The Arizona Sentinel

April 2, 2009

The Fiscal Economical Adjustment of 2009

Filed under: My Posts — thearizonasentinel @ 7:09 pm

The Arizona Sentinel

Today, there are several issues that are important going forward.  And like it or not we will go forward.

Frist, to day we learn that the housing foreclosure issue that is dictated by Mark to Market is going to see some relaxation.  For those of you that dont understand Mark to Market. Its fairly simple.  Here is what happens.  A bank regulator looks at a loan and determines whether your payoff is at current market , if you have equity based on the current market , or are you upside down based on the current market.  This was a major issue in the 80’s when commercial paper, was over leveraged causing the banks to call those loans, under the guidance of regulator guidelines.  One thing is certain , Wall Street likes the decision to back off of Mark to Market.

Relaxing these guidelines is a double edged sword.  The upside for the banks and the borrowers is that many that still have jobs, and can afford their mortgages , will have a chance to stay in their homes. Easing the toxic asset numbers on bank books.  Sounds good at first glance.  But there is a downside.  Lets say , your in a neighbor hood that has been funded with sub prime, no doc, stated income, or simply liar loans.  And this is a major issue because some subdivision , additions, built by builders, had relationships with brokers,and lenders that were chasing these bad loan policies.  Now because of that your sitting in a neighbor hood surrounded by foreclosures.  The value of your home is going to be dramatically devalued not just today , but going forward.  In other words the level playing field that you would expect has just gone away.  What can you do .  Refinance, or better yet accelerate your principal payments,.. Or I suppose you could do a short sale,. but that has some downsides also.

So, personally Im not in favor of forgiving the mark to market rule.  And now that we know that our economy has lost 40-50% of its value,.   Our entire economy is going thru a fiscal adjustment.  Different sectors of the economy are and will fight the adjustment.  Salaries, energy,cost of materials, etc etc, are going to eventually be reduced.  Government , and Unions, will be the last to get in line. But they will, because until they do ,  business’s will shut down,or move off shore or other states that have recognized the need .

Now about today we had some different signs in the market,.. The complete results of the G-20 meeting are not evident at this hour. However , while Obama was speaking at his press conference following the summit, . The market went up 55 points,. That unusual.   Wall Street likes the words coming from Obama, the real question is will Main Street.

Tomorrow we will get the unemployment numbers from the government,. It is expected that they will be higher than the 742 thousand layoffs last month.   The factor in unemployment that will soon be on the table is that the phony economy that we have been operating under for the past decade created job numbers  that were unsustainable.

Why is this so important.

Because we have millions of illegal aliens here that are taking jobs that if Americans , that is legal Americans, are going to have jobs they are going to have   to adjust their lifestyles and take jobs, that two or three years ago they would not consider.  its tough but that’s the way it is.

What should we do next?  We should demand that all elected , appointed, etc, government employees, take the same cut in pay that the rest of America is taking.  At the Federal , State , County , and City levels,,, they work for us.

Some other surprising news out of London,.  If the reports are true , the Obama administration , refused to sign on to a Global Regulator of International Banks,and to quote a Obama spokesman, “that goes to a sovereignty issue”. That was good to hear.  They G-20 did address off shore tax havens.  That could have some positive results.

FEDUPREPVET

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