Daily Archives: February 13, 2008

Visio – not just for IT diagrams

As an IT architect, I use Microsoft Visio for some of the diagrams I do. (I do use IBM’s Rational products as well.) Little did I imagine you could use it for non-technical things the way David Salaguinto does to make funny comics like this one:

For more on this, see Office Hours: Drawing a daily comic strip with Visio – Help and How-to – Microsoft Office Online

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Neutron loans, or how the subprime disaster works

Over at bloomberg.com is a very simple explanation of how the subprime problem works it’s destructive effect:

Joe Ripplinger took out a $184,000 mortgage in 2006 and makes his payments every month. Now he owes $192,000. The 66-year-old Minneapolis house painter has a payment- option adjustable-rate mortgage. It allows him to write a check for $565 a month even though he owes $1,300. The difference is added to the mortgage, and when his total debt reaches $212,000, or after five years have passed, he said his monthly minimum could jump to about $2,800, which he can’t afford. “We’re barely making it right now,” Ripplinger said. The estimated 1 million homeowners with $500 billion of option ARMs are beyond the help of interest-rate cuts by Federal Reserve Chairman Ben S. Bernanke. While subprime borrowers face an average increase of 8 percent or less when their adjustable- rate mortgages reset, option ARM homeowners may see their monthly payments double after their adjustments kick in. “We call them neutron loans because they’re like a neutron bomb,” said Brock Davis, a broker with U.S. Express Mortgage Corp. in Las Vegas. “Three years later the house is still there and the people are gone.”

ARMs are fine for speculators who know what they are doing and can handle the risk. For people like Joe Ripplinger, they are anything but fine. And there are alot of people like him out there. See: Bloomberg.com: Exclusive