Behind The Meltdown: Many Americans are unaware of the causes of the greatest economic calamity of our lifetime. A new congressional report details how government politicized housing, wrecking the economy.

I know this may be off target for this post but I think that Palin may be moving herself politically to the center in order to grasp the huge middle of America. The America that wants sensible conservative natured government. She is endorsing “conservative” Democrats in this

http://www.washingtontimes.com/news/2009/jul/12/palin-stump-conservative-democrats/

article. Who cares, as it seems, what party they are affiliated with, but are they conservative in nature seems to be the group she is gunning for. If she is backing conservative Democracts and Republicans then I think that puts her in a unique position aside from everyone else in typical political discourse but right in the middle of America. Most of us are libertarians at heart and conservative in our daily lives so it seems to me to be a good fit for her to target.

Nearly twice as many mortgages are set to recast in January ’10 than June ’09. This is one of the reasons we see the financial companies hoarding huge reserves of cash. There are two more waves of foreclosures coming, both on “prime” mortgages. They know it is coming and real estate markets in the bubble areas are not rebounding.

OUTrageous!

Checkmate, George W. Bush.

I do wonder what Carville is saying in his daily phone calls with Begalla/Steph…

The eradication of statism as an ideology.

It’s not about simply winning elections. The GOP went down that path the last ten years, and found it leads nowhere.

It is the war of principles that must be won. The conflict that Reagan fought in 1980, the battle that Gingrich continued in 1994. The entire idea of Government solving problems by grabbing power over the economy must be as discredited as solving problems through genocide.

Obama, his corruption, and, above all, the statist ideology must be made as repellent as fascism to future generations. THAT is the goal.

Of course, the “stimulus” is working as planned.

No that is a vague enough statement .. but planned to do what ?

There was talk just after the “stimulus” was passed that there would be another just before the election next year, but then it went silent after the Europeans, our partners in repairing the financial markets, said a recovery was underway and no further stimulus would be needed. So now, starting with Joe Biden, the ripples have begun to activate another “stimulus” tsunami.

The Democrats have painted themselves into a corner.

Say you bought a home in 2002 for 300K. In 2005 or 2006 you refinanced it for 600K (going market rate) pulling out 300K in equity that you used to remodel, buy an RV, new furniture and put a kid through school. You refinanced in 2005 with a 5 year ARM figuring prices would be even higher in 5 years allowing you to refinance and pull out even MORE equity.

Now it is 2010, your 5-year ARM is ending, you have a 600K mortgage and a home that is now worth 250K even with the remodeling you did. You are forced to refinance or come up with 600K cash. But you can’t refinance because your house is under water and you blew the 300K equity you pulled out in 2005. It’s gone. Your kid now has a bachelors degree.

You are a “prime” mortgage. You have never missed a payment. You have a stable job but are now looking at migrating from county park to county park in your RV because you are about to lose your home. But your bank is about to take a hit for 300K on your mortgage and maybe 1,000 other mortgages like it. A 30 million dollar hit is major for a small bank.

The next wave of damage is not going to come from defaults. It is going to come from the refinancing of short term adjustable loans that are due to expire in 2010 and 2011. Those are “prime” mortgages and are going to be the tsunami that swamps the Democrats.

1. A lower tax rate for self-employed individuals with a gross income under 1 million dollars. (many sole proprietors could show a million dollar gross with very little net).

2. A lower tax rate for individuals having less than 20 employees. (note: not corporations with fewer than 20 employees … INDIVIDUALS with fewer than 20 employees).

3. Reduce federal minimum wages to 2007 levels for all employers.

4. Reduce federal minimum wagest to 2002 levels for employers with less than 10 employees.

Extrapolate out to the conclusion that most people are still scared to face – we are looking at a lost decade, similar to Japan’s lost decade in the late 80′s and 90′s.

Commentators keep talking about “when the recovery comes in 2010″ – there ain’t gonna be any meaningful recovery in 2010. This is not a normal recession – this is a once every other generation breakdown and reset of the entire financial system as we know it. Things are going to get MUCH much worse before they start to get better.

Can be found at KeithHennessey.com or a “Instapundit”, Glen Rennolds.

A house next door to a friend of mine sold at the peak of the market for 645K. That house is now worth about 250K and is in foreclosure. That is the destruction of about $400,000 of wealth. Mutiply that by all houses sold in that community in 2006 and you have a HUGE destruction of net worth for a lot of people.

That particular community is made up of mostly Hispanic agricultural workers; exactly the people that were needed for FannieMae and FreddieMac to meet their quotas. Home values were artificially inflated by increasing demand with easy loans. More demand bid the cost of the homes up as you had potential buyers bidding against each other for available homes.

Barney Frank wants to re-inflate the housing market by bringing back easy money, flooding the market with buyers, and using demand to push prices back up. Won’t work. Many people have already been foreclosed on and have lost their money; reinflating the market at this point is closing the barn door after the horse has gone for them. Also, an artificial inflation is not sustainable once you A: reach the bottom of the barrel and there are no more buyers to put into the market or B: interest rates rise causing default of marginal loans.

They government had a housing Ponzi scheme collapse and their answer now seems to be to try to create a new one.

Normally a reduction in the cost of something (housing) would result in more demand as more people can afford it. But this case is “special”. All that home equity was causing people to refinance, pull out that equity, and spend it. This was injecting billions of dollars into the economy. When the housing market crashed, this injection of dollars into the economy stopped. This results in a rise in unemployment. When people aren’t working, they aren’t buying houses. We had an entire economy built on a Ponzi scheme with no reserves to handle even a moderate downturn in the market. As soon as mortgages began to default, a string of dominoes began to fall with banks going broke and mortgage default insurers going broke, the whole system fell apart.

Frank wants to set all those dominoes back up again.

The way to stability is the old fashioned way. You don’t build wealth by being given easy money, buy something, and let an artificial rise in price subsidize your future. People holding tulip futures learned that the hard way centuries ago.

Obama MUST find a way to spur small business. Every single unemployed person is a potential freelancer … potential sole proprietor. Obama needs to find ways to make it easier to start small business and keep them running.

Reduce taxes for the self-employed. Reduce minimum wages to allow people to hire new workers for small business. Reduce the paperwork for small businesses so hiring people isn’t a pain in the rear.

Build wealth the old fashioned way … EARN IT.

Lots of money has gone out to shore up state services, police, firefighters, and teachers. Also we know that unemployment insurance and helping people keep medical plans is big.

They always knew that shovel ready jobs would take 2 years. Why, because the bill states that they can be let to only union members and must be approved by the Feds, not states. So if projects were shovel ready, the aren’t any more because they have to go through the Fed process.

The big lie was that unemployment would not go above 8%, but they needed to tell that lie because it was the only way to convince people that there was a hurry, and if we hurried we could keep employed people employed. So it seems Obama thinks he has enough mojo to lie and all will be well. I am surprised his crack shot financial team would let their reputation be used in that way. Presumably they will have a job outside the government and will need every bit of their reputation in tact.