American Politics, bailouts, banking, bonds, Business, Business Practices, commodities, corporate America, corporate fraud, corporate welfare, corporations, credit crunch crisis, credit default swaps, credit derivatives, Cricket Diane C Phillips, cricketdiane, currency values, economic crisis, Economics, Federal Reserve, financial derivatives, financial institutions, financial markets, foreclosures, global economic crisis, Global Economy, Great Depression of 2008 2009, Housing and Finance Committee, housing market, international business, International Concerns, investment banking, investments, macro-economic future forecasting, macro-economics, mortgage backed securities, mortgage defaults, Office of Thrift Supervision, Politics, principles of democracy, Principles of Economics, recession, Securities and Exchange Commission, Sparky Phillips, stock market, stocks, tax cuts, US business, US chamber of commerce, US Congress, US currency, US dollar, US dollar value, US economic crisis, US Economy, US foreclosures, US government bailouts, US government policy, US Senate, Wall Street
* What if corporations have been converting assets into investment portfolios? Then they are now in the business of managing those portfolios rather than in the running of the business they are in.
* Statistics are a strange animal. Unlike foxbusiness reported a couple months ago, when statistics show a percentage of homes in foreclosure or default, it does not in any way imply that the greater percentage are being paid on time.
If 5% of the homes are in default, that does not mean that 95% are not. Especially as over 4 million homes have already been foreclosed in the past five years. Obviously, 95% are part of a total that excludes all the homes that have already been foreclosed.
It fails to accomplish the task of statistics, which is to provide an accurate overview of the magnitude of the problem.
* There is a chart that shows a huge number of homes whose mortgages will be resetting over the first six months of 2009. The number of jobs lost, layoffs and business closings that have created our substantial unemployment will have rippling effects through our economy that have not been tallied yet. Neither of these facets in the economy have been accurately projected by the “experts” as seen on the news and likely those advising our government leaders.
October 16, 2007
The Honorable Barney Frank Chairman Committee on Financial Services House of Representatives
The Honorable Spencer Bachus Ranking Member Committee on Financial Services House of Representatives
Subject: Information on Recent Default and Foreclosure Trends for Home Mortgages and Associated Economic and Market Developments
Substantial growth in the mortgage market in recent years has helped many Americans become homeowners. However, as of the latest quarterly data available, June 2007, more than 1 million mortgages were in default or foreclosure, an increase of 50 percent compared with June 2005.1 Defaults and foreclosures on home mortgages can impose significant costs on borrowers, lenders, mortgage investors, and neighborhoods. Additionally, recent increases in defaults and foreclosures have contributed to concern and increased volatility in certain U.S. and global financial markets. These developments have raised questions about the extent and causes of problems in the mortgage market.
My comments – (continued)
People without jobs and those whose hours have been cut at their existing jobs do not spend money in the same way as those fully employed.
Although living with limited or no income is far more expensive than living with a substantial income, the variety of choices for spending money also changes. For instance, more is spent on food and less on clothing. The choices change and with limited means, it is far more difficult to get good deals on what is purchased.
In a larger sense, this means that mall stores will see a drop in sales and there will not likely be repurchase power for homes over quite some time. Restaurants will no longer have as extensive a customer base nor as regular a repeat business. Frequency of customer use in many businesses will be lost. And, new customers won’t be available either.
People don’t paint houses they don’t own unless that is their business to provide. They don’t remodel or put upgraded flooring or appliances in houses that have been lost. They’re not going to buy new bedding or window treatments for the guest room when they now live with relatives or in the homeless shelter.
All of which begs the question – what happens when everyone is selling and no one is buying? Will businesses continue to go to their conventions, rent hotel rooms, buy airfare for employees and attend seminars? Will those industries suffer, too?
Will businesses continue to buy advertising to promote themselves to an audience who can no longer buy their products and services? Will the printing, advertising and promotions businesses still continue without the customer base available for their services?
Or, does it matter, because businesses have become investment portfolio managers rather than retailers, manufacturers, service providers or whatever? How long will that hold out when they are losing the money that is coming in the door from the customer base they used to enjoy?
It certainly answers the question about what CEOs are paid to do. Apparently, they are the hedge fund managers of the companies’ portfolios of investments, stocks, bonds and credit default swaps. Those aren’t profits derived from their initial and primary business foundation. Ultimately, this puts no footing under their business whatsoever and undermines the very substance of their original business model.
So, as it turns out, the US government could have given a million dollars each to every man, woman and child, legal citizen or not, living in the US and solved the problems we face. Everyone could have paid off their mortgages, bought new cars, bought new clothes, appliances and goodies, paid for college educations, started new businesses and had money to live on for awhile.
It would’ve cost less than what they’ve done and solved nearly all the problems in our economy. And, for what they’ve spent now doing it their way and the way their favorite lobbyists for the bankers and chamber of commerce have insisted, every aspect of economic blight, weakness and disruption still exists. It hasn’t even made a dent in it of any significance and in fact, may very well contribute to a continuation and deepening of these economic difficulties.
Who taught these people in Washington to think? Are they capable of generating real solutions in that environment at all? Who let the bankers loan money they didn’t have in the first place? Who let corporations become hedge fund managers instead of pursuing better business practices for their primary products and services in the marketplace?
Who decided to bailout their friends with our money on a blank check instead of eradicating bad and nearly criminal business methods that are causing the problems? And, then who was it that turned around and blamed us for their ineptitude, lack of action to resolve these issues and unwillingness to serve the greater good?
There seems to be a certain inbreeding of thought and perception among the business leaders, financiers and politicians in our country. Are they capable of knowing the difference between using the real facts to direct decisions and falling prey to perception management which alters the facts to suit some particular outcome? Are they in a position to even discern the difference?
It is no longer a matter of what is left or right, conservative or liberal, business or non-business – when the tangible assets of our country are being converted to rubble and ruin. It isn’t a choice of who is capable of swaying the public opinion when the public is living with the outcome in every real sense and losing the opportunities of today and their future is constrained.
And, how could anyone believe that a $500 a year reduction on our federal tax bill make up for the tax increases that every state, county and local government is currently adding? Why don’t they just leave the tax codes alone and give the states the money they need?
By the time every fee is raised, every sort of tax is increased in every city, county, state and every other federal tax is hiked – none of us will have any money to spend anyway. Well over 50% of every income is already going to the government now. If it isn’t taxed one way, it is taxed another. There is a steady increase even today, of every tax and fee charged by the government and these were already inflated and exorbitant in many cases as it was.
I guarantee – it won’t be our children’s children that pay for this mess and the pathetic excuse for the “solutions” they’ve called bailouts and buying of bad debt by our government. It will be each of us and our children in the coming days, weeks, months and years that will be paying for it.
Our communities don’t exist to serve the needs of the community any more – they stand desolate and increasingly, in disrepair – their tax base has been destroyed – the very fibers of the communities have been decimated. How will taking $500 off our taxes two years from now fix any of that?
– cricketdiane, Cricket House Studios, Cricket Diane C Phillips, 01-05-09
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