Your letters
Reader opinions on Business news
By Times Staff
Published October 28, 2007
How to blissfully ignore reasons for 1987 crash, column Oct. 19
Columnist needs to check facts
Wow. How blissfully ignorant columnist John Wasik seems to be. It's okay to say the U.S. economy is resilient and only see detours where others see hurdles, roadblocks and minefields. But can we have a little less denial and more fact-checking, please?
Gerasimos Alex Morfesis, Tarpon Springs
Insurance show must not go on, column Oct. 21
Don't let insurers cherry pick
Great column! I have been a bond broker to money managers for over 20 years and have watched insurance companies' profitability skyrocket. State Farm and Allstate insured everyone at pretty reasonable rates during the "no-hurricane-threat years," invested the premium money and made a ton of money. After all, that is the business they are in: insuring risk. They calculate the risk, calculate a price for it, insure themselves through a reinsurance company (like those that Warren Buffett runs) and invest the premiums for the times that they will be called upon to pay out on claims.
The thing that bothers me personally is that the industry's dirty tactics make me wonder if there is a way that our state can brainstorm on some ideas with the other coastal states as to how to prevent the insurance companies from cherry picking the years they want to insure us. I can guarantee you that when this weather cycle changes, these same companies will be back knocking back at our doors. It is too big a market. They are truly "fair weather" players.
Sandy Hutton, Belleair
Officials fighting rate increases
I don't feel like I'm stuck watching the same melodramatic skit concerning property insurance in the state of Florida like you seem to be. I watch Florida government proceedings on Ch. 14, especially during insurance rate increase requests, and I commend the Office of Insurance Regulation for its recent denials of several of these requests.
You portray the governor and the Office of Insurance Regulation as a cast of "amateurs" in a soap opera. I'm surprised because I usually agree with most of your columns. I believe that the governor and the OIR are trying to enforce what the special session held earlier this year agreed upon concerning homeowners insurance rates.
As you know, Allstate Insurance returns to Tallahassee in January and will testify, under oath, to the staff of OIR and possibly the governor about their rate increase request. I wonder what your response will be to that encounter.
Rich Zutell, Hudson
How much have insurers lost?
Sure would like to see an article concerning how much money Allstate, State Farm and others have lost for the past two years since they have pulled out of Florida. I am sure they have gained a windfall because there have not been any hurricanes, not even near Florida, for some time.
Yes, we still have few more days for hurricane season, but I and others are predicting "No Hurricanes this Year and Next." My prediction is just as good as the top hurricane predictor. It seems that his constant downgrading of the number shows how wrong he is. Also, it seems that Citizens Property Insurance should consider coming down in price if we have another no-hurricane season.
James R. Luck, St. Petersburg
Keep the pressure on officials
You and Howard Troxler should be troop leaders for the "hired help" in our state. Your words were to the point Sunday. Then over on the opposite side of Sunday's Money page is a story about health insurers paying $250 a night for their convention hotel rooms.
Ah, life goes on for the middle class. If only we could keep enough income coming in after taxes to pay for all the waste. Keep printing the real story and maybe, before it's too late, more eyes will open or more pols will be embarrassed at how ineffective they are while spending our dimes.
Robyn Dalton, Largo
Insurers are, in effect, bookies
Our insurance predicament is a lot more complex than simply a faceoff between Florida and its greedy insurers. What is involved is politics vs. risk control.
In some ways, the closest comparison you can find to an insurance company is a bookie. Instead of betting on a horse or a football game, you are betting on accidents and freaks of nature such as storms. Whether you call the mathematical basis for the bet an actuarial table or an odds line is unimportant, but there is a strong family resemblance. And like both the insurer and the bookie, if you get too much business in one area, you either buy reinsurance or lay off some of the action with other bookies.
But suppose now that you as a bookie or insurer find out that the mathematical basis for your assumptions and odds are demonstrably wrong.
How do you know what the correct odds are? How much do you really need in reserves? If a bookie makes a mistake, he bears the consequences. But what about the executives of a corporation who are betting the assets of others? Well, the first step in risk control (because that is what we are talking about) is to figure out what changed.
Well, it is partly hurricane cycles, and perhaps partly global warming, but mainly it is us - the customers. We are building more and more in exposed locations where risk is higher. Fifty years ago, no Floridian with an ounce of common sense would have built on or close to the water. We knew it was asking for trouble. When you built a home, it tended to be solidly built in the expectation of storms. You had shutters, and your doors opened outward. Today, we build with wall board, aluminum 2 by 4s, particle board, Tyvek and siding.
Now, of course, these are luxury units, so they are a bit pricey to repair or replace. And, given the density of construction and the exposed locations, there aren't likely to be many small losses, just big ones.
What's not to like? So Mr. Insurer, how many policies can I put you down for? Why, Mr. Insurer, your hands are shaking. What's the matter? Now the Legislature says they must cut rates. But where does it say that they have to sell policies?
No bookie will take a bet if he can't figure the odds or if the bettors will not accept his odds line. Is it surprising then that insurers won't, either?
Jim Bennett, Clearwater
Variety of options to finance schooling Oct. 21
'Throes' is the correct word
In paragraph 4 of the Jean Chatzky article, it reads as follows: "But if you're in the throws of paying a loan back." "Throes" is the correct word. A faithful reader of your great newspaper.
Althea Brandon, Zephyrhills
McGehee a man of inspiration, letter Oct. 21
McGehee officer and gentleman
Bob McGehee (Progress Energy CEO who died this month) and I were classmates at the U.S. Naval Academy (Class of '66) and were in the same company, as well. We went through plebe summer together, became friends easily and "shipmates forever," as an old Navy song goes. Bob's photograph reminded me of how little Bob's appearance had changed over more than 40 years. Still distinguished looking and put together as ever because he was much the same way at 19. Easy to know and easier to like. I'll never forget Bob in formation, his lean figure rising above the mass, half his head and composed face, topped perfectly by his uniform cap. An "officer and gentleman" in every sense of the term and well into the making, even then.
David Morgan, Dunedin
Nation's debt
Don't pass debt on to children
The political officials we elected have created a financial crisis. The burden of this crisis will fall on future generations. They will vilify our generation for allowing this to happen. The Federal Reserve continues to print more money to put liquidity into the economy. This action can only lessen the value of the dollar and could result in price inflation. Our nation has continued to export our money and jobs to Asia, which means that much of the world investment profit will be generated in this region.
Our money keeps flowing overseas at a rate of approximately $700-billion per year. The Europeans and Asians continue to facilitate our national debt by buying our Treasury bonds with the money that we send to them from our huge trade imbalances. If the dollar continues to devalue and the interest we pay on these bonds drops, will they continue to buy? They will hold us as financial captives if they do not, or worse, if they attempt to call in some of this debt. Our nation is dependent upon the purchase of this debt, which is somewhere around $9-trillion dollars. The unfunded financial obligation for Social Security and Medicare/Medicaid is estimated at over $72-trillion. Public infrastructure maintenance has been deferred on our roads, bridges, schools, dams, etc., and will require some $1.5-trillion to bring them up to standard. Let our generation not be one of the first to pass our debt on to our children and mortgage their financial futures.
Rob Chapman, Dunedin
Real estate market
Bad press hurts housing sales
If you continually tell a kid that he or she is stupid, after a while they truly believe they are stupid, right? The St. Pete Times' continued negativity toward the real estate market and Realtors is actually helping to keep the local market down. Your stories are almost always negative and you keep anyone reading from realizing that this is a great time to get a great deal on a home.
First-time home buyers should be lining up to buy right now, and with the new FHA guidelines, they can avoid those predatory adjustable-rate mortgages, and get fantastic funding with very little money down that is backed by the government. Why not run some stories like that?
I do realize that something must be done about property taxes to get current Floridia homeowners moving again, but maybe you should help encourage first-time home buyers, investors and those looking for a second home, that this might be a good market for them. Start trying to help the situation rather than relying on riding the easy wave of national negativity for the housing market.
Todd Christofferson, Palm Harbor
Real estate agent
Building costs have doubled
In response to the misinformed opinions regarding the current price of real estate: Do any of these people realize that new home prices go up due to current costs of construction, stricter building codes, impact fees, land cost and demand? Home prices for new homes have decreased only slightly due to less demand. New home prices will never fall by a large amount that others seem to be dreaming about.
The costs of concrete, lumber, steel, etc., have doubled in recent years due to the demands from foreign markets. Our concrete and block cost are projected to increase 10 percent in January. Everyone knows building codes have gotten much stricter, increasing the costs of building. Impact fees are always increasing and vacant land and development costs will always rise.
The University of Florida recently published a report about the excessive demand for housing coming to this state in 2009 and lasting at least 10 more years due to the number of people moving to Florida. So if the demand is there and cost to build is rising, then housing prices have nowhere to go but up.
New homes are larger, have a lot more amenities and are better constructed than ever before, which, of course, will make them more expensive. Contractors have been forced to lower profits greatly due to the slow market. Realtors have lowered commissions due to the flat market in sales. The Fed has lowered interest rates to entice people to purchase. Now it is time for the buyers to do their part. This, for some, is to pay the higher prices.
Stop listening to the uninformed who only see that the price of housing has risen. These are the people who will deny you the chance to own the only thing that is guaranteed to increase in value over time. This is the time to get great prices in real estate due to the fact that prices will only rise. They always have and they always will.
What did your parents pay for their first house? Think about it!
Bob Butler, Palm Harbor
Don't reward housing gamblers
I believe the public is generally unaware that there are actually two types of adjustable mortgages that cause concern when they reset.
The first type is what people generally refer to when they speak of the subprime market. The loans had a 2-year grace period of reasonable rates (although still higher than prime) that allowed the borrowers time to correct their credit problems, then refinance when the grace period was over.
In general, had these borrowers corrected their credit issues, a large majority would still be able to refinance and lower their payments.
The second type of adjustable mortgages, commonly known as "pay option ARMs," were aimed at generally prime credit borrowers who were gambling on the market and bought houses way out of their price range. These loans started with payment rates as low as 1 percent and offered unbelievably low payments for high-dollar loans. These low payments did not cover the interest owed on these loans and borrowers ended up owing more on the principal at the end of the year.
In either instance, the borrowers were aware of the implications of the loans they chose. They had to sign at least three different disclosures at their closing before they even got the keys. They are being dishonest if they say they didn't know what they were getting into.
While it may make some sense to help the subprime borrowers by lowering their now-reset double-digit interest rates, any bailout of the borrowers in the second group is simply rewarding gamblers and speculators who made the wrong bet.
Dave Hoyt, Palm Harbor
Unemployment benefits
More out of work than we know
With unemployment on the increase and jobs leaving the state in record numbers due to sky-high taxes and exorbitant insurance rates, I think it is time for the state Legislature to extend unemployment benefits. Laid-off workers just can't find work. Huge numbers of illegal and legal immigrants working in the state have taken a toll on Florida's workers. The mortgage crisis has caused new construction to slow down, leaving thousands more unemployed
Official rates of low unemployment are as phony as a $3 bill. These rates only reflect those workers who register at the state employment office. Most of those out of work use the Internet or the newspaper to look for work and are therefore not counted as unemployed by the state.
Pinellas County is being hit harder than most places due to annexation by cities like Largo. Largo's annexation of businesses in the High Point area has caused companies to close due to titanic city taxes, colossal city franchise fees and excessive city license fees.
That means even more people out of work.
Bob Snow, Clearwater