As disappointed global stock markets plummeted in response to the U.S. Federal Reserve’s latest stimulus initiative last week, few investors were paying attention to what may have been the Fed’s real intention behind this new plan — mortgage refinancing.For the longest time, I have been convinced that the housing market holds the key to economic growth (or lack of it) in the United States. As such, I have been hoping against hope that one or more of a long line of presidential candidates would actually have the courage and intellect to recognize and address our main problem.Instead, I hear how “we need to get America back to work” or “we need to roll back all these regulations that are preventing businesses from investing.” While all of those jingoistic slogans sound good, none of them address the main issue: how to deal with the trillions of dollars in underwater mortgages and the people who hold them.The Fed, through QE II, (quantitative easing), attempted to push interest rates low enough so that borrowers could stave off foreclosure by refinancing their mortgages. The problem is that lenders insist that the market value of homes to be refinanced must be no lower than 25 percent of the mortgage they carry. That’s a real “Catch-22” for most borrowers, thanks to the decline in housing values over the last three years. Their houses are now worth a lot less than that. So mortgage holders are in a bind. They can’t sell their property because they won’t get back enough to pay off the loan. They can’t refinance because the house is worth less than the mortgage and they can’t afford the monthly mortgage payments. As the situation drags on, more and more Americans slip into bankruptcy or walk away from their home/mortgage, leaving an already weakened financial system to pick up the pieces.Right now, this is just my guess of what the Obama administration may be planning. Over the last week, a number of governmental trial balloons were floated in the media concerning refinancing of up to $1 trillion of mortgage loans on easier terms. It won’t be a giveaway, if it occurs, in the sense that to qualify for refinancing, you must be current on your mortgage payments and the loans must have been guaranteed by Fannie Mae, Freddie Mac or the Federal Housing Administration. How would it work?Homeowners who qualify would get a new 30-year loan at, say, 4 percent and pay off 100 percent of the old mortgage (presumably carrying a much higher rate of interest). This is called prepaying your loan in the mortgage business. Your bank receives the proceeds and pays off the old loan to Fannie and Freddie. These two government mortgage entities would receive these billions in prepaid mortgages and dispense them to the ultimate mortgage holders in the mortgage-backed securities market.Now, guess who holds the lion’s share of mortgage-backed securities in this country? You guessed it, the Fed.That still leaves Fannie and Freddie with a problem. They need to refinance all these new 30-year, 4 percent mortgages. They are also assuming a lot of risk since lending now, when interest rates are at historical lows, is a dicey business. Who will buy them and how can they protect these new mortgage loans from future losses when interest rates begin to rise? The answer was revealed in last week’s Fed announcement.The Federal Reserve announced that it intends to drive long-term interest rates lower by purchasing long-term U.S. Treasury bonds. The Fed said it will also juggle its $2.65 trillion securities holdings by using its enormous cash flow to buy more mortgage debt. In other words, since it will be on the receiving end of all these billions in prepaid mortgage money, it will just turn around and use that cash to buy up billions in these new refinanced mortgages. At the same time, by driving long rates lower through their purchase of long dated treasury bonds, they effectively remove the risk of rates rising anytime in the near future. The Fed becomes both buyer and seller of this entire refinancing operation.The beauty of this move, in my opinion, is that the White House will be able to launch a new refinancing program/stimulus plan without going through Congress for approval. Nor will it add to the deficit, since all of these transactions will be run through the Federal Reserve. The Republicans may have gotten wind of this, thus the letter to the Federal Reserve Board just prior to their meeting, warning the Fed members not to do anything further to stimulate the economy.Well, boys, the Fed just blew you off and you can’t do a thing about it.Is this all a hair-brained scheme of mine borne of too much work and too little vacation? Time will tell. But if I’m right, I would expect an announcement fairly soon. I have to hand it to the Obama administration if it is true and they can pull this off. The scope of refinancing they are planning will put $2,000 or more a year into borrower’s pockets, which will amount to a huge stimulus program that bypasses Congress and goes straight to the people. I hope I’m right. Bill Schmick is registered as an investment advisor representative with Berkshire Money Management. Schmick’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Schmick at 888-232-6072 or email him at Bill@afewdollarsmore.com.
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Dick Hermans in the Oblong Bookstore on Millerton\u2019s Main Street in 1985.
Provided
For Hermans, the award has prompted some reflection about why he has spent so much of his life involved in community projects.
“I was thinking about it this morning: Why do I do what I do?” he said. “And I think no matter what I’ve done, whether it’s been school board or rail trail, I’m trying to be useful to the communities I’m associated with.”
Hermans is perhaps best known as the longtime co-founder and steward of Oblong Books in Millerton, a business that began almost by accident. He and his first wife, Holly Nelson, were living in Millerton and looking for something to do during the winter. They had been painting houses, including the Grange Hall in Millerton, a job Hermans got through his aunt, who belonged to the Grange.
At the time, Hermans was also working in insurance for his father, doing collections.
“It was fine except I was doing collections, and it really kind of left me cold,” he said.
He and Nelson began thinking about what they might do together. Nelson was an avid reader, while Hermans had studied journalism and had worked in a record store. They noticed a chain of book and record stores operating elsewhere in the Hudson Valley and decided to follow that model.
And so Oblong was born.
Dick Hermans in the Oblong Bookstore on Millerton’s Main Street in 1985.Provided
“We really learned it by the seat of our pants,” Hermans said.
The business would eventually become a beloved and integral part of Millerton’s commercial life. But although Hermans may have learned the book business as he went, his affinity for retail — and for the connections that happen across a counter — had begun much earlier.
As a child, his second-grade teacher operated a little cardboard pencil shop in the classroom, and Hermans still remembers the satisfaction of selling a pencil for a nickel.
“I really liked selling somebody a pencil for a nickel,” he recalled. “I can remember that experience, and it was so pleasant.”
Later, while living in Arizona, he helped establish a food co-op and worked at the counter.
“I kind of knew that I liked doing that kind of thing,” he said. “It’s a nice way to be pleasant with people, but without making too much commitment to them.”
His relationship with Millerton also predates Oblong. His grandparents lived in the village, and he first came to Millerton as a baby. Over the years, he has watched the town change through several generations.
He remembers a Millerton with a much broader array of businesses, when stores such as Delson’s, the Main Street department store that stood for nearly 40 years in what is now Millerton’s Antiques Center, seemed to carry almost everything a resident might need.
“You could find everything from a set of dishes to a shotgun,” he recalled.
The rise of shopping malls changed that kind of downtown retail, he said, but Millerton has remained a lively commercial village.
“For us, it’s been a great place to have business,” Hermans said. “It’s a busy village.”
For Hermans, running a store was never simply about selling books and records. It was a way of being part of a place.
Music has remained another constant. Hermans continues to sell music at Oblong and hosts the radio program “New Harmony” on WKZE. The business of selling music has changed dramatically over the years, particularly with the rise of streaming, but Hermans has adapted.
He was initially reluctant to bring vinyl records back into the store because of their expense. But about four or five years ago, he began stocking LPs again, and they have become the main form of music the store sells.
He finds that many of the customers buying them are reconnecting with music they loved years ago.
“I do best with classic albums that people may have had when they were young,” he said. “And now that they’re retired, they want to hear it again.”
Hermans still reviews between 700 and 1,200 new music releases each week through the store’s distributor, Alliance Entertainment, carefully deciding what belongs on Oblong’s shelves.
That same commitment to place has led Hermans into a wide range of community projects. His work with the Harlem Valley Rail Trail is among the efforts he mentions when reflecting on his years of civic involvement. He has also served on the school board and has been involved with the Millerton Business Alliance and the Irondale Schoolhouse. He is now involved with The New Pine Plains Herald, which he sees as complementary to the work of The Millerton News and The Lakeville Journal.
“I really think that the important thing about this award is that people understand what a newspaper does to connect them to their community,” he said. “And if that means anything to their lives, they gotta support it.”
Hermans knew Mary Lou and Robert Estabrook and remembers them as people who were deeply conscious of their responsibilities to the community.
“They were really nice folks,” he said. “They were very conscious of what their role in the community was.”
There is, in fact, still plenty on his plate. Hermans admits he needs to scale back because he has taken on more than his current abilities can comfortably accommodate.
“To be given this award is very special,” he added. “But I don’t feel like I’m done.”
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Adamah Farm crew members planning out the day’s tasks on a late September day.
Janna Siller
Over my 15 years of growing vegetables in Falls Village, I’ve exerted my will over all kinds of conditions, from drought to humidity to crows with a taste for cantaloupe. That’s what farming is all about. You zip around the field, hopping on and off tractors, moving hoses and chasing weeds, all in an effort to arrange conditions in favor of your crops. It is the crops’ job to gulp up sunlight and move water through their stems, to transform solar energy into your next pesto or ratatouille or butternut squash soup. It is the job of the farmer to irrigate just enough but not too much, to slice dandelion leaves without damaging delicate cabbage roots, to pander and pamper and stay in tune with what plants need to thrive.
The easy part of farming is trusting plants’ resilience. I have seen bright green shoots barrel ahead out of a plant torn to shreds by hail. I’ve watched wilty, heat-stressed seedlings turn rigid overnight and greet the next morning with vigor. The hard part is letting go of what you can’t control. As our crops lapped up Friday’s gentle sunshine and I considered the weekend forecast, I imagined roots holding tight to wet earth and branches supporting each other in sideways, pelting rain. I made sure all of our storage crops were already harvested and tucked away. I battened down the sides of our greenhouses and wished the remaining field crops good luck.
The nor’easter didn’t materialize too dramatically in our corner of New England. A few broken branches and debris blown about, nothing like the July Fourth storm that sent half a tree crashing onto the deer fence and left crates of fresh veggies in coolers without power.
Fall storage crop harvests amid soil building cover crops at Adamah Farm in Falls Village. Janna Siller
Farming is an exercise in acceptance. To do it well and return year after year, you have to balance hubris and humility. The prize can often be a certain equanimity, a training in the art of moving into the next day even when the last one scrambled all your plans.
Epic change is not always about the unexpected. It also comes like clockwork on the seasonal calendar. As I type, the last of summer’s watermelons wait naively on the vine for a few hot days to finish ripening. Broccoli are holding their leaves wide as they did in June and July, only to find that the hours of sunlight decrease with each earlier sunset. Plants can’t pick up and go south or call the manager to order a bonus round of sunshine. Their growth slows and they get a resigned look to the hue of their leaves, so different from the frenzied growth of summer.
The release of fall is not tragic or gloomy. It is not an ending because so many fall tasks are about setting up for the new beginnings in spring.
We turn the vines that yielded thousands of pounds of fruit into the soil, where healthy microbes feast on their rotting stems. Then we plant cover crops — a mix of cereal grains like rye and oats and legumes like peas, vetch and clover. Cover crops hold the soil and its nutrients in place over winter, feeding the soil food web and adding organic matter that next season’s crops will need to grow.
We sort sprinklers and repair hoses. We inventory tarps. We take notes about which plants did well where and how we might try a new approach for this or that. We stack crates of cured garlic and onions and winter squash in a cool, dark room.
We save seeds from tomatoes and beans and lettuce, carefully labeling each variety for next season’s long, sunny days.
Janna Siller is the farm director at Adamah, a community farm in Falls Village offering CSA shares, educational programs and a food access program.
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