If one were to look at what happened in Sweden in the early 1990's one might find a mirror up against what America is dealing with right now. Both followed through periods of financial crisis and deregulation. Both then experienced the deregulation to find new financial institutions who rely on bookkeeping and other financial manipulation techniques which help drive the real estate market soaring. Thus allowing the banking institutions and its borrowers to take on huge amounts of debt soon to become unsustainable. One a good note though, despite economic conditions that were far worse then than what the US is currently experiencing, Sweden pulled through and recovered quickly.
How did they do it? They taxed the people heavily. This wouldn't go over well in the US as people tend to not want taxes, however, they wish to have a country with all of the perks and running well. In essence, the Swedish government ended up recapitalizing the system. Similar to the Bear-Sterns takeover. But, not for the average guy...
All in all the clean up in Sweden cost the public the equivalent of 6% of annual economic output. In real dollar terms that would be approx. $850 Billion today for our debacle.
The Bear-Sterns move mimics what Sweden did for their fix. The Fed's come in and rescue big corporation, although there is only a meager handout coming to the public thus far.
It we were to move some war money to this problem we could get things solved. With more breakdowns in the negotiations for a fix, and more neighborhoods going vacant we will find the problem running away from us soon.
Monday, March 31, 2008
Tuesday, March 18, 2008
If the Titanic had silicone caulk...
Perhaps the uses for band aids, silicone caulk, gaffers tape, vinegar and other known fix it type of products could be figured in to the economy? Well, today, it seems that a 3/4 point adjustment in rates by the Feds helped some people with their thoughts and feelings anyway. As the stocks rose, gold fell, and oil rose. What also seemed to help a bit for confidence today were the results of a few of the large banks like Goldman Sachs and Lehman Bros.
What does this mean for tomorrow and the rest of the year? Hmmmm...We'll see?
If the FHA $417,000 loan cap can be lifted, as has been discussed, we will see some major changes made in the overall economic situation throughout the United States. Bush has refused to do anything with this saying that it is designed to help low and moderate income families not the rich. Perhaps he hasn't ventured out of his sheltered lifestyle for some time. It is true that in TX that kind of money can get someone a whole lot a house, but there are so many areas in the United States at this point that this kind of housing price would not get anyone anything except a crack house. Those are not the most desired neighborhoods in which to raise a family. Amendment HR 1852 was written to bring this number up to $500,000, however, even today there are discussions to raise it as high as $700,000's. As inflation gets adjusted this never seemed to over time. As job income falls behind inflation we can begin to see how this number can quickly get out of reach for so many areas in the United States. In order for people to be able to get the loans that are not Jumbo type of loan programs I don't think will we be able to see the mortgage situation begin to get into control anytime soon.
I feel that the FHA rates needs serious work in order to help all type of home buyers. The rich are not considered rich at $1,000,000 anymore. We need to bring things into the 21 century so we can move forward. As soon as this happens we will find the needed band aid, caulk, tape or solution to many of the ailments we are seeing...
What does this mean for tomorrow and the rest of the year? Hmmmm...We'll see?
If the FHA $417,000 loan cap can be lifted, as has been discussed, we will see some major changes made in the overall economic situation throughout the United States. Bush has refused to do anything with this saying that it is designed to help low and moderate income families not the rich. Perhaps he hasn't ventured out of his sheltered lifestyle for some time. It is true that in TX that kind of money can get someone a whole lot a house, but there are so many areas in the United States at this point that this kind of housing price would not get anyone anything except a crack house. Those are not the most desired neighborhoods in which to raise a family. Amendment HR 1852 was written to bring this number up to $500,000, however, even today there are discussions to raise it as high as $700,000's. As inflation gets adjusted this never seemed to over time. As job income falls behind inflation we can begin to see how this number can quickly get out of reach for so many areas in the United States. In order for people to be able to get the loans that are not Jumbo type of loan programs I don't think will we be able to see the mortgage situation begin to get into control anytime soon.
I feel that the FHA rates needs serious work in order to help all type of home buyers. The rich are not considered rich at $1,000,000 anymore. We need to bring things into the 21 century so we can move forward. As soon as this happens we will find the needed band aid, caulk, tape or solution to many of the ailments we are seeing...
Monday, March 17, 2008
Where oh where have our civil liberties gone?...
President Bush continues to try to breed fear into the American people on the dangers of a bad intelligence surveillance bill. He simply wants another blank check to expand his powers, take away more civil liberties, and continue the administrations use of no accountability to anyone for anything by making sure that corporations are not held accountable for any wiretapping that he ordered after 911. Bush continues to distort the truth and use his veto power to threaten the House as they try to create a more sound intelligence bill to move us into the future. It is quite simple that Mr. Bush simply wants to be able to read your emails or listen to your phone calls anytime he wants without a court being able to prevent it or the ability to judge the legality of his actions in any way.
The "cumbersome process" as he called the new House plan is actually a court that has acted rather quickly in actions previously and has refused not even a dozen previous wire taps in over 21,000 requests in its nearly 30 years of existence. The current law already allows the government to wiretap first and get a warrant after the fact. What he is really trying to accomplish in that there will be no need for companies to turn over information is not to protect the individual, but to make sure that the individual does not find out the full extent of damage that has been given to their civil liberties.
The "cumbersome process" as he called the new House plan is actually a court that has acted rather quickly in actions previously and has refused not even a dozen previous wire taps in over 21,000 requests in its nearly 30 years of existence. The current law already allows the government to wiretap first and get a warrant after the fact. What he is really trying to accomplish in that there will be no need for companies to turn over information is not to protect the individual, but to make sure that the individual does not find out the full extent of damage that has been given to their civil liberties.
Sunday, March 16, 2008
Open the eyes...
It's time to open the eyes Mr. Bush and see just what roadless ways you have had us travel. As per my previous entry on Friday, he came out and tried to explain to his America that it was coming into some harder economic times. WOW, what an amazing and enlightened being he is. We certainly can tell that he is not an artist through his clouded attempts to paint a different and false economic picture. He tried to dispel nearly all of Congresses proposals to help alleviate and control the mortgage meltdown. He continues to try to maintain that the inadequate policies of his administration are a much better road to go down. What he doesn't understand is that all of the roads he wishes to lead us down, have only lead us UP a path with no end in sight...
Thanks to the recent rescue from JP Morgan Chase of Bear Stearns at $2/share we will not be seeing a global reaction of the fifth largest financial institution going into the toilet. Their high at close of the deal was $30/share. Good buy for JP. This negotiation was the first bailout of its kind since the 1930's. JP was also able to negotiate through a government backed guarantee that they would not suffer any losses from this transaction. This transaction for JP was done at roughly 1% of what the value of Bear Stearns was just 16 days ago. It seems even in a down market there are opportunities to make some good returns.
This shows us just how bad things have become, but it also shows that there is willingness to rescue situations if possible. This is what our administration can learn from this transaction, that there is rescuing to be done. Perhaps bankruptcy reform for individuals would be in order to help those homeowners going into default.
If there is Federal help and guarantees to JP Morgan, perhaps there could be Federal help for individuals whose homes are now valued lower than their original mortgage values.
Mr. Bush continues to try to lie to the American public about the stability of the current economy by saying how job growth has been consecutively rising for 52 months during his Presidency. The economic expansion gained under Mr. Bush has been measured at 4.2%. This is the worst performing business cycle since these records have been measured beginning in 1945. Long term unemployment has reached levels of 17.5% or more likened to a depression rather than the beginnings of a recession. Short term unemployment is interesting and deceptive at its 4.8% rate in that hundreds of thousands of people have dropped out of the market completely since they cannot find a jobs and have had to create something for themselves or go without work altogether.
Mr. Bush also lied when he said that wages were rising. Another attempt to dispel the truth to the American public since that same day the government reported that wages failed to outpace inflation for the fifth straight month. Having a weaker dollar helps to create higher oil prices, and add in the higher global consumption needs of crude creates that much more increases due to higher demand.
Mr. Bush continues to address the congress to maintain his tax reduction programs as if the country doesn't need any more money to run things. It seems that he is ignoring the fact that the federal debt will have increased over 76% by the end of his tenure in office by continuing to borrow on top of existing debt.
With John McCain following the Bush administration and their policies as well as stating publicly that he doesn't know much about economics I think it might be best to look for another candidate who will be able to handle the necessary economic issues at hand.
Thanks to the recent rescue from JP Morgan Chase of Bear Stearns at $2/share we will not be seeing a global reaction of the fifth largest financial institution going into the toilet. Their high at close of the deal was $30/share. Good buy for JP. This negotiation was the first bailout of its kind since the 1930's. JP was also able to negotiate through a government backed guarantee that they would not suffer any losses from this transaction. This transaction for JP was done at roughly 1% of what the value of Bear Stearns was just 16 days ago. It seems even in a down market there are opportunities to make some good returns.
This shows us just how bad things have become, but it also shows that there is willingness to rescue situations if possible. This is what our administration can learn from this transaction, that there is rescuing to be done. Perhaps bankruptcy reform for individuals would be in order to help those homeowners going into default.
If there is Federal help and guarantees to JP Morgan, perhaps there could be Federal help for individuals whose homes are now valued lower than their original mortgage values.
Mr. Bush continues to try to lie to the American public about the stability of the current economy by saying how job growth has been consecutively rising for 52 months during his Presidency. The economic expansion gained under Mr. Bush has been measured at 4.2%. This is the worst performing business cycle since these records have been measured beginning in 1945. Long term unemployment has reached levels of 17.5% or more likened to a depression rather than the beginnings of a recession. Short term unemployment is interesting and deceptive at its 4.8% rate in that hundreds of thousands of people have dropped out of the market completely since they cannot find a jobs and have had to create something for themselves or go without work altogether.
Mr. Bush also lied when he said that wages were rising. Another attempt to dispel the truth to the American public since that same day the government reported that wages failed to outpace inflation for the fifth straight month. Having a weaker dollar helps to create higher oil prices, and add in the higher global consumption needs of crude creates that much more increases due to higher demand.
Mr. Bush continues to address the congress to maintain his tax reduction programs as if the country doesn't need any more money to run things. It seems that he is ignoring the fact that the federal debt will have increased over 76% by the end of his tenure in office by continuing to borrow on top of existing debt.
With John McCain following the Bush administration and their policies as well as stating publicly that he doesn't know much about economics I think it might be best to look for another candidate who will be able to handle the necessary economic issues at hand.
Friday, March 14, 2008
McCain...there you go again...
I wanted to add this for today as I was a bit blown by this one. It seems that McCain is right on the heels of Bush in the creation of fear for our society by stating that if he loses the election it will be because of influence from Al-Qaida. This Al guy really gets around and has a lot of power if this is the reason for McCain losing. Of course it couldn't be because he is not right for the job. No not that...
Don't get me wrong, there are things I like about John McCain, although at this time they escape me, but I have sided with him over the years. Once... By his adding that through the intercepts of intelligence he worries is another attempt at the Republican party to keep the fear based mentality alive. They are trying to keep people and their attention on the democrats decisions to change the surveillance laws as being wrong since Bush wishes to veto this action. I think it's time that the GOP come up with some new material. This is really getting old and tired. Oh, wait, this means that John McCain is the perfect spokesman...
Don't get me wrong, there are things I like about John McCain, although at this time they escape me, but I have sided with him over the years. Once... By his adding that through the intercepts of intelligence he worries is another attempt at the Republican party to keep the fear based mentality alive. They are trying to keep people and their attention on the democrats decisions to change the surveillance laws as being wrong since Bush wishes to veto this action. I think it's time that the GOP come up with some new material. This is really getting old and tired. Oh, wait, this means that John McCain is the perfect spokesman...
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