« | Home | »

“Sherman! Did You Really Use the ‘D’ Word…??”

By Sherman Ragland | March 10, 2008

Yes, in my monthly newsletter (The Washington Real Estate Investors’ Insider) this month,  I did use the “D” word.

Right now the US Economy is in a RECESSION.
As you know, I stated that this is what would be happen if the Bush Administration did not move quickly back in July & August of ‘07.

Rather than getting serious about a real solution to the mortgage meltdown and credit problems, the Bush Administration has continued to make light of what is really taking place in the economy.

The “so-called” stimulus package that will put an additional ONE-TIME check of a few hundred bucks in people’s pockets is a J-O-K-E.

Right now we are in a recession, but the Bush Administration will not officially say so for at least another 6 months. This has a much to do with the official definition of a recession (two quarters of negative growth) as well as politics at its worst.

Bottom line: if the Bush Administration were serious about exerting leadership (which is the first order of what a President of the United States is elected to do), there would be SERIOUS discussion taking place right now about the Federal Government buying a SUBSTANTIAL portion of sub-prime – owner occupied – mortgages from the banks and then recasting these loans to the borrowers with a fixed rate 4.5% 45 year mortgage.

This is a simple strategy that the Administration could have in place in less than a year and it would not only bring peace of mind to homeowners in distress, it would being confidence back into the mortgage markets.

Total cost to the American Taxpayer would be less than what we are currently spending in Iraq on a monthly basis.

Where is the solution?

Where is the discussion?


Why hasn’t Bush gone to http://www.AfterTheMeltdown.com and got his hands on my presentation??

Not happening, because Bush is too embarrassed to admit that his Administration is as much to blame for the sub-prime mess as is Wall Street. Even the “Average Observer” of the US Department of Housing and Urban Development over the past 7 years will tell you that the Administration’s MYOPIC policy on “HOME OWNERSHIP FOR EVERYONE” did not fall on deaf ears. Wall Street responded to the Administration’s wishes, and now BUSH & CO. want to plead “Stupid” when the marketplace solution to Administration Policies did not quite work out as everyone expected.

So why did I use the “D” word?

The US Economy is weak and getting weaker, and the “traditional solutions” are not working, and will not work to revive the economy.

When the economy gets weak, normally the FED lowers interest rates. THIS IS NOT WORKING. Every time the FED lowers interest rates, it causes the price of commodities (like Oil, Wheat, GOLD) to GO UP! It is by definition: INFLATIONARY. The FED can not fight a recession and inflation at the same time. Right now at the urging of the Bush Administration the FED has chosen to fight RECESSION.

The other “Proven” strategy for jump starting the economy is to start a war and go into deficit sending mode. – We already did that to fight the Recession we were heading into after 9/11.

Because the US Economy is weak and getting weaker we are at risk of slipping into a deep recession if two things happen:

#1 – Another Terrorist attack on US soil will cause the economy to spin even deeper into the hole; and,

#2 – If the Democratic controlled Congress moves aggressively with new laws to respond to the mortgage crises, and in so doing create fear amongst the mortgage originators and investors that prevents them from coming back to the marketplace sooner.

This “One, Two Punch” would bring the economy to a screeching halt.

Again, the solution to prevent either of these things is to:

A) Get IRAQ to start using some of its $52 Billion in Oil Profits to start paying for its own reconstruction, rather than using US Taxpayer money, and

B) Start diverting some of the money we are spending in Iraq every month into the purchase of sub-prime/owner occupied mortgages from the banks that currently own them so these guys can get back to making new loans, and the US Government can use the power of the US GOVERNMENT to recast these 8, 9 and 10% adjustable rate loans into new 4.5% 45 year mortgages for low income home owners.

Otherwise, we are all just waiting for the bottom to completely fall out…

Popularity: 5% [?]

Topics: Uncategorized | No Comments »

Tags: No Tags

Comments

You must be logged in to post a comment.