Today is my birthday. I am 56 years old. Not old enough to be a respected sage, but too old to wear sagging jeans. I thought this might be a good day to review my basic beliefs. Not only for anyone who might stumble across this blog, but for myself.
Personally, I believe in honesty. I believe in life, liberty and the pursuit of happiness. I believe in helping those less fortunate than I. I believe in faith, hope and charity. I believe that hard work builds character. This doesn't mean I live my life through cliches'. It might mean that those who have gone before me were much more capable at distilling life's mysteries to one liners...
HONESTY, because it truly is the only way to navigate the currents of life. Honesty, in all its forms, is the only foundation which successfully withstands adversity over time. In order to help (others as well as one's self), starting from a basic honest understanding is mandatory.
LIFE, LIBERTY, and the PURSUIT of HAPPINESS. Life, because we have the opportunity to make of it exactly what we desire from it. Life, because without it, nothing else much matters.
Liberty, the foundation of our nation is and should be, the basis upon which we awake each morning, and close our eyes at night. Liberty, the underlying and undying ability to accomplish as much (or as little) as we desire. Liberty, the knowledge that, regardless of our (legal) actions, we will move forward into tomorrow without having been prosecuted, jailed, or executed without a trial by our peers. The knowledge that tomorrow and every day after that, we have the opportunity to excel. That is truly what liberty means to me.
The Pursuit of Happiness. Don't you think it sort of speaks for itself? The opportunity to do what one will with life. The ability to make decisions without the fear that others have the right to impose on your free will. While not guaranteed happiness, being able to pursue it puts everyone on an even and equal playing field. Life and happiness are not about where you started or even where you finished. It is about how you got there, and whether the decisions were yours. Ultimately, happiness is a personal decision...
Helping others less fortunate, for through helping others, I find that I improve myself. To see myself through others allows me to work on what is important to me. Helping others leads me to helping myself, and that may be one of the best reasons to help others.
Faith, Hope and Charity, for without any one of these, honesty and liberty and life and the pursuit of happiness and helping others mean less. Faith isn't JUST a belief in GOD. It is also a belief in mankind. It is a belief that, given the opportunity, man will eventually do the right thing. Hope, not that blind hope where you hope you win the lottery or hope "things" go well, but the kind of hope on which the future hinges. Hope that we, as a nation, can resolve our conflicts (both internal and external). Hope that we, as a people, can become more tolerant of those who are in "The Pursuit of Happiness", whatever that means to them. And Hope, that we as a species can and will address those issues which are muddy-ing the future of Earth.
And Charity. The giving, not only of money or riches, but the giving of self. The giving of time to a grandson who asks to "play trains", when what he really desires is time with papaw. The giving of a shoulder for someone in pain. The giving of friendship to someone who cannot do anything for you other than be a friend. The giving of self.
I think it is important to question our beliefs. It makes us better, or at least it lets us see where we might be better. It allows us to reflect upon our fortunes, our mission in life, and our motivation.
All in all, I believe, no, I KNOW I am blessed. I have a wife who loves and cares for me. I have four amazing children and five awesome grandchildren and, even at 56, I have all the opportunities in the world in front of me.
Wednesday, October 12, 2011
Thursday, September 29, 2011
Let's solve the housing and economic issues of the United States!
I have been away from this blog for a considerable amount of time. It seems other activities have had a higher priority. Since my last entry, I have successfully completed my MBA and have had my 501c(3) corporation approved by the IRS. All in all, it has been a very productive year. I continue working on the not-for-profit (see www.wealthypeople1.org), but find that I have some time and desire to blog a bit. SO......
The topic of this blog is how best (in my opinion) to solve the housing crisis, which in turn, solves much of the economic crisis in the United States.
First, a bit about the housing crisis. We have been fed lots of information from many different people and organizations about the causes, affects, and status updates. We have been told that it will take YEARS to recover. We have been told that the solution was to bail out the banks. We were told we had to bail out big business in order to spur the economy so that you and I can/will buy houses again.
MY OPINION: That's BS.
FACTS (via on-line research):
The median value of a house in 2005 was $167,500.
In December of 2005 the average mortgage interest rate was 6.39% for a 30 year mortgage.
Answers.com reports that between 6 and 10 million homes are sold each year. Lets assume 6 million sold in 2005.
If we assume a 20% downpayment (no PMI, mortgage of $134,000.00), the payment for this "median home" would be $1,011.78 per month for 30 years.
Now lets look at the same home with a 4% interest rate. The monthly payment is $814.22 for 30 years. A difference of $197.56 per month.
Multiply that by the 6 million homes sold in 2005 and we get $1,185,360,000.00 (roughly 1.2 billion dollars) per month in reduced home mortgage payments.
Now lets look at the current housing market.
Banks repossessed more than 1 million homes in 2010
On top of that, 1 in 45 homeowners received a foreclosure notice (2.9 million in 2010).
Short sale prices are generally 10 to 15% less than appraised value, and appraised value is current market value, not purchase price.
The median home price on 9/6/2011 was $146,300.00. That means banks are seeing short sales on "median priced" homes in the range of $124,355.00 to $131,670.00.
So, banks take a loss on the "median Mortgage" of $2,330.00 to $9,645.00 when they approve a short sale.
The banks lose alot of money. They homeowner loses their home. The community loses taxes. The neighborhood loses neighbors. Seems everyone loses.
How can we make it a win and fix the economy?
First: Allow every homeowner, regardless of mortgage status, regardless of income status, regardless of credit score refinance their EXISTING home at 4.00%. This takes the banks off the hook for the costs of millions of foreclosures. It reduces the monthly costs of mortgage payments by nearly 1.2 billion dollars. It reduces vacancies in neighborhoods across the nation. It maintains the tax base in local communities. Everyone wins something. So, how does this do anything for the economy?
The government has tried a number of methods, Qualitative Easing, Stimulus, Tax cuts, Tax increases,. NONE of them have worked for one fundamental reason. The money ends up in the wrong hands to stimulate the economy!
If you want to see a "shovel ready" spending spree, put 1.2 billion dollars a month directly into the hands of consumers. At the current savings rate of 5%, $1,140,000,000.00 will be spent monthly on new cars, new tv's, clothes, food, entertainment, auto repairs, haircuts, and thousands of other "must have" items not currently being bought. Pump that amount into our economy for a few months in a row, and inventories of everything go down. As inventories go down, manufacturing must go up to replace the inventory. If manufacturing must go up, then hiring must go up. If hiring goes up, unemployment goes down. Unemployment goes down, economy gets better. Tax base goes up, (big assumption here) with no increased government spending, and deficit goes down. Deficit goes down makes consumer confidence go up, so consumer spending goes up. Rinse and repeat this cycle, and we see dramatic economic growth. Imports go up. Global economy gets better. Global economy gets better, more US goods are exported. Exports go up, US economy improves.
This is a simple solution. Note, I did not say it was an easy solution. It will take considerable effort to get the government and the banking industry on board with a solution this responsible (and radical). However, remember, this only assumes refinancing of the homes sold in 2005. That 1.2 billion dollars per month will actually be much larger, as EVERY MORTGAGE IN THE USA currently above 4.00% gets refinanced at the 4% rate. The numbers are staggering. The economic impact would be greater than ANY GOVERNMENT PROGRAM currently considered; all with NO government spending. That is the POWER OF CONSUMERISM.
Just my two cents worth on solving the housing and economic crisis with one very direct action requiring $0.00 from the federal, state or local governments.
The topic of this blog is how best (in my opinion) to solve the housing crisis, which in turn, solves much of the economic crisis in the United States.
First, a bit about the housing crisis. We have been fed lots of information from many different people and organizations about the causes, affects, and status updates. We have been told that it will take YEARS to recover. We have been told that the solution was to bail out the banks. We were told we had to bail out big business in order to spur the economy so that you and I can/will buy houses again.
MY OPINION: That's BS.
FACTS (via on-line research):
The median value of a house in 2005 was $167,500.
In December of 2005 the average mortgage interest rate was 6.39% for a 30 year mortgage.
Answers.com reports that between 6 and 10 million homes are sold each year. Lets assume 6 million sold in 2005.
If we assume a 20% downpayment (no PMI, mortgage of $134,000.00), the payment for this "median home" would be $1,011.78 per month for 30 years.
Now lets look at the same home with a 4% interest rate. The monthly payment is $814.22 for 30 years. A difference of $197.56 per month.
Multiply that by the 6 million homes sold in 2005 and we get $1,185,360,000.00 (roughly 1.2 billion dollars) per month in reduced home mortgage payments.
Now lets look at the current housing market.
Banks repossessed more than 1 million homes in 2010
On top of that, 1 in 45 homeowners received a foreclosure notice (2.9 million in 2010).
Short sale prices are generally 10 to 15% less than appraised value, and appraised value is current market value, not purchase price.
The median home price on 9/6/2011 was $146,300.00. That means banks are seeing short sales on "median priced" homes in the range of $124,355.00 to $131,670.00.
So, banks take a loss on the "median Mortgage" of $2,330.00 to $9,645.00 when they approve a short sale.
The banks lose alot of money. They homeowner loses their home. The community loses taxes. The neighborhood loses neighbors. Seems everyone loses.
How can we make it a win and fix the economy?
First: Allow every homeowner, regardless of mortgage status, regardless of income status, regardless of credit score refinance their EXISTING home at 4.00%. This takes the banks off the hook for the costs of millions of foreclosures. It reduces the monthly costs of mortgage payments by nearly 1.2 billion dollars. It reduces vacancies in neighborhoods across the nation. It maintains the tax base in local communities. Everyone wins something. So, how does this do anything for the economy?
The government has tried a number of methods, Qualitative Easing, Stimulus, Tax cuts, Tax increases,
If you want to see a "shovel ready" spending spree, put 1.2 billion dollars a month directly into the hands of consumers. At the current savings rate of 5%, $1,140,000,000.00 will be spent monthly on new cars, new tv's, clothes, food, entertainment, auto repairs, haircuts, and thousands of other "must have" items not currently being bought. Pump that amount into our economy for a few months in a row, and inventories of everything go down. As inventories go down, manufacturing must go up to replace the inventory. If manufacturing must go up, then hiring must go up. If hiring goes up, unemployment goes down. Unemployment goes down, economy gets better. Tax base goes up, (big assumption here) with no increased government spending, and deficit goes down. Deficit goes down makes consumer confidence go up, so consumer spending goes up. Rinse and repeat this cycle, and we see dramatic economic growth. Imports go up. Global economy gets better. Global economy gets better, more US goods are exported. Exports go up, US economy improves.
This is a simple solution. Note, I did not say it was an easy solution. It will take considerable effort to get the government and the banking industry on board with a solution this responsible (and radical). However, remember, this only assumes refinancing of the homes sold in 2005. That 1.2 billion dollars per month will actually be much larger, as EVERY MORTGAGE IN THE USA currently above 4.00% gets refinanced at the 4% rate. The numbers are staggering. The economic impact would be greater than ANY GOVERNMENT PROGRAM currently considered; all with NO government spending. That is the POWER OF CONSUMERISM.
Just my two cents worth on solving the housing and economic crisis with one very direct action requiring $0.00 from the federal, state or local governments.
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