Well there is another point too jan. I understand that small business owners like us will not be receiving a "rebate" while others who have not paid tax will in fact be getting this "rebate". But let's start by calling it what it actually is - WELFARE.

Secondly, this will help nothing. Substantial cuts in income tax are what is required and at the same time that is going on, substantial cuts in Government spending. As you rightly say, this is a bandaid on an amputation.

JAN you broach some great but perplexing questions. I don't see the purpose or benefit of the stimulus package. It is as if a house is on fire and the firetruck stops to aid a cat stranded in a tree. The funds are not directed or incentives established to aid the housing market. It is not a substantial amount of money on an individual basis. What could an individual possibly put on their wish-list that would ease the housing market crisis? No, it will not help housing market woes.

Jan,

I am not sure what is going to help us rebound. The Feds only control short term interest rates and the 30 yr bond controls long rates. As long as there is bad news the 30 yr bond will be the safe haven for money but also keep long rates declining. I really think the stimulas will help some especially the part affecting investment by companies.

Simon:  I really like what Bill Gross proposes.  To subsidize mortgages... reduce the mortgages to 4.5 or 4% interest and 0 down for people who have demonstrated good credit and a willingness to pay on time.

It wouldn't be as expensive as the $150 billion stimulus package.  He's proposing the FHA to provide the mortgages a subsidized interest rate.   Eliminate the down payments.  

I probably need to edit my post so that it clearer... I'll do that right now.

Dionne:  I think was Bill Gross is proposing (it's in U.S. News and World Report on February 4) is for FHA to create a program, the government to subsidize the interest rate to 4 or 4.5%, little or no down payment.  This would really help you people in California.  It would help us too, but you guys are sitting there with a tremendous amount of inventory in existing homes that people either need to refi or sell.

Mike:  Thanks for commenting. How are things in the Dyersburg area... is that close to Mt. Pleasant?

I agree Jan, the drunken sailor spending has got to stop. It will probably take to the next President to do that thought.

Thanks to the last poster... I do wish you had left your name.  Thanks for your comment... it will most certainly take the next President. 

Jan, All these esteemed Economists you have commenting here make me shake my head in wonder. The stimulus package will help. Especially the investment tax credit for small businesses.

Now for the housing issue. I may be a conservative Republican but I fervently believe in everybody's right to own their own home, not just the credit-worthy people that you and Gross seem to want to help. Everybody needs a place to live. They have a God-given right to own that home. Making those "undeserving" poor people be tenants rather than owners is really repugnant to me. I think they deserve a mortgage without qualification and it needs very strong protections against the right of foreclosure. People need to be safe in their homes.

Bill Roberts

Bill:   The stimulus package will help small businesses... and it may help people pay their energy bills for a couple of months and maybe buy some groceries.  It will be short-term help for the average person.  Not a long-term solution.  The package is designed to help businesses.

FDR's "New Deal" just keeps expanding.   We are fast becoming a country dependent upon its government for free hand-outs, assistance, entitlements, etc.  I've worked hard all my life and I have a comfortable living.  I remember living in a 1000 sq ft home when I first got married.  We had a child and stayed in that home for five more years until we could buy something larger.  We tried to live within our means and didn't ask for a bailout.  Everyone does have a God-given right to own a home.  They just need to work hard in order to buy one.  

The government, as I write this comment, is trying to come up with a solution for a very complex problem.  Different economists are trying to work out a plan to "fix" the problem.  We have gotten ourselves in this predicament because people overextended and bought homes that are now declining in value.  The loans were quick and easy.  The fact that they weren't credit-worthy was somehow overlooked.  It's a huge problem.

What is repugnant to me is to see the homeless sleeping on the streets.  Most are schizo.  There is no facility to house these people.  The people that really need assistance should get it... I don't deny there are people who need help.  What our government is doing, however, is playing a political game with the world.  Our money is going to Darfur, Bosnia, Iraq, Africa, etc. and we are not taking care of our own hungry people.  

the government needs to stay the heck out of it.  We need to realize that the less the government is in anyones business the better you're going to be long term.  Housing needs to correct itself.  The government is not going to be able to stop the housing situation and if they try it's only going to stretch the recovery period out.  The fact is that people made stupid decisions that they need to learn from.  If we bail them out they will never learn their lessons.  Sorry, but that's how capitalism works.  We are the greatest economical country because of this.  There will be winners and losers and we can't keep acting like "there are no losers".  If I remember correctly one of the things that got us into this mess was "little or no down" programs.  There are always going to be people who can't afford homes (that's okay), home ownership is not for everyone.  Especially the ones who have no ability to save a few dollars and put money down.  If someone wants a home they need to save money and make the right moves.  I'm not willing to pay for people who got greedy and stupid in the housing market.  It's time for them to take their lumps and learn their lesson.  Otherwise, we stand to lose all the gains America has made at the hands of those who came before us and had to work for it; and we're willing to give that up so we can make a few irresponsible people feel good about themselves???  Sorry, I subscribe to the old hard work theory and that you reap what you sow.

If our children and grandchildren (by the way, I'm one of them) are going to have to pay the tab, then why would we want to subsidize loans?  The last time I checked the word "subsidize" means that someone is paying the bill, and that generally means the taxpayer.  Where else does the money come from?

Jan, For the most part we send "things" to those places not money. The money is spent here at home. It is good for our economy.

Please read my post What This Country Needs Is A Good 5% Home Loan and the comments. Some of the discussion takes place on Bill Archambault's blog post But I Don't Have A Down Payment.

Early in life I got interested in libertarianism because I was an unofficial member of Young Americans for Freedom. We were for economic freedom. Somehow they got involved with the "Peace and Freedom" types who were for lifestyle freedoms. They argued that consistency was the highest good. I didn't buy it. I think "common sense" is a higher good. I am a conservative Republican. I have a fairly good understanding of economics (my minor in college, major was finance). However, some aspects of Keynesian economics makes sense to me. When the economy is faltering the government needs to "spend" money to get it going again. This money is counted in the "macro" sense. Individually the money may be wasted or used in ways we don't think will help but overall the influx of money will help.

And again, the investment tax credit for small business will have a great stimulative effect on the economy.

In answer to your title question, yes I think the government needs to subsidize mortgages a little more than they are currently doing.

Bill Roberts

Rob:  I agree with your comments (see my comment previous to your first one).  What the government spent as a stimulus package, could have been spent helping people reposition their mortgage financing.  They subsidize agriculture and everything else. 

Would you rather the banks go belly up and your hard earned money with it?  We don't need another "great depression".  A solution must be worked out soon.

I have quite a bit of money in the stock market and the banks and I don't wish to see it go down the tubes.  If my money goes down the tubes, my children and grandchildren's inheritance goes down the tube. 

It would have been cheaper on the taxpayer's for the government to come up with a real plan for the "housing market" instead of small businesses. 

I want less government and not more government... I agree.  This problem was created by greed and predatory lending that the Fed should have stopped, but turned a blind eye because of the "laissez-faire" attitude of Greenspan.  Now, we are in a huge "world" economic mess. 

Bill Roberts: 2/20/2008   Bush said Rwanda would receive $12 million of the $100-million contribution the U.S. is making this year to U.N. peacekeeping efforts in Darfur. The money will help provide training and vehicles for the 2,400 troops that Rwanda has said it will add to a 7,000-troop deployment in the troubled area of western Sudan.

Thank goodness, in Tennessee the Seller can help with the down payment on a home.  I have some seller's right now who would be willing to pay a buyer's downpayment, but I'm not getting any calls because of the stupid media.

Jan, I've read this over and over again since yesterday morning. I just didn't know what to say to you.

It seems you don't like the stimulous package for some reason or don't understand it.

Most people are employed by small business. When small business is energized we all benefit. Personal income is a macro number, not an individual number. This stimulous package will drive up personal income. That money will be spent. More people will be employed. Still more personal income will be earned. It is a cycle that feeds on itself.

As for the housing problem, you commented on my latest post about Due on Sale clauses, but I'm not sure you fully understood all that was said. There are many good comments on that post. Things that could help your sales in TN and the rest of the country. Just like the stimulous package, there is a venturi-like principle here. Get the sales moving in the right direction and the market will firm up.

Foreign Aid has always been a controversial proposition but the truth is that most of the foreign aid money is spent here in this country, and the products and/or services are sent overseas. Again, it has a stimulative affect on our economy. Military hardware and food are the two largest categories of foreign aid.

Jan, all we can do is look out for oourselves. I hope you are able to take advantage of this real estate market to reposition your assets. I noted that you said you had a quite a bit invested in the stock market. I think you would be well advised to move that money into the real estate market. Maybe buy land in the path of progress.

Good luck to you.

Bill Roberts

Bill:   It will help small businesses and will help the average person for a short period of time.  In those areas, yes, it does help.  But the government will have to give us another stimulus package in the very near future, to stimulate the stimulation.  That's sounds sort of sexy.  Anyway,

Yes, I fully understand the sue on sale clause.  I could have my arm twisted to have it repealed because I keep forgetting the rest of the country is in worse shape than Middle Tennessee.  I'll be glad to do my part to have it repealed. 

Most of our foreclosures and subprime mess is in Shelby County or Memphis.  We do have some problems, don't get me wrong.  In my area alone, we have many empty, expensive homes that need to be sold.  We have had some builders go into bankruptcy.  I have a listing whose home, we just found out, has had a mechanics lien put on it.  She just bought it 5 months ago, moved back to California because she hated it here, and I have the listing.  The builder went bankrupt and didn't pay for the $7,400 in hardwoods.  I don't know quite how to handle the problem because we have been sailing along for years with no problems like this.

And, yes, we have a financial planner who handles all our financial affairs... A.G. Edwards.  I have been thinking about doing some investing of my own.  Land in the path of progress, a cross roads.   

Jan, When your financial planner is in the stock and insurance business, that is where your investments are going to go. As a real estate broker you should "walk the walk" not just "talk the talk."

I have written extensively on the benefits of land over mutual funds for retirement accounts. Why don't you read through some of them?

As for your mechanic's lien, check with the supplier to see if they are willing to wait until the house sells to get paid.

Bill Roberts

Bill:  I have read quite a few of your blogs about the benefits of investing in land.  You have a very good point, like I said on one of them, I wish I had known you 10 years ago.

As far as my listing, the lien has already been filed and recorded.  My seller did talk to the president of the company, and, of course, they want their money.  So that means that she will have paid for the hardwoods twice... once at closing and then again once we get the home sold. 

Jan,
OK. About your mechanic's lien: check to see when it was filed. If it was filed prior to closing and the title company didn't pick it up it is their responsibility. If it was filed after the transfer it is probably invalid against the new owner.

The only situation where your buyer is liable is if the lien was filed prior to closing, the title company picked it up and informed your buyer. In a case like that it would have probably been paid through escrow, so I guess that it didn't happen that way.

Good luck.

Bill Roberts

Bill:   This is crazy... the Title Company is in receivership.  

The mechanic's lien was filed "after" she closed on the home.  She closed on the home in September 2007 and they put the lien on in January 2008. 

We may not have a case in Tennessee.  We have different mechanic's lien laws according to an attorney  she has talked to.  I thought it would be frivolous... this will be interesting.