Real Estate Blog - TOP DOWN ISN'T WORKING. WHEN WILL THE GOVERNMENT THINK OF TRYING A BOTTOM UP FIX?

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TOP DOWN ISN'T WORKING. WHEN WILL THE GOVERNMENT THINK OF TRYING A BOTTOM UP FIX?

* * * * WARNING! HARD CORE REAL ESTATE TALK * * * *

Do "WE NEED MORE BAILOUTS?" Jim Crawford asks that question in a thoughtful post this a.m.

Jim touches on the absurdity of rewarding inefficiencies by bailing out GM and other auto manufacturers.

The question in my mind is. "WHEN WILL THE PUBLIC CATCH ON?"

WAIT! I just figured it out. They, the public, will all scream in unison, "Hey, you said my taxes were not going up!"

SERVICE FEES: JUST ANOTHER WORD FOR TAXES. Thanks Richard Iarossi.

Until it, the dramatic loss of buying power, hits the majority of the public in the pocketbook, the majority will not notice. However, I believe that it's just a matter of time until the public takes notice of what that Wall Street Bailout really means to their families financial security.

MISPLACED PRIORITY. Fact is, the housing industry was crippled by Wall Street. To "fix" the economy, the Secretary of the Treasury decided to start the remedy by giving his Wall Street cronies $Billions of tax payer money to keep them, the snake oil salesmen who profited by the securitizing of mortgages, solvent. This is the most classic example of killing the Golden Goose that I have witnessed in my lifetime. In order to "fix" the economy, the government is killing the housing industry that fuels our economy. Until the government realizes that the housing industry, the back bone of our industry, is solvent, there will be no recovery. public schools

Our real estate taxes support our public schools.
Our real estate taxes contribute to our public libraries.
Our property taxes help pay for police.
Our property taxes help pay for fire houses and fire fighters.
Our property taxes help pay for hospitals and clinics.
Our property taxes help pay for county services such as trash disposal.
Our property taxes help pay for parks.
Our real estate taxes contribute to our counties/states contribution to road construction and maintenance.
Our real estate taxes (impact fees) contribute to our property infrastructure, sewers and water.

WHAT HAPPENS LOCALLY WHEN PROPERTY VALUES FALL? Property owners cannot eliminate property taxes. They are a lien on the property. However, as property values fall, tax receipts to our counties and states are reduced accordingly. Does Secretary Paulson plan to bail out our local governments with $Billions of Dollars? Not at the moment. After all, once the money planned to bail out the banks is gone, what will be left for local help??

FACT: When property values fall, property tax rates must rise to pay for existing government services.

I predict that the government will agree to bail out foreign entities before they spend a dime to help local governments. Don't get me wrong. I'm not in favor of federal bailouts of inefficient local governments either, but if we are going to bail anyone or anything out, it, handouts or guarantees, should start with local rather than international entities. WAIT, LENN! Representatives of 20 nations are meeting with President Bush this weekend. Why are they here? Good question. Why do YOU thing that they are here?

WHEN WILL THE GOVERNMENT DO ANYTHING THAT HELPS THE LOCAL REAL ESTATE MARKETS? The answer to that is above my pay grade. Some major banks, JP Morgan Chase and Citibank are going in that direction on their own. However, I haven't seen anything proposed or implemented that will help the average home owner recover the lost equity suffered over the past 2-3 years. It will be many years before home values are back to the 2005 levels and those dominoes keep falling. Don't look for housing recovery in the near future.

SO, WHEN IS THE GROUND SWELL OF OUTCRY FROM THE PUBLIC COMING? Soon. Soon.

Just wait until their taxes begin to go up.

Or, Mom or Dad lose their job.
Or, the library closes.
Or, the playground closes.
Or, the pothole in the road wrecks their automotile.
Or, the fire company takes 20 minutes to get to a burning house rather than 5 minutes.

These are the events that will cause the popular uprising.

Sooner or later, these matters will be reflected in the voting booth. Sooner or later. Just as President Elect Obama spun his way to the White House by opposing the war in Iraq early on, a few politicians who voted AGAINST the $700,000,000,000 bank bail out may have "BRAGGING RIGHTS".

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.

Posted by Lenn Harley, Real Estate Broker, Maryland & Virginia on 11/15/2008 01:12 PM

Comments (74)

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74 Comments on TOP DOWN ISN'T WORKING. WHEN WILL THE GOVERNMENT THINK OF TRYING A BOTTOM UP FIX?

NOV

2008

It's like giving a child an allowance ...a generous one at that...at expecting them to do nothing...you don't have to lower interest rates,have first timer programs....just take the money and enjoy....oh how we wish NOT !

The underlying stress is excruciating. Watching credit card rates go up for NO reason fathomable to an on-time paying consumer; property values going down; and now, the BIG hit awaiting all of us- tax increases- along with no measurable difference to the average homeowner struggling to keep everything above the drown line while understanding that ,through no fault of the average on time paying homeowner, the life vest (an understanding that paying on time- no favors from anyone, just diligence) has been jerked...just the caboose, larger than the train in this case, heading right for us.

Lenn, for two years, I've been telling anyone who would listen, that the housing industry drives the economy. It must be fixed first. When you buy a home, you buy towels, toilet paper and T-bones. When you no longer have a house because of eviction, you ask for towels, toilet paper and a handout. This must be fixed from the bottom up. It's the only way it will work. I surely hope the next administration can get that. And, can fix, by executive orders, some of the insanity of late.

Lenn, Our library has already cut its operating hours by closing on Sunday. When the legislature returns in 2009 we can be assured of a whole host of new "service fees". They don't like to call them taxes any more, too negative.

We are in for an extended period of financial crisis and the solutions seem to be evading the purportedly best and brightest.

Good Morning Lenn

I'm in the shadows these days so I'll comment briefly. As usual, you and I are on the same page.

You said it all when you said: " When property values fall, property tax rates must rise to pay for existing government services."

We're in for a lengthy and very ugly correction period. People, especially the powers that be, just don't seem to get it.

Ed Ryb

In a horribly comedic way I see Laurel and Hardy saying.. "oh what a fine mess you got us into now"!! But this is not a comedy its life and its scarey because everyday there are more layoffs, more foreclosures and yes more proposed bailouts. Is it the patients have really taken over the institute?

Lenn, when things get tough people start to do bad things to other citizens, they steal, shop lift, insurance fraude, ect..and the county jails are funded by our property taxes. It is a vicious circle, and something at the top will have to drasticly change for the real estate market to make vast improvements. The government is putting the cart before the horse on this one, great points.

YES.....START WITH WHAT REALLY NEEDS HELP and always leads economic recovery HOUSING! Members....DO YOUR NAR CALL TO ACTION TODAY...it should have arrived in your email box Thursday 11-12-08 very early morning..it is just a click or two....in my blog last night there is a link:

http://activerain.com/blogsview/791041/WHAT-CAN-ONE-PERSON-DO-ABOUT-THE-MESS

Steve. Thanks. The governments handling of this crisis is so misguided, it defies logic.

Gail. Funny. We're living a Laurel & Hardy moment.

Ed. Nice to hear from you. The "folks" don't get it yet, but they will.

Suzanne. The housing industry does indeed drive the economy. Everyone knows that but the guys on Wall Street and the guys in government FROM WALL STREET.

Richard. Thanks for the quote. Yes, libraries are not the only services to be reduced. Folks will notice soon.

Laurie. The interest rate on credit cards is insidious. Folks don't really notice more than the mimimum payment. If it were not for Internet subscriptions, domain name charges, etc., I wouldn't even use one.

Sally and David. Goodness. A child could not have handled our money any worse. The word "thrift" is not in Sec. Paulson's lexicon.

Pat. Thanks for the link.

Yes, thanks for the link, Pat - I did not receive that.

Lenn, I am absolutely dumbfounded by the current situation. YOU are right about this situation, as usual... and let's hope you're right about people waking up to what's around them. I'm not sure the media will communicate it, however, so they'll have to be touched personally.

Lenn, Equity is gone. It ain't coming back for a decade or so. There is no saving it. What needs to happen is non-performing assets need to be sold. "The man" could step in and regulate how short sales are handled. This would not only help inventory get sold but it would also save the lenders tax payers billions of dollars by moving these non-performing assets off the books before they become worth even less money.

Use the "bail out" money to give incentives to lenders that streamline the short sale process.

In my opinion folks are concentrating too much on pulling us out of the housing crisis when they need to concentrate on pulling us through it. It's too late to pull us out.

Oh it's beginning. Last week we got a "News Flash" from the state association that the RE Commission has proposed a "significant" increase in our liscensing fees. Methinks they too are hurting. Now we get to pay for it.

Lenn-I can't even express anymore how disappointed, frustrated, angry pick a word that I am with where our government is leading us with the "bailout." There is no doubt that my real estate taxes are going up next year and my condo fee just took at 15% jump due to the investors who have bailed on their units. These "little" increases add up and mean that even more people will not be able to afford their homes next year. Round 2 of foreclosures is coming and it won't be because of a sub-prime mortgages.

When are the Bail Outs (hands out) going to stop? Who will be next in line with THEIR hands out? How are these HAND OUTS going to be paid back? (and they MUST be paid back!). Some think there's a money-making machine that can just crank it out WITHOUT repercussion--in fact this kind of mindset is SCREWED up. I'm afraid IT'S only going to get worse, before it gets better.

Cindy. Agreed. The foreclosures will just keep coming. This debacle is like a financial tsunami.

Kristal. Interesting. I haven't noticed anything from our commission. I, frankly, wouldn't care if they rose our fee from whatever it is, $80-120 to $1,000. That alone would thin the ranks.

Bryant. Words of wisdon. Send your post to good old "Hank".

Margaret. The matter leaves me almost speechless, too. Good thing I have a keyboard. Of course, my keyboard has no e, i, o, a, s, d, h, l, n, or m.

Lenn, The problem is that housing prices got artificially too high and we were all living in a fatasy economy based on fatasy housing prices. We were spending money based on loans we got because of this fantasy pricing. It wasn't real money. Therefore it disappeared into thin air so quickly.

The reality is that housing prices are tied to incomes. When incomes go up, house prices will go up. How do incomes go up? Incomes go up when productivity goes up or you work harder and longer. How does productivity go up? Productivity goes up when people produce more with less. How do you produce more with less? You take money you have left over after you cover your living expenses, real savings, and you invest them in better factories and innovative companies. You don't take those savings and blow them all on consumer items.

So the solution is that we will all need to work harder, longer, smarter. We will have to leave frugally so that we can start saving money to invest in more productive activities. That won't win anyone an election but the sooner we face that reality, the sooner we will become a great country again.

Tim. Housing prices in my area were not tied to income. They were tied to easy loans. Our homes have been out of qualifying range for the average buyers for 5 years. But, they sold because the buyers could get financing.

I agree that we'll survive this mess. But, a lot more folks are going to lose their homes. That is not going to be pretty.

Lenn, you know I live here in Michigan..........well the spin mongers ALL of them locally keep saying that 1 of 10 jobs are going to be effected if the big 3 go under. Living here, we have already been effected starting in 2001 when they started laying people off, restructuring. Our home prices in many areas are down to 1990 prices. I am on a mission to where and why they are all spinning that number, but sure enough I've heard all the politicians saying it.

Why can't they just use Chapter 11 and give them time to re-organize ? However, the Unions and their demands have been out of control since we moved here, it is so sad. There was a time they were necessary but over the years got out of control. That is why Toyota and the Japanese companies are not unionized, don't use relo companies, united way. They just do their jobs and very well.

Until the big wigs will stand up to them the bailout will not help.

Robbing Peter to pay Paul -- people don't understand that payments made out of one pocket must be repaid by the other. ~ Evelyn

Evelyn. You quoted the precise definition of the bailout. Our of our pockets into Wall Street's.

Missy. It won't happen. The folks taking over the government now owe their elections to the Unions. We're doomed.

Lenn, I'm feeling mean and selfish right now, but I have no sympathy whatsoever for the US auto makers. The unions, the owners, the cars that fall apart after a couple of years - Yikes! I own an eight year old Lexus that still drives like it rolled off the showroom floor. I'm not sure where the thing was made, but it's manufactured by Toyota. Ford and GM have never figured out how to build a car that works over the long haul! While all of the bail outs are pissing me off, the auto bailout is the last straw.

Patricia. Agreed. Folks keep saying "But what about all the auto workers that will lose their jobs. These are the same auto workers that voted the same union leaders in that negotiated the killer contracts. Let them collect union benefits. How much money is in the UAW bank accounty??

I finally, after fighting for many, many years, went to Toyota. It rather broke my heart, but reliability is critical.

Lenn, money apparently is still not free flowing---wonder when it will? I hear of people even complaining now with government work that the hours have been relaxed. Everyone is feeling something now. Luckily, in this market values have not slipped as in other areas of the country, some homes are still selling, and people are still refinancing (not as many as one would want). I believe the type of industry in an area has a lot to do with how the area fares and in how quickly they will recover.

Lenn, When will the public learn where that money is coming from, our pockets? Congress just keeps on spending like an executive (from a bailed out company) on his expense account...

Lenn, if I'm not mistaken, I read an article the other day that a local county near here was $5million in the red based off of budget. I started wondering how much of that was indeed due to the local bust in real estate. ....

Im confused here because I am completely against trickle down theory as it is not only racist in its nature but obviously not much more than an elaborate pyramid scheme. Yet here it is once again the thing that I have been advocating all along that we help out the bottom first. That doing things to help out those that are most in need should be first priority. If we have a stable base we will have a strong ecomony. If you put too much money in the hands of a few it will topple.

So I am confused why now suddenly I see this.

"Representatives of 20 nations are meeting with President Bush this weekend. Why are they here? Good question. Why do YOU thing that they are here? "

The foreign leaders that are here for the G20 Summit are here so that they can puff up their chests a little, claim that they were heard and then go home to their European Union. For now, this is nothing but the beginning of a discussion.

It's the next economic Summit that we need to be worried about.

Lenn - As I keep hearing about the funds from the bailout vanishing into thin air, I too find myself thinking that the money would be better spent helping the public. I don't know how many times we have to be reminded that trickle down doesn't work. Fantastic post!

One thing that would help right now is reinstating a down payment assistance program! Bring back Nehemiah! Right now its asking alot for buyers to use what little they have saved as down payment on a home. They want to hang onto their cash for many other things - home fix up, hard times ahead, whatever. As long as the home is ethically appraised it should be fine!

Shane, bty trickle down is "racist"? I guess voting Republican was racist too? Keeping businesses and job makers able to stay in business and create new jobs is essentially trickle down theory isn't it? Without job growth and healthy businesses there is no ground to build.

Jackie. I was against any bailout. However, rather than handouts to folks on Wall Street, I'd rather see about a $Trillion go to reducing mortgage balances. We've all lost equity. How much would it cost to modify everyone's existing loans to market value?

As it is, the only help for consumers is help for defaulting folks. Those consumers who are innocent bystanders are the ones really hurt, for years and years.

Shane. I'm confused about everything you wrote.

Eric. Of course the money isn't free flowing. If it's kept on the companies books, they can dole it out in dividends and bonuses. These corporate officers have millions of stocks in their companies.

Paul. The average expense account has more accountability.

Steve. We're going to see that from the Pacific to the Atlantic Oceans and from Canada to Mexico. States that reassess every year will see it first.

Amanda. If history teaches us anything, they are here with their hand out. Bush won't fall for that. He doesn't care what they think.

Brian and Marie. Of course. Stopping that program just keeps more inventory active.

Lenn - This is the first time I'm "Active" on one of your posts. What you said to Shane truely made me LOL.

Lenn,

Excellent post. You asked the question - SO, WHEN IS THE GROUND SWELL OF OUTCRY FROM THE PUBLIC COMING? Soon. Soon. The answer may be never because people (not on AR of course) are not engaged (I would add educated too) enough in this country to undersand the situation which would get them off their easy chairs and out in the streets for a real eigtheenth century uprising.

Stay far away from NAR calls to action. The last one pushed in my office wanted us to support the bailout. I was the only one in my office against the bailout and I didn't get involved in the NAR action. And by the way, let the big 3 FAIL (and their corrupt unions too).

Trickle down is racist? As I said, an engaged electorate could save the day but most of us see the world through our own selfish, slanted, myopic goggles and it doesn't do the country much good.

Tim

Lenn- Missy is right about the car industry. The unions have brought the automakers to the bankruptcy doors. Nestor has told me all kinds of stories from his father who worked for GM all his adult like since coming here from Cuba and how the unions were all about power and control.

I once met a man who had 6 children. He was a welder who made good money but he was laid off. Well, because he was a member of the union, he was not allowed to take a job that was not union. There were companies that wanted to hire him but instead he would sit at the phone each morning until 10:15 in case the union called him with a union job. His dues were high! And before he bought food for his family he would pay his union dues.

I never got it!

In fact, I am so against unions as they are now, that whenever we were having to join SAG, we would go to Canada, Japan, Mexico or Utah and Florida for the kids's acting and modeling jobs. I just did not see how we should pay out all that money for what!

You are right, now it is pay back time. I am procatively against the Teachers Union becuase they want to outlaw homeschool so that they can ruin more kids.

Katerina,

I have a new teachers union story for you. I'm a high school soccer coach and therefore a part-time school employee. I'm NOT allowed to join the union (their rules) because of my part-time status but this year I was told that the teachers union will require me to donate a percentage of my income to the Teachers Retirement Trust Fund. When I asked them about it they told me I would NEVER be elgible to receive any of the monies I paid to the Fund because of my part-time status. So, they can steal my money (I have no recourse--I've already talked to the school board) to fund their unions pension and I will never collect a penny of my own money.

The unions are a bunch of corrupt thieves!

Tim

I was just talking with my husband about this very issue. The foreclosures in the past years were due to lending issues. The coming foreclosures are going to be due to job losses. I agree that we are heading for a nasty descent.

I've had two clients email me offering to pay me for a CMA as they are arguing the assessed value of their property taxes. Our city services are going to be in trouble. Higher taxes means less disposable income to spend on the economy, which means less jobs...well...you know. This is going to get ugly.

Lenn - you know we're on the same page here. One can only hope there will be a groundswell as people come to realize they've been lied to time and again, their taxes don't go down, their buying power is diminished and all the ' good stuff' hasn't come to pass. Unfortunately, over the course of the last half-century we have institutionalized a generational welfare mentality that expects the government to provide more and more even as it takes more and more. This bail-out has set a terrible precedent for another whole generation who now sees this as a business model that eliminates personal accountability.

A good friend of mine is fond of quoting Thomas Jefferson - "A government big enough to give you everything you want is also strong enough to take everything you have." People should be paying attention instead of paying more taxes.

Lenn -

You know what it is like?

It's as if you know there's a bad guy hidden in a dark room. You barge into the room, after breaking the door, with guns blazing.

You might get the bad guy, you may not. Often times, you waste your ammunition - ammunition that is costly to replenish and perhaps should have been used with more care in the first place.

I think that even those in high levels of government are not sure what will help solve the housing crisis. So, they do whatever action matches their ideology, and HOPE it works.

Trouble is, no steps taken indicate that anything will trickle down strongly enough to bolster real estate markets. And if it does help in some way, it would be merely circumstantial help.

Within the past few weeks, banks receiving bailout money have done little to help turn the housing market around.

And I fail to see any indication that this is going to change.

DEAN & DEAN'S TEAM CHICAGO

I'd like to see the accountants books just to see where it is all going.

Dean. Funny you should mention that. My primary bank, PNC, took $7.500,000,000 of bail out money and bought National City Bank. I can't see how it has helped one homeowner on the verge of bankruptcy.

Gene. I can't figure the bailout out. They distributed $250,000,000,000 and yet, not one bank has stopped one foreclosure. They are holding the money, paying bonuses, paying dividends and just sitting and the government is paying them interest on what they are sitting on.

I just can't figure this thing. When something doesn't make any sense, we have to ask why did they do it. Worse yet, there is no accountability. None.

Melina. It's 10990 all over again. I did a lot of CMAs for folks filing bankruptcy in those days.

Tim. Just wait until Obama gets in office. The unions will send him the bill for putting him in office. They want to end the secret ballot and I believe that they'll get it. All I can say is Wal-Mart watch out. You are in their sights.

Katerina. The Teachers' Unions are the worst thing that ever happened to public education.

Steve. Welcome. Stick around. We have some lively and productive conversations on my blog.

My county and the one just north of me that I am also active in has already announced property tax increases. The nearest urban city to me (Memphis, TN) announced earlier this year they were going to have to close several libraries. We've had a few auto makers build plants down my way in the past couple of years - Nissan, Toyota and BMW. I think they built here because we are pro-business and I'm pretty sure the facilities are non-union. They have helped bring some nice paying jobs to the area.

Our county and city governments here are already trying to figure out how to handle their budget shortfalls for 2009. The mayor of Columbus mentioned closing some rec centers in the inner city, parks, etc. He's hoping to not cut police and fire as crime is apt to increase given the economy. I think the figure thrown out was $80 million short. The issue is as you mention ... property taxes don't get paid on vacant homes waiting for foreclosure and income taxes don't get paid by people without jobs. They are considering raising the sales tax, but that would further restrict consumer spending. Thank goodness one of the councilmen said that was a stupid idea.

Regarding unions, remember all the Hollywood celebs and the media that supported the Dems, belong to unions. Gee, what a coincidence. The need for unions is as obsolete as the dinosaur. They have caused companies to price themselves out of the market and forced companies to out-source to other countries. It will be interesting to see how Obama plans to "bring jobs back here" while still wearing his umbilical cord tied to the unions who got him elected. Until the cost of doing business is made competitive, those companies can't afford to bring jobs back here.

BTW, non-union Honda is just up the road and doing OK.

Pam. You are absolutely right. Many of the southern states are "right to work" states and the unions can't get in. That's why the Japanese and German automakers are building plants there.

Neal. There is no requirement that they disclose how they are using the money. However, when their quarterly statements are filed with the SEC, I suspect that we'll see a significant increase in capitalization.

Elaine. Just look at the difference in job security at Honda in Ohio and GM in Michigan. The legacy and featherbedding costs of unions has totally destroyed the American auto industry. It's so sad.

Cities and towns and counties across the country are going to be in deep trouble if they are not already.

Hi Lenn,

I had this same talk with my father in-law last night and I have been having the talk with my self and whoever else will listen for the past year.

Until the government provides a new fiscal policy to stimulate the real estate market, they can throw whatever money they want at the financial and banking institutions - it won't fix the problem.

Lenn,

It looks like the present leadership in Washington is missing the point big time, namely that a healthy housing market is double important. On the other hand, at least Citi and JP Morgan are doing something now with their foreclosures since the government isn't seemingly going to help much.

Esko. Right you are. Unfortunately, Countrywide has the predominent percentage of mortgages in my area.

Lenn,

Top down isn't working because there is too much government creating a stranglehold bottleneck...help the big 3 automakers restructure with fewer regulations not taxpayer bailouts!!! Thanks, Fran

Fran. Whatever regulations the big three must meet must also be met by foreigh manufacturers in this country.

It is the $1,500 per vehicle for union costs that has been the trouble. U.S. is building obsolete vehicles.

We shouldn't subsidize obsolesence.

Lenn,

All these bailouts, stimulus packages, etc. look like another fraud-stimulus for me. We hardly survived the crash crisis of Las Vegas style gambling, pyramid building economy. Wall Street along with Fannie and Freddie fooled out the whole world, selling globally fraudulently packed MBSs. Foreign investors pretended that they believed in constant growth of US housing value. Con persons and whole organizations from mortgage industry were actively selling "fancy" loans to unqualified borrowers who pretended that they owned the houses having zero or nagative equity in them. Banks pretended that they did not realize how risky their lending practices were. Public pretended that borrowed money was real. Public keeps pretending that bailout money is coming from Santa Claus, not from their or their children's own pockets. Wisely ruled pretentious society!

Unfortunately, reality is that government stimulus or bailouts are stimulating another wave of fraudulent behavior. Have you heard about new short sale schemes?

We will see the light at the end of tunnel when the honest, diligent tax and mortgage payers will benefit somehow from the government actions. It may be mortgage balance reduction, it may be property tax credit, it may be at least more easy lending money to support our housing value.

Lenn, You raise some really good points - some things that most people don't "get"...I do have a question though...do you think that the efforts Freddie and Fannie are making with renegotiating mortgages for homeowners who are 90 days late is going to do anything? From what I understand, it seems like the thought is if they can keep more homeowners in their homes instead of doing a short sale or being foreclosed on that the housing market should stabilize...that seems to be the thought process the media is touting....curious your take on it..

Lenn, I knew I liked you a year ago! You have hit the nail on the head here--I was out with buyers today and generally don't even think about broaching the political topics but, we had a 3-hour discussion about economics and the government! Amazingly, the government is bailing out everyone who GOT themselves in a BAD BUSINESS position--if American made cars aren't selling, there's a reason--why not go back to the drawing board and change gears (no pun intended)--produce a product that Americans WILL buy! And, get rid of those unions! ARRGH!

As long as the government is taking care of the bottom feeders of life it will never change. When the top 20% can no longer carry the bottom 80% then we will be forced to change. If you ever want to get elected to anything just promise the 80% that their life will get better in some way. One bail out will lead to another. This country needs a good belt tightening and let the businesses fall where they may. As long as the government is willinf to put something in their hands they'll stay when it stops they'll figure out how to make it on their own.

If we don't get out of this borrow and spend cycle soon, our dollar is going to be absolutely worthless. I don't know if they will wait to raise taxes until it's too late (just like everything else.) China's bailout included selling US Bonds from what I understand.

If that's not freakin scary.........

Lenn-Your posts are always first class and right on the nail. My husband was a union plumber for years before he retired. At one time, I believe that unions got the working man a decent wage, however, unions got greedy. All of them! When GM employees get laid off I believe they draw 90% of their salary. Build a car that will hold up over 1 year, which is another mess in itself as people have started letting the cars go back to the bank, the car did not last the 74 months of their loan. No, let the auto makers go upside down they don't deserve the taxpayer's money but then again I believe that Wall Street should have taken their hit also. (They made their mess, let them figure it out). I have not seen one thing that is going to help the housing industry from our "friends" in Washington. Housing is the BACK BONE of America! I don't have the answers but apparently they don't either.

Missouri and some other states are putting all or most of their road construction on hold until who knows when. So far our City has not cut back but I am certain at some point it will be.

We have a pretty stable economy in Mo., because of the diversity, but it is a rippling effect and I have begun to see some of the small ripples starting. When the snow (very soon) gets on the ground and the seasonal employees are on the unemployment rolls that could change rather quickly.

Unions hate em! I was just talking to a previous boss, in a previous life, who was mid-management for a Direct Marketing Firm - (Director position, responsible for about 50-75 people), making somewhere between 90k to 110k, he lost his job a few months ago, and while I am happy, he may have found a job, it is a Union job for the "Scenic Dept." for the film industry in NY. He told me the union is paying him more for is "Entry Level job", then he made in mid-management. CRAZY!!! If you ask me, to pay someone that much for carpenter.

My Father-in-Law, used to own a gas/repair station, and for years told me to by American. Finally a few years back, he gave up, and said buy a Honda, or Toyota, they make a great product.

Where there is government there will be programs we don't agree with but in this case throwing money at a problem that was caused by giving money to people that should not have received it doesn't make sense. We need some personal responsibility and let the companies and people that made bad decisions fail we can not save everyone.

NOV

2008

Lenn,

I agree with you about the U.S. most likely to help bailout abroad before locally. I think the outcry will come, I hear much discontent in my neck of the woods already.

In terms of the benefits of the housing industry, I would like to add two. Quality of life- Homeownership allows people a better quality of life. The second, Safety in community. More homeownership in neighborhoods gives a better sense of community, unity, safety.

Rebecca. I don't know that we'll know the help given foreign governments. Shucks, we don't even know what the banks we're giving $Billions are using the money for. Unless something comes out in the news, there are no reports.

Terry. At this point, the companies have been saved, meaning the banks. The consumers are the ones "taking the fall".

Keith. Many of us followed the buy American mantra. Until we felt like fools. I switched to Toyota 3 years ago.

Donna. Many communities are just beginning to feel the cutbacks. California is looking for a bailout but will not change anything. Curious.

Renee. What has been scary to me is that we've been depending on China to buy our Treasuries for several years.

IMO, the bailout bill was designed to rescue the Chinese investments in the MBAa. But, everyone knows I'm a cynic.

Charles. What a concept. A market system.

Debe. Risky talk with clients. Unless you know that they agree with you before you say a word.

Sonia. No I do not agree that it's a good program. They are helping only folks who are already in arrears. They are breeding a decade of bad credit reports. Not only that, the requirments are Draconian.

I believe that we need an across the board reduction of mortgage balances to no more than the tax assessments of the properties across America. That is what would stop foreclosures. The banks who would write down the loans have been compensated or could be compensated. That's what the original idea of giving the $700,000,000,000 to the banks was supposed to do. They, the banks, are using the money to pay dividends, bonuses and buy each other. They are NOT writing down mortgage loans.

Svetlana.

"It may be mortgage balance reduction, it may be property tax credit, it may be at least more easy lending money to support our housing value."

These are the programs I've been petitioning for. Precisely. Mortgage write-downs is critical. Otherwise, the American family is going to be held hostage to their negative equity for a decade.

Lenn,

GM sells more units overseas than it does domestically...only our domestic market has ridiculous and unrealistic standards...the foreign makers sell the polluting stuff to Europe and Asia...if we were making obsolescence any more than foreign manufacturers, there wouldn't be an overseas market, and you would see people driving Hondas and Toyotas purchased in the 80s...I don't see many in PA...JMHO, Thanks, Fran

They will never try bottom up cuz tjhe people that make the decisions and have the money are on the top.

Lenn:

The public is never going to scream - there will be no outcry - because for the last century the Government and the political parties on both sides have done an excellent job creating two types of modern American citizen:

1. The one, who is productive, self-sufficient and independent, is now a criminal in more than 10,000 ways he doesn't even know. There are so many laws and regulations that JUST ABOUT EVERY ACTION he can take can land him in jail - if and when the government ever feels like it. So these individuals just disconnect from their government - they don't participate, march, vote, care; they stay in American simply because it's better than being in a Russian or Chinese prison - but they don't participate in politics.

2. The other American is the one with his hand out all the time. Now that millions of American all "get" something from their government, they LOVE bailouts, rescues, emergencies, and any other time they get to come to the feeding troth of their neighbor's stolen money. Why would they be UPSET that the government bails out the auto makers or the banks? Many of them will get something from it - their job, some free tax money, a free-pass for paying their bills, etc.

When half of the citizens are disenfranchised and the other half are willing participants in the power-grab, then you'll never have an outcry because the only people who "cry" are talking to themselves.

Great post. Most citizens don't get it. Local taxes (and yes...national taxes) will start to go through the roof shortly...to maintain the status quo with diminished services. Yes, we will pay more, and and get less. That is a given.

Several years ago I lived in Buffalo New York for a short while. In the 1980's the steel mills closed. Western New York lost well over 80,000 high paying union jobs the result was a mass exodus. Congressional seats were lost, and taxes started to go through the roof. The Eire County budget when I lived there accounted for over 60% social services. Property taxes were obsene, and still are. On my 190K home the annual tax when we sold it was over 12K a year in 1992. The property taxes on a 300K home were over 24K - 30K a year in East Amherst. It was one of the highest taxes I believe in the country.

The lesson to this - is that is regressive and counter productive. People do not move en masse to an area with taxes like that. Companies do not consider opening up factories where their employees cannot afford to live well. That is also whey these areas have been called the "Rust belt!" The ideology doesn't work! Welfare is not a solution to growth. That is also why many areas in the rust belt voted Democratic - they need the government welfare to hold on to something that doesn't exist anymore instead of biting the bullet and seeking real change and accountability in their government.

Good post Lenn, yes, we are going to pay for this. Once you start paying more do not hold your breath for a readjustment, it will never come. It kills me that politicians chant that the small businesses drive our economy, but, if our mom and pop small real estate company goes under they do not give a ****. In reference to Jim's comment, I grew up in Cleveland, they have been talking about a recovery for 30 years, Yikes!

I am a cynic too and I am completely with ya!

LOL! You KNOW that I was silent for QUITE some time until I absolutely HAD to respond!! Yes, I shared their views!!

Congrats on that little gold star too!

Debe in Charlotte

Lenn,

Great, detailed post! It is obvious that you put a lot of effort into this post.

I could not agree with you more. As the world economic leaders gathered in Washington, D.C. this weekend, sipping $500 per bottle wine, Joe and Jane Citizen here in the U.S. is facing ridiculous pressure.

Now, I will go ahead and say that Obama is an idiot and will fail horribly. But the alternative offered my McCain was just as big government. The private sector could have been rallied to address this issue. I don't think anyone tried to get the private sector. Politicians and federal employees are motivated to grow government and increase their union's influence.

Wasn't it DeToqueville who stated that any democracy is doomed to fail as soon as enough citizens learn that they can vote themselves free money.

Obama promised over a trillion dollars in new spending. Just like the Depression Era presidents, Obama promised that the federal government would rescue us and heal us.

McCain was weak. I liked Bob Dole a lot more, and Dole was a horrible candidate.

We must not begin to believe that the government is the answer to our problems. The shift to socialism and government control would occur quickly.

What I hear you saying is that it must get worst before it gets better.

NOV

2008

Teresa. Exactly. I sat in amazement listening to Paulson stumble over the words trying to justify giving $700,000,000,000 to his friends and cronies.

He appeared to be mildly embarrassed when they didn't spend the money the way he had expected, loans to consumers and businesses, but then, he never really asked them to do so.

The guys on Wall Street understand the meaning of "no strings attached".

Matthew. How insightful. You described me quite well in #1.

Jim. Right on target. I showed homes in Charles and PG County to a couple this weekend. The taxes in PG are almost 2 times those in Charles. $4,000 compared to $7,000 for the same priced home. They are going to buy in Charles County, or Virginia.

Frank and Jodi. Funny thing about taxes. The taxes go up long before the county or city budgets come down.

Renee. We cynics have to stick together. Sometimes we are the only ones who listed to us.

Debe. Thanks. Those little Gold Stars are great for spreading your word sround.

Richard. Thoughtful comments. Thanks. Government is here to defend us from foreign invasion and regulate intrrstate commerce. Once it got involved in our daily lives, it has been down hill ever since.

Lenn - I found that local article I refered to a day or two ago about local budgets being off. I'm in South Jersey. Thought you might care to read. I post-ed about it.

I think they should have treated all these bailouts like a small business loan. You have to show a good business plan that will make a profit before they hand over the money. Instead they just threw the money away on some people that will spend it until it is gone, then ask for more. Enough is enough, you would hand your paycheck over to someone with a gambling problem would you?

Todd. You're right. TARP will go down as the biggest "BOONDOGGLE" for businesses in history.

This is, IMO, a classic example of cronyism gone amuck.

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