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Where’s The Recovery? Discussing the Mess We’re in Today

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Growing weary

Anyone else growing weary of hearing about how this economic bog we’re in is all W’s fault? Yes, 43 was a fiscal knucklehead and absolutely contributed to the mess we’re in today but it’s your mess now, Obama. Regrettably the President’s focus is not on housing and the economy, it’s on healthcare.

When Bush 41 was defeated by Bill Clinton it was all about ‘the economy stupid.’ I can already see those signs coming out again as we near the mid term elections. Mr. Obama’s focus on a healthcare program which at the very least will cost business a per diem on every new worker hired highlights how little he understands or cares about the severity of our housing and economic downturn.

It’s about jobs, Mr. President…and right now housing and jobs are both showing little signs of recovering.

Realtor, Speaker, former Indianapolis radio personality. Least prettiest person ever on HGTV. Crashed in a helicopter and a Cessna 182. Seven lives left. Blessed by an amazing family!

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21 Comments

21 Comments

  1. Duke Long

    February 28, 2010 at 1:56 pm

    The REAL Housing Market. I hope someone is paying attention!

  2. Ken Montville

    February 28, 2010 at 3:59 pm

    I’m not ready to through Obama overboard yet. I can’t debate the rest of the video, though. It’s a mess and it’s going to get messier. The sad part is that both sellers and buyers are in some sort of denial. Sellers (at least the ones with some equity) seem to think they can sell their house like it’s 2005. Buyer’s, on the other hand, think they can get a mortgage at the drop of a hat or, more likely, are just giving up.

    Unless someone turns the credit spigots back on were really in for a rough ride.

    All I can say is I sure hope Wendy’s gave you a double bacon cheeseburger with fries for that nice product placement! 🙂

  3. Ruthmarie Hicks

    March 1, 2010 at 1:49 am

    In general the focus on health care is actually good in the long run. We can not have 1/6th of the economy tied up in health care and the costs of same are holding back employment. Benefit costs are impacting the decision to employ and that is also causing companies to throw older (more expensive) workers off a cliff. It is also one of the top reasons why people lose their homes and file for bankruptcy.

    The other focus needs to be jobs, jobs, JOBS!! But not just jobs – jobs that actually PAY. One of the issues that we have in this country is that very few fields are lucrative enough. Too many H1-B visas were issued, and too many other high-tech jobs have been outsourced. This has pushed salaries into an abyss. Ask any engineer or scientist or programmer. I was talking to one programmer and his earning capacity has fallen from about $150k to under $50k in a matter of a few short years. In NY that’s near the poverty level. The difficulty is that the only careers that will actually pay the bills are in business, finance, banking and MAYBE law and sales. Law is now undergoing a lot of outsourcing – that combined with glut of J.D.’s coming out of the pipeline eliminates yet another avenue for a decent income. I’m not one to spout protectionism – but for God’s sake, something has to be done about the implosion of salaries particularly in fields that require extensive education. The scope of jobs available that are actually lucrative are far too narrow for society to thrive.

  4. Susie Blackmon

    March 1, 2010 at 8:06 am

    Corporate America needs to stop the ridiculous pay to the CEO’s, etc. Their ‘pay’ has gone up drastically over the years while ’employees/workers’ have pretty much not even experienced a noticeable spike on a graph over the same period.

  5. Justin Boland

    March 1, 2010 at 11:07 am

    Crunching numbers for an article recently, I was really struck by the fact it would have been cheaper to pay off up to $200,000 of the principal on every underwater mortgage in the United States back in February 2009. Based on my admittedly limited knowledge of macroeconomics, I cannot help but think this would have dealt with several major problems (the scope of the subprime debt bomb and the 2009 drop in consumer spending and confidence levels) and it would have clinched a 2nd term for Obama right out of the gate.

    Am I insane? Or just totally wrong?

    • Benn Rosales

      March 1, 2010 at 11:17 am

      on the net side, it would have accomplished the cash infusion the banks needed and uprighted the default leans leaving the banks to adjust payment schedules based on the new principal balance. Ultimately however, the resetting interest rates on arms and other exotic loans would still have probably tidal waved many homeowners. The other side of the argument was why would we give over leveraged investors $200k? I say it’s a bailout for Americans rather than Bank of America.

      In theory it all sounds great.

  6. Nashville Grant

    March 1, 2010 at 6:50 pm

    Perhaps that buyer shouldn’t be that grateful after all, if mortgage rates are 7 or 8% in a few years home prices will fall drastically. The relative affordability of homes will most likely rise as the market corrects, especially if it is a market guided correction and not a government enforced one. What scares me is the impending stagnation is sales and what that will mean for our economic recovery. I read a statistic that said the US Housing Market and related industries pour over 17% of our country’s GDF into the system…what if that were to just, go away? Wow.

    • Ken Montville

      March 1, 2010 at 8:27 pm

      Nashville, I think you’re being too optimistic. 7% rates will probably be here by late 2010 or early 2011 at the latest. Your are correct in your assertion that home prices will fall but one of the by-products of that will be increased foreclosures and short sales which make the home affordable in price only. There will be repair costs and the enormous glut of inventory. People without jobs will have a hard time renting, homelessness will increase, crime will increase as people become more and more desperate.

      Or the banks will be forced to play ball and things will work out like they did in the early 80s with double digit interest rates.

  7. Nick Sweeney, DotLoop Social Media

    March 3, 2010 at 1:18 pm

    While I don’t agree with everything you said, I do have to applaud the quality of your argument. If the only reason you can afford to buy a home is due to an extra $8000, then you can’t afford to buy a home. In some markets, $8000 barely covers a year of maintenance costs on a home.

    You’re right that the housing stimulus was like pouring sugar into a ten-year old (great line, by the way), but some forget that prior to this extra sugar, the ten year-old had just finished gorging on a whole jar of cookies. Housing prices were over-inflated for years, yet no one cautioned against it. The market itself was shaky long before any government stepped in.

    As for the foreclosures, the lenders took on the risk as much as the homeowners, so both are at fault. But since it may be a bit more work to renegotiate a lot of defaulted mortgages, lenders would rather just kick the people out. The banks lose (they have a house that is still not able to be sold for what is owed) and the homeowners lose (they end up living in their Hondas). So why not compromise?

    Last I checked, the taxpayers lent the banks money interest-free. It’s now time to lend some of that grace back. Until lenders realize that nobody benefits by kicking people out of their homes, recovery will never happen.

    Great post, Greg!

    • gardenknome

      August 19, 2010 at 2:49 pm

      why cant you afford the home after the stimulus? we bought ours, and the stimulus gave us the money for a 20% downpayment, so , no pmi! sure, there are maintenence costs, but if you dont live outside your means, like us, we are paying morgage for 500/month, less than our apartment!…..

      just work hard, pay your bills, and dont vote in anymore liberals, – and for a better analogy, try this, a stimulus is like putting a cheap bandaide on a wound, works great at first, but you know that it will fall off after an hour!

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Politics

FFEE Act wants to save you from having to pay to freeze your credit

(POLITICS NEWS) The FFEE Act wants to help give consumers more rights more control over how credit agencies use their data.

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Taking action

Following the compromise of consumer data from credit reporting bureau Equifax, Senator Elizabeth Warren (D-MA) and Senator Brian Schatz (D-HI) have introduced the Freedom From Equifax Exploitation (FFEE) Act.

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This act aims to give consumers more rights more control over how credit agencies use their data.

The bill

The bill is available here, but here is a few of the bill’s highlights:

  • Create a uniform, federal process for obtaining and lifting a credit freeze.
  • Preventing credit reporting agencies from profiting off the use of consumer information for the duration of a credit freeze;
  • Strengthening the fraud alert protection from 90 days to a one year, with a year renewable.
  • In ID theft cases, a 7 year fraud alert is created.
  • Require any credit reporting agency who charged a fee to freeze credit in response to the data breach to refund those fees,
  • Allow for an additional free credit report (consumers already get one under the Fair Credit Reporting Act through annualcreditreport.com)

Freezing credit

The most important feature here is the removal of any fee to freeze your credit. Currently, agencies like Equifax charge nominal fees to freeze credit (anywhere from 3-10) dollars. If this bill passes – not only will that service be free, but it will restrict the way credit agencies use that information while the freeze is active.

The idea behind making this free also keeps credit companies, whom many believe are responsible for the security of credit information, from profiting off information breaches. Given that many financial advisors have advised those impacted to freeze their credit, this would be a benefit to consumers.

It is important to note here that Equifax has suspended the fees to freeze credit for the next month.

A credit freeze restricts access to your credit report. Simply put, it requires the credit agency to contact you first to ensure it was you who applied for credit, thus making it harder for you to apply for credit. You would need to unfreeze your account to apply for new credit. You must also freeze credit with each bureau, which can lead to some expenses as you must pay anytime to lift a freeze.

Remember: a credit freeze doesn’t impact current accounts or your credit score. If you apply for credit often, or open new accounts often, then a credit freeze may not be for you.

Lots of names

The bill has several original co-sponsors, including Senators Sanders, Franken, and Blumenthal. Companies like the National Consumer Law Center, Americans for Financial Reform, CREDO, and the Consumer Federation of America all have also endorsed the bill.

#CreditFreeze

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Politics

President Trump disbands his business councils with one tweet

(POLITICS) President Trump has disbanded the councils that he previously very adamantly supported, so what happened?

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We interrupt this regularly scheduled program

Huge news on the domestic policy front – per a Twitter announcement, President Trump’s two business advisory councils – the Strategic and Policy Forum and the Manufacturing Jobs Initiative – have been disbanded.

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The sequence of events has been fast and difficult to follow, but here’s how things went down.

See ya later

On Monday, Kenneth C. Frazier, the CEO of pharmaceutical giant Merck, resigned from the Manufacturing Jobs Initiative in protest at President Trump’s comments on the recent violence in Charlottesville. By the evening of the same day, Brian Krzanich of Intel and Kevin Planck of Under Armour had done the same. They were quickly followed by Thea Lee and Richard Trumka of the AFL-CIO, Scott Paul of the Alliance of American Manufacturing, Denise Morrison of Campbell Soup and Inge Thulin of 3M.

This morning, in response to the sudden exodus, Stephen Schwartzman, chief executive of the Blackstone Group and longtime Trump business and political ally, led a conference call of the remaining council members this morning to debate how to proceed.

By the end, all members had resigned.

In short, President Trump is not disbanding his advisory councils in the sense of (no “The Apprentice” jokes, please) firing their members. The members already quit. The President’s Tweet simply announced that had taken place, and that, as it states he “disbanded” the now-vacant groups, there are presumably no plans in the near future to replace them.

Bold move

This is a surprising move from the President. Historically the role of business advisory councils has been to keep an open communication pipeline between the President and the American business community, something this president has consistently identified as a priority. President Trump has always positioned himself as passionately pro-business, particularly concerned with global competitiveness and the loss of jobs and revenue in American manufacturing.

The Strategic and Policy Forum and the Manufacturing Jobs Initiative were founded specifically to address those issues.

The business community in particular had expected the President to draw heavily on their advice.

On the other hand, that advice has repeatedly conflicted with the President’s other policies. Well before Charlottesville, the Strategic and Policy Forum had seen high-profile resignations: Bob Iger of Disney and Elon Musk of Tesla (who served on, and resigned from, both the SPF and the Manufacturing Jobs Initiative) resigned over the President’s withdrawal from the Paris Climate Accord, and ex-CEO of Uber Travis Kalanick departed over restrictions on immigration from the Middle East.

New directions

President Trump’s elimination of his business advisory councils clearly indicates a new direction in the relationship between the White House and the American business community.

What that direction will be, and what consequences it will have for the economy, remain to be seen.

#ByeByeBusiness

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Politics

The House just voted to take away some important consumer rights

(POLITICS) If adopted by the Senate and the President, our banks, credit card companies, student loan companies, and other financial services will have a hall pass on all sorts of bad behavior.

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Same story, different day

Big banks have won again, as they and other financial institutions continue to restrict consumer rights all in the name of “choice.” Well, choice for the companies that is.

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The GOP controlled House just voted to introduce a Congressional Review Act Resolution that if passed by the Senate, will make it harder for consumers to have their day in court.

Bump the consumers, right?

The Resolution would overturn rules from the Consumer Financial Protection Bureau (CFPB) aimed at protecting consumer rights and keep financial institutions – like banks, credit card companies, and loan services – in check.

The rules center on the forced arbitration clause that is hidden among many contracts.

This clause allows consumers and companies the chance to settle issues behind closed doors without going through the legal system. That doesn’t sound too harsh at first glance, right? Well, of course there are a few caveats that allow the pendulum to swing in favor of financial companies.

Like the fact that there are no public records of these arbitrations, even if the company was found at fault.

Also, that consumers can choose between arbitration and the court system unless the company wants arbitration, then the choice is gone. Most importantly, forced arbitration severely limits class action lawsuits, which results in a lot less individual suits.

Wall Street wins again

Many bank-backed House representatives argued that class action lawsuits only result in a miniscule payout for consumers.

This may be true, but it is a smaller amount for a lot more people.

This means the company pays a larger amount to more mistreated consumers overall. House Democrats, none of which voted in favor of the Resolution, feel that this is another way for Wall Street to benefit from their ties to lawmakers. Without a chance to go to court, consumers are deprived of their rights simply by signing a contract.

There’s still hope

Consumers still have a chance if the Resolution is rejected by Congress. It will be more of a debate, since it would only take two opposing votes from the GOP side to reject it. Hopefully they will consider who the CFPB rules protect.

No consumers have raised issues to repeal them. It is a wish from the financial companies they have affected, and unfortunately their wish just may come true.

#RestrictingRights

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