More of This Please

Earlier this week, the Wall Street Journal published an excellent article on the financial crisis and how it affects the average person.

This is what I've struggled with through the breaking news of this crisis. I knew it was a crisis because everyone kept telling me that it was, and I knew that we may be heading into a recession or a depression and I know how THOSE things affect me, but I never saw the correlation of the the financial market crisis and its direct relationship to my life. This article helps to break it down.

Why This 'Credit Crisis' Hits Everyone

Continue reading "More of This Please"

Who Can We Blame For the Sub-Prime Crisis...Who's To Say?

I don't usually like to post email forwards that I receive, but this one is at least interesting in light of the subprime crisis.

This is a NY Times article published in 1999; actually nine years ago, yesterday. The article is being floated around the internet in the form of an email forward in a slightly edited form. A few sentences and paragraphs have been omitted from the email version which do not change the message of the article entirely, but seem to have been removed in an attempt to rest the blame for today's crisis solely on the Clinton Administration. Certainly that administration had some part in it, but as the actual article illustrates, there were other interest groups who pushed for the policy change.

Emphasis is added by me.

Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
Published: September 30, 1999

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.

In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.

Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

In contrast, the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.

Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.

In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.

The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

Continue reading "Who Can We Blame For the Sub-Prime Crisis...Who's To Say?"

Visit Portland, Oregon

Hey guys, I've got cool news to report.

As if it wasn't flattering enough to be published in the book Signs of Life, which was a collection of photos from the Gulf Coast region in the wake of Hurricane Katrina, now I have a photo published on the Schmap Northwest Travel Guide.

Schmap Northwest is an interactive online only travel guide for Oregon and Washington. While we were living in Portland, Lindsey and I went to the
Japanese Garden several times. It is really a beautiful garden park in the southwest section of town. If you ever find yourself in Portland I recommend that you visit.

The photo selected for the guide was taken on June 25, 2006 on a trip to the garden just before we moved. We went with Mom and Kim and it was a lovely day. If you are interested in more pictures of the garden you can check out my Flickr set here.

This is the photo included in the Schmap Northwest Guide.



You should also check out my photo on the Schmap Guide website under the Parks and Gardens section.

Continue reading "Visit Portland, Oregon"

This is Pretty Cool

Lafayette population now at 210,000

Lafayette Parish is really growing. Let's hope that the city and parish can keep up with the growing population and begin to offer more amenities typically found in larger cities.

I love living here so much, and I am very pleased to raise my son here, but there are so many things I miss about living in large cities. It would be great to get some of those little things that make city life so cool.

Continue reading "This is Pretty Cool"

Red Light Violations

The local Lafayette newspaper The Daily Advertiser recently revamped it's website. One of the new regular features is really cool.

Every day the Advertiser posts a local red light violation. The city has been installing cameras at red lights for a while now. The offending driver's license plate is photographed and a ticket issued.

Certainly I should be concerned about where Big Brother is taking this, and when the cameras first went up I was. Watching these videos though kind of makes you rethink things. Some of these people are just being reckless. Maybe they need someone to help them be more careful. What do you guys think?

Continue reading "Red Light Violations"

We're Going to March For the Sake of Marching If We Must!

This is so ridiculous. I wish the UL police would simply release the video in question. If they have video evidence to dispute the claims of the girl and this ready-to-rally-and-raise-the-roof-Reverend (alliteration is fun) then why not release it and avoid allowing this situation to escalate any further.

My opinion: you DO NOT get in the face of any officer of the law (even one that you consider is "not a real cop, anyway") at any time at the scene of an incident. If the situation was unjust, address it in an appropriate manner with the appropriate authorities. Confronting a police officer at the scene is not a decent answer because body language and intent can be misinterpreted in the heat of the moment, resulting in the mess below.


via The Daily Advertiser

Activists vow protests for UL student
Read initial report, UL police chief's statement
Police brutality alleged during woman's arrest
Marsha Sills
msills@theadvertiser.com

A civil rights group is calling for the firing of a UL police officer, accusing him of excessive force and the unlawful arrest of a UL student last week.


The Rev. Charles Steele, president of the Southern Christian Leadership Conference, vowed to protest on the campus until action is taken by the university in response to the claims of student Courtney Green.

Green was arrested Aug. 20 after she disputed why a university police officer pulled her boyfriend over for speeding and then tried to tow his car when he didn't have proof of insurance. Green questioned the officer and the situation escalated from there, with her allegedly being thrown to the ground and sprayed with Mace by the officer in an attempt to restrain her.

"We're not going to tolerate this kind of behavior," Steele said. "This is the organization that freed the world and never fired a shot."

Steele and the Revs. Byron Clay, regional vice president of SCLC, and Raymond Brown of the New Black Panther Party, held a news conference on campus Wednesday to show support for Green.

The charges against Green should be dropped, Clay said.

"Her civil rights have been violated and her human spirits, as well, have been violated," he said.

On Wednesday, Green said that the officer "snapped" after she questioned him and asked to see the radar that showed her boyfriend, Hiroji Pratt, had been speeding. She said that the officer grabbed her arm and pushed her to the ground and used mace to subdue her.

According to the police report, Green began walking aggressively toward the officer after he told her to walk away from the scene. When she didn't, the officer attempted to arrest her, but Green resisted, according to the report. A struggle followed and the officer stated that Green attempted to disarm him and struck him "causing the inside of my upper lip to bust."

Green disputes the officer's account of her actions.

"I think he snapped. I made a comment, 'You're not a real cop, anyway. ...' He snapped. I was never read my rights. ... I never struck him. I never resisted arrest because I was never under arrest," she said.

UL Police Chief Ray Lucas has said he has proof from the video on the officer's dashboard that backs up his officer's version of events. The officer's last name is Mattox, according to the report. However, Lucas would not release the officer's first name.

In reference to the SCLC's visit, he said, "I'd be happy to speak with anyone who makes an appointment."

When asked about the group's demands, Lucas said that the university issued a news release with its comments.

"That's the only comment that I can make at this time," he said.

In the release, Lucas defends the officer's actions and references the videotape taken from the officer's dashboard camera.

"After reviewing a videotape from the police unit camera, I have determined that the university police officer involved broke no department policies and acted within his authority following a traffic stop involving Courtney Green on Aug. 20, 2007," the release stated.

Lucas would not release the tape because it's evidence in the investigation. When asked if the officer has had other complaints made against him in the past, Lucas said, "I do not know. To my knowledge, none."

University police maintain that because Pratt was driving without proof of insurance, the officer was within the law to take Pratt's license plate and tow the vehicle.

Steele said that the SCLC will protest Green's arrest with marches and demonstrations until action is taken by the university. The group has 200,000 members and 72 chapters charged with bringing about social change through nonviolence in the legacy of the Rev. Martin Luther King Jr.

"We'll return soon and start setting up camp and requesting meetings with the president and the deans," Clay said. "We'll be here to stay. We'll be here until the demands are met. We're prepared to bring in freedom soldiers. ... We demand that justice be done in this case."

Green is also protesting disciplinary action against her taken by the university. The university is requiring her to take an anger-management class.

Continue reading "We're Going to March For the Sake of Marching If We Must!"

In An Effort To Be Fair...

...I'll give this the same attention that I gave the screw up.

via Yahoo News (Thanks to Joe for sending this in.)

Pageant Contestant Re-answers Question

This time, the question was a little easier for Miss Teen South Carolina. After being stumped by a Miss Teen USA pageant question on live television Friday night, Lauren Caitlin Upton's confused, mangled response has been drawing a lot of attention.

The 18-year-old got a chance to redeem herself Tuesday on NBC's "Today" show when she was again asked why one-fifth of Americans can't locate the U.S. on a map.



"I would love to re-answer that question," Upton said. "Well personally, my friends and I, we know exactly where the United States is on our map. I don't know anyone else who doesn't. And if the statistics are correct, I believe there should be more emphasis on geography."

That was much better than her previous response, which included "U.S. Americans" and mentions of South Africa and "the Iraq."

A YouTube video of Upton has drawn a couple million hits and thousands of comments, many of them with harsh remarks for the Lexington High School graduate who plans to attend Appalachian State University in Boone, N.C.

Upton was taking her flubbed answer — and the attention — in stride.

"Everything did come at me at once. I was overwhelmed and I made a mistake. Everybody makes a mistake. I'm human," she said Tuesday. "I seriously think I only heard about one or two words of the actual question."

Upton's former principal Creig Tyler remembered her as a well-rounded student.

"She took college-prep and honors courses and performed well," Tyler told The (Columbia) State newspaper.

Miss Teen Colorado Hilary Carol Cruz won the crown. Upton was third runner-up.
___
NBC is owned by General Electric Co.
___
On the Net:
"Today" show:
http://www.msnbc.com/
Miss Teen USA:
http://www.missteenusa.com/

Continue reading "In An Effort To Be Fair..."

Notable Events That Have Occured While My Head Was In The Sand

I'm getting to the point now that I update so rarely I wonder if I can even sustain a blog anymore. Assuming anyone is still checking in with any regularity, here are a few notable events I missed while on hiatus.

June 28, 2007 - Scott and Elise fourth wedding anniversary. Happy anniversary you guys. Not only is my head buried in the sand as it relates to the blogosphere, but it is buried in relation to real life as well. I'm not sure what you did to celebrate, but I hope it was great. Congrats.

July 13, 2007 - Happy Birthday Scott and Donovan. I hope you each had a great one.

July 19, 2007 - Happy Birthday Mom. I hesitate to say your age because I know what a sensitive subject that can be, but it starts with a 5 and ends with an 0. Maybe that's discreet enough. I really hope it was a great one. The real beauty of it is that with every passing day I am convinced that age means less and less in today's society. Today's 50 is yesterday's 30. We've entered an era which allows our behavior to dictate our station in life rather than the opposite. Do as you please, and I hope you had a great time.

July 19, 2007 - Lindsey and Luke fourth wedding anniversary. We had a nice quiet anniversary this year. Nothing special, just a nice dinner. Hopefully we can do it up really nice for number five next year.

April - Have I mentioned here that Lindsey and I quit smoking? While we were trying I didn't want to say too much, in case we failed, but we started trying to quit back in March and I'm pretty sure we officially quit in April. I know for a fact that Lindsey hasn't smoked since April 21st or so. I'd say that I officially quit around the same time, but I have had one or two since then when drinking alcohol. In any case, we both went from a pack a day to pretty much 0 per day on average since March. We used the Pfizer drug Chantix, and both found it to be way easier than quitting smoking should have been. If you are interested in quitting, we wholeheartedly recommend this drug. Please. I kicked a 12 year pack a day habit and hardly blinked to do it. This is officially a wonder-drug.

That about wraps up everything that has been happening. I'd like to say that I am going to start blogging more regularly and keeping you guys more up to date, but I am still studying for the CPA exam and chances are I won't update nearly as often as I'd like to. On that front, I took FAR (Financial Accounting and Reporting) for the first time a few weeks ago and haven't gotten my results yet, and I will be taking Auditing for the second time on Friday, August 3rd. Hopefully two times will be a charm.

Continue reading "Notable Events That Have Occured While My Head Was In The Sand"

Dr. David Thibodaux

I just want to take an opportunity to pay my respects to my favorite professor during my five years of college.

While I majored in accounting, I took enough English electives for it be a non-declared minor. Dr. David Thibodaux had a huge impact on me as a student. I took his classes every time I had the opportunity, which unfortunately was only twice. Recently I've talked to two friends who are hoping to pursue English degrees and my first response was to recommend Dr. Thibodaux's classes.


Below is the initial article from The Daily Advertiser.

Lafayette Parish School Board Vice President David Thibodaux was killed in a vehicle accident Saturday night, according to board members Ed Sam and Carl Lacombe.

The Lafayette Parish Sheriff’s Office said the crash was being handled by the Scott Police Department. Scott officials could not be reached by 11 p.m. Saturday.

It was unclear what caused the accident.

Sam said he learned of Thibodaux’s death around 10 p.m. Saturday when he received a phone call from Lacombe.

“I’m just so sorry to hear the news,” Sam said. “David was a real trouper on this board, and he worked well with the students, teachers and parents.”

Lacombe said he preferred not to comment without first talking to Thibodaux’s family.

Thibodaux, a longtime board member, was a staunch advocate for smaller class sizes and a proponent for improving school facilities.

He also was on the UL faculty, where he was an associate professor of English.

Continue reading "Dr. David Thibodaux"

Literary Quickie

I don't have much time but I wanted to share this with everyone because it's so cool.

For years my Mom has been really into genealogy as a hobby. Yesterday she tells me that through Ancestry.com she discovered that I am related to Jack Kerouac.

Check out our family tree to get from my Dad to Jack Kerouac.

My Dad is "Living Sonnier" and it goes up from him nine generations to Jean Hebert, who is my Dad's 7th Great Grandfather. Jean Hebert is also Jack Kerouac's 7th Great Grandfather.

Is that not some of the coolest shit you've ever heard?

Continue reading "Literary Quickie"

Screw Chicago

I haven't said anything about last weeks New Orleans Saints vs. Chicago Bears game in the NFC Championship. It was a damn shame to see the Saints lose, but they honestly lost it fairly. They did not play very well in bad weather and just could not get it done.

Now I know Louisianians can be crass and tactless, but this is just awful:



Courtesy of Weather.com Blog

Continue reading "Screw Chicago"

You Know, This Just Isn't Cool

Gizmodo has the full story.

Continue reading "You Know, This Just Isn't Cool"

How Safe is Your Music

There are things to get irritated about on so many levels regarding this post, but the one that I am going to focus on (because it irritates me the least) is the fact that there is no need for anyone to bother thinking on their own when there are great men like Donnie Davies out there doing all the thinking for you. As if that weren't enough, he's got a website to let you know what he's thought up for you. How nice of Donnie.

Read why I find Donnie so disgusting after the jump.

One of the most dangerous ways homosexuality invades family life is through popular music. Parents should keep careful watch over their children's listening habits, especially in this Internet Age of MP3 piracy.

So says Donnie, founder of the C.H.O.P.S. program, or Changing Homosexuals in Ordinary People.

Donnie is compiling a list of "Gay bands" that people should watch out for, lest homosexuality invade their home. I almost can't decide which is more irritating, the fact that someone is compiling such a ridiculous list, or that the artists on the list don't make any sense. Ok, Rufus Wainwright? Yeah, he's gay so I can see his inclusion on such a list. Elton John, sure, if you were going to think up a stupid list like this I can see the inclination to include him. But Metallica? Jay-Z? Ghostface Killa? Lil Wayne? Sufjan Stevens (a very publicly Chrstian singer/songwriter)? The Strokes? What the hell are these people doing on a list like this? It's preposterous.

Thankfully for those among us who are letting Donnie do our thinking, there is also a list of "Safe" artists. Artists who won't threaten your and your children's sexuality in any way. Strangely, the safe list is very short and filled with mostly Christian rock artists....and Cyndi Lauper????? How did she make the safe list?

Continue reading "How Safe is Your Music"

No DRM: Can it Be?

It's about damned time.

Record Labels Contemplate Unrestricted Digital Music

Executives of several technology companies meeting here at Midem, the annual global trade fair for the music industry, said over the weekend that at least one of the four major record companies could move toward the sale of unrestricted digital files in the MP3 format within months.

I completely understand the purpose and use of DRM (Digital Rights Management) on music files, but I don't believe that the use of a product I purchase should be restricted to what some suits at record labels say it should. In a few years when the next hot Portable Media Player comes along to beat out the iPod, all those folks who've spent hundreds (thousands?) of dollars on files purchased through iTunes are going to be pretty pissed that they can't listen to their libraries on anything but an iPod (at least, not without a lot of wasted time and effort.)

Continue reading "No DRM: Can it Be?"

Highway 182 Accident

There was a nasty accident this morning just outside of Lafayette. I read about it in the online paper this morning, and somehow this afternoon pictures of it showed up in my inbox. It is unbelievable the way those cars are torn to shreds.

Two killed in early morning accident
Kyle Jackson
kjackson@theadvertiser.com

Two men were killed at 6 a.m. today after a car struck a pickup truck head-on while trying to pass another vehicle on La. 182 near Cade.

According to State Police Troop I, Jeremy Addie, 19, of Lafayette, was traveling on La. 182 eastbound when he reportedly crossed the center line and began to pass a slower-moving vehicle, also traveling eastbound.

It was then, state police officials said, that Addie’s vehicle slammed head-on into a pickup truck traveling in the opposite lane.

Addie was ejected from the vehicle upon impact and died at the scene.
The driver of the pickup truck, Albert Bayard, 68, of New Iberia, was trapped in the truck and died at the scene.

Bayard was wearing his seatbelt at the time of the collision. However, Addie was not, state police said.

An investigation is ongoing.

Pictures after the jump.









Notice in this picture the black bag on the ground between the two pairs of police officers. That is the body of the boy who wasn't wearing his seatbelt.

Continue reading "Highway 182 Accident"

Science! We Don't Need No Stinkin' Science!

Science 0, Fundamentalist Christians 1:

Grand Canyon National Park is not permitted to give an official estimate of the geologic age of its principal feature, due to pressure from Bush administration appointees. Despite promising a prompt review of its approval for a book claiming the Grand Canyon was created by Noah's flood rather than by geologic forces, more than three years later no review has ever been done and the book remains on sale at the park, according to documents released today by Public Employees for Environmental Responsibility (PEER).

“In order to avoid offending religious fundamentalists, our National Park Service is under orders to suspend its belief in geology,” stated PEER Executive Director Jeff Ruch. “It is disconcerting that the official position of a national park as to the geologic age of the Grand Canyon is ‘no comment.’”

Via Eyeteeth Via PEER

HOW OLD IS THE GRAND CANYON? PARK SERVICE WON’T SAY — Orders to Cater to Creationists Makes National Park Agnostic on Geology

Washington, DC — Grand Canyon National Park is not permitted to give an official estimate of the geologic age of its principal feature, due to pressure from Bush administration appointees. Despite promising a prompt review of its approval for a book claiming the Grand Canyon was created by Noah's flood rather than by geologic forces, more than three years later no review has ever been done and the book remains on sale at the park, according to documents released today by Public Employees for Environmental Responsibility (PEER).

“In order to avoid offending religious fundamentalists, our National Park Service is under orders to suspend its belief in geology,” stated PEER Executive Director Jeff Ruch. “It is disconcerting that the official position of a national park as to the geologic age of the Grand Canyon is ‘no comment.’”

In a letter released today, PEER urged the new Director of the National Park Service (NPS), Mary Bomar, to end the stalling tactics, remove the book from sale at the park and allow park interpretive rangers to honestly answer questions from the public about the geologic age of the Grand Canyon. PEER is also asking Director Bomar to approve a pamphlet, suppressed since 2002 by Bush appointees, providing guidance for rangers and other interpretive staff in making distinctions between science and religion when speaking to park visitors about geologic issues.

In August 2003, Park Superintendent Joe Alston attempted to block the sale at park bookstores of Grand Canyon: A Different View by Tom Vail, a book claiming the Canyon developed on a biblical rather than an evolutionary time scale. NPS Headquarters, however, intervened and overruled Alston. To quiet the resulting furor, NPS Chief of Communications David Barna told reporters and members of Congress that there would be a high-level policy review of the issue.

According to a recent NPS response to a Freedom of Information Act request filed by PEER, no such review was ever requested, let alone conducted or completed.

Park officials have defended the decision to approve the sale of Grand Canyon: A Different View, claiming that park bookstores are like libraries, where the broadest range of views are displayed. In fact, however, both law and park policies make it clear that the park bookstores are more like schoolrooms rather than libraries. As such, materials are only to reflect the highest quality science and are supposed to closely support approved interpretive themes. Moreover, unlike a library the approval process is very selective. Records released to PEER show that during 2003, Grand Canyon officials rejected 22 books and other products for bookstore placement while approving only one new sale item — the creationist book.

Ironically, in 2005, two years after the Grand Canyon creationist controversy erupted, NPS approved a new directive on “Interpretation and Education (Director’s Order #6) which reinforces the posture that materials on the “history of the Earth must be based on the best scientific evidence available, as found in scholarly sources that have stood the test of scientific peer review and criticism [and] Interpretive and educational programs must refrain from appearing to endorse religious beliefs explaining natural processes.”

“As one park geologist said, this is equivalent of Yellowstone National Park selling a book entitled Geysers of Old Faithful: Nostrils of Satan,” Ruch added, pointing to the fact that previous NPS leadership ignored strong protests from both its own scientists and leading geological societies against the agency approval of the creationist book. “We sincerely hope that the new Director of the Park Service now has the autonomy to do her job.”

Continue reading "Science! We Don't Need No Stinkin' Science!"

Hello Google....Can You Do This?

Wow. This is pretty impressive.

Microsoft's response to the super cool, awesome and incredibly useful Google Earth is now live (in something of a beta test version) here.

Who needs to see simple aerial views of the Puget Sound when you can look at that same aerial view while simultaneously looking at the view through the windshield of your race car, or the view while walking around Downtown Seattle?

Check out the new and improved Microsoft Windows Live Local. Serious cool.

Continue reading "Hello Google....Can You Do This?"

Can the IRS Tax You on Assets That Are Not Real?

IRS Taxation of Online Game Virtual Assets Inevitable

A recent panel discussion saw the topic of the taxation of virtual assets in games like Everquest, World of Warcraft and others talked about heavily. I have never played these games, but my understanding is that there are a multitude of assets within the game that are or can be very valuable to the player in possession of them.

But can (or should) the IRS tax players on acquiring these assets? I say until the virtual assets provide some real-world benefit or something resembling real-world income, what justification is there in taxing them? Does this mean that someone can take a Sch. A deduction for the mortgage on his or her incredible house in the Sims? Can I deduct contributions to virtual charities in Sim City 4? You bet I can't, but why not?

By Daniel Terdiman
Staff Writer, CNET News.com
Published: December 3, 2006, 9:45 AM PST

NEW YORK--If you are a hard-core player of virtual worlds like World of Warcraft, Second Life, EverQuest or There, IRS form 1099 may someday soon take on a new meaning for you.

That's because game publishers may well in the not-too-distant future have to send the forms--which individuals receive when earning nonemployee income from companies or institutions--to virtual world players engaging in transactions for valuable items like Ultima Online castles, EverQuest weapons or Second Life currency, even when those players don't convert the assets into cash.

Most governments are only beginning to become aware of the substantial economic activity in online games, but the games' rapid growth and the substantial value of the many virtual assets changing hands in them is almost certain to bring them into the popular consciousness.

"Given growth rates of 10 to 15 percent a month, the question is when, not if, Congress and IRS start paying attention to these issues," said Dan Miller, a senior economist with the Congress' Joint Economic Committee, who is also a fan of virtual worlds. "So it is incumbent on us to set the terms and the debate so we have a shaped tax policy toward virtual worlds and virtual economies in a favorable way."

Miller's comments came during a Saturday panel called "Tax and Finance" at the State of Play/Terra Nova symposium, the fourth annual gathering at New York Law School of academics, lawyers and other scholars to talk about the legal, social and economic issues surrounding virtual worlds.

The panel was formed in the context of recent questions, which were first raised by author Julian Dibbel in his book Play Money and in an article he wrote earlier in Legal Affairs magazine, about whether the transfer of virtual assets, or players' acquisition of virtual loot by, for example, killing monsters, creates taxable events.

"If you haven't misspent hours battling an Arctic Ogre Lord near an Ice Dungeon or been equally profligate spending time reading the published works of the Internal Revenue Service," Dibbell's article began, "you probably haven't wondered whether the United States government will someday tax your virtual winnings from games played over the Internet. The real question is: Why hasn't it happened already?"

And while Miller's committee began examining these issues in October, his comments Saturday suggested there could be wider future congressional oversight and a revised IRS tax policy. That's in spite of the fact that Miller said his committee, and Congress in general, is not out to gouge virtual world players.

"The Joint Economic Committee is not seeking to impose a new tax on virtual economies," Miller said. "We have a very clear record of supporting lower taxes in free market."

Meanwhile, Miller's fellow panelists also weighed in Saturday on Dibbel's question, and came at it from several different perspectives.

First up was William LaPiana, a wills, trusts and estates professor at New York Law School. He approached the question by examining whether estate taxes would accrue on the transfer to an heir of a sizable collection of valuable virtual assets.

LaPiana said that there is little question that the transfer of such assets could be taxable, since it is property. However, he did say that the taxes would accrue only if the total value of the estate's assets exceeded the limit set by the state in which the deceased had lived. In most cases, he said, that amount is $2 million, though some states, like New York and New Jersey, have lower limits.

Thus, there are not that many instances in which someone has that level of assets, though the recent news that Second Life land mogul Anshe Chung had amassed $1 million in virtual land and other holdings certainly puts her heirs at risk if she dies.

More problematic, LaPiana said, would be laws that require estate administrators to take on responsibility for the proper transfer of assets to beneficiaries. And because most virtual assets are locked behind password-protected accounts, it would be incumbent on the administrator to try to figure out how to get access to those accounts.

"Whoever is going to run your estate...has an absolute obligation to collect all your property and make sure that it goes to the (proper) people," LaPiana said. "How do I make sure my trustee has access to this stuff after I die? These are all problems we're going to have to face."

Next up, Texas Tech University School of Law tax professor Bryan Camp addressed Dibbel's question with a warning.

"Be careful what you ask for," Camp said, "because tax is always behind the corner. Tax is the shadow life" to many issues.

Camp said that that section 61 of the U.S. tax code, a 1913 provision, stated clearly that all income, "from whatever source derived," is taxable.

Thus, the question of whether the transfer of virtual assets is taxable boils down to determining if there is a profit afterward.

As an example, he explained that if two people were to exchange copies of books, one of which is worth $30 and the other worth $24, the person ending up with the more expensive volume would have acquired $6 of taxable income.

Another example, he said, was Kyle MacDonald's much-publicized quest to trade up from a red paperclip to a house, which was ultimately successful.

"He has massive tax issues," said Camp of MacDonald. "He started with (the value of) a paperclip and ended up with (the value of) a house."

MacDonald is Canadian, though, which puts him under Canadian tax law, which Camp did not address.

His point is well taken, though: in determining tax liability--regardless of whether the IRS would likely try to collect--it is necessary to figure out how much profit has derived from a transaction.

However, Camp also said he is working on a legal journal article in which he will argue that at least some profits from transfers of virtual goods are not taxable.

For his part, Miller--who spoke last on the panel--said the Joint Economic Committee is expected to produce a report early next year that will address three goals.

First, he said, the report will address the areas, such as tax, cybercrime and education, where virtual worlds connect with public policy and will therefore educate the committee's staff members about such issues.

Next, the report will seek to identify future uses of virtual worlds, including those by commercial, nonprofit and governmental bodies.

And lastly, the report will specifically investigate the tax issues raised by virtual worlds.

"We will look at factual technical questions," Miller said, "like what is a taxable event in a virtual world."

And that's where the answer to Dibbel's question is likely to come into clear focus, he suggested.

"The key takeaway for the people" at State of Play," Miller said, "is that congressional and IRS interest in this issue is simply a matter of time."

Continue reading "Can the IRS Tax You on Assets That Are Not Real?"

This is Certainly Good News

Twin Peaks Season 2 Release Date

There still hasn't been a formal announcement for season 2 of Twin Peaks coming to DVD, but we've received some information that backs up our previous news item that the set would be released in April. Our new source says the set will be released on April 10, 2007. Hopefully we get studio confirmation about this soon.

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Michael Richards Apologizes

So, after watching the offending video a few times, giving it a lot of thought, then discussing it with a few people, and now watching Michael Richards' apology (below as long as Goo-Tube will leave it up) I'm not sure what to think about this whole situation.

Nothing that he can say and no apology he can offer will make amends for the comments he made on that stage. However, if you really watch the first video, and listen to what he says in his apology, it does seem that he got caught up in a furious moment of rage that overtook him and he allowed himself to be carried away. At one point in he first video it doesn't even seem like he's aware of what he's saying anymore. He's just completely lost it.

His appearance on David Letterman made for six of the most uncomfortable minutes of TV that I've seen in a while. He really seemed shaken up over it, reeling from his own actions. He wasn't quite able to explain why he reacted the way he did, or where those feelings came from. Like I said, none of that excuses his actions, but as uncomfortable as it seems, I think he truly is sorry, and not just because of the backlash that come at him, but because he is genuinely sorry for allowing himself to go to that place.

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