What could you do with $9,000 dollars a year for three years?

+$1.15T being injected into the Financial market. Washington has now put in $9T to "fix" the economy. This is 89,000+ per household in the US. I am trying to find the statistics but I would think we could have just paid up the mortgages on everyone at risk for far less. But like many of these plans that too would have been rewarding failure by taking from the shrinking majority that pay taxes. So what to do.

I would expect that most people do not have a mortgage over $1500 a month. I looked it up. Based on all homes the number is $927. Yeah... always forget when you live in a big city or suburb. This number is also lowered by folks that have $0 cost for housing (paid off home mortgage). There is a number for homes less than four years old ($1,371). If you remove the 112,000 of these folks that have no mortgage the average rises to $1,392. These numbers are from 2007. So a gut check of $1500 a month works.

So for a cost of 9,000 a household the US government could have covered 6 months of payments on the average house for every person in the country. For nearly 44% of homeowners this would cover 100% of their housing costs. [Because of this cost discrepancy this would actually cost less than the price tag]. Allow this exemption for 5 years at a total of 45,000 per family. That would be about $4.5T.

Wouldn't this have stopped the rash of foreclosures? That would have stabilized the securities market at created a floor on the price of securities. This would have, in turn, stabilized the banks. It would have also [not sure I like this] allowed people to buy houses off of the open market knowing that the first 5 years of mortgage was covered. This would have stabalized housing prices. With a bit of diligence to manage the out years, this could be constrained so that it does not simply defer the problems. For those without a "mortgage crisis" [93% of all homeowners] this would have created spendable income that would likely be used to pay off debt and/or buy things [stimulus].

In summary, for half of the current cost this could have been solved. I would have been content with 3 years (or 1/3 the cost). If some are worried about non-homeowners being left out, don't fret. I set you up. These numbers include housing costs by households, which includes renters. I checked and there are actually less households (105mill) then homeowners (123mill - owners of multiple homes). Since we don't want to reward on both homes, we can assume it will cost even less. So for three years every household would get $9,000.... Question..wouldn't this in effect be an "across-the-board tax cut" [ewwww... I know those are evil]. And this one would be far bigger then the Bush tax cuts. It is important to note that some suggested this (and for only 2009) and were lambasted for not having a Government-centric solution.
..and so we spend.

The economy continues to worsen and the costs to taxpayers keeps rising. Once again proof that "government experts" spend more time reading books and talking to each other about how much smarter they are then the rest of us; no time living life like the rest of us. They look at macro-economic issues and forget that those numbers are driven by the hard work of every American, every day. They all need a new line of work. One that actually produces something for the country. I believe that will help the economy. We have a chance in 2010 to help that along.

Madoff for Senate

I know that Bernie Madoff is a thief. He is a scammer, a schemer and deserves to go to jail. He has stolen 38+ billion dollars in a ponzi-scheme. But you have to look at the big picture. In the end this is pocket change to a Senator in Washington.

They just passed a pork filled Omni-bus bill costing us 400 billion with 10+ billion in pork barrel spending. Before this, they spent 700 billion + interest to "stimulate" the economy. Before this 700 billion to bail out the banks. In this spending was 20+ billion for foreign banks and billions more to buy toxic assets at prices over their planned maturity (expected cost 78 billion). A large quantity of wasted cash to be sure.

Maybe Madoff is too clean. Madoff took money from adults that consented to put their money at risk. Again, he is a criminal and gets what he deserves. The government takes this money by force; from us, our children and their children and then throws it away. This too should be criminal.

But that is not even close to the real cost of the ponzi-scheme. A scheme where money is invested in fake funds and trusts and then they produce false holding statements and fallacious returns. We have all seen this kind of documentation firsthand. We get them in our mailboxes directly from the Social Security Office. An account statement with "your balance"; when the money was spent years ago. Ten Trillion+ dollars, money taken from us and every employer we every worked for, has been wasted. All the while, money was spent on Congressional pay raises, pet projects, State dinners, working vacations. Sound familiar? These pages are worth the same as those accounts from Bernie Madoff.

The "outrage" that these professionals throw at a rookie like Madoff is laughable. He is getting exactly what he deserves for defrauding clients and working his schemes to his own benefit. I only wish we had the same outrage and legal outcomes when it comes to elected officials as we do with private citizens. Since Bernie's career in the private sector is over, I nominate him as the Junior senator from New York where he can learn from the best crooks in the country.

So as you listen to the members of our illustrious congress fain outrage at Madoff and corporate excess, remember this. We have a way to prosecute these crimes in the private sector. The people will go to prison for their crimes and restitution, in whatever form possible, will be granted to their victims. In public office we, at best, can remove them from office. Only to see them resurface in cabinet appointments or as lobbyists; making millions. I think it best to keep these crimes in the private sector were we have some recourse. Then we can all sit back and watch them rot in jail.

Label:

"Barack Obama is the smartest President"?

Have you heard it before? We have all heard how "dumb" George Bush is/was. I think it is about time to reveal that there is a big difference between book-smart and street-smart; Obama being the former and in no way the latter. The media being much of the former as well, has little to no respect for the latter. I guess, for the sake of honesty, I would be the reverse. I respect more what people have done and how the interact with people then I do what their grades were and where they went to school.

Obama can't find the door.
1. Might have seen this one. Yes that is a window. Dear Sir, Please note that there are no hinges or a handle. I am sure you have seen this one (again and again). But note it has handles and hinges and is simply locked. Even when it is covered, Bush must be mentioned and bashed. Mr. Obama simply "hasn't gotten acquainted" with his surroundings. That was not an excuse for Mr. Bush who was in CHINA. The Bush gaff was often labelled "Bush has no Exit Strategy"; including by the network news (see below). Is also became a top ten list on Letterman.

In the opening tease at 7:00am, co-host Charlie Gibson announced over video of Bush trying to open the locked doors: "No way out. President Bush tries the wrong door on his trip to Asia and has fun for the cameras. But the big question now: Does he have an exit strategy for Iraq?"

Not the same "oops, ha ha" coverage Obama got is it?

Gifts for our UK "friends".
2. Anyone can make a silly honest mistake...but it take a special person to insult a respected ally. Have you heard about the gift exchange between President Obama and Gordon Brown (UK Prime Minister)? Probably not. This article covered it but missed one of the gifts given to our President; The framed commission from the ship that was used to make his desk. How thoughtful and personal. And from the US 25 pack of DVDs. I hope they were not Region 1 (US) encoded. I am sure their were personalized by making sure they were Region 2. Like school on the weekend... no class.

Obama the stock advisor.
3. The confidence his policies give the stock market has been pretty obvious. Maybe one of those books he reads should have include the definition of P/E Ratio (Price to Earnings). Of course, his definition may explain a lot of his policies. I am so glad we have someone so smart now running our economy. No sense in leaving it in the hands of those Bankers and Finance folks. By the way Price to Earnings only matters when there are Earnings! Otherwise, it is called speculation .. a practice that helped us all so much in the Internet boom.

More brilliance to come, I am sure.

Bad Bank.. What happened to it?

I continue to be amazed that the "Bad Bank" concept that was the impetus for the 700billion dollar bailout has yet to be used. I looked for Pros and Cons of this concept. The dominant con seems to be paying too much for the assets or "nationalization". But what I found even less was a decent explanation as to the impact of getting these off the market. The conversation linked above is stunningly devoid of detail and value.

Let me explain it as I understand it (this comes from a conversation with a high level banker). This may help you translate the talking heads. The impact on the economy is elevated in the negative and the positive because of a combination of existing laws.

The first is the debt to asset ratio of a "bank". I have heard that this ratio is 10:1. In other words, if a bank holds 10billion in assets they can lend as much as 100billion. The problem came into play that these Mortgaged Backed Securities were considered assets (which seems odd since they are a rollup of lending so I must be missing some element). So when these assets began to default, their overall value was reduced. Based on the "Mark to Market" laws passed with Sarbanes-Oxley this loss of value must be accounted for on a companies balance sheet. I do not know that this is a bad idea, as some state. In the example I was given, a bank value lost because of these assets was 26billion dollars. This would mean that the bank had to reduce it outstanding debt by 260billion dollars. This number was more than there entire market capitalization. Therefore, they are bankrupt. But are they? Hence the argument against Mark to Market. The loans outside of these assets still have value and still may be repaid.

So there is argument against the practice but it exists. So the Bad Bank concept tries to reverse the problem. If the bad assets can be bought form the banks; even at a cheap price; the spiral starts to reverse. The assets that are purchased are removed from the bank's books. The impact of removing that bad asset allows for a ten-fold multiplier in lending. But the impact spreads rapidly. With a new price set on the assets banks can rebalance their books. Some may now be able to hold the assets. With the death spiral stopped the assets may being to trade. If not the government can against but some assets off the market. Again setting a new price. Once these assets being to sell again on the market the government could sell the assets into a rising market at higher prices to offset the other bailout funding.

Well that's what I think I know. And it made sense. So maybe that is why the government never did it. Instead they forced money onto the banks in exchanged for preferred stock. This devalued the shareholders and left the assets on the books. What I found interesting in the video above was the reasoning for the change in policy... World opinion. Europe was injecting money into banks for equity. It was decided that all of the major countries should follow a similar policy. Two problems. It sounds like an all eggs one basket solution. Additionally, we are listening to European Socialists on how to solve a banking issue caused by accounting practices in the U.S.

I am still hoping that government can follow a basic premise and buy low and sell high.

Well played, Mr. Obama

Many is the media are "confused" by the seeming contradictions in the ever expanding spending coming from Washington and the statements about the desire to "balance the budget". Since most of them are devoid of 5th grade math skills they can't make the connections that most of the rest of us can make..."this just does not balance out". But I believe that it does balance out and very quickly. I believe the President is honest is his desires to get the budget deficit cut in half by the end of his first term and that this is in no way a conflict with the current spending or his budget.

The goal is not to try and pay for this or to worry about revenue at this point. The goal is to establish government dependence and control. I believe that President Obama is playing this perfectly. He is spending out of control because the public is demanding that they "do something". True, this spending will have little impact on stimulating the economy. It will however create entire agencies and government dependence among those that will now survive based on the bailouts. Many believe that this is overplaying their hand. I think not. This is their hand. What will happen to the public economy is obvious to almost everyone and the public outcry shows this as well. But many believe that he is misjudging the economy or the American people. I believe this is exactly the intent.

As these policies and the next budget are passed (there is little chance enough Democrats will change sides to stop it) massive spending will hit many sectors of the economy. Government funding will push out private equity. Dependence will be created. More bailouts, Healthcare takeovers, locking up the energy industry will all limit the economy and limit tax revenue. But Mr. Obama has stated he wants to balance the budget and soon. Unlike many that see this in opposition to his current spending and budget, I take him at his word. Revenues will not go up. Unemployment will not go down. But this increasing crisis is exactly what is needed for the next phase of the project.

That is the "need" to tax everyone at a very high level to balance the budget. Many look at the budget as written and say that this must occur anyway. They are correct and believe that it will therefore be stopped early on. But with a complicit media, no 5th grade math, and a struggling economy, it will pass. Once you lock out private investment, once agencies are established, once your industry, your health care and your energy are a service of the Federal Government; could you (would you) "deny" yourself those services as they are transitioned back to a free market? Not enough will, a new recession and risk will be avoided by the American voters; and under a tax load of greater than 50%; the control is established.

This level of control cannot be undertaking directly. You already see the concern building based on the individual policies today. But Obama has learned from the mistakes of socialized health care that gave us the Republican Revolution in 2000. You cannot get these changes passed in a good economy and in the light of day. He is ensuring that our dependence and need are sufficient so that we have little choice.

Well played Mr. Obama.

2,239.11

Obama has stated that he wants to undo much of the "era of Reagan" and he is on the way. He is tightening the noose on capaitalism taken over more industies and adding restrictions and higher taxes to others. Those with means and money in the market are reacting.

It will not be long before the market reaches the levels it was at when Regan left office. The close on January, 19th 1989; the last full day of the Reagan presidancy; was 2,239.11. At this time and not before, do I believe Obama will be complete. He will then try to remake ths country in his image.

Remember the number, buy the bumper stickers.