Read What I See

 

     We can see with the proposed $815 billion stimulus package that they haven’t learned yet. As our elected officials point fingers to Wall Street and Capitalism greed, their cynicism ignores that the buck stops with them for they are elected to oversee that such things do not happen.  As a matter of fact, they are the perpetrators in the current crisis.  It was they who encouraged, promoted, and forced banks to issue sub-prime loans.  The unscrupulous dealing that took place with the bundling of bad mortgages would have not occurred if they had not been there in the first place.  Banks are not in the business of making bad loans and they would have not if the Federal Government would have not given them Freddie Mac and Fannie Mae.  In addition, Freddie and Fannie should have not been allowed to infest other banks by bundling and continued dumping bad loans.

     The recent World Economic Forum in Davos indicates that the entire world is blaming the U.S. for the world economic crisis. 

Follow up:

Our citizens do not need more credit they need cash.  Barack Obama who knows nothing about economics is promoting the same failed lending policies of the past.  He has surrounded himself with those he has proclaimed indispensable experts and Czars who got us in this mess in the first place.  What became of his rhetoric on the failed policies of the past?  Every time we turn on the TV with the hope of finding good news, we just find a gloomier picture and more of the same: Barney Franks, Chris Dodd, Ben Bernanke, Tim Gheithner, and our new economic expert Nancy Pelosi.

     We have had bailouts and more bailouts and even bailout of bailouts.  At this point, there is no one that can or will say how many trillions have been spent and there is an estimate that four more trillions are needed.  Not even the almighty U.S.A can sustain such without destroying the value of the currency and eventually have an economic collapse.

     The government initial obligation when the sub-prime crisis erupted in the middle of 2008 was to its citizens and not the banks.  The trillions that they have wasted trying to save the banks should have been used to reduce the principles of mortgages.  This is what I think would have work better for the benefit of our citizens and the future of our country:

     Allocate bailout money to banks to reduce the principal on mortgages, not for them but for the mortgagees.

     Leave all mortgage terms such as remaining time and interest rates unchanged but reduced the principal on all primary residence first mortgages and recalculate the monthly payments.

     Take all first mortgages on primary homes with a balance below $500,000 and reduce them by 30%.  As an example a $250,000 mortgage would be reduced by ($250.000 x .30=) $75,000.  Subtract that from the principle of $250,000 and now you have a $175,000 principle balance.  By doing this principles can be brought down below the devalued home prices.  This would encourage owners to stay and pay.

     This would give the borrowers as an average an extra $500 plus every month to continue spending.  The extra cash in hand would stimulate our economy, the world economies, virtually eliminate foreclosures and we would not be having the unemployment mess that we are now facing.

     Restrict the sale of the homes for 24 months from the time of bailout and stop the issue or the increase of equity loans during that period.

     If the home is sold during the probationary 24 months then the proceeds must be used to repay the entire bailout amount but not to exceed the net worth of the sale.

     After the 24 months, all home sales must repay 50% of the bailout amount with no interest.

     During the 24 month period, banks would also face restrictions for having been saved from bankruptcy.  They must forfeit to the Federal Government 50% of the profits and all executive bonuses.  In addition during that time 100% of all stocks dividends must be payable to the Fed.

     Include mortgages from $500,000 to $1,000,000 with the same rules but only do a 10% bailout on these.

     Anything above $1,000,000, we could consider to be owned by someone wealthy enough that no bailout is needed.

     This program would be considered a mortgage bailout to save the economy.  Because there is a payback provision, those who own their properties and renters would not be included.

     As a good Capitalistic policy no bailout money should be allocated for business, if they cannot manage them successfully they need to liquidate and be replaced by those who are able to do so.

     Even if such mortgage bailout would have cost two to three trillions, it would have been just a fraction of what it is now costing and over 50% of it would have been recovered.  Needless to say the amount of suffering that these failed bailout is causing and the pain that is yet to come is a good indication of how out of touch our Liberal-Socialist politicians are.

     The proposed $815 billion stimulus cannot stop what is already in motion.  There will be millions more productive private sector jobs lost and not many unproductive new government bureaucratic positions created. Foreclosures will continue, homes prices will continue to decline.  The people are scared and in a savings mode, that will accelerate the economic chaos.  The auto industry eventually will bankrupt from the lack of sales.  As business, collapse banks will continue to need more injections of bailout cash.  With the collapse of business so it will the stock market taking out even more cash from the economy.  Asian countries economies that rely on exports to us will suffer our same fate and eventually will stop holding our currency.  The dollar will collapse and our savings will evaporate with devaluation and hyperinflation.

     In the midst of this, have no fear for our new Socialist government will own everything.  People will have lost their business, homes, cars, 401Ks and pensions.  Even those with rental properties will lose it as renters do not pay and they are not able to evict them.  The banks will own everything but will be bankrupt and the government will nationalize them.  So basically, by having a failed bailout of the economy the government will legally be able to nationalize and own just about everything.  This is what Hugo Chavez has been doing in Venezuela.  What will be next for our Socialist politicians, terms limit extension?

     Unfortunately, government ownership will not give us our homes, money, savings and pensions back.  Those that are able to save some of their possessions will restore Capitalism by gradually buying back from the government everything they took from us by not accurately responding in our best interest to the mortgage crisis . 

     If you are one of those who cannot see these things as possibly happening, stop listening to our government propaganda of clueless wishful thinkers.  Take the head out of the sand and see what is really happening around us.