One MSNBC reporter stated "You never want to see how sausage is made, and the country saw this week, how sausage is made, with a lot of pork." In order for the house to pass the bailout/rescue package there had to be a lot of pork added to the bill. After attending the Community Roundtable on Financial Markets and the Economy hosted by the Eller Business College at the University of Arizona, listening to several hours of reports and debates on news channels and talking to several colleagues I think I can understand the economic situation as much as I can.
The speakers at the U of A roundtable were Eller College of Management dean Paul Portney, finance department head Chris Lamoureux, and bestselling author and economist Gerry Swanson. This event packed one auditorium and several overflow classrooms with live feeds. One of the problems with the current economic situation is that most of the country does not know how we got to this point. Although Mr. Lamoureaux was full of doom and gloom his speech was very informative. All three gentlemen were very informative, and while listening too them I found out I knew more than I thought I knew, I had just not put it all together. I encourage you to listen to the whole presentation, since it is online. I am a graduate of the University of Arizona, although my degree is in English, and was very proud that my school was able to put on such a stellar event with such short notice.
Mr. Swanson stated that the U.S. economy is based on confidence. For instance, confidence that a $20 bill will be accepted at a store for $20 worth of items. The confidence level in the U.S. is low now with a president with a low approval rating, housing prices declining and many people feeling that their money may not be safe in the bank. How do we fix this? Well, the economist as the U of A felt than the Bailout/ Rescue bill may help a little but it will still probably take the country a year and a half to work out our economic problems. If this bill fails and we just let these problems work themselves out, they probably will, but it will take several years and be very painful for the whole country.
I have hope and confidence that the bill finally passed by the House and Senate will let us know that the floor has not fallen out from underneath us, and slowly but surely things should get better.
I should state that I do not think that down payment assistance programs were the bad guy, quite the opposite. Many of my clients used the FHA Ameridream program because they have good jobs, and good credit ratings, they just could not save $10,000- $20,000 because they had to pay for healthcare or education expenses that have gotten out of hand. Most of these buyers are not the ones that are being foreclosed on, at least that I know of. It was the people that overextended themselves and bought 2, 3 or 4 houses because they could get the loans for them, then the market started to go down, and they were stuck with these houses. Most, if not all of the real estate market problems are because of mortgage industry problems, first they were too lax, now they can't loan money even if they wanted too.
For more information on the Eller College, and the full presentation go to www.eller.arizona.edu