If the government took over other industries, as it is trying to do with the health insurance industry, with an entity that will be run by the government without profit, how much money the government could save the people of this country?
If they did take over all these other industries, the profits would be gone and so would the tax revenue needed to keep the government going. This might be called a no win situation!
The new law, HVCC (home value code of conduct), which prohibits mortgage loan officers to order an appraisal from the appraiser directly, has seemed to ruin a rather large number of purchases as reported by the National Association of Realtors. The problem is the appraisals are coming in too low.
If this keeps up, real estate will tank again because refinances aren't working either. The appraisers, without knowledge of the transaction in most cases, and usually without knowledge of the area as well, cannot successfully produce a reasonable number of appraisals to make refis or cash-out transactions work. This leads to loans not being funded and transactions failing to close.
The unfair advantage General, or Government Motors has by being run by the government who can fix all the problems, financing and legacy debt to name just two, over the plethora (or actually two) of other American car manufacturers.
We could be down to a very small number of domestic car manufacturers that will make up this industry that needed to be saved. After careful calculation, I believe it would be somewhere between 0 and 2, at a cost approaching $100 billion when all the figures are added up. Is it too late to rethink this bailout?
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Hopefully you are beginning to see the point of this article: words can paint a pretty picture as long as you don't study the picture too intently. This government is for competition in the health industry, but not the auto industry. This government wants real estate to bottom out and start a steady path upward, but passes laws that won't accommodate common sense lending or reasonable practices because they have been dumped for half baked ideas that hinder, not help facilitate purchases and sales of real estate. I mentioned the appraisal problem, but another example is what you can or cannot do when applying for and being approved for an FHA loan (100% government loan). If you are self employed and file a schedule C on your tax return, you must have a separate bank account to pay your business bills or they will be disallowed. That simply means you must qualify with double the amount of bills and payments that you actually have. Let's say you have a delivery truck that you expense because it is 100% used for the business. You pay for it with your personal check and even though you can prove the only need for the truck is for the business, you have to qualify with two monthly payments. Why? Because you will get your Schedule C income, which has already deducted the truck payment and then your income will be lowered by the truck payment again. Talk about new math!
What's next?
How about turning the energy industry upside down when an alternative that will serve more than one in one hundred consumers is not available. If we stopped using foreign oil, or any oil, we couldn't produce a fraction of what we would need in energy to keep our country moving. We could perhaps let everyone with a name that starts with A drive one day, B the next, C the following day and so on! This certainly would cut down on our need for foreign oil and a few hundred other needs as well. How ironic is it that a government who cares so much for the average Americans, and making their life better, is going to raise the cost of fuel (by adding more taxes) to a point that only the rich will be able to drive at will?
I am not sure but, I think I am beginning to see a pattern.
And then there is the budget and that little nagging deficit. How could that have happened with the brain trust that visits 1600 Pennsylvania Ave most days of the week? The last I heard, but it is hard to keep up on the gossip and still work for a living, they forgot to plan for a drop in tax revenues, around 36%, in their contingency figures. Fortunately, most of us now know what a Trillion dollars is (see my column of 2-20-09)
and won't have to take much time figuring out "we are in deep wanugus"! What happens if the World Bank is correct and the recovery isn't coming that quickly? While we're busy considering what's happening, what ever happened to all those shovel ready jobs? It seems to me if they were ready, why is the unemployment rate heading up instead of down? I thought all of that stimulus money was put out to create jobs. Were they just kidding?
Finally, does anybody know whether they ever changed the no uptick rule back to the uptick rule? Now that was a humdinger of a idea. While we were busy ruining our financial system, we could have become more European and changed sides of the street for our traffic direction just to see what other type of havoc that could have caused.
Soon, in a month or so, we are going to get the half time statistics on our burgeoning deficit and probably some new slogans. I can visualize YES, WE COULD HAVE as the lead slogan, followed by TAXES ARE YOUR FRIEND (unless you have to pay them)! But we are only just beginning. As bad as the deficit may be this year and next year, it is the following years that have economists' " innards in an uproar." We may be able to cut the deficit in half, in theory, by some date in the future, but that half may be bigger than the deficit we are facing now! Stating the obvious in a more understandable way, it would be akin to burning down your house to get rid of the termites! But that doesn't mean our leaders are prepared to chuck it in and call it a day. They are already preparing the slogans for 2012: When nighttime turns to morning and you can see the light, you'll realize we still just need another term to get it right! Or how about Elect experience, we've seen what novices can do! I wonder if that can be translated into Chinese?
I will close with the thought that inflation will be on the horizon in the future and those without any inflationary protection should be looking at buying houses at this time. Not only are the prices low, the financing is low as well and with projected rampant inflation, this could be the best time you ever will have seen to stake out your future.
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