC seems to indicate that the public thinks maybe we're out of the woods. We say, remember Bernanke's comment last week? Take a look at the what the folks over at Lehman and Goldman are willing to be quoted on today.

Mortgage Meltdown Legacy? Sea Change at the Fed?

Will the ultimate legacy of the Credit Crisis be a change in Fed policy regarding bubbles? If you only read the online edition, then you might have missed the Wall Street Journal's "Bernanke's Bubble Laboratory". Check it out today for your clue as to how the crisis of tomorrow may get handled by the Fed.

FORTUNE's Great Read on Investment Vultures

Here's piece worth checking out: Fortune's article The Year of the Vulture. It'll give you a window into how determination to make lemonade from lemons rules the day with the investment minded. It is also intstructive to consider how some of the same headlines you are reading now are the similar to the early 1990's.