Wow! Joe Can't Spend Money? Only the Big Cats Can.

McCain bailout: New and workable, or desperate?

   McCain's proposal, which he calls the American Homeownership Resurgence Plan, would mandate it.

Consumers pay down debt for first time in 10 years 

   Outstanding debt falls by record $7.5 billion in August, Fed says.  (NOTE: To my surprise, this is the first sign to show us that U. S. economy may follow the so-called "Balance Sheet Recession" happen in Japan 18 years ago.  If it is the case, problem is nobody, except those fat cats, wants to borrow money to expand his business or upgrade life style, not credit availability or financial freeze. )

My Honorable Senator McCain:

Let's do the American Insurgence (not Resurgence) Plan as what has happening in Iraq or Mao tse-tung did in battlefield, My dearest McCcain.  As a conservative capitalist as you are, I really hate to see you lose the game. 

Please figure out a simple and workable plan as I put in my "AIP" above (Please take a note: It is not AIG who is just given additional fund of $37.8 billion after they got $86 billion and enjoyed a luxury weekend in California.)   

Go to the basic of business.  Do it simple, you will meet the minds of the root of our country.  American people will easily understand what you say and sure you mean business:  to directly help the poor folks without complexity and bureaucracy.   Then, you can knock Obama off the balance and get the economic agenda back at your hands to the advantage of you.

Please I beg you do something real, efficient and effective to the real cause of problems for the America!  God bless you.

 ps. The AIP makes sense if you consider:

       1. The $700 billion will equally distribute to every family in America.  No bureaucracy red tape involved.  No discrimination allowed to differentiate those CEO or the invisible poor folks. 

       2. It is the basic and revolutionary theory of John M. Keynes that there was no self-correcting property in the market system to keep capitalism growing and that government spending might be an essential economic policy for a depressed capitalism trying to recover its vitality.  

Now it is the time to vitalize or stimulate our system which is clogged, freeze or "dead." (NOTE: not as Paulson's "stabilize," i.e. sounds like to only rescue the status quo and maintain institutionally controlling powers of those fat cats.)   Yes, the most important economic sector is industrial factory or manufacture at the time Keynes imported the idea.  So, the "new deal" worked on manufacturing the major infrastructure.  But, our society evolved into a service industry for 52 years.  Situation is relatively total difference from then.  We have to do something in service sectors, not just infrastructure.

      3. What is the most important sector in our service-oriented society.  Yes, I don't blame you to first think of the banking system since it is so important.  But, to deeply think, is it the most important economic force?  

After WWII,  the world resurgence has been counted on the Bretton Woods system until early 1970'.   In fact, the system and the world economy or finance are largely based on American consumer's spending or consumption to create the wealth in Europe or other emerging countries. 

Given the fact that 80% of our economic production or activities comes from it, American consumer spending should rank the number 1 factor to our economy or the world prosperity.  Let me put it this way, there is no place for the Wall Street financial machine to operate smoothly without American consumers.   Conversely, our ancestors still can do business without the Wall Street.

Recently, we read so many reports regarding the retail projection.   Almost everyone says bad holiday sales expected.  Where those consumers go?  Why they don't spend money?  Instead, they are trying to pay back their debts.  Saving is a good deed, but at this difficult time, it is probably not so good.   It is an alternative to help the economy for GWB to ask his fellow citizens to spend "tax rebate"  when he gave it out last Spring.   It works for a while, but the amount of rebate is too small to really do the job.

Take a look at Japan where depression prolong for 20 years since everyone wants to keep his balance sheet look good and try to conserve cash.  No one wants paper, credit or expansion.  Even the Japanese government or banks charges no interest, they can't make lending. 

To bailout the main street (the victim of this ponzi scandal) first in order to revive our consumer spending is the key to save the financial system, not the opposite.   Paulson's folks believe to bailout the wall street (the wrongdoers, if not criminals) first.  That is the reason why they keep doing something without results and still see the negative reaction of stock market.  Their wishes to keep real estate price so high to be unaffordable to business or Mr. Joe is NOT the right medicine. 

After we create and expand American consumer's ability to spend money overnight to improve the business climate, at least to have rosy holidays for the retailers, we certainly have to better our skills to fix, regulate and overhaul the financial system and be brave to replace it if it is really broke as we have used "fiat money" to replace "gold standard".

  

Here's my point: Secretary Henry Paulson said approximately 5 million Americans are now in some stage of defaulting on their home mortgage. That's 5 million families, living down the block from you and I, about to get the carpet ripped out from under them. What are we doing to ensure that they are stabilized enough so that the taxpayers can reap some benefit from this massive bailout? Unless we help our neighbors and co-workers, this crisis will not end anytime soon.

What should really concern us with all this frenzied talk about the financial crisis is that no clear picture is given of what these "illiquid assets" that we, the taxpayers, are being asked to buy consist of. I mean, I know it's some form of mortgage assets and related unregulated mortgage-backed securities. But, specifically, what exactly are we buying? What are we holding on to and when, if anyone truly knows, will the government get its money back?

Will the government resell the homes that are in foreclosure or do we even know who will have title to them once they're taken off the bank's books and added to our collective debt?

Bush, Paulson and others with a stake in getting bailed out all tell us we have no time to figure out what we are being asked to buy because if we don't buy it fast, all will be lost. Isn't that how we got in trouble in the first place?

 ****

Excuse me, can we still have the cake of $700 billion, while the fat cats are eating it at an urgency speed of biting more than they can chew?

The House passed the bill at 1:28 pm last Friday; and George was so anxious to sign it into law within 1 hour and 20 minutes.  There are a lot of possibilities for the poor to get even with those fat cats by taking advantage of the bill.  

It goes and it will come back.  There are some better ideas or alternatives for American people to win.  Paulson choose the easy and lazy way, not an "One Stone Kills Two Birds" strategy.  Believe me, another Mr. Paulson may come up to say: "we need the last and best one tool in our government tool box to finish the job" and we have to play another round of $700 billion bill.

For now, we have to cope with the realty after the financial Hurricane Ike, surely with smartness that Paulson never had. 

Folks, read the 100 pages bill and you will find a way to feel much better after the defeat.  Yes, so many things are not clear at this moment.  Who knows how those Wall Street Friends in DC are going to process the assets.  With the lightening speed as George had to sign the bill into law?  Or like FDIC's "due process" to take it "forever"?   Nothing can be worse than the current situation, right?

This morning, George said he would not buy those bad assets at face value and would like to hold on the assets for "a while" to recoup a better value if not making profit to the people.   Well, I knew from my past what "2 minutes" means to a Congressman, does that "a while" mean anything?  I have no clue from George the boy.  But who cares?  Since he will at most stay in that little white house for about 3 months, what he said or interpreted now is not so important to us or Obama.

Maybe we are going to have an improved RTC later.  Who knows?  The possibility is there for the next President.  Hopefully it is Ms. Sara Palin who is the only one of those 4 hopefuls dares to verbally take a position against the bailout bill, but she didn't go further to tell us what she has to offer in detail.

So relax, read the bill (not much, just about 100 pages) with soft musics at nights and see the opportunity when it comes next.  

Cheer up! nothing is so serious, life goes on.   (NOTE: at least read the article Bailout 101: What new law says)

The higher ranking a public official is, the more distance he has from the root(people).  At least he knows how to be smart enough to hide his intention or "justify" his conscience, if not to mask himself and "well-(ad)dressed" for a Halloween "haunted scary" fun party.

(NOTE: Compare what was one and only urgent action GWB want us "to listen" in his speech 5 years ago and what he now asks in his speech last Saturday and today.  Bush promised us to "smoke" something out.   Sorry, GWB didn't delivered what he promised.  Yes, he did "smoke" Saddam Hussein out of the hole.  But, what or whom he referred to aim at 5 years ago?  Nothing being smoke out yet as we or he expected.  That's costed us trillions of dollars.  That's not important compared to 4,000 soldier's life, including at least 50 graduates of West Points.

This time I hope George learn something from the 5 years experience.  He know how to handle his shotgun, and make no mistake to shut at a endangerous bird in Texas.  We pray he hold himself to have a right direction. His plan is aimed at M street, not to "180 degree" reversely put it upside down into W Street.    

Ouch, don't lie, lies and more lies, we are not going to be happy to see all lies made by our public servants will not be ended until the day we die?  The fact that Paulson wrote only 3 pages plan keeps me thinking who needs to be seriously rescue? A Government Workforce in Need of Its Own Rescue

By Joe Davidson
Thursday, October 2, 2008; D04) 

For Immediate Release
Office of the Press Secretary
October 7, 2002

President Bush Outlines Iraqi Threat
Remarks by the President on Iraq
Cincinnati Museum Center - Cincinnati Union Terminal
Cincinnati, Ohio

Print Story Bush Lawmakers 'must listen' vote yes on Yahoo!

(NOTE:  My computer said the stored shortcut is missing.   The title of this article on internet has clearly been changed into "News Furious lobbying for much-maligned bailout bill."  We may not make decent comparison "word by word" since the new version may change its main tone and content.

It happens all the time.  In the past few days, it is often we run into articles saying "today the stock is SET for down" in the early morning.  Particularly right before the Congress is about to vote on the Paulson's bailout plan.   Then it disappeared without trace.  Who have the power to "set" the Wall Street to lower gear from higher as a car driver?  

The media dares to report the market is down for worry of the dim chance to pass the bill.  It always said the optimism was high everytime the stocks was up.  The explanations the media has is based on one factor:  the bill decide every move, including the live or death of the stock market.   Sounds that is one and only factor in the Wall Street.  

Is it true?  Look at today (09-02-08) market, Dow is down 315 points.   What's on the earth, isn't it the first best news for the market and the best answer for GWB's urgent demand to to have the best tool that our Senate passed the bill last night since our House defeated it?   

Bailout bill faces next test in House on Friday By Robert Schroeder, (MarketWatch)

The $700 billion rescue plan for the financial markets approved by the Senate Wednesday night faces its next test in the House on Friday, as some lawmakers and the White House were cautiously optimistic on Thursday about its passage.

Gee! where the expectation, sentiment, excitement or optismism the media claimed about is gone? )  

Compare what the Senators intend to give the riches and the poor.  One is given a prime rib steak.  The other will pick up the check, don't even mention about the French fries (once upon a time, it was changed into Free fries).  What tax break or FDIC insurance is for?  Not for the average Joe who worry $5 per gallon I don't think Mr. Joe will if he has $100,000 in his bank.  How many of us need that, except those richer who has more than $100,000 in his piggy bank? 

However, that will make some House representative in a very difficult situation.  If they don't change their position, they may be blamed by some people, say, for not getting tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana.  At least, they lay the foundation to give a good justification for some Congressman change their minds.  All they need is just to turn 12 votes around.  Isn't it much easier?

Sorry, our constitution doesn't give our President an "item veto" power to get rid of some tricky junks in a decent bill.  The presidents have no choice, but to judge the upside and downside and then comprise or reject the whole package.  Neither it gives us or our representatives the right to exercise the "item veto" power.

The world is full of complexity.  Life is a choice of value and judgment, in which there is no poetic justice.   We still have to face the reality and accept it so flexibly in order to be a team member (or a leader), even we know something should not be done.  How could we expect our congressman have the guts to be upright to hold his rightness as a Don Quixote?  

Yes, we do need our Senators equipped with smart skills of sophistication.  We are lucky to have them serving us when I saw 3 quarters of the four presidential candidates have the skills.  But, just one thing bothers me: do you think we enjoy and deserve the smartness they used to vote against the interest of the American people?   You are the judge. 

(NOTE: To me, I will stick to my position to vote out those Wall Street buddies who casted their "yes", but I will listen to my heart and try to understand my congressman who change his position for the bill in the second round.  Believe me, my understanding of their "justification" is nothing like "read my lips" as Bush said "to ask you make sacrifices is not fair.  I understand your feeling", on his last Saturday speech.)

****  ****

Senate passes $700B rescue; House votes lured

WASHINGTON - After one spectacular failure, the $700 billion financial industry bailout found a second life Wednesday, winning lopsided passage in the Senate and gaining ground in the House, where Republicans opposition softened.

Senators loaded the economic rescue bill with tax breaks and other sweeteners before passing it by a wide margin, 74-25, a month before the presidential and congressional elections.

Even as the Senate voted, House leaders were hunting for the 12 votes they would need to turn around Monday's 228-205 defeat. They were especially targeting the 133 Republicans who voted "no."

The measure didn't cause the same uproar in the Senate, where both parties' presidential candidates, Republican John McCain and Democrat Barack Obama, made rare appearances to cast "aye" votes, as did Obama's running mate, Sen. Joe Biden of Delaware.

In addition to extending several tax breaks popular with businesses, the bill would keep the alternative minimum tax from hitting 20 million middle-income Americans and provide $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana.

Their opposition appeared to be easing after the Senate added $110 billion in tax breaks for businesses and the middle class, plus a provision to raise, from $100,000 to $250,000, the cap on federal deposit insurance.

Tax cuts new and old are favorites for most House Republicans. Help for rural schools was aimed mainly at lawmakers in the West, while disaster aid was a top priority for lawmakers from across the Midwest and South.

Another addition, to extend the deductibility of state and local taxes for people in states without income taxes, helps Florida and Texas, among others.

 Congress weighs options amid signs of optimism   

WASHINGTON (MarketWatch) -- Calling it a "critical moment" for the U.S. economy, President Bush called on Congress Tuesday to regroup and act quickly on legislation to prop up the faltering financial system, one day after the House shocked Washington and the markets by rejecting a $700 billion rescue plan.

Bush: Inaction isn't option
After setback, pro-bailout lawmakers return to work on legislation to overcome hurdles.

****

Hi! my dear boy George (Not the famous singer),

Let's show you what impatience is. 

You should know we couldn't heal a wound and have the scar disappear overnight.  No doctor or medicine can do it except the nature.  And it takes time, not like a McDonald hamburger or an instant marriage.  

A older seasoned man knows when to act or not to act, or to hold or fold, by experience.  To act may make something even worse.  Sometimes, inaction is the best option, much better than a reckless mistake.  Now is the time for our congressman and people to rest, think and re-think.  We want to fix it right the first time when it is broken. 

We don't understand why almost everyone in Wall Street shouted out: "the stock is floored" or "the capitalism or Wall Street is ended."    When we take a 10 days time frame to gouge it, we look at the curve before and after the broader plan you boys invented on September 18.   In fact, the stock market gains more points back today.  To make Dow index even 241 points higher than the day you unveiled the plan. 

Something is so weired.  Around afternoon of September 18, the stock shot up for 800 points two days in a roll when a rumor was confirmed there was a George Boy's plan to "bailout" bad assets.  However, yesterday (Mondy) when almost everyone got an impression by your guys sayings that our Congress would pass the plan with broad agreement reached, the stock started to act so strangely.  In the very early morning, stock began to fell more than 500 points before the vote was casted, even long before the plan was defeated. 

With the same auroa of optimism, why the sentiment is so big different?  Let's remind you there was a 1 percent (more than 100 points) surge in the last hour the previous day (Friday.)  Are there some forces trying to manipulate the voting process and result?  I don't know and don't want to speculate on it since there is no proof, even I noticed there is one congressman said "stock is falling, let us get the job done."

Then, today we look around to find out that American dollar is worth a lot more against Euro or Japanese dollar .  It is hard to see it so strong recently, am I right?  

$1 is worth... 0.7117 Euro 106.14 ¥en

So, George, take it easy and relax.  It is something a lot different from your field trip to Disneyland for a roller coaster.  In Disneyland, you don't even need a 3 pages plan sketch prepared by Hank Paulson.  All you need is to prepare yourself to cry out.   But I am sure you learn how to sit tight there, right? 

There is a saying "don't fix it if it is not broken."  Okay, you guys claimed it was too bad as a dead meat.   Being a responsible adult, we don't want to act like a lemon car dealer in recklessness.   It has to be serious in business.  So, The most important for us is not to act like a lemon car dealer to treat his customers.  We need a quiet and peaceful climate to listen, observe, verify and analyse what the reality, causes or consequence are and to figure out what options we may have.  

Please don't just cry out your noisy voice all day long to terrify everyone, okay? 

Now, it is the best time for my dear George to sit tight on the corner chair facing the wall to think too.  If you are naive and don't want to use your brain, just shut up and be patient staying there.  At least, allow us listen to what the next presidential hopefuls have to say. 

Thank you my dear boy for your cooperation!   You're our good boy now, and I promise you I will buy you a Klondike later. 

God Damn Good!  The Main Street won!

Allow me to salute those 226 plus Congressmen who refused the plan!

Remember it is the darkest before dawn. Let us stand firm on our feet and clean up the Paulson junks.

Oh, don't forget it will be due soon for us to cast a vote this coming November.   Vote smartly.  Make sure to check the voting record of our Congress, to see who is for the plan, particularly who is the one voting for it after it is clear that enough votes is there to defeat the bill.   I would not vote for those who were so blind and unrealistic to hog the fat cats to "waste" their votes on the wrong side. 

Certainly, on this coming Wedesday let's watch the Senate performance.  Who are those people so determinded against Mr. Joe on the Main Street?  Hope this time, we can see clearly and definitely vote some of those cat's toys out!

Also, let's expect the nature functions of economy will resume without further government interruption, including speeding up distressed property management such as "short sale" or "REO."  Don't act as Mr. Paulson to not seriously, if not recklessly or corruptedly, give out 3 page plan sketch to our Congress.   Learn a lesson from him. (NOTE: the definition of "Corrupted" here means the way some have for the interests of a few people, not for the general public.)

For the opportunities to come and make great money while some bankers are failing (Note: trust me, it is not "everyone" as GWB said),  be WELL prepared to be busy and hand out a serious, professional market report to your clients and investors who are a Main Street streetwise average Joe, certainly not a Wall Street dummy in terms of spending money and asset management.

Treasurys add to gains after House rejects rescue package

NEW YORK (MarketWatch) -- Treasurys added to gains Monday after initial indications that the U.S. House of Representatives surprisingly voted Monday against a proposal to prop up financial institutions being dragged down by losses on non-performing debt.

September 29

House votes against $700 billion rescue package 

BULLETIN

Dow falls 500 (NOTE: It is 700 down now.  Don't be scared and stand up for the truth and democracy!  The stock market will be bounced right back very soon.)

Enough Is Enough, No Hell Is Waiting for Us

Wow! Joe Can't Spend Money? Only the Big Cats Can.

Hi Ed:  Our country will come together...Both Republicans and Democrats agree this is ONE NATION, UNDER GOD. ...I pray every day that our country will prevail over this difficult time...and I also pray for our Leaders that they will unify in their efforts toward these objectives.  

****  ****

Hi! James,

Thank you for your kindness.  Let's pray together for our great country before or after the lamb was slaughtered on the Main Street.

Enclosed here are an article published by Dr. HB and Some of my thoughts for your reference:

The Silent Economic Depression: Lessons from the Great Depression Part XIX: Revising the Economic Past.

Quoted:

These designated areas (added by me: the Tent City) are exploding with new residents and only reflect a decline in the overall economic climate.  Now you tell me how the $700 billion bail out is going to help these folks?  The way they are marketing it is through fear that if you don't get on board, you may end up with no job and you will lose your credit and sanity.  How many Americans are one paycheck away from being out on the street?

Unquoted.

Sunday eyed for agreement on package but some Republicans hold out

Quoted:

Bush sought to reach out to taxpayers in his Saturday radio address, saying he understands their frustrations. "You make sacrifices every day to meet your mortgage payments and keep up with your bills," Bush told listeners. "When the government asks you to pay for mistakes on Wall Street, it does not seem fair. And I understand that," Bush said. But he said it's impossible to let every firm on Wall Street fail without American families' finances being affected.  【Noted: Could anyone tell me what GWB means by "every firm"?  JP Morgan is getting bigger and bigger and easily having its presence in CA and FL, in which JP Morgan can hardly been seen, by taking over Bear Steam and Wamu?  Bank of America is expanding too, am I right?  GWB, please don't tell us "everyone" is failing that is simply NOT a fact or a valid assumption for your plan.   If GWB was a real estate agent, he should be sent to jail since he should know it is a crime to say something like that as a "blockbuster" in real estate who would committed a racial discrimination in terms of civil rights. 】

"The rescue effort we're negotiating is not aimed at Wall Street - it is aimed at your street," Bush said Saturday. " 

Unquoted.

***  ***

What a lie or nonsense a politician can make up! 

Where can we see the Main Street in the original 3 page Paulson sketch?  Did GWB ask any sacrifices to be made by those Wall Street big fats?  No, the Bush Boys even strongly resist the idea of setting restrictions on those cats' CEO hefty compensation. 

(Note: Emergency measures By Andrea Coombes & Ruth Mantell, MarketWatch Last update: 11:30 a.m. EDT Sept. 28, 2008  SAN FRANCISCO (MarketWatch) -- The proposed multi-billion-dollar bailout package is aimed at Wall Street, but how will it affect U.S. homeowners, consumers and savers?)

Did I twist or misinterpret GWB"s speech?  Now how dare they claim it is aimed for the Main Street.  

The last Monday, they said there was a general agreement on the plan.  Last Thursday, it was very clear that there was a Big disagreement. 

(Note: News said, Bush summoned lawmakers and the presidential candidates to the White House on Thursday to rally consensus behind his plan. Instead, the meeting revealed a deep split between Democrats and House Republicans.)

My local radio reported, a congressman said that "the plan is a fantastic idea when our government can buy cheap MBS assets and later sell them even cheaper to our people."  Is he treating us like a baby just born yesterday, without any business experience?  Exactly, who is buying cheapest assets and who is going to be a victim of the plan to pay the check?

My dear congressperson, let me ask you a question: Do we have any chance to get a bargain by paying 10 cents on a dollar to buy those troubled asset by this Paulson plan?  Am I too greedy to ask too much?  It really depends on which side of the table you are sitting on.  Clearly, some cats are paying 3 cents for a dollar.

Let's see what happened first.  The things I know are that JP Morgan scoop up Bear Steam last Spring and now took over MaMu.  Again, JP Morgan got huge profit potentials at deals in which they paid 3 cents on a dollar.  In addition, How much you expect to spend on a marketing plan in order to attract a huge amount of bank deposit and expand your customer base?   JP Morgan doesn't spend a penny of operation cost in the fierce markets to easily have its huge NEW customers who have almost $200 billion bank deposit overnight.   Who can do better than that?   Sure, there are something like Mr. Alan Fisherman, CEO of WaMu, may have $18 million in his compensation for 14 working days with WaMu while Tillions of dollars, all the savings of the public as a direct stock buyer or a indirect investor through all kinds of funds or pension fund, are wiping out.  

So far, please tell me what our average Joe has gotten from Bush Boys, except the Spring "tax rebate"?  NOTHING! period.

This morning, both presidential candidates are claiming what they've accomplished in the rescue negotiation talks.  Obama said he spent on the phone everyday with Paulson, McCain claimed he did whatever he could.  Well, tell you the truth I have no idea what they have done, except lip service.

Deal or No deal?  We don't know yet (It seems no way to stop it to pass in a revised form, no matter what the Main Street Joe cried).   The Paulson plan grows from its original 3 pages (09/18/08) into 42 pages (Monday, 09/22) and went onto 102 pages (09/27).   What I saw and read leaves me an impression that those politicians are trying to make things so complicated to hide their main intention to protect their Wall Street buddies at the expense of the main street Joe. 

Our root is at the people, not those fat cats in Wall street.  What I'd like to see most is for one of candidates or someone to stand up and say "NO DEAL"!  I wish they could be brave enough to look around and find the root voice for the average Joe, like the one bellow:

Whoever provides lip service and claims credit for himself has no chance for my vote.  Whoever dares to stand up for the Main Street Joe has my vote, period.

 How to Spend $700B and Actually Solve the Problem

The Bailout Plan's Rough Road Through Congress

House Democrats are very concerned that the GOP will try to use the bailout as a populist rallying cry on the campaign trail, as a few conservative activists have already counseled. Some Democrats have even suggested that they will not vote for it unless Republican nominee John McCain does the same. They are adamant that "this has to be done together - we all hold our noses and jump at once," as one Democratic leadership aide put it.   Wednesday, Sep. 24, 2008   Enclosed herewith are the most two recent CNN polls on $700 billion spending:  Back to home page QUICK VOTE RESULTS Thanks For Your Vote!  <!-- -->1. What's your view about granting taxpayers stock in any company taking part in the proposed $700 billion bailout? It's needed to approve the plan 41% The plan should be approved with no conditions 7% No bailout in any form 51% Total responses to this question: 53876

Back to home page QUICK VOTE RESULTS Thanks For Your Vote!  <!-- -->1. What should Congress do with the $700 billion proposal to take pressure off the credit markets?

Pass the legislation quickly	16%
Pass it, but add stimulus and foreclosure relief	32% 31%
Reject it	52% 53%

 ******  *****  *****  ******

This week almost everyone is eying at one thing: $700 billion proposal made by those Bush Boys.

There are at least two roots we have to consider: One is the root of a democracy and the other is the root of the recent financial chaos.

It is easy to agree the root of a democracy and summed up as "of the people, by the people, for the people."  But it is not so clear that we agree the root(s) of the recent chaos in our economic system. 

According to the two CNN polls, there is a lot of angry expressed by American people.  However, no matter how hard people cry against the idea, it seems the Bush boys' proposal is going to be put into the next act and become one of our laws per those reports this morning.  Sound weired?  who cares of the voice of the root of a democracy?  Where McCain or Obama stands for?

Everybody has his angle.  Greedy, fraud, bad regulation, ... and try to find a scapegoat to be pointed at, you name it.  George Bush, Henry Paulson and Ben Bernanke said that the root of the recent hardship rests on the illiqidity of those big financial institutions.  Is it the true cause?  No, it is just the syndrome or consequence as a result of the Wall Street Ponzi.

However, I believe that it would be acceptable that housing bubble is the immediate cause which ended the fancy Ponzi games created and played by those big fat cats.  If the housing price could keep up, everybody is happy and we have no problem at all.  The real root of this financial chaos is the housing price going down rapidly. 

Let's go back a little bit.  At the beginning those Bush boys claimed that housing problem would be "contained."  They invented some extraordinary program to ease the problem: tax rebate of $600 in the Spring and a crazy "rescue" law to combined "public home equity sharing" and "loan relief with a banker's kind cooperation" in July.  What happened?  The tax rebate went into history.  The "rescue" law is literally pronounced "ineffective", if not "dead" as some said, even before it is effective this coming October.  Now, they even change their tones.  They used to say "the economy is fundamental sound," even a few weeks ago.  Last week, they have begun to say "It will be disastrous if we don't act." (Excuse me, does that mean they are trying to translate "to act" into "to accept" or "unconditional surrender": to accept their proposal that is the last defense tool for saving all of us?)

Well, now those Bush Boys come up with a so-called "broader rescue" plan.  The original 3 page project asked a dictatorship style control of the fund of $700 billion.  They have intimidated our people and threaten our Congress that a big disaster would come if we don't act or accept their proposal.  That remind some of us of Bush's wolf lies, such as those leading us to the Iraqi War.  After their ineffective plans, can those Bush boys accomplish their mission this time?  No, I don't give it a dime.

Just forget those big pictures, let's see the specific Bush proposal. 

First, let's not argue over the question: "do we need the money to act?"  Just let assume we do need the money to act immediately and see if we have the money of $700 billion? 

 (Note: I believe there is in deed no legitimacy and emergency for such a Paulson's plan.  It is very questionable why we need the Paulson plan and what is the motive for him to bring it to us.

Need proof for it?  For a recent example, please look at what just happen to Washington Mutual who has $310 billion asset and $190 billion deposit.  OTS took it over last night in an unusually urgent speed.(some called it "breathtaking."   Even Alan Fishman, who took over the title of chairman of  WaMu 16 days ago, was knocked off while he is on an airplane from DC back to Seattle.  Why is it so urgent?  Don't ask me.  Just look around who is benefited from it?  Oh, my God!   Great, I love it.  The same steal for them: 3 cents for a dollar deal, again?)   But read in between of what OTS Chief said.  He said, "there is no cost to FDIC or taxpayers and create a seamless transaction to all the concerned." 

What he meant?  All the financial students predicted that FDIC would have a loss of about $90 billion and quickly run out of its fund because WaMu would cost at least ten times what Indymac did.  In fact, It seems nothing happen even the biggest thrift of our country failed.    NO, no big deal.   No turmoil like bank run after the seizure.   Sun still comes up, the Wall Street is running (no crash or collapse).  And hard to believe, stock price is rising up this morning.  It is totally contrary to all the scary episode described by those reports.   Looking at the cool WaMu realities, in particular, with bad news in general economy, Paulson's action is freaking enough to me. 

Who decided WaMu is failed as they did in Indymac case?  Oh, It is purely an Administrative discretion to act very agressively to meet an urgent need to protect the public.  In other words, it is the Treasury or Mr. Paulson.  Yes, nobody can go ask a court of law to review the seizure decision as Henry Paulson wanted for the $700 billion in his 3 page proposal.)

No problem, Bush boys said they could run our printing machine in highest gear to create as much as we need with Congress permission. 

Second, how could we spent the fund on those Wall Street big fat cats, if created in the way Bush Boys want? Are you comfortable with it?

Give me a break.  Those Bush Boys are very smart guys, if not knowledgeable.  They want to get money from our Congress and turn around give it to the Wall Street Cats in the form of "blank check"?  If you are the boys, I don't expect you would just hand the money over to someone, especially those who created the turmoils bringing down their company and our global economy? Why those Bush boys are so adamant that there is only one (last?) solution: to give money (surrender) to those spoiled bad boys or die?  Since when we American people are the hostage held as human shield against the bankruptcy of big cats?

The very important issue I have problem with is: when the Bush boys have so much confidence on the Wall street cats, how come they don't believe we, the average Joe on the main street, have the same ability to spend money like those crazy guys?  Believe me we can do much better.

Third, is there no other alternatives except to accept those Bush boys' blackmail?

Well, it seems to me that those Bush boys are so brave to try stopping snow falling on American land in the winter.  How come they are not dare to stop the Hurricane Ike landing on my Texas land?

Why I say so?  Don't blame me.  In terms of economy, real estate is NOT a productive asset.  For a business, a cheaper land is always sought for to reduce its operation costs.  May I ask: why those boys has only one way street in their mindset: they just want keep housing price up in the sky while it is going to fall naturally?  Why don't they let it be and release the pressure as an earthquake?  

When we see only 8% of California people can afford the median house and a lot of American people spent more than 50% of their income on housing, what you feel?

Of course, Mr. Fuld, CEO of Lehman Brother earns $17.000 an hour while he has running his corporation into bankruptcy.  Those big Wall Street cats can easily buy any McMansion.  But, how about Mr. Joe on the main street?  The asset distribution nationwide is expanding to such unbearable level.  20 years ago, the statistics said those CEO earn 30-40 times the income of its worker.   Nowadays, they earn more than 300 times. 

At least, you will agree that the housing market is not affordable to an average Joe.  The high price of housing is not sustainable in terms of our income.  Particularly in the past 4 years, it is not reachable by any responsible citizen for home/ shelter, if they are not a participant of NINjA loans in the abnormal Ponzi games.

Instead of inflating the price tag of housing as only means, why don't we have some sort of brainstorm: what will happen if the housing price is naturally going down?  Does our society need those big fat cats to operate?  Or we can have a more healthy structure waiting for us to pursue for a better future of us and our next generations?

Let's go to more small fine frameworks.  President Reagan has a famous phrase used in his first national campaign against G. Ford and J. Carter: "Let's try a different course."   If we followed his wisdom, we would know there is a different course for us, if it is not sure safe. 

Say, how about go for a "asset distribution" project to DIRECTLY dispense those $700 billion to our people's pocket?

Does it sound too crazy to scare you to death?  Give me a break!  What makes it so different from those Bush boys' Spring "tax rebate"?  Certainly, it is very clear that there is one difference:  the amount of distribution.   Does Bernanke say the amount of rebate is not big enough to stimulate the economy?  If it would work as those boys said, but just not big enough dose, why we don't make it double like we did in the bar, or tripple or hundred times?

Some students release their studies and call our nation "A Debt Empire."  Figures also tell us that American people has a lot of debt.  As I recall, we have $6,500 per capita (or per family?).  If that's the case and if we agree to send our citizen (the root of our country) a government check to use up the fund of $700 billion, what would happen?

Easily we know that an American household will receive about $8,000 to $20,000 (per the Census, we have more than 3 persons in a household.  It is not rare that we have a much bigger family out there which has 5-6 persons or more.)  With this amount of money, most of us would be debt-free like a bird.  If not enough for some people, they'd feel some relief.  I guarantee that they don't have to act as weired as some of my neighbors knocked on my door and asked for a loan of $30 to fill gas, am I right?

If the Bush boys' most recent "broader rescue" can be considered as a "President" pardon to those Wall Street cats for what they have done, why we are unable to equally give the president pardon to the main street Joe for his financial mistake made in the past?

Okay, you're going to say Joe is not going to change his spending behavior as a drug addict.  Well, let's be fair.  Is there any pledge or guarantee from the Wall Street cats to promise "no future misconduct" under the original 3 page Paulson's plan?  Nothing mention about "limits on CEO's perks", am I right?  Then, why we pick on the small Joe?

Well, let assume the worst come into both situations.  The fat cats keep doing the same old shits (trust me it is a truth in my observation), what can happen?  The recent crisis is NOT solved at least.   Look deeply at the Joes, the picture is totally different.   Joe kept his habit to recklessly spend the money to enjoy shopping spree, what happens?  All the retailer will be delighted to see it and wish it is the case, they won't give us a terrible projection to say the coming holiday sale is dimmed as GE did today.  The economic vitality will resume or revive, everyone is happy and business is booming including GM automaker who won't need to file in bankruptcy because their Hummer is hot, let alone its Chevy's volt.  GM takes back the number 1 position globally.  Are you proud of America now?

Now let look specifically at real estate.  Recently I run into a lot of families who cry out "our dream home" when they step into my property.  They can enjoy a lot better home than they have now.   But they never make me an offer.   There are problems as you know: they are not a "ready" buyer.   They have job.  They have enough money to pay the monthly payment since it is about half of their rent.   You may say, the problem is no bank financing is available as those Wall Street boys said "clog in the financial channel."  

No, don't be so simple-minded.  Our ancestors did business so smoothly and successfully even before those Wall Street cats existed.  In my deal, I do my own seller financing, I am the banker.  The buyers don't have to go talk to any banker or loan officer.  The real problem is they don't have $2,000 down payment, let alone my minimum down payment of $5,000.  No deal can be made.

This "broader rescue" plan is so bad to real estate.  With the free lunch hope in sight, the REO bankers are too reluctant to deal with their non-performing assets.  There is no incentive for them to get rid of those assets at a so-called "fire sale price" to end up to get 30 cents for a dollar if they believe they can get 80 cents from the foolish Bush boys.  I used to wonder why there are at least 25,000 REO back to bankers in California in 3 months, only 4,000 shown up on the market.   Now I know one of the reasons: they have tried to use their influence, relationship or manipulation to dump them unto our government at the expense of taxpayers.

We know some home owners are trapped.  There are a lot of situations.  For example, they love to upgrade their living condition and want to buy a new home, due to outgrown or whatever.  The problem is their home can not be sold.  Then they are unable to buy their next dream home.  It is a vicious cycle and business is not moving.

In the above cases, three problems can be solved if our Congress send check to Joe and he spend the money, not to save it, as down payment. 

There are so many ways to spend the fund more wisely than giving it to the big cats.   Don't tell me that we have no choice but to use the well-established Wall Street machine.  Look at Indymac case, FDIC took the private bank over on July 11 and immediately created a brand new Indymac Federal bank on the next business Monday July 14.  It is functioning well under our government control, am I right?  Does this new bank has illiquidity problem?

Do you like my idea of "Cash Santa"?   At first, I expect that you will say: "you are crazy!"   Am I?  I know you have at least one problem with it: WHERE COMES THE MONEY?  I don't blame you. 

Certainly there is no such a Santa.  It is not from Santa too.  But don't give up, let go back to the beginning.  Did the Bush Boys say something?  Where they can get the reminding $695 billion after Warren Buffet bet in his $5 billion on Lehman?  Their goal is simply to get the Congress approval and let them spend it in their way beyond law and supervision of us or our Congress.    (note: Section 8 of Paulson's plan states: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."  Who can have such a power?  The quick answer is the King Paulson.)

If the Congress issue the approval, money (or more precisely "credit") is deemed to be there, right?  If that's the case, what's the problem for us to spent it and give to our root/ people and to give it to the fat cats through a so-called "bailout" plan? 

Well, "cash distribution" is much better and effective than other alternatives if our Congress needs to act.  Take a right action and do it right at the first time.  It is better than CNN's "stock sharing" proposal.  Half of American don't like to own a share of those bad corporation stocks, but I am sure that nobody will be up against having a pure solid US government check and say "I want a cashier's check from a banker."  

Don't believe me, go ask CNN put my cash distribution idea on its poll.  

Dear Tom: California Cities Provide Santa-Mozilo Loans to Upset Mozilo & Geroge Bush

Question: where did you find the 8 page pdf??  I would like a copy of it.. and what cities are you aware of that have this program?  Thomas Hargreaves (Teamwork Financial Services)

What a coincidence!   God wants you know what one of the cities I am talking about.  So go to the city's website and you can see its first time buyer's program.  It is identical with the 8 page pdf form, but I don't blame you if you could not see the whole or the best part of "Santa-Mozila" loan at the city website: http://www.comptoncity.org/cra/redevAgency1a.html).  Just please don't ask me why the website used a brief word "silent" and didn't clearly spell out the goodies: the 2nd lien can be forgiven, no interest, and no monthly payments. 

For the same token, don't assume your city don't have the same good free stuff by just clicking and looking at its website.  Remember there is a saying, "Don't judge a book by its cover."  Dig it out by yourself.  

FIRST TIME HOMEBUYERS PROGRAM

The Community Redevelopment Agency (Agency) of the City of Compton has designed the First Time HomebuyersProgram (Program) to relieve the prevailing housing affordability crisis in the community. The Program consists of a SecondMortgage, which is in the form of a Silent Second Deed of Trust. An eligible household may receive second mortgage assistance up to $100,000.00. The amount awarded, however, will be based on the need for each household on a case-by-case basis.

WHAT IS SECOND MORTGAGE ASSISTANCE?

Second Mortgage Assistance is a mortgage subsidy provided by the Agency to a first time homebuyerin the form of a deferred Second Deed of Trust loan. The Agency's subsidy shall be used to reduce the price of the home to enable the homebuyer to qualify for the purchase of a home at an affordable level. The maximum loan awarded by the Agency is $100,000, which may be used towards down payment and closing costs.

The funds may be used for a larger down payment to satisfy the difference between the amount for which the buyer qualifies and the actual amount of the property. For example, if the property sells for $310,000 and the family qualifies for only $210,000, $90,000 of the $100,000 subsidy may be used to reduce the mortgage, and up to $10,000 may be used towards closing costs.

After securing the loan with a Second Deed of Trust, a lien will be placed against the property that is being purchased with the Agency's assistance. The Agency will serve as the Program Administrator, and participating mortgage lenders will be responsible for processing and underwriting the homebuyer(s) applications for a first mortgage.

Please also check the following article and see the house in Compton, CA.  Find out how you can take advantage of it out of the housing downturn.  Don't just sit on the fence complaining, "I can't do anything," while the opportunity boat is here.

******   ******   ****** 

... 

When we get to the featured home of the day, you are going to see a home that has dropped 71 percent in one year!  Stunning example of what was produced by this housing mania...

So with that, let us now take a look at today's Real Home of Genius.  Today we salute you Compton with our Real Home of Genius Award.

The Dash to the Bottom

This home is 500 square feet and was built at the end of the Great Depression in 1939.  It has one spacious bedroom and 1 large bathroom.  As we are told in the ad that there is room to "add" which you may need to do if you need more space than 500 square feet.  Again, is it really that difficult to move the garbage bin before taking a picture?  So what is the sales history on this place?  Let us take a look:

Sale History

07/21/2008: $235,060 *

09/27/2007: $340,000

I really have to sit in amazement at that sales price that occurred last year in September.  Which institution wrote that mortgage?  ...  Some have been under the impression that after the credit crunch in August, that all of a sudden bad financial housing moves had ceased to plague the market.  In fact, the above is simply an example that horrible lending is still occurring...  Yet that September 2007 purchase price of $340,000 is a real deal.

So what is this home now selling for?  How about $97,900.  That is right folks, this home "depreciated" 71% in 11 months.  This simply drives the point home at how horrific the mortgage industry really has become.  Keep in mind the $340,000 loan was made 11 months ago!  This isn't a loan that was made in 2005 or 2006 at the peak of insanity but after the credit crisis hit.  The good news is that the current price may actually make sense for someone since the payment would work out to something like:

PITI:               $720/per month 30-year fixed at 6.5% (see note 2)

Note:I am not in the mood to write today.  My response to Dr. HB's article is very limited to just to the funny sentence "Again, is it really that difficult to move the garbage bin before taking a picture? "   Then, I added the following:

Note 2: To me, the article is somehow not perfect if Dr. Housing Bubble didn't mention the Compton's Santa-Mozila loan (Real Homes of Genius: Foreclosing to the Bottom. Today we Salute Compton with a Stunning 71 Percent One Year Decline.)  (Clearly, under the city Santa-Mozila loan, the new monthly payment shall be $285 or less.  Very affordable, am I right?)

How to use 1% down payment to buy a $300K house 

Who says Californians have budget problems?  California Cities have no financial pressure at all.  At least, they are in a better position than Mr. Mozilo, former CEO of Countrywide.  They are even greater or more generous than Presidents Geroge Bush or Benanke to provide us a Santa-Mozilo Loan.

With this kind of city programs, you can afford to buy a home up to $300,000 or more, with your one percent down payment.   You can get up to 99 percent loan for your purchase.  It is so great, isn't it?  Maybe, you will say, "What's the big deal! VA has zero down program" or "DOA has the same zero down program in remote country area."  Gee, you are not so easy to be pleased!

Okay, I got it.  Let's move on! you haven't seen the best part of it yet.  Not like those two stingy Mr. B who want you to pay back their tax credit of $7,500 and like to bite a big slice of your "future profit" through their "profit sharing" project by the so-called "Congress Rescue Bill."  Those Californian cities don't charge you interest or ask monthly payments.   Compared to those two year no interest programs provided by furniture stores or 7 year no interest program from automakers, is it good enough to please you? 

Wow, wait.  Things even get much better!  If you own (live in?) the house for 15 years, Guess what will happen?  Your 2nd loan of $150,000 provided by the city will be forgiven.  Yes, it will be "wiped out."  (Note: don't be scared when you hear these two words. The situation is working for you, not like Indymac's stockholders being wiped out or the possible GSEs wipe out.)  Literally, that means the city will give you $10,000 every year.  At the end of 15 years, you don't owe nothing to the city.  You own your property "free and clear," except the unpaid balance of the first loan of $150,000.   

Am I kidding?   No, I am not.  "Read my lips" and verify the following attachments (Note: It contains 8 pages in pdf format that are very difficult for me to copy without a writer, I just post the most important part.)   It is a decent business.  There is no trick or fine print hidden like Alt-A loans, Option loans or any negative amortization loan. 

So, hurry to get on board.  Common, it is hot.  But it is just new and hot out of oven.   Don't look it as a hot potato.  Find out if your city has this Santa-Mozilo program as an early bird, before time is changed or fund is dried or crunched as subprime loans did. (Note: don't be lazy by just clicking on your city website.  You probably can't find it as I can't find it at the city website. Go out and talk to somebody.  Please don't tell me we have the most transparent system in the world.) 

Wow, what a surprise today I encountered!  One thousand dollars for this California city house?  Is this a joke?  Is this a reckoning day?  Am I kidding? 

No, there is no typo.   This house is absolutely not in Michigan or Ohio where a house sold for $1,000 is no surprise; it is indeed in a big city of California.

This house surprises me:

1**1 ******t Ave ***** CA  9****  

2 beds, 2.0 baths, 894 sq ft

For Sale: $71,859

See listing websit

From the above info, 10 years ago this house is valued at $70,000.  Its Peak sold price was $272K in November 2005.  9 months ago, a bank took it back for $184K.

Recently the listing price was $71K (Note: the above listing in Zillow.com as of August 22) and reduced to $54K (see the bellow).  It is reducing, reducing, and finally falling apart...  

Try harder and harder, please (Note: as an investor, I have ample time to wait).  Now, everybody almost finished their hard works and tired (satisfied?).  A realistic price tag is finally on the auction table.  How much they would get for?

Down to ask for $1,000.  After all the hard works done by the banker, asset manager, and agents in the past 9 month, do you expect all of them possibly get just a thousand dollar out of it?   See, how good our traditional marketing channels can do the job? 

Don't say it is a waste time!  Look at a bright and broader view, it is a job-creating so that everyone can be busy and earn some money to put bread on the table.  So it is a MacroEconomics.  Who cares about national productivity, right?   

I am very disappointed at some fellow agents who refuse to write a low ball offer, say 20% off, since they are trying to act as a principal, not an agent.  However, if I make you an offer asking 90% off your listing price, I don't blame you if you kick my butt.   How much do you think you "will" buy this house?   You are not serious to expect a final price omitting the two "0" at the end of its previous sold price, aren't you?  

But just for this case.  If you're not, you are too kind to be greedy, for I know you may be wrong.  Look at stock market, as of August 22, our two big GSE Fannie and Freddie lost their stock value more than 90-96 percent in a year.  Don't you think it could happen in real estate?  Why not?

Yesterday I watched PBS TV on Californian Education Review.  It was said that California education, particularly the infrastructure, has been deteriorating to follow Michigan and Ohio.  But it is still incredible for me to think the housing market will follow the shoe.  Gee, I shouldn't watch the TV program.

I know this auction site very well and have been with it for more than 3 years.  It is a serious auction with no tricks, not like others, such as R**** or other W**** that play buyers at their fingertips.  

One thing I am 100 percent sure is this house will be sold a lot less than the price it held 10 years ago.   It would not surprise me if it could be sold for less than $5K (Note: I have my reasons).  

Let see the result in a few days.