Some Postal Musings

Having nothing to do with real estate, other than our use of the Post Office for some direct mail advertising, I'd still like to talk about them, and the latest rate increase. I guess they are not technically a governmental agency, although we all feel that "flavor" about them, they are none- the-less a well protected monopoly, and certainly a bureaucracy, and the behavior of bureaucrats is a constantly intriguing study. The price increase apparently stems from a need to increase profitability which requires increasing income, which in the more formalized government usually means simply raising taxes. For a bureaucrat there may be an almost perfect correlation between raising prices to increase income and raising taxes for that purpose. A businessperson might ask why profits were shrinking in the first place and seek some strategy that would work to try to correct the problem. Unquestionably the use of e-mail and the competition of the private sector such as FedEx, United Parcel, California Overnight, DHL and others have seriously reduced the USPS business volume, and they have enormous investment in plant and equipment to handle a large volume of mail, plus a difficult to dislodge and very well paid personnel roster. The effect of raising prices is likely to be the opposite of the one intended. If shrinking volume caused the income reduction, the rise will likely drive away even more marginal users, and reduce the volume even further, probably eliminating any hoped for increase in revenue and profitability. The high cost of plant and people is not going to go away. A business approach to the problem would more realistically involve studying the capacity of the current system and determining a postage price that would attract sufficient volume to utilize that capacity and return a profit. That determination would likely result in a price cut, but an increase in profit. That isn't going to happen of course, and if the "forever" stamp doesn't save them possibly they might just get out of the business. Private enterprise would fill the void in a heartbeat.
The furor about the mortgage industry continues. Even for those of us in the business it's getting a little tiresome. Barney Frank would introduce some legislation making it possible for borrowers who felt wronged to sue right through the system into the bond holders who buy the security instruments made up of mortgages. Not a carefully thought out idea. If you want to dry up the availability of mortgage money that would be a nifty beginning. Cleaning up the origination arena of mortgages would be a good idea. Support the integrity of the appraisal process, make sure underwriters and staff in loan origination brokerages and mortgage banks are salaried rather than commission employees, eliminate stated income loans for any W-2 employed people. For the most part the hand wringing over the disadvantaged is overplayed. The bulk of the troubles in foreclosures stem from the use of the home as an ATM machine. The people who took out the equity loans, got the money, spent the money, and Detroit, the TV manufacturers and other consumer goods providers were the beneficiaries of this lending activity. The party was fun, but sobriety may be painful. If you want to read some excellent blogs, diverse and daily, http://ml-implode.com/, go there. Note that everyone, including us, speaks from some position of interest, so read accordingly. We think our position is benign, but probably not if you're a real estate agent or mortgage seller.
As usual,
Thanks for visiting.