Insurance Rates to Soar for Homeowners at Flood Risk

From The Kiplinger Letter, June 14, 2013

Insurance costs are zapping homeowners in flood-prone parts of the U.S. Premiums are soaring, and redrawn flood zone maps include more property in the wake of superstorm Sandy and other major flooding along rivers and lakes.

Those with jumbo mortgages will take another hit. More mortgage lenders will require borrowers to buy the maximum National Flood Insurance Program policy of $250,000, and may encourage additional private flood insurance coverage. For some properties in high-risk zones, premiums will jump by as much as 25%.

Meanwhile, the number of new jumbo loans is up 40% from one year ago, fueled by a dip in interest rates during the period. For most parts of the country, jumbo mortgages are for more than $417,000. In high-cost areas...$625,000.

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Higher Postal Rates in Jan. for Some Business Mailers

-- From The Kiplinger Letter, June 14, 2013

If your business mails catalogs or promotional material, prepare to pay more. A rate increase in the range of 4% to 7% is likely to take effect in January. unless federal courts intervene. The higher prices would apply to material that is sent by standard class. Rates now range from nearly 14¢ for the largest-volume mailers to about 64¢ per piece, depending on how the material is bundled and addressed.

The U.S. Postal Service board of governors will propose the hike this year. The Postal Regulatory Comm. must OK it. First-class rates won’t increase.

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Secret Government Snooping Will Stay Mostly Secret

-- From The Kiplinger Letter, June 14, 2013

Security will still trump privacy in the fight over government snooping. Absent a public outcry against Uncle Sam’s mass surveillance programs, spy agencies won’t pull the plug on their telephone or online data mining tools. For now, most voters seem unconcerned, so big legislative changes aren’t likely.

Hearings are coming, but don’t expect to learn much about the practices. Congress will do most of its questioning behind closed doors, to maintain secrecy. And lawmakers privately say they’re more interested in prosecuting the contractor who leaked the news than in easing measures that most quietly support anyway.

The White House won’t say much, either. The Obama administration fears that any queries congressional GOPers make will be posed for political gain… to remind voters that Obama ran against domestic spying in the 2008 election.

Still, pushback could come…particularly in the form of a legal challenge... if, say, the program led to terrorism charges against someone that proved untrue. Meanwhile, more leaks are likely, especially if hearings don’t bring many changes. Too many intelligence workers are concerned about the operations to stay silent.

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Turning Debt-Laden Students into Investments

-- From The Kiplinger Letter, June 7, 2013

Is there an investment opportunity in backing heavily indebted college grads? Some entrepreneurs think so. New firms, such as Upstart and Pave, offer well-heeled investors seeking better-than-average returns the chance to earn 8% a year by helping pay off grads’ student loans in exchange for a share of their income. The Upstart model has potential investees create an online profile to attract backers, while the service determines how much money can be raised per 1% of their income over the next 10 years (up to 7%). To do that, Upstart analyzes data on schools, majors and more, plus the potential investee’s geographic location and personal background.

Backers often sink more than money into their projects, acting as mentors. At least for now, the firms are targeting mainly top students from top schools.

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Solar, Wind Make Big Gains as Energy Sources

-- From The Kiplinger Letter, June 7, 2013

Look for solar power production to double in 2013, following a 150% increase last year. Increased use of solar panels and wind turbines in recent years is paying dividends in the form of significant power generation. Sometime this year, solar will vault past geothermal power in the ranks of clean energy sources. Within a few years, look for solar power to also overtake wood-based fuel sources.

Meanwhile, gains in wind energy mean it'll soon rival hydroelectric dams, long a power grid mainstay. Though wind can't boast the rapid growth rate of solar, its 5% share of total U.S. generation will keep rising, especially in spring and fall.

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More Commuters Choosing Bikes Over Cars, Buses

-- From The Kiplinger Letter, June 7, 2013

More commuters are shunning cars and public transportation for bicycles. Not just in big cities with bike sharing programs…New York, Boston, Chicago… but in a number of smaller downtowns, too, including Indianapolis; Memphis, Tenn.; Wichita, Kan.; and Tulsa, Okla. In Washington, D.C., the surge in bike ridership coincides with a decline in the number of passengers using the subway and buses.

Many municipalities are adding cycling lanes and bike sharing programs, catering to existing riders and attracting new ones...a real draw for younger folks.

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Sequester Throws Defense Planning for a Loop

-- From The Kiplinger Letter, June 7, 2013

The sequester will cause headaches for the Pentagon's long-term planners. Defense officials don't know precisely what will be cut or by how much. They only know automatic cuts are coming for nine years. That can be a big problem when dealing with weapons, ships and aircraft, which take years to plan and build. For instance, a modern, 300-ship Navy would take 30 years, at $22 billion per year. Spending cuts in the early years of that program would extend the wrap-up date.

The uncertainty will carry over to defense contractors large and small. They'll have trouble figuring out how many workers and what materials they'll need to fill Uncle Sam's orders. In some cases, the inability to plan may boost spending in the short run rather than cut it because of cost overruns and inventory disruptions.

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Attorney General Eric Holder is a Short-Timer

-- From The Kiplinger Letter, June 7, 2013

Attorney General Eric Holder's days in the administration are numbered. Even his staunchest backers at the White House say he'll be gone soon, probably by the end of the year. He's a victim of bad timing as much as anything. Republicans would rather keep the spotlight on the IRS instead of the Justice Dept., which focused on reporters in leak cases, but top IRS officials have already departed.

The longer Holder stays on, the bigger the political liability he will become. That's one reason to expect his departure well before the 2014 elections.

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Teachers Turn to Robograding to Keep Up

-- From The Kiplinger Letter, May 31, 2013

Teachers are getting help dealing with bigger classes caused by budget cuts. Computer software to grade essays is quite good…and it's getting better, allowing educators to assign more and longer writing assignments to their students. The software is tireless, working around the clock if necessary, so teachers can focus on kids who need one-on-one attention or on specific aspects of writing assignments. The programs look at sentence and paragraph structure and key words and phrases, using proprietary algorithms to rank student performance. But they're not foolproof.

Critics say using a lot of big words games the system, earning good grades without necessarily reflecting comprehension. And shorter essays are more problematic. Software can't easily tell whether using the best words means having the right answer. But the robograders are here to stay and will keep growing in popularity.

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More States Will Approve Crowdfunding Ventures

-- From The Kiplinger Letter, May 31, 2013

Expect more states to allow crowdfunding of new business ventures. They'll OK online exchanges that give entrepreneurs the opportunity to raise financing from many small investors. Legislation governing the websites is moving in Washington and North Carolina, and is in place in Kansas and Georgia. Federal regulations making it easier for smalls to sell shares without triggering SEC rules on public offerings will come later in 2013.

An individual's backing of any venture will be capped to protect investors, and states will typically require that shares be held for at least a year. Previously, even small firms had to meet tough SEC rules to issue a general solicitation for funds.

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Where U.S. Investors Are Seeking Returns Overseas

-- From The Kiplinger Letter, May 31, 2013

With the appeal of the Chinese and European economies tarnished, U.S. foreign investors are migrating elsewhere in search of better returns, while holdings in western Europe, especially Greece and Portugal, are being cut.

Investors are upping their antes in eastern Europe. In fourth-quarter 2012, for example, U.S. banks' loans in Russia shot up by 27%, with those in Romania, Serbia and Montenegro rising about 15%. Plus their lending in Finland rose 17%.

And for those seeking the next booming market and double-digit returns… Indonesia is the new siren. The fourth most populous country in the world, Indonesia has one of the fastest-growing middle classes. Consumption is soaring… it grew by about 5% last year…with GDP likely to climb by about 6.2% this year.

Increased financial exposure to these markets comes with significant risks. Russian and eastern European economies are closely tied to their western neighbors'. And Indonesia remains politically volatile and vulnerable to mounting protectionism.

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New Computers, Satellites Will Improve Weather Warnings

-- From The Kiplinger Letter, May 31, 2013

U.S. meteorologists are playing catch-up with European weather forecasters. But not for long. More-powerful computers and better software are coming to the National Weather Service, starting this year. They'll help forecasters digest and analyze the stream of data sent from weather satellites that orbit the planet.

The upgrades will improve the forecasting of hurricanes and floods. And they may buy a minute or two of additional warning before a tornado. That may not seem like much, but it's enough time to get more people into shelters.

Two new weather satellites will be launched within the next five years by the National Oceanic and Atmospheric Admin., replacing the eyes in the sky that now provide the bulk of the data used by public and private sector forecasters.

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Congress Will Keep the Heat on Obama's IRS

-- From The Kiplinger Letter, May 31, 2013

Republicans in Congress won't back off from the IRS mess anytime soon. They'll drag out hearings on the tax agency's conduct late into the year, and maybe into 2014, hoping their investigation translates into favor with voters. One tactic House GOPers will use to keep the issue alive: Seeking copies of e-mails to determine whether anyone from the White House was involved in the targeting of conservative groups by tax agents. President Obama won't give in on that front. He'll claim executive privilege, likely bringing about an extended battle in court.