When I think of the actions of our politicians, some words come to mind: disgusting, sickening and repugnant. They along with Wall Street bankers, assorted miscreants, caused the real estate and economic collapse and yet they have no desire or ability to fix it.
This week, a couple of shocking examples of their ineptitude were displayed. Be aware, before we get into the details, that I’m not making any political statements against or toward either party. Both Republicans and Democrats share the blame.
HotAir.com reports that President Obama stated Wednesday that his administration had not provided enough assistance to homeowners in need. Is that really the problem? The Feds want to continue a few more programs, even though they have not achieved anything with any of them. Like the others, this president has no idea of real estate and economics. His advisors and he mistakenly believe the government should be the savior. However, the evidence is overwhelming that their programs are not making any headway.
Debt reduction talks have been a laughing stock. It is obvious that spending cuts will not be enough. Revenue enhancements will also be needed (raising taxes or closing loopholes). They should not be equal. Spending cuts will have to be the larger part. Republicans can’t insist on tax cuts in order to close loopholes. The far left of the Democratic Party can’t keep entitlement programs off the table.
As I have said in other blogs, the country will have to suffer great pain to return to a solid foundation. We need to create a solid foundation from which to build. The U.S. has been plagued by frivolous spending for years, if not decades.
Real estate is the opposite. This means that the financial system must be completely freed from financial exotica such as option ARMS and strict regulation of derivatives and other Wall Street-created funding schemes. The banks must require decent down payments from property buyers (10% for houses, more for other types of property) and offer basic financing programs. The real estate market needs more owner financing. This will ensure that mortgage notes are made in transparent transactions and do not put taxpayer money at risk. This is an option for anyone who wants to sell a mortgage to note buyers.
It is time to end all recently launched government housing programs. Current debt negotiations reflect savings of $400 billion annually over the next decade. This is not enough to address yearly deficits that range from 3-4 times that amount. The politicians must somehow and eventually get their collective heads out from the ground and do what is right for the country.