Last Newsletter info

Are you stimulated?

Well, the government keeps throwing money at problems and nothing is working. When will this madness stop? What intrigues me is how we've lost focus. Let's go back in time--what is this mess all about? HOUSING. Yes, banking is a mess, AIG is "too big to fail" and unemployment is like a cancer on our country right now. With that being said, Housing was the problem that brought our economy to a screeching halt. Housing prices up, sales stopped. Loans a mess, banks fail (or need to be bailed out, while cutting the credit lifeline). AIG? Wouldn't you know that it sold insurance to banks for loan defaults (sort of). Well guess what? Those 'great bets' started losing and AIG lost a ton as well. But again, where did this start? Housing. Stimulus? I think not. The bill put forth an $8,000 tax credit for first time homebuyers--not enough. I've said all this, so let's move on. The 'latest and greatest' plan is the "Making Homes Affordable" program that was officially unveiled today. If you are a good boy or girl and have been paying your mortgage, you may be able to 'refinance' so that your payments are more affordable. There are many 'what-ifs' concerning this and I'm not sure how it will work out. For more information, check out www.financialstability.gov. I will dig into this further and talk about it on my Economics blog, at right. Bear with me as there is a lot of info to digest! What's next on the horizon? Potential "Cram down" legislation could be coming this week. For reference, a bankruptcy judge may 'cram down' new terms to a mortgage company if the legislation passes. For example, a judge may be able to change/lower payments, interest rates and even principal balances! Again, this one is not ready yet, so stay tuned! My only comment to all of this? I am worried that people are going to just say to heck with it and stop paying their mortgages--not because they can't pay, but because they WON'T pay. This article seems to think it's due to negative equity--What I fear is a paradigm shift of borrowers giving up and saying "Who cares". Not a pleasant thought!

By the numbers
Recovery in 2009? Think YES!

Again we hear doom and gloom daily. Every once and a while the media 'censors' allow something positive to escape and actually make it into print. At the same time, however, any good news is currently tempered by some bad news. The current Fed "Beige book" report noted that conditions worsened in January and February (did you hear the auto sales reports yesterday? bleah!) When can we expect improvement? Unfortunately it appears late 2009/early 2010. Housing is stable more or less and there are hopes that purchases will pick up this Spring as buyers (what does that word mean? I forgot) start looking for homes. Foreclosures are a wild card right now-we should have many unfavorable re-sets (ARM rate adjustments) THROUGH 2010 and beyond. Not only that, the new legislation may keep some people on the fence. Then again, now that it has been passed, perhaps people can get a better feel for the current climate and finally BUY. Another issue? Many economists note that unemployment will continue to rise in the months to come. Even an optimist like me has to take note of the fact that someone without a job cannot buy a home, no matter how cheap it is or how low the rates have dropped. Georgia State's economist thinks that losses will drop for the next two years and paints a pretty bleak picture. Well, for this NON-economist, I am betting he is wrong! I wish I had some extra cash (don't we all??). I would love to purchase some stocks (just ask the Prez!) or better yet-some REAL ESTATE! Go get 'em!