Listening to the GOP debates and now the back and forth between the candidates can make ones mind numb. Especially since the two main runners are Romney and Newt (yes I feel that Gingrich has made it to the status of a one name superstar). I could go on forever talking about politics and what I feel about each candidate but there was something said today that reconfirms a mindset that I just can't agree with.
Maybe it's a generational thing. Maybe it's my love for sci-fi. Maybe it's my hope that the world can be a better place and one day the people of earth will see that, like it or not, we are ALL from the same planet.
Newt stated that "in his second term as as president there will be a permanent settlement on the moon, and it will be American".
Avoiding the absurdness of the fact that Newt would have a second term as president, I'm more concerned about this American settlement on the moon. Whether or not we actually NEED this settlement is a different debate that time will tell. What disturbs me is that if we get to the advanced state as to be able to have this permanent settlement and could leave our home rock, Earth, is that we'd still be saddled with antiquated ideals that have held our world apart for at least the last 5000+ years.
I am and always will be a true red, white and blue American. But I also see that our world has become much smaller over the past few decades as technology has brought people from all over the world together. It's amazing to me that in seconds I could be online with people from all over the world. I could jump onto my Xbox and be playing Gears of War with someone from NYC or London or even Iran or China.
I truly believe that as the world becomes smaller, old school war will become a thing of the past. I don't ever think we will have a conflict on the scale and scope of World War 2. We knew very little of what Germany was doing in early 1930. The average person couldn't tell you what countries or providences made up the USSR in the 70's and 80's. Compare that to now, we know when there's the slightest unrest in the middle of an African desert. We might not do anything about it but we know. Twitter and Facebook can topple a corupt regime in Egypt at the same time a lonely man in Calabasas downloads what would normally be illegal porn from his office computer... I mean check soccer scores from the EPL (that's right, whew that was close). Anyway, my point being the world is a much smaller place. I could understand hiding under your desk at school due to the threat of a nuclear attack from a nameless / faceless enemy, but would I go to war with Han from Korea that I play video games with online and who sends me bootleg movies?
How does all this fit into an economic blog? Well, because like it or not, we're in an world economy now. On a day to day basis we feel the affects of what happens in Europe and Asia. We've got 24 hour economic news channels. I can trade stocks all over the world from my iPhone at any time of day. If anything is going to bring the world together it's going to be money.
To have a permanent fixture on the moon would take a massive amount of money. It would also be tremendously risky. What any shrewd person would tell you would be to bring in different groups and spread the risk out. I'd hope that we'd also bring in the best and brightest for such an endeavor and that would mean bringing together people from where ever they may be from.
This is the next step of exploration not just to see who can plant a flag first. The moon already has an American flag. Does that mean we own it? I don't think so. Besides, unfortunately and sadly a corporation will probably claim or be given ownership over anything new that is discovered. More than likely it will be a multi national corporation.
To think that a man who is running for president wants the USA to own the moon scares me. What are we going to do with the moon when we can't even fix the problems we have at home? Or maybe he's thinking of a good place to divorce his 3rd wife and leave her on this moon settlement.
We've learn from the past, that to become great we must work together. A massive undertaking, like living on the moon, is going to take a joint venture. As we are becoming one economy and one society, we certainly shouldn't forget our roots and heritage, but we should put aside old xenophobic fears accept that we need to work together. Instead of an American settlement we should have a human settlement. Believe me, when the aliens come to take us over as slaves or steal Earth's natural resources (the ones we haven't polluted) they won't care which part of the rock we're from.
Thursday, January 26, 2012
Tuesday, January 10, 2012
Lenders / Banks passing the buck.
Well it’s 2012 and this year I promise, or at least one of my goals, is to update you all with the most recent financial and mortgage information with the Bear perspective. The first thing I’ll say is that, thank GOD 2011 is over. 2012 has to be and will be a much better year for all of us. I’m actually excited and encouraged about where the loan industry will go. I don’t think we’ll see to much of a growth or betterment of our economy but there are so many changes that are going on, I can’t help but think one or two might actually help the average consumer.
I can’t say that 2012 is starting off great as far as all you mortgage customers out there. Sure rates are low, and will continue to be low. But I’m going to show you the best example of “the banks will only do what the banks want to do”.
Attached is an actual email that is basically passing the buck to the consumer regarding fees for ALL mortgages. It’s funny that even though they say this increase to rates / fees are due to Fannie Mae and Freddie Mac new regulations, the lenders are continently applying this rate / rebate hike to ALL loans. I wonder who’ll pocket that money? HMMMMM?
The funny thing is that this email from Wells Fargo came out Monday and no other lender said anything. This led to may of my piers speculating that maybe this was just a Wells Fargo thing. Which very well could have been the case. But seeing how this is a copy cat business, I knew other lenders would follow suite. Especially since most “lenders” just sell their loans on money lines to Wells Fargo, Bank of America and Citibank (just to name some big ones). Sure enough today, Tuesday, I started to get the same emails from even the smallest lender that rates / fees would increase.
About two months ago Obama said in a speech that he was going to push for a loan program that would help everyone, even if they where upside down on what they owed, there would be a mortgage for you. I got call after call for about two weeks asking about the new “Obama” loans. Well, two months later and there still hasn’t been a new loan program that has come out yet.
See, Obama is a politician. Like him or hate him, he’s going to say what he wants to happen. All politicians do this and if a republican had said this, the result would be the same. No one will tell the banks what to do. Sure they’ll take our bailout money but they’re only going to do what they want and if by chance there is a regulation that they have to adhere to such as this increase in GFees, they’re just going to pass it along to the borrower. They’re not going to let something like this stop them from making the same money they’ve always made.
Tuesday, August 9, 2011
When Politics and Economics collide - MEGA POST
After watching the hysteria of today’s 500+ point drop of the DOW, I can’t just sit back and pretend that you can take politics out of our current economic conversation. Forever I was taught to not include my personal political views in discussions of politics because 1) you don’t want to alienate people from what should be a numbers conversation and 2) you don’t want readers and clients to judge you due to certain political views (I’m in the business to get as many clients, not turn off potential or current clients). But things have gotten so bad that it’s time to put some cards on the table.
Let me first say I’m an Obama supporter. I think he’s a very smart man. I like a million things about him, and his family, in a personal and social way. The biggest issue I have with him, which isn’t very different than issues I have with most Democrats, is that he either has no balls, lost them or sold them out. For his 50th birthday I hope he wished for his political balls to drop like a teenage boy going through puberty.
As for Republicans, I don’t even think that word describes the current party that opposes the Democrats these days. They’re so fractured that I’m confused when I hear various groups trying to describe what the Republican Party stands for in 2011. You’ve got Reagan Republicans, right wing religious Republicans, Tea Baggers, Birth-ers, Constitutional and about 10 other descriptions of what a Republican is / are. I don’t think any of these groups actually know what ‘true” republicans stand for. Take a conservative from 40 years ago and ask them to join one of our two parties now, I think they’d make a B-line for the Democrats.
The problem with the economy is huge. So huge that it’s not limited to what was just perceived as a United States issue or just a political ideals issue. What’s strange is that with each new economic disaster, the path to recovery or the question of what can be done seems to be easier to find. Today was a shock to the system when the DOW and almost all other markets took huge hits. Lots of news has come out that is surprising to many but in reality shouldn’t be as shocking as it is. Italy’s economic troubles, Greece’s issues and other EU countries are reporting such economic troubles that there is great fear that the EURO may be headed for a rollercoaster ride to which many felt that the Euro’s creation and the EU would shelter the whole from some of these problems of the parts. China’s eventual slowdown in growth shouldn’t shock anyone. How long can one country continue to grow and grow and the double digit pace that they’ve been growing (especially for a communist country) and not expect the party to finally be over and real governing has to take place. It’s like in sports, there are no problems for winning teams; but as soon as a team starts loosing, fingers are pointed, backstabbing starts and no one is happy with their contract or playing time. Winning, or in this case making money, hides all problems. What happens when the winning (or growth) slows down? How that is handled is even more important than when times where good. Japan, well lets face it, Japan would rather have had an attach from Mothra or Godzilla than deal with tsunamis and nuclear meltdowns right in the middle of their own economic stagnation.
If you’ve been reading my blog or spoken to me, I’m a huge jobs person. Obviously I’m no genius to say that America needs new, better and higher paying jobs. It’s so easy to say, that I hate to even type it, because it shouldn’t even need to be said. Apparently it does need to be said because no one is doing anything about it. Now this is where we start getting political.
What’s clear to me is that the Republican Party wants nothing to do with any success that Obama can have or might have. They’re doing every thing possible to keep our economy as bad as it is so that the jobs numbers and the real “working class” have a revolt against the president in the 2012 election. “They”; the secret “they” that run each side of the Dems and GOP, “They” on the GOP side know that they have no real contender for the presidency. Part of the reason is that the GOP is so fractured that there is no one person that can stand up and represent all the different factions. Especially when some of the factions are just plain crazy, such as the Glen Beck-ians or the Palin followers. “They” know that in the past no president that has had nearly as bad of an economy has every won re-election but the GOP has such a bottom of the barrel group of candidates that for them to win the economy has to be at or heading to an all time failure.
Don’t get me wrong, Obama isn’t doing anything to help himself. I’ve seen better negotiating skills from my five year old niece this weekend when I tried to pay her to make and deliver drinks to me during our family vacation. When GOP leader Boehner says gleefully that he got “98% of what he wanted” from the recent debt limit negotiations AND is still crying (you decided if I’m speaking literally of figuratively) that the Obama Whitehouse is the root of all our problems; he basically handed the president his ass on a plate. I’d rather think that this president is too smart for bully fights. He’s brought a sniper rifle to a nuke fight. He’s trying to involve all sides, thinking that he can reason with the “enemy” and that he’s actually in a debate / negotiation where both sides want what’s best for the country. In reality, the GOP just wants to blow up the president and the democratic leaders and don’t care how it gets done even if that means killing themselves in the process.
There was no question in my mind that we would raise the debt limit. Why, because Wall Street didn’t have a question about it. If there was any doubt, the months and weeks leading up to August would have seen huge shifts in the market to embrace the fact that were where going to not pay our bills for the first time ever. But there where no such signs and when the smart people came to the kids table and told them to quit all this bitching, the debt limit was going to get raised. (Yes, current drops in the Dow and other indices would lead you to believe this was a surprise, but let’s be real; the Dow is still over 10k and if there was a real scare we’d be at 5k) It’s something that has been done many times in the past and will happen again. Debt is a commodity and every country uses it to one extent or another. Just as debt has become a viable stock option that can be bought sold and traded (but this is going to go on too long anyway, let’s not go there). This was a hostage situation where hostage was itself. There was a gun being pointed at the US economy’s head by the GOP. Sure some out there said, pull the trigger, that’s just what we need to get back on the right foot. But these are just morons. Essentially saying, we’re not going to pay our biggest debts so that we can balance our books for a few years, and then once (and if) we do balance our books we’ll start paying back the debt that we ran up. I don’t think that would set well with our investors. Ask any of the banks (whom we should have let kill themselves in 2009) if they would agree to let mortgages slide for a few years and make no money off interest so that the public could get back on it’s feet and then start paying off the mortgage again. This is simple economics or better yet, street economics. Ask a drug dealer if we can have that ounce of pot, smoke it, in the meantime not pay them but when we get our check in next month, we’ll pay them back. I don’t think that would sit well.
But I’m droning on. The point was there was a fake crisis and the GOP was either ballsy or brilliantly using this fake crisis to 1) keep the money flowing to the rich (themselves and their backers) and / or 2) make the president look bad. At the end of the day, as Boehner almost said, they got both.
I’ve got no problem with socialized medicine. I’ve got no problems with raising taxes on people making over 200 – 250k in income by 3%.
*Let me stop right her to make a point that I talk about every week. There isn’t a person in the world whose Net taxable income is over 200k and aren’t in reality making at least double that. Even a half assed accountant will get someone whose making 300 – 400k look like the person or family is making less than 200k per year. Even if you are someone who gets straight W-2’d and taxes are taken out automatically out of your paycheck, there are thousands of ways for you to get some sort of refund; whether it’s housing interest deductions or small business losses or… you know, I’m not even going to get into it. Just look at the tax code book. It’s about 3 inches thick. There’s a reason for that, it’s because there are 1,000+ ways to not give the government money. And if you ARE one of the few that Makes 200k+ per year and have no deductions or creative accounting and your taxes get raised 3% (like the president proposes) then I’m sorry, find another line of work. We’re just talking about 3% or $6,000 on that 200k. If you’re already paying your 20-25% what’s another 3% so that you can live in the “best country in the world”. I think the real problem is that you don’t see what the initial or extra money gets you. I’ll leave this sidebar and topic for later or another post because the waste of tax dollars could fill up another 10,000 words.*
Back to what got me started, Politics and Economics. The politics have gotten so bad that they’re using our current economic problems to push political agendas. As I said, the GOP was holding a gun to our economic future. What the president fell for was the fact that they couldn’t pull the trigger. They had a hostage that needs to be kept alive. They can’t kill it and then give the dead body back. That would destroy their plans as well.
As always, Obama tried to reason with the GOP. Obama even tried to give the GOP a little threatening of his own, but that’s not him. When he set a deadline, it was more of a suggestion. “24 – 36 hours” and you guys better figure something out. Yeah that really scared them. Never does Obama start on the crazy left and work his way to the middle. (No, I didn't steal this from Bill Maher's latest show. I had this going since last week. Great minds think alike) The GOP starts from the crazy right, Obama starts from the middle and we end up in a generally conservative solution. To which the GOP still say they’re unhappy so Obama has to go even further to the right and basically give in to 98% of what the GOP wants. Frankly I think Obama and the Dems are lucky to get the 2% that’s left over.
I heard an economist listing all the troubles that the world economy is going through. It’s clear that the US isn’t the only country that has problems. But what was a silver lining was that they where speaking about how SOMEONE was going to have to be the leader of the recovery. With so many countries failing and others slowing down, there needs to be and will be a country that leads the world out of this mess.
That was inspirational to me because I feel that this is a golden opportunity for the US to regain its spot in the world economy but also regain its spot as the top world superpower. Someone’s going to figure out how to create new jobs and manufacture something that the world wants, why not let it be the good ole USofA?!?!
In my world things are great. Since the Treasury yields are what determine interest rates, the fact that the yields are so low, they are creating record low interest rates. What can we really learn from these low yield and high bond prices (yields and bond prices move in opposite directions)? It tells us that investors are willing to give us (the American people) money at very low interest rates. This means that the people that are investing in Treasury bonds are willing to take almost nothing as interest because they see that as a safer bet than investing in stocks or even in other markets around the world. Can I just say this was another reason we couldn’t just not pay our bills, we have to preserve our AAA credit rating. Even with an AA rating our treasuries are still a better investment than other stocks which are taking hits. With money coming in at such low rates, why not use that to further push along social and infrastructure projects that can put people back to work which would then create revenues via taxes and make the public buyers of goods instead of hoarders of money. Using the money that’s coming in via the treasuries why not earmark that money to fill up the many potholes in the city of Los Angeles? There is no lack of potholes that need filling and I’m sure we could find people to do this work. In a very short time you could see money being worked back into the system. Back in the day, there were endowments for the arts. This wasn’t just a liberal-hippy cash giveaway but an actual way to get creative people out there making money and creating something. During past recessions, photographers where sent to take pictures and make books. This seems like a waste on the surface but you’re giving an artist a job. Someone who would more than likely be unemployed or unemployable in this recession. They’re creating something that maybe will lead them to go out on their own on the next project because they now have proven their talents. They’ve also used their income to purchase cameras and computers to create these pictures. Then they’ve also spent money on the publishers / printers that produce these books. One job that on the surface seems so silly actually can create so many revenue streams for other business and possibly create a new small business owner down the line. And where did this money come from? Treasuries that only need to pay 3.8% as of 8/4/2011. It’s costing the government 3.8% to fund something that can generate 8% in sales tax alone. I’m sure I’m oversimplifying the process but it can’t bet that much further than what I’m talking about.
Why do we need jobs? So that people will spend money. That’s the goal. Forget that if people are working there are tax dollars to be made, the truth is that if people are working they can spend money on goods that then in turn make companies a profit which will hopefully mean that small business need to hire more people… I don’t know how it can be any clearer to how a strong economy grows. It’s not because the rich get to keep a few percentage points. If companies and individuals with great wealth get to keep what they’ve already made there’s no motivation or incentive for them to higher more people or put out that extra money. They’ll just keep it because the economy is bad and they either wants to cash in on that extra money or keep it incase things get worse. The joke is that if they sit on that extra money, things will get worse. Tax cuts do not work to stimulate the economy on the ground level. If anything they do the opposite.
Now giving the average worker a federal tax holiday or small business tax incentives to newly hired workers, that will get people to hire more and spend more. Imagine a tax cut that’s not on money that a millionaire has already made but for the average person taking home a paycheck, there isn’t a federal tax deduction on that paycheck for a month. Wouldn’t that put money directly into the worker’s hand? In turn, logic would tell you that they will spend that money back into the economy. Again, these seem like simple answers. But because politics are involved, things get complicated in a hurry.
The GOP doesn’t want these problems solved, especially by such “socialist” means because they want to be in office. My question to that is, if you screw up the economy so badly, that when and if you take over, what are you going to do if you do end up with the Whitehouse? We’ll be in a worse position than we are now. The only answers that the Republicans seem to want to push are the same old answers of tax breaks for the “job creators” or rich. At that point, we’ll have officially killed the middle class and have a two tiered caste system (which many people believe we’re in now).
The bottom line is that we need adults. The leadership on all sides is pathetic. I’m not very old, certainly not old enough to say, “In my time I remember”. But I can read. And when I read I find that not to long ago the winning or loosing of power was 2nd to what was best for the people of this country. Now it seems that the possession of power is more important to the politicians than the health, liberty and happiness of our country’s people. It’s now about keeping the job rather than doing it based on what the people voted for.
I used to think that the first 100 days of a presidency was important because that was supposed to set the tone for the new president but now I think it’s the only 100 days that a president has before he has to start worrying about the next election.
If anything (if you’ve made it with me this far); I hope you take away that it’s not one side or another that is hurting us right now. Sure there are social sides and ideas that I like better from one party than the other. That’s not what is important right now. We need LEADERSHIP. We need people to put aside their differences and figure out solutions and be able to enact on these solutions ASAP. We’re going to choke on our own political bullshit. I just hope someone smart comes along and gives us the Heimlich.
Let me first say I’m an Obama supporter. I think he’s a very smart man. I like a million things about him, and his family, in a personal and social way. The biggest issue I have with him, which isn’t very different than issues I have with most Democrats, is that he either has no balls, lost them or sold them out. For his 50th birthday I hope he wished for his political balls to drop like a teenage boy going through puberty.
As for Republicans, I don’t even think that word describes the current party that opposes the Democrats these days. They’re so fractured that I’m confused when I hear various groups trying to describe what the Republican Party stands for in 2011. You’ve got Reagan Republicans, right wing religious Republicans, Tea Baggers, Birth-ers, Constitutional and about 10 other descriptions of what a Republican is / are. I don’t think any of these groups actually know what ‘true” republicans stand for. Take a conservative from 40 years ago and ask them to join one of our two parties now, I think they’d make a B-line for the Democrats.
The problem with the economy is huge. So huge that it’s not limited to what was just perceived as a United States issue or just a political ideals issue. What’s strange is that with each new economic disaster, the path to recovery or the question of what can be done seems to be easier to find. Today was a shock to the system when the DOW and almost all other markets took huge hits. Lots of news has come out that is surprising to many but in reality shouldn’t be as shocking as it is. Italy’s economic troubles, Greece’s issues and other EU countries are reporting such economic troubles that there is great fear that the EURO may be headed for a rollercoaster ride to which many felt that the Euro’s creation and the EU would shelter the whole from some of these problems of the parts. China’s eventual slowdown in growth shouldn’t shock anyone. How long can one country continue to grow and grow and the double digit pace that they’ve been growing (especially for a communist country) and not expect the party to finally be over and real governing has to take place. It’s like in sports, there are no problems for winning teams; but as soon as a team starts loosing, fingers are pointed, backstabbing starts and no one is happy with their contract or playing time. Winning, or in this case making money, hides all problems. What happens when the winning (or growth) slows down? How that is handled is even more important than when times where good. Japan, well lets face it, Japan would rather have had an attach from Mothra or Godzilla than deal with tsunamis and nuclear meltdowns right in the middle of their own economic stagnation.
If you’ve been reading my blog or spoken to me, I’m a huge jobs person. Obviously I’m no genius to say that America needs new, better and higher paying jobs. It’s so easy to say, that I hate to even type it, because it shouldn’t even need to be said. Apparently it does need to be said because no one is doing anything about it. Now this is where we start getting political.
What’s clear to me is that the Republican Party wants nothing to do with any success that Obama can have or might have. They’re doing every thing possible to keep our economy as bad as it is so that the jobs numbers and the real “working class” have a revolt against the president in the 2012 election. “They”; the secret “they” that run each side of the Dems and GOP, “They” on the GOP side know that they have no real contender for the presidency. Part of the reason is that the GOP is so fractured that there is no one person that can stand up and represent all the different factions. Especially when some of the factions are just plain crazy, such as the Glen Beck-ians or the Palin followers. “They” know that in the past no president that has had nearly as bad of an economy has every won re-election but the GOP has such a bottom of the barrel group of candidates that for them to win the economy has to be at or heading to an all time failure.
Don’t get me wrong, Obama isn’t doing anything to help himself. I’ve seen better negotiating skills from my five year old niece this weekend when I tried to pay her to make and deliver drinks to me during our family vacation. When GOP leader Boehner says gleefully that he got “98% of what he wanted” from the recent debt limit negotiations AND is still crying (you decided if I’m speaking literally of figuratively) that the Obama Whitehouse is the root of all our problems; he basically handed the president his ass on a plate. I’d rather think that this president is too smart for bully fights. He’s brought a sniper rifle to a nuke fight. He’s trying to involve all sides, thinking that he can reason with the “enemy” and that he’s actually in a debate / negotiation where both sides want what’s best for the country. In reality, the GOP just wants to blow up the president and the democratic leaders and don’t care how it gets done even if that means killing themselves in the process.
There was no question in my mind that we would raise the debt limit. Why, because Wall Street didn’t have a question about it. If there was any doubt, the months and weeks leading up to August would have seen huge shifts in the market to embrace the fact that were where going to not pay our bills for the first time ever. But there where no such signs and when the smart people came to the kids table and told them to quit all this bitching, the debt limit was going to get raised. (Yes, current drops in the Dow and other indices would lead you to believe this was a surprise, but let’s be real; the Dow is still over 10k and if there was a real scare we’d be at 5k) It’s something that has been done many times in the past and will happen again. Debt is a commodity and every country uses it to one extent or another. Just as debt has become a viable stock option that can be bought sold and traded (but this is going to go on too long anyway, let’s not go there). This was a hostage situation where hostage was itself. There was a gun being pointed at the US economy’s head by the GOP. Sure some out there said, pull the trigger, that’s just what we need to get back on the right foot. But these are just morons. Essentially saying, we’re not going to pay our biggest debts so that we can balance our books for a few years, and then once (and if) we do balance our books we’ll start paying back the debt that we ran up. I don’t think that would set well with our investors. Ask any of the banks (whom we should have let kill themselves in 2009) if they would agree to let mortgages slide for a few years and make no money off interest so that the public could get back on it’s feet and then start paying off the mortgage again. This is simple economics or better yet, street economics. Ask a drug dealer if we can have that ounce of pot, smoke it, in the meantime not pay them but when we get our check in next month, we’ll pay them back. I don’t think that would sit well.
But I’m droning on. The point was there was a fake crisis and the GOP was either ballsy or brilliantly using this fake crisis to 1) keep the money flowing to the rich (themselves and their backers) and / or 2) make the president look bad. At the end of the day, as Boehner almost said, they got both.
I’ve got no problem with socialized medicine. I’ve got no problems with raising taxes on people making over 200 – 250k in income by 3%.
*Let me stop right her to make a point that I talk about every week. There isn’t a person in the world whose Net taxable income is over 200k and aren’t in reality making at least double that. Even a half assed accountant will get someone whose making 300 – 400k look like the person or family is making less than 200k per year. Even if you are someone who gets straight W-2’d and taxes are taken out automatically out of your paycheck, there are thousands of ways for you to get some sort of refund; whether it’s housing interest deductions or small business losses or… you know, I’m not even going to get into it. Just look at the tax code book. It’s about 3 inches thick. There’s a reason for that, it’s because there are 1,000+ ways to not give the government money. And if you ARE one of the few that Makes 200k+ per year and have no deductions or creative accounting and your taxes get raised 3% (like the president proposes) then I’m sorry, find another line of work. We’re just talking about 3% or $6,000 on that 200k. If you’re already paying your 20-25% what’s another 3% so that you can live in the “best country in the world”. I think the real problem is that you don’t see what the initial or extra money gets you. I’ll leave this sidebar and topic for later or another post because the waste of tax dollars could fill up another 10,000 words.*
Back to what got me started, Politics and Economics. The politics have gotten so bad that they’re using our current economic problems to push political agendas. As I said, the GOP was holding a gun to our economic future. What the president fell for was the fact that they couldn’t pull the trigger. They had a hostage that needs to be kept alive. They can’t kill it and then give the dead body back. That would destroy their plans as well.
As always, Obama tried to reason with the GOP. Obama even tried to give the GOP a little threatening of his own, but that’s not him. When he set a deadline, it was more of a suggestion. “24 – 36 hours” and you guys better figure something out. Yeah that really scared them. Never does Obama start on the crazy left and work his way to the middle. (No, I didn't steal this from Bill Maher's latest show. I had this going since last week. Great minds think alike) The GOP starts from the crazy right, Obama starts from the middle and we end up in a generally conservative solution. To which the GOP still say they’re unhappy so Obama has to go even further to the right and basically give in to 98% of what the GOP wants. Frankly I think Obama and the Dems are lucky to get the 2% that’s left over.
I heard an economist listing all the troubles that the world economy is going through. It’s clear that the US isn’t the only country that has problems. But what was a silver lining was that they where speaking about how SOMEONE was going to have to be the leader of the recovery. With so many countries failing and others slowing down, there needs to be and will be a country that leads the world out of this mess.
That was inspirational to me because I feel that this is a golden opportunity for the US to regain its spot in the world economy but also regain its spot as the top world superpower. Someone’s going to figure out how to create new jobs and manufacture something that the world wants, why not let it be the good ole USofA?!?!
In my world things are great. Since the Treasury yields are what determine interest rates, the fact that the yields are so low, they are creating record low interest rates. What can we really learn from these low yield and high bond prices (yields and bond prices move in opposite directions)? It tells us that investors are willing to give us (the American people) money at very low interest rates. This means that the people that are investing in Treasury bonds are willing to take almost nothing as interest because they see that as a safer bet than investing in stocks or even in other markets around the world. Can I just say this was another reason we couldn’t just not pay our bills, we have to preserve our AAA credit rating. Even with an AA rating our treasuries are still a better investment than other stocks which are taking hits. With money coming in at such low rates, why not use that to further push along social and infrastructure projects that can put people back to work which would then create revenues via taxes and make the public buyers of goods instead of hoarders of money. Using the money that’s coming in via the treasuries why not earmark that money to fill up the many potholes in the city of Los Angeles? There is no lack of potholes that need filling and I’m sure we could find people to do this work. In a very short time you could see money being worked back into the system. Back in the day, there were endowments for the arts. This wasn’t just a liberal-hippy cash giveaway but an actual way to get creative people out there making money and creating something. During past recessions, photographers where sent to take pictures and make books. This seems like a waste on the surface but you’re giving an artist a job. Someone who would more than likely be unemployed or unemployable in this recession. They’re creating something that maybe will lead them to go out on their own on the next project because they now have proven their talents. They’ve also used their income to purchase cameras and computers to create these pictures. Then they’ve also spent money on the publishers / printers that produce these books. One job that on the surface seems so silly actually can create so many revenue streams for other business and possibly create a new small business owner down the line. And where did this money come from? Treasuries that only need to pay 3.8% as of 8/4/2011. It’s costing the government 3.8% to fund something that can generate 8% in sales tax alone. I’m sure I’m oversimplifying the process but it can’t bet that much further than what I’m talking about.
Why do we need jobs? So that people will spend money. That’s the goal. Forget that if people are working there are tax dollars to be made, the truth is that if people are working they can spend money on goods that then in turn make companies a profit which will hopefully mean that small business need to hire more people… I don’t know how it can be any clearer to how a strong economy grows. It’s not because the rich get to keep a few percentage points. If companies and individuals with great wealth get to keep what they’ve already made there’s no motivation or incentive for them to higher more people or put out that extra money. They’ll just keep it because the economy is bad and they either wants to cash in on that extra money or keep it incase things get worse. The joke is that if they sit on that extra money, things will get worse. Tax cuts do not work to stimulate the economy on the ground level. If anything they do the opposite.
Now giving the average worker a federal tax holiday or small business tax incentives to newly hired workers, that will get people to hire more and spend more. Imagine a tax cut that’s not on money that a millionaire has already made but for the average person taking home a paycheck, there isn’t a federal tax deduction on that paycheck for a month. Wouldn’t that put money directly into the worker’s hand? In turn, logic would tell you that they will spend that money back into the economy. Again, these seem like simple answers. But because politics are involved, things get complicated in a hurry.
The GOP doesn’t want these problems solved, especially by such “socialist” means because they want to be in office. My question to that is, if you screw up the economy so badly, that when and if you take over, what are you going to do if you do end up with the Whitehouse? We’ll be in a worse position than we are now. The only answers that the Republicans seem to want to push are the same old answers of tax breaks for the “job creators” or rich. At that point, we’ll have officially killed the middle class and have a two tiered caste system (which many people believe we’re in now).
The bottom line is that we need adults. The leadership on all sides is pathetic. I’m not very old, certainly not old enough to say, “In my time I remember”. But I can read. And when I read I find that not to long ago the winning or loosing of power was 2nd to what was best for the people of this country. Now it seems that the possession of power is more important to the politicians than the health, liberty and happiness of our country’s people. It’s now about keeping the job rather than doing it based on what the people voted for.
I used to think that the first 100 days of a presidency was important because that was supposed to set the tone for the new president but now I think it’s the only 100 days that a president has before he has to start worrying about the next election.
If anything (if you’ve made it with me this far); I hope you take away that it’s not one side or another that is hurting us right now. Sure there are social sides and ideas that I like better from one party than the other. That’s not what is important right now. We need LEADERSHIP. We need people to put aside their differences and figure out solutions and be able to enact on these solutions ASAP. We’re going to choke on our own political bullshit. I just hope someone smart comes along and gives us the Heimlich.
Friday, August 5, 2011
What Did We Just See?
A 510+ drop in the DOW took place on 8/4/2011. Additionally we saw almost all other major markets take similar dives, percentage wise (approximately 4 – 5%). Another commentary was that we gave back all the gains that we have made in 2011 in just one day. Lastly, over the past week or so we’ve lost a combined 10% off the DOW.
All I have to say is look at what happened over the last two years. We’ve seen much more worrisome roller-coaster rides. Let’s not forget that the DOW has dipped below 7k in March of 2009. Let me say that again, in March of 2009 the DOW was below $7,000. We’re currently over 11k even after this tremendous drop.
I’m not going to freak out just yet. As with a lot of economic news it’s almost better to have things happen dramatically than over a long period of time. We may be down 500k+ yesterday and even have a few more down days but I believe that this is the time when investor hawks will actually buy into the market thinking that they can pick up a stock at a discounted price.
Did any of the companies go out of business yesterday? Did Microsoft go bankrupt? Did Sirius’s satellite fall out of the sky? Did Home Depot lock it’s front doors or Sears stop selling dishwashers? No. Call it a correction. Call it a fear. Call it a million things but certainly do not call it the demise of the stock market.
I think it’s good that the country gets a wake-up call like this every now and then. It gets people to ask questions that they don’t want to be bothered with on a normal day. They get to see what politics can do to the economy. More importantly it shows you who knows what they’re doing in the market and who might be a reactionary / scared investor. If people sold everything when the market dropped below 7k and no one ever bought back; then how did we get back up to where we are over 11k now? Sure there will always be casualties and I hope no one gets caught in those cross-hairs.
I can give you two examples of investments that I’ve made. I’m a huge Howard Stern fan and more importantly hater of regular “terrestrial” radio. Even without Howard, I’d still keep my Sirius because I love it so much more than the commercial crammed and same 5 song loops that “terrestrial” radio spits out. I, almost on a whim, bought shares of Sirius when it was down to around .20 cents. Even when it dropped to about .5, sure I was scared but knew there was value there. Now it’s at $2. I only wish that I had the balls to drop a ton more money into that stock at 5 cents. Conversely, I thought with all this government takeover and stimulus that Fannie Mae was another stock that had taken a beating but would bounce back. Clearly I didn’t do my research enough on this one and now I’m stuck with a stock that I bought at $20 or $30 (I’m so disgusted I can’t even remember but I know it was double digit dollars) and now it’s basically off market and worth 50 cents.
You win some, you loose some. But you’ll never know until you put your money down. You just hope to win a little more than you loose.
But let’s be real. It’s legalized gambling and what’s worse it’s an inside gambling. If you’re telling me that Martha Stewart is the only person who bought or sold a stock based on a tip from someone “in the know” than you’re fooling yourself. It’s a scam but it’s a proven scam that you’re money will increase over the long term better than many other investments. If you’re looking for quick money then you take on a much higher amount of risk.
What can we take away from this news and the upcoming employment news? I’d say not much. We know it’s going to be bad. But as you’ll see in my next post, it’s mainly political. Don’t sell off your portfolio yet. In fact if there was a stock you’ve been watching and the price has come down, you might want to jump on it. Be calm. Let’s see what the next few days bring us. Let’s looking into the numbers, instead of reacting too the numbers. More importantly let’s look into the politics of what’s happening here in the USA and around the world.
All I have to say is look at what happened over the last two years. We’ve seen much more worrisome roller-coaster rides. Let’s not forget that the DOW has dipped below 7k in March of 2009. Let me say that again, in March of 2009 the DOW was below $7,000. We’re currently over 11k even after this tremendous drop.
I’m not going to freak out just yet. As with a lot of economic news it’s almost better to have things happen dramatically than over a long period of time. We may be down 500k+ yesterday and even have a few more down days but I believe that this is the time when investor hawks will actually buy into the market thinking that they can pick up a stock at a discounted price.
Did any of the companies go out of business yesterday? Did Microsoft go bankrupt? Did Sirius’s satellite fall out of the sky? Did Home Depot lock it’s front doors or Sears stop selling dishwashers? No. Call it a correction. Call it a fear. Call it a million things but certainly do not call it the demise of the stock market.
I think it’s good that the country gets a wake-up call like this every now and then. It gets people to ask questions that they don’t want to be bothered with on a normal day. They get to see what politics can do to the economy. More importantly it shows you who knows what they’re doing in the market and who might be a reactionary / scared investor. If people sold everything when the market dropped below 7k and no one ever bought back; then how did we get back up to where we are over 11k now? Sure there will always be casualties and I hope no one gets caught in those cross-hairs.
I can give you two examples of investments that I’ve made. I’m a huge Howard Stern fan and more importantly hater of regular “terrestrial” radio. Even without Howard, I’d still keep my Sirius because I love it so much more than the commercial crammed and same 5 song loops that “terrestrial” radio spits out. I, almost on a whim, bought shares of Sirius when it was down to around .20 cents. Even when it dropped to about .5, sure I was scared but knew there was value there. Now it’s at $2. I only wish that I had the balls to drop a ton more money into that stock at 5 cents. Conversely, I thought with all this government takeover and stimulus that Fannie Mae was another stock that had taken a beating but would bounce back. Clearly I didn’t do my research enough on this one and now I’m stuck with a stock that I bought at $20 or $30 (I’m so disgusted I can’t even remember but I know it was double digit dollars) and now it’s basically off market and worth 50 cents.
You win some, you loose some. But you’ll never know until you put your money down. You just hope to win a little more than you loose.
But let’s be real. It’s legalized gambling and what’s worse it’s an inside gambling. If you’re telling me that Martha Stewart is the only person who bought or sold a stock based on a tip from someone “in the know” than you’re fooling yourself. It’s a scam but it’s a proven scam that you’re money will increase over the long term better than many other investments. If you’re looking for quick money then you take on a much higher amount of risk.
What can we take away from this news and the upcoming employment news? I’d say not much. We know it’s going to be bad. But as you’ll see in my next post, it’s mainly political. Don’t sell off your portfolio yet. In fact if there was a stock you’ve been watching and the price has come down, you might want to jump on it. Be calm. Let’s see what the next few days bring us. Let’s looking into the numbers, instead of reacting too the numbers. More importantly let’s look into the politics of what’s happening here in the USA and around the world.
Wednesday, March 16, 2011
You dirty rat!
I don't usually like to share my precious blog space to promote anyone but myself, I mean you're reading this for me right? But I have to make an exception. This guy saved my house from the most disgusting smell / thing.
I had a dead animal in the attic and the man who saved me was:
Bryce Muench
AIPM
805 499-5050
888 344-6567
bmuench@animalinsectpm.com
www.animalinsectpm.com
Thanks to Bryce, I'm rat free and smell free. Here's a shout out. Thanks my man. I certainly wasn't going to / couldn't do what you did.
I had a dead animal in the attic and the man who saved me was:
Bryce Muench
AIPM
805 499-5050
888 344-6567
bmuench@animalinsectpm.com
www.animalinsectpm.com
Thanks to Bryce, I'm rat free and smell free. Here's a shout out. Thanks my man. I certainly wasn't going to / couldn't do what you did.
Thursday, February 3, 2011
Will recovery come down to jobs?
I’m back. Sorry it’s been so long boys and girls but the Bear is out of hibernation. Looks like just in time to see a mountain of trouble starting to poke it’s peak out of the snow. Ok, that analogy sucked but I’m getting back into the flow.
Here’s a section taken from MSNBC’s column:
“The economy is strengthening, and will likely grow at a faster pace this year as more confident consumers and companies spend more, Bernanke said in prepared remarks to the National Press Club in Washington, D.C. But he warned that the growth won't be strong enough to quickly drive down high unemployment, and it could take several years before it returns to more normal levels.
“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” he said.”
Well, it’s now February 3rd and finally I hear a bit of truth / fact coming out of Washington. Not that it matters. None of the people in charge or talking heads will come out and say the truth. WE’RE SCREWED. Maybe I’m being a little over dramatic but things are not good.
article
I feel justified that someone has backed up my claim that nothing is going to help this economy except for job creation. I’d go even further by saying we not only need job creation but GOOD jobs created. We need jobs to replace middle class jobs that we’ve been loosing over the past two decades. It’s been a coffee like drip for years but until this latest crash of layoffs it seems that everyone has opened their eyes to the fact that the middle class and the middle class job has been sent elsewhere.
We can create all the McDonald jobs we want but none of them are going to replace Ford jobs that a single employee can support their family. Ever since I can remember, I’ve always heard about jobs going overseas or to Mexico. It’s just now that things are starting to crash or people are noticing. I’m sure it has to do with the whole, “well it’s not happening to me so why should I care” mentality. Let’s call it the discount or Wall-Mart theory.
I’m not going to get into Unions VS Big Business and who’s caused what or reasons for workers making less and doing more. That’s for another post. Let’s just look at one example. I used to have a job at a Supermarket. One of the best reasons for working there was because of the great benefits. I was young and didn’t care or use these health benefits like many of the older workers or even how I would need them now, but they where good. I knew if anything happened I was taken care of. Well with the cost of health care going up and the “loss of profits” that the supermarkets where receiving, the health care that’s now provided to new workers is a fraction of what we used to have. And you have to work longer and harder to get to where you’re covered decently.
If you added 1 cent to everything at the market and put that towards heath care for the employees I bet the quality of life for the employees would increase and the quality of employee would increase because good workers would know that they’d be taken care of. What would the cost to the customers be? Even on a huge order, $1 or $2 maybe $3?
I see this as a three problem answer.
1) We don’t see the benefit
- We don’t hear about the horror stories that go on because of a lack of medical coverage. We see it when the grocery workers go on strike but what are they striking for. These workers need better ad men to sell us on why we should care, why it may cost us a little more and why it in the end benefits us.
2) We go for cheaper which in turn makes business cut from the workers
- That discount today may cost you your job tomorrow. Overly simplistic but over time it’s true. You keep needing the lowest price and going to the Wall-Mart’s of the world for everything, it’s going to eventually affect you. Unless there are means and ways to stop certain plateaus from being hit (which I don’t claim to know, this is for much smarter economic minds) the over search for cheaper goods will come back to bite you. If by finding cheaper workers and / or paying them less is going to be how a market lowers it’s prices then that will snowball into lower wages for employees who then will not be able to afford the things they need to buy who will look for cheaper homes who will spend less on cars, and so on. I’m not talking about a coupon sale. I’m talking about a total cut to costs, which almost always affects the employees (except the highest levels of management who’ll still make more year after year), that pushes down the average worker so that the grocery can sell toilet paper for 1 – 5 cents cheaper and get people to come to their market. Wal-Mart pays people with lower money and less benefits so they can offer cheaper prices.
3) It’s too late until it’s gone and affects us
- Touching back on the first answer, on average we won’t react until it’s too late. By the time jobs going out of this country really hit us, we where past the point of doing anything about it. Then when it’s your job that gets cut you sit there with your pink slip and wonder why you didn’t do anything before. It’s either human or animal nature to only care about your own situation. I bet it’s a higher form of living if you can think out what ramifications will happen if event “A” starts and you try to see what will unfold. No one hopes or expects their neighbor to loose a job but I wonder how many trips to Wal-Mart did it take to have Ralph’s workers make less and get less on benefits?
We’re a long way from recovery. The word in the street seems bleak. I will say that if anything, it’s encouraging to at least hear someone in the government say the words, WE NEED MORE JOBS. Now what will come next?
Here’s a section taken from MSNBC’s column:
“The economy is strengthening, and will likely grow at a faster pace this year as more confident consumers and companies spend more, Bernanke said in prepared remarks to the National Press Club in Washington, D.C. But he warned that the growth won't be strong enough to quickly drive down high unemployment, and it could take several years before it returns to more normal levels.
“Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established,” he said.”
Well, it’s now February 3rd and finally I hear a bit of truth / fact coming out of Washington. Not that it matters. None of the people in charge or talking heads will come out and say the truth. WE’RE SCREWED. Maybe I’m being a little over dramatic but things are not good.
article
I feel justified that someone has backed up my claim that nothing is going to help this economy except for job creation. I’d go even further by saying we not only need job creation but GOOD jobs created. We need jobs to replace middle class jobs that we’ve been loosing over the past two decades. It’s been a coffee like drip for years but until this latest crash of layoffs it seems that everyone has opened their eyes to the fact that the middle class and the middle class job has been sent elsewhere.
We can create all the McDonald jobs we want but none of them are going to replace Ford jobs that a single employee can support their family. Ever since I can remember, I’ve always heard about jobs going overseas or to Mexico. It’s just now that things are starting to crash or people are noticing. I’m sure it has to do with the whole, “well it’s not happening to me so why should I care” mentality. Let’s call it the discount or Wall-Mart theory.
I’m not going to get into Unions VS Big Business and who’s caused what or reasons for workers making less and doing more. That’s for another post. Let’s just look at one example. I used to have a job at a Supermarket. One of the best reasons for working there was because of the great benefits. I was young and didn’t care or use these health benefits like many of the older workers or even how I would need them now, but they where good. I knew if anything happened I was taken care of. Well with the cost of health care going up and the “loss of profits” that the supermarkets where receiving, the health care that’s now provided to new workers is a fraction of what we used to have. And you have to work longer and harder to get to where you’re covered decently.
If you added 1 cent to everything at the market and put that towards heath care for the employees I bet the quality of life for the employees would increase and the quality of employee would increase because good workers would know that they’d be taken care of. What would the cost to the customers be? Even on a huge order, $1 or $2 maybe $3?
I see this as a three problem answer.
1) We don’t see the benefit
- We don’t hear about the horror stories that go on because of a lack of medical coverage. We see it when the grocery workers go on strike but what are they striking for. These workers need better ad men to sell us on why we should care, why it may cost us a little more and why it in the end benefits us.
2) We go for cheaper which in turn makes business cut from the workers
- That discount today may cost you your job tomorrow. Overly simplistic but over time it’s true. You keep needing the lowest price and going to the Wall-Mart’s of the world for everything, it’s going to eventually affect you. Unless there are means and ways to stop certain plateaus from being hit (which I don’t claim to know, this is for much smarter economic minds) the over search for cheaper goods will come back to bite you. If by finding cheaper workers and / or paying them less is going to be how a market lowers it’s prices then that will snowball into lower wages for employees who then will not be able to afford the things they need to buy who will look for cheaper homes who will spend less on cars, and so on. I’m not talking about a coupon sale. I’m talking about a total cut to costs, which almost always affects the employees (except the highest levels of management who’ll still make more year after year), that pushes down the average worker so that the grocery can sell toilet paper for 1 – 5 cents cheaper and get people to come to their market. Wal-Mart pays people with lower money and less benefits so they can offer cheaper prices.
3) It’s too late until it’s gone and affects us
- Touching back on the first answer, on average we won’t react until it’s too late. By the time jobs going out of this country really hit us, we where past the point of doing anything about it. Then when it’s your job that gets cut you sit there with your pink slip and wonder why you didn’t do anything before. It’s either human or animal nature to only care about your own situation. I bet it’s a higher form of living if you can think out what ramifications will happen if event “A” starts and you try to see what will unfold. No one hopes or expects their neighbor to loose a job but I wonder how many trips to Wal-Mart did it take to have Ralph’s workers make less and get less on benefits?
We’re a long way from recovery. The word in the street seems bleak. I will say that if anything, it’s encouraging to at least hear someone in the government say the words, WE NEED MORE JOBS. Now what will come next?
Thursday, July 15, 2010
Solutions
So I realize while writing the last post I'm no better than the people who play Monday morning quarterback. Where are my solutions? I'm complaining about the world but what would I do.
I'm not Harvard educated economist. In fact my economy teacher in college said I wouldn't amount to anything. Maybe that's where my chip for the people are supposed to know and solve our problems come from. Economics are fluid. No one problem is the same as another. We can learn from the past but there are no exact fixes that apply to every situation. If that where true, we'd just need to start a war because that's truly what got us out of the Great Depression years ago. Wait, we are in a war...what, we're in fact in two wars? Oh, well...um.. maybe War isn't the way out or at least these wars. We're in multiple wars and we (the average person) is asked to sacrifice NOTHING. When we go to bed at night the furthest thing from our thoughts are the young men and women dying for us.
We might be able to solve our debt problems in a matter of months if we where to stop the major campaigns of both Iraq and Afghanistan. I hate to sound to simplistic but I don't see the bang for our buck. Most of the terrorist threats that we've been told that we've captured have been on our soil lately. I haven't heard of any plans that we've disrupted from over seas. Are we really fighting them over there so that we don't have to fight them over here?
Anyway, what would I do. If I had ultimate power, one of the first things that I would try is to put this TARP money in the hands of the borrowers and not the lenders. Recently the lenders where told that they where going to have to start lowering the principal owed on the loans. This is the last thing the lenders want to do. Even though they might be upside down on Loan to Value, they're hoping that one day the values will rise and they'll get their money back. They'd actually rather loose money on interest than they would on principal. Let's be real here. The banks where just as much of a culprit on the inflation of prices as anyone else. They allowed stated, 100% LTV, low FICO loans. The lenders where competing with themselves to produce more and more and make as much money as they could which meant the rise of prices would keep them making money the easiest and fastest. They weren't really lending their own money, they where putting it together and selling these unknown and unproven assets on the stock markets.
So screw the banks. Put this TARP money into the hands of the borrowers. Figure out, in very similar ways that they're doing rate mods, to see what it will take to lower the principal that people owe to get them at the 38 - 42% Debt to Income that the government feels loans should be at. By lowering the principal it will save the borrower on their monthly payment AND then make it much easier for them to sell their homes in the near future. They might even be able to make a small profit. Yes, it could be seen as the government giving away money but it will promote and allow for real estate movement in the private sector, not just foreclosing and shortselling people's homes to which only the lenders get to write off the losses. Write them off they are doing, it's very common for the lenders to now send the borrower's on a shortsale a 1099 for the difference of what they owe and what the lender actually got paid off. So you owe 150,000 on a house and it shortsales for 100,000; the lenders will send you a 1099 for that 50k difference. You're going to end up paying taxes on the 50k loss so that the lender doesn't. I'm sure it's more complicated than that but this is what the normal personal is experiencing.
Banks and investors would tell you that they'd loose lots of money on the principal, but I ask, how much is being lost on the the shortsale or foreclosures? How much money in interest and principal at the end of the day when a house sits on the market for six months?
This would promote sales by individuals and make it easier for them to get rid of houses on their own, really push people in and around the real estate business. They would spend more money and higher new processors and invest in their own businesses instead of not being able to pay for the bills.
Another thing I'd do is let knowledgeable people figure out helpful and sensible loan guidelines. There is a need for stated. there is a need for 95 or 100% financing. But make the more risky loans, not terribly worse in pricing but much more restrictive. There is no reason that that someone who qualifies with a full doc income and assets and huge FICO scores shouldn't be given the option to have a 100% loan. If someone can truly afford it, why not. What's more American than that?!
I think I owe it to not just complain, but to also bring to light the failures and possible successes that I see and think of. I'm getting tired and have a long day of fighting for my loans. I'm going to get a few winks but check back in. Let me know what you think we should do to fix and promote the real estate world.
I'm not Harvard educated economist. In fact my economy teacher in college said I wouldn't amount to anything. Maybe that's where my chip for the people are supposed to know and solve our problems come from. Economics are fluid. No one problem is the same as another. We can learn from the past but there are no exact fixes that apply to every situation. If that where true, we'd just need to start a war because that's truly what got us out of the Great Depression years ago. Wait, we are in a war...what, we're in fact in two wars? Oh, well...um.. maybe War isn't the way out or at least these wars. We're in multiple wars and we (the average person) is asked to sacrifice NOTHING. When we go to bed at night the furthest thing from our thoughts are the young men and women dying for us.
We might be able to solve our debt problems in a matter of months if we where to stop the major campaigns of both Iraq and Afghanistan. I hate to sound to simplistic but I don't see the bang for our buck. Most of the terrorist threats that we've been told that we've captured have been on our soil lately. I haven't heard of any plans that we've disrupted from over seas. Are we really fighting them over there so that we don't have to fight them over here?
Anyway, what would I do. If I had ultimate power, one of the first things that I would try is to put this TARP money in the hands of the borrowers and not the lenders. Recently the lenders where told that they where going to have to start lowering the principal owed on the loans. This is the last thing the lenders want to do. Even though they might be upside down on Loan to Value, they're hoping that one day the values will rise and they'll get their money back. They'd actually rather loose money on interest than they would on principal. Let's be real here. The banks where just as much of a culprit on the inflation of prices as anyone else. They allowed stated, 100% LTV, low FICO loans. The lenders where competing with themselves to produce more and more and make as much money as they could which meant the rise of prices would keep them making money the easiest and fastest. They weren't really lending their own money, they where putting it together and selling these unknown and unproven assets on the stock markets.
So screw the banks. Put this TARP money into the hands of the borrowers. Figure out, in very similar ways that they're doing rate mods, to see what it will take to lower the principal that people owe to get them at the 38 - 42% Debt to Income that the government feels loans should be at. By lowering the principal it will save the borrower on their monthly payment AND then make it much easier for them to sell their homes in the near future. They might even be able to make a small profit. Yes, it could be seen as the government giving away money but it will promote and allow for real estate movement in the private sector, not just foreclosing and shortselling people's homes to which only the lenders get to write off the losses. Write them off they are doing, it's very common for the lenders to now send the borrower's on a shortsale a 1099 for the difference of what they owe and what the lender actually got paid off. So you owe 150,000 on a house and it shortsales for 100,000; the lenders will send you a 1099 for that 50k difference. You're going to end up paying taxes on the 50k loss so that the lender doesn't. I'm sure it's more complicated than that but this is what the normal personal is experiencing.
Banks and investors would tell you that they'd loose lots of money on the principal, but I ask, how much is being lost on the the shortsale or foreclosures? How much money in interest and principal at the end of the day when a house sits on the market for six months?
This would promote sales by individuals and make it easier for them to get rid of houses on their own, really push people in and around the real estate business. They would spend more money and higher new processors and invest in their own businesses instead of not being able to pay for the bills.
Another thing I'd do is let knowledgeable people figure out helpful and sensible loan guidelines. There is a need for stated. there is a need for 95 or 100% financing. But make the more risky loans, not terribly worse in pricing but much more restrictive. There is no reason that that someone who qualifies with a full doc income and assets and huge FICO scores shouldn't be given the option to have a 100% loan. If someone can truly afford it, why not. What's more American than that?!
I think I owe it to not just complain, but to also bring to light the failures and possible successes that I see and think of. I'm getting tired and have a long day of fighting for my loans. I'm going to get a few winks but check back in. Let me know what you think we should do to fix and promote the real estate world.
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