Half Truth Is More Palatable

Now that so many families have been shaken to their very core regarding foreclosure of their primary domicile, perhaps it is time to divulge the truth concerning this very issue. A great number of people have indicated to this writer how families have written or called their Congressman/woman or Senator with the growing concern over imminent or potential foreclosure. The general responses from these persons indicated that contact of the families' mortgage company or bank should be their initial act. During my research of this problem, I discovered what the government is not telling the public. Firstly, the government cannot or will not overstep the mortgage company or bank with respect to the terms of the mortgage and its modification. Secondly according to my research, if the owner or investor of the loan does not wish to modify the terms of the mortgage there is nothing to be done by the government regarding that mortgage modification request. Often mortgages are "serviced" by a company other than the mortgage company or bank as a result of the mortgage servicing being "sold". This "service company" does not actually own the loan, they are merely collecting fees and funds of the mortgage and forwarding the loan amount minus fees to the bank, owner or investor. Mortgage service contracts are frequently sold to "servicing companies" for a plethora of reasons. These "servicing companies" can realize enormous profits as a result of attached fees and charges. Therefore, it is not in the interest of each mortgage servicing company to eagerly want a modification of the loan. Additionally, mortgages are frequently sold and may be purchased by investors whose names can remain anonymous. That being said, it could be extremely difficult, if not impossible, to obtain specific information in order to contact the new mortgage owner for a possibility of loan modification. Again, the government is not obliged to step in to mandate the release of this invaluable information to the mortgagee. Of course, our government is touting quite the opposite in its "new approach to solving the home buying and foreclosure crisis". Just what are we, the taxpayer, receiving for our Four Hundred Billion Dollars infusion to the mortgage industry? It does give one pause!

What conclusions are we to draw from these little known facts? Firstly, this new administration truly does not have an interest in resolving the "housing crisis". A simple Executive Order requiring those mortgage companies receiving "bailout funds" to modify requested mortgage loans to between 4% and 5% interest might easily resolve that problem. This could potentially save hundreds of thousands of existing or pending foreclosures and those families effected by this process. After all, misery of losing employment compounded by a foreclosure is almost more than a family can bear. Secondly, mortgage companies selling loans to investors or loan servicing to other companies should be required to reveal information regarding that sale. Once again, our government has thoughtfully seen to it this small procedural oversight has been permitted to remain secreted away from public scrutiny.

What is the answer to this mounting question of foreclosure and/or mortgage modification? Perhaps, the answer lies in the hands of your "legislative representative". Do we need another "Boston Tea Party" in order for representation of the people to once again become a reality? Does the cry of "Throw the bums out" reverberate through the halls of our homes and workplaces? This may be closer than each of us knows. The saga continues....

Artificial Price Markets

One of the numerous accomplishments of Obama's "cartoon characters" is to have lain the ground work for the creation of an artificial price market. In essence, a potential government owned mortgage company/bank Vi's a Vi's Citi Group opens the door for the government to own as much as 40% of that company. Once that has been completed, the "majority stockholder" (government) then has the power to put into place a "puppet" of the current thinking. By doing so, this effectively stifles competition from other banks due to having a socialist agenda directed management. In this case, the majority stockholder demands specific downward or upward changes in pricing direction. Of course, other banks or mortgage companies may attempt to keep track, but will fall by the wayside and voila competition soon ceases to exist. In effect, a monopoly rises from the ashes of fallen competition and everyone is painfully aware of the ramifications of that monopoly. A case in point is the railroad tycoon, George Stevens of the nineteenth century. Considered the father of American railroads, he amassed considerable wealth building and controlling the first railroad system (a monopoly). This could be potentially the same for our current form of mortgage banking institutions. As more banks fail, competition in that market dwindles and so does the ability to create price competition, the tool which permits ideas and technology to flourish.


Another form of price control is the process by which the government subsidizes our dairy industry in order to maintain specific consumer price levels. As a dairy farmer has the ability to produce in excess of marketable goods, the government, through dairy subsidies, pays that same farmer to produce fewer marketable goods. Thus, the market price of a dairy commodity is kept at a specific level. If market conditions worsen and the farmer is not able to produce a previously expected level, the government subsidy acts as a financial cushion and the farmer's profit margin is somewhat maintained. However, market price fluctuates only slightly upward due to an artificial control mechanism being placed on the market. There are enumerable instances of product pricing being controlled in this same manner.

While there remains a suitable quantity of competition in any field, that competition is limited in those areas by the artificial means of controlling it--the government's price subsidy. And once again, the consumer is at the mercy of those artificially induced pricing schemes. The saga continues....

Laws of Supply and Demand

In a never ending attempt to both amuse and educate, today's saga will center on Obama's (aka Mr. Gloom) Wall Street reflection. His most recent foray into the world of "savior economics" (save those dead beat mortgagees) the new plan calls for mortgage servicing companies to be compensated at the rate of $1000.00 per modified mortgage with additional compensation for three years, providing the mortgagee pays the mortgage in a timely fashion. Ask yourself, "What does this do for the mortgagee and what does this do for the mortgage servicing company?" Let us say, for discussion's sake, the mortgage servicing company has 1000 mortgages to modify. The mathematics is relatively simple and we can then see just whom is truly benefiting from Obama's new plan. Further, we see the mortgage servicing companies then have no incentive to report any late payments on the part of the mortgagees. After all, they would not wish to be deprived of that additional three year incentive. So, in essence, Obama has done nothing more than shift the primary problem from mortgage lending institutes to mortgage servicing companies. The "dead beat mortgagees" continue to ride the "coat-tails" of the honest, hardworking individuals in an effort for Obama's "team" to look proudly at their record for home ownership, regardless of ability to pay. Incidentally, the initial Obama "package" called for an input of $75 Billion however, since the "economic stimulus/pork bill" was signed, that amount designated for mortgage assistance has magically blossomed to almost $400 Billion. The evidence can be reviewed on the Internet in a number of places (www.mortgageloan.com; www.heritage.com ).

Now, let us turn to the day's basic economics. An attempt to amuse you during this dry topic should make the journey more palatable. The individual laws of "supply" and "demand" are fundamental concepts toward understanding basic economics. Simply stated, the law of "demand" indicates that as the price of a service (dry cleaning service--what, do we not own washing machines any more?) or good (ice cream cone--with ice cream in a dish, you needn't worry about dripping) increases in price, the less demand there is for that service or good. Economists would state this in such a fashion, "The demand curve is inversely proportional to the price curve." Intuitively, we can then realize the law of "supply" is directly related to "demand". As demand decreases (the high price of ice cream cones), the supply of those same cones increases (just as the fabled "Tribbles" of Star Trek, these ice cream cones keep multiplying in my warehouse). Therefore, economists with their pocket protectors and taped glasses would merely say, "The supply curve is inversely proportional to the demand curve". All of this is true providing all other factors are equal. Of course, there is always the caveat (beware the curve ball). The basic laws in this economic game always remain constant. However, creation of an artificial barrier by some external entity (the government interferes again) raises havoc on these laws. The saga continues....

Obama's Corporate Reorganization Assistance Program(C.R.A.P.)

Now that Obama's Governmental Expansion Program is solidly underway, the economic outlook will certainly improve. Speculators in the form of Wall Street investors have been drawn to the "feast" as a moth to flame. Now, let us reflect! The Dow Jones Average has declined more than 2000 points since Obama was "anointed" and the mere fact Monday was a national holiday, President's Day, saved it further decline. Further, Jobs lost thus far number in the thousands and we are that much closer to Obama's socialistic view of America, where "Big Government" knows all; sees all; controls all! The Socialist Liberal crowd must be drooling at the accomplishments to date of its "fearless leader".

In my view, Obama needs a lesson in simple economics. Firstly, a bailout package for the automobile industry is a moot point due to the basic concept its management staff have systematically "raped" the stockholders while feathering their own financial "nests" through manipulation of facts and innuendos and perhaps a prevarication or two. Secondly, the business model originally derived from the ingenuity of pioneers, Henry Ford and enumerable others has been systematically diluted as a result of placation of union demands. Unless the automobile companies replace their current management and business model, all that "bailout" money will do nothing more than continue to stoke the fires of "greed" and send those bastions of industry knocking on the door of Congress for yet another "handout". Of course, we, the taxpayer, will be reaping the "benefits" of such congressional magnanimity for generations to come. Your sons and daughters and their sons and daughters will be pursuing a life of labor with no end in sight to pay for the ignominious deeds perpetrated on the "people". Obama and other socialists have effectively created a forced labor camp to which every American has been sent.

In order to understand motives of this socialist administration, we must review a brief history of economic theory. During the last century, a British Economist, John M. Keynes defined his view of successful economic functionality as that stemming from the "public sector" or government, whereby all actions by the public sector were geared toward the stabilization of the business cycle. This stabilization included monetary policy, fiscal policy and central bank decisions in order to create a centralized command structure as a result of the lack of confidence in a free market scenario. Keynes believed "private sector" or free enterprise participants lacked the necessary tools and judgment to make sound economic decisions and that a central organization was the sole entity to formulate and implement these plans. In current vernacular, "the government will care for you from womb to tomb."

At present, supporters of the Keynesian economic approach have infiltrated key positions of the American government in order to subdue free market economics and subjugate its supporters. This parallels Germany of the early 1930's, in that the free market system could not respond quickly enough during the world economic crisis and the masses were disheartened on the whole. Initially, a small group planted the seeds of discontent and inexorably the flower of capitalism began to whither and die.

The lesson in economics today is the concept that free enterprise systems create jobs through the continued flow of financial instruments with consumer confidence to speculate in that system. As long as "Big Brother" the government continues to expend your money, the further this economy strays toward the precipice of depression. Case in point, The "Great Depression" of 1929 was extended almost a decade through the moribund economic philosophy of FDR, another staunch socialist leaning Democrat. FDR's approach was merely to spend the government's way out of the depression, much like that philosophy utilized by the current administration. The only event to artificially create jobs was the bombing of Pearl Harbor and implementation of the draft. Perhaps it is the wish of this administration that a second "bombing" occur to yank us out of this "depression". The saga continues....

All King Obama's Fairy Tale Characters

While "Humpty Dumpty" (free enterprise) is teetering from his precarious position atop the "wall"(U.S. Constitution), the "Cheshire Cat" (Nancy Pelosi) continues her evil grin at the Republican Party. The inability of legislative conservatives to mount a defense of any worth against the onslaught of "our King's" plan (complete socialism in this lifetime), parallels Nikita Kruschev's endearing speech, "We will bury you from within". In the mean time, his knights (the King's cabinet members), as so many Monty Python-like warriors, flail and flounder amidst their own inadequacies (failure to pay taxes, forget to file proper immigration papers for domestic help). During all of this, the "Mad Hatter" (Al Gore) persists with his animated global warming diatribe in defiance of all logic and science fact. At the end of this tale, are the king's down trodden subjects fleeing the axe weilded by the henchman from the Queen of Hearts--"Off with their heads"(Harry Reid) while attempting to derive any sense of chaos and merely survive. Where do you suppose our "king" was able to uncover enough rocks to find this many fairy tale characters? The "king's" political soap opera continues....

Economics, YTT

Precepts of basic economics are simple and few. According to the observations of "Simple Simon" from the Washington Times, February 2, 2009 our current recession, as well as numerous recessions from the past, stem from the "short selling" of stocks. For those neophytes of economics, the term "short selling" refers to the practice of an individual selling a financial instrument that individual does not own at the time of the sale, but with the intention of purchasing that same financial instrument at a lower price. In essence, the financial instrument is "borrowed" or "rented" (the term used most prominently in the financial world) with a promise to the lender of repayment in kind. However, if that same financial instrument's price decreases, the original seller makes a profit on the difference between the "original selling price" and the price paid at the time of repurchase. Conversely, if the price of that same financial instrument increases, the original seller has a loss and then must make up that difference to the lender. As you can see, "short selling" or "shorting" is an extremely risky venture. According to many economic experts, the rescinding of the Securities and Exchange Commission in 2007 of the original 1934 "uptick rule" which prevented short selling, is a primary causation of our current economic crisis. Numerous Republican Presidents have supported and enforced the "uptick rule" in order to sustain economic stability and growth. President Bush "43" was the most recent to uphold that same principle of 1934. In contrast, Democratic presidents have seen fit to rescind the "uptick rule", causing instability and added chaos in the financial markets.
Further, creation of the Community Reinvestment Act of 1994, during President Clinton's presidency is thought to be a major contributor of the current housing crisis, in that it forced banks to lend money in the form of mortgages to those whom did not have the financial capacity to support their mortgage loan. On the whole, it appears recent history has demonstrated the Democrat controlled Congress, since 2006, has performed brilliantly to foster more mortgages to all, while permitting lending institutions free reign without proper supervision. Now, the financial crisis burdens every taxpayer's future through potential tax increases currently being proposed by Mr. Obama, Nancy Pelosi and Harry Reid. What will be next? This saga shall continue...for a very long time!
And for the record, your medical records will not be the only aspect controlled by the government. Take a walk down the more than sixteen hundred pages of the proposed "stimulus package". America, are you becoming more livid with each additional piece of bad news and the manner in which we are being treated by our own government? Stay tuned!

"The Emperor Has No Clothes"

During Obama's presidential campaign and three weeks into his presidency, the "leader of the free world" has merely loaned the people of America his ability to wax eloquently. Thus far, we have borne witness to his inability to select members of his cabinet worthy of the title, Secretary of .... We have listened to his empty promises of "change" and we are being subjected to a continuation of FDR's "New Deal". More governmental spending to extricate us from this self-induced oblivion. Our President appears to be flailing about as though he were salmon on a stream bank. The burning question we must ask is, "Why did we elect someone whose credentials we did not question?" Does Mr. Obama really have the experience to provide answers to those enumerable concerns facing us currently? Or is he merely engaging in "on the job training" as a means to ply more Democrats with the inebriating affects of power? The efforts of Republicans to thwart the passage of a "stimulus (more pork than substance) package appears to be of the ghostly image type...where appearances are deceiving. Perhaps it is high time Republicans return to the golden age of Republicanism where conservatism was not a "dirty word" bandied about in the Congressional Locker Room.