Disgusting, sickening, repugnant, and demoralizing are just some of the words that spring to mind when I think about the actions of our politicians. They, together with Wall Street bankers and assorted other miscreants, caused the economic and real estate collapse, yet show no ability or inclination to fix it.
A couple of glaring examples of their ineptitude presented themselves this week. Before we get into them, be aware that I am not making political statements toward or against either party, as both Republicans and Democrats share the blame.
According to HotAir.com, President Obama said on Wednesday that his administration failed to provide enough support to struggling homeowners. Really, is that the problem? The Feds have accomplished nothing with any of their programs yet want to spew forth a few more! This president, like the previous few, has no concept of the realities of economics and real estate. He and his advisors erroneously believe that the government should try to be the savior, even though the evidence shows over and over again that their programs are making no headway.
The debt reduction talks are, thus far, a joke. Common sense tells us that there will need to be a combination of spending cuts and revenue enhancements (raising taxes and/or closing loopholes), as neither by itself will suffice. That does not mean that they should be equal, as spending cuts will need to be the bigger piece of that. The Republicans cannot insist on tax cuts to offset the closing of loopholes, and the far left side of the Democratic Party cannot keep entitlement programs off of the table.
As I’ve said in previous blogs, the country and its citizens will need to endure much pain to get the country to firm footing. The U.S. has had years – decades actually – of frivolous spending and inflated housing prices, so we need to establish a solid base from which to build.
On the real estate side, that means completely ridding the financial system of such financial exotica as option ARMS, and tightly regulating derivatives and other Wall Street-created financing schemes. Banks need to require decent down payments (10% on houses; more on other property types) from property buyers, and offer basic financing programs to most of them. Owner financing needs to play a bigger part in the real estate market, so that mortgage notes are created in transparent transactions that never put taxpayer money at risk. If someone wants to sell a mortgage note to note buyers, then that is an option for them.
It is time to shut down recently-launched government housing programs now. The current debt discussions reflect savings of $400 billion per year over the next decade, which does not come close to attacking yearly deficits that are 3-4 times that amount. Somehow and someday, the politicians will have to pull their collective heads out of the ground and do the right thing for the country.