Fiscal Cliff- We Survived the Fall - Now What??

If there was a real "fiscal" Cliff, at least three-quarters (¾) of Congress would have been thrown over into the abyss far below. Sorting out the facts from the political rhetoric and greed, we are quick to discover that this entire issue was created by Congress itself in 2012 because of a basic moral disconnect within Congress and a desire to stop the President’s re-election.

Congress was deadlocked within itself and with the President on the National Debt-Ceiling (IT'S BACK - NEXT POST - TRILLION DOLLAR COIN?) – that is the amount of money the Country is authorized to borrow; right now it’s about $16 trillion or $16,000,000,000,000. We had hit the limit a year ago when it was nearer to $14.5 trillion and the Republican controlled House of Representatives would not go along with raising the ceiling. The argument is that we, as a nation, already owe too much – that we are mortgaging our childrens’ futures. Congress with the White House decided to pass a law that would force a minimum of $1.2 trillion in cuts to Government agencies’ budgets across the boards. At the same time there’d be an increase in taxes for almost everyone, but especially the highest paid and wealthiest, unless an agreement was reached before January 1, 2013

The idea was to create such a nightmarish picture that Congress and the President (all being reasonable people) could come to a quick agreement to strike a balanced program. If there was no agreement, the law would go into effect and automatic cuts to Social Security, Food Stamps, Unemployment and other so-called Entitlement Programs would take effect and there would be an equal cut to defense and related spending. And there would be those tax increases. The technical term for this is Sequestration.

No wonder that for the sake of easy reference someone called the failure to reach an agreement a “Fiscal Cliff” because we would “fall” into a financial crisis that no one wanted nor about which anyone could predict the outcome. So the term FISCAL CLIFF was just shorthand for a very complex set of spending cuts and tax hikes that would go into effect at the stroke of midnight as the Times Square Ball dropped on 1/31/2012.

THE DETAILS (most of them anyway)

Enough background and theory: What does the agreement that was reached at 3 A.M. on Jan 1st and signed by the President, really mean to us – the rich, the poor, and the few in the middle?

1. Tax cuts, that had been passed in George Bush’s term will stay in effect except for persons earning more than $400,000 (couples $450,000) who will have those income tax cuts disappear. The top tax rate will jump from 35% to 39.6%. This is supposed to bring in $600 billion over 10 years **

2. The spending cuts to all of the entitlement programs and the defense industry won’t happen

3. Capital gains taxes, the tax paid on profits from the sale of stocks or any other investment will go up 33% from 15% to 20% if income is above the $400,000/$450,000 “safe” level. (I have yet to see the tax effects on business capital gains)

4. The Child Tax Credit, which would have expired will continue another 5 years

5. The Alternative Minimum Tax (a tax that’s calculated to be sure you don’t have too many tax breaks) will be adjusted so middle-middle class and below incomes won’t be affected**

6. UNEMPLOYMENT BENEFITS will be extended for the long-term unemployed for 1 year

7. The amount doctors are paid under Medicare WILL NOT be cut THIS YEAR by the threatened 27%. That would have caused many docs to stop taking Medicare and therefore Medicaid patients

8. The estate tax exemption, the level at which estates start to get taxed, will stay at $5.12 million but it will have an inflation adjustment in the future. Also, the top rate will move from 35% to 40% **

9. Itemized deductions will be limited for taxpayers making $250,000 or more ($300,000 for Joint Filers)

10. Businesses developing wind projects and doing certain research and development programs will receive the same tax credits they have had for an additional two years

11. Businesses, and this affects even small business, will be able to obtain bonus depreciation. Simply put , instead of being able to deduct 1/7th of the cost of a truck (depreciating value) each year for 7 years, the law may allow a two (2) year period which makes short-term investment in equipment more attractive.

** (These items are permanent changes, not needing further action)

THE “BACK-STORY” – Why this really happened

In the first paragraph there was a reference to a “moral disconnect” in Congress. The comment was not a slur but rather the key to most of the fighting. There are those who truly believe that as a Country we should always run with a balanced budget, like a business or a family would do. There are others who are as firm in the philosophy that it’s okay to incur debt that will take a long time to repay. That is the basis for one of the most basic on-going debates in economics.

In a deep recession, one caused by a collapse of a major segment of the economy (housing this time), you may not be able to reach a balanced budget. Even though it might be the best resolution, austerity, not spending, will dry out any ability for employment to get better, for purchases of goods to increase etc. Imagine asking everyone in your family to have a balanced budget within a year. That means that everyone would have to balance at essentially the same time. Well, so much for getting a short-term loan from Mom or Auntie or your favorite Uncle! Now imagine having every family and business in the Country to accomplish a balanced budget in a year – the same year.

There are others who believe that in financially dire times (now), to keep things from getting worse, the Government is equipped to borrow huge sums by selling bonds and spending money on projects to create jobs, to make lending/borrowing easier (thus the low interest rates) and a host of other measures. It’s like a “Texas Steel-Cage Death Match” between the two extremes. That is the real genesis of the dilemma. Well, and the politics of trying to win the presidency.

BUT WAIT, THERE’S MORE!

It doesn’t really matter in the short run which side you are on – spend our way out and pay the bills later or cut spending to the bare bones and enter a true austerity program to pay everything faster. There is no ANSWER, there is no TRUTH in a social science which is what Economics really is. There are many views but we have to settle on a path to recovery, to solvency. If there is no agreement in two months, we get to go to another Fiscal Cliff or sorts but with an unimaginable drop-off: The DEBT CEILING. Will we pay our national debt and keep things running here at the same time, or will we default and become a deadbeat Country?

Author's Copyright by Richard I. Isacoff, Esq January, 2013
www.isacofflaw.com
isacofflaw@msn.com

Fiscal Cliff - Who Is Cliff Anyway?

The much discussed fiscal cliff about which will fall over (or not based on Congress) is probably misunderstood more than any other jargonistic word in politics today. What is it? Please read further.

About a year ago, or so it seems, Congress and the President couldn't agree on the issue of the national debt - should it be allowed to increase again. Actually, not even the House of Representatives and the Senate could agree (Thank you Tea Party!). A deal was made that allowed the Debt Ceiling to increase by $1-2Trillion. Had it not increased, so goes the theory, we would have defaulted on international and domestic debt. (I guess Bain Capital would have bought the Country for 5 cents on the dollar).

The agreement was simple: "Everyone" agreed to reduce the debt by $1Trillion by a mix of spending cuts and increased revenues (called Taxes). Whether any of the parties would have actually done what they promised is still unknown. IN EXCHANGE for the "put the decision off until after the election" scenario, each "side" accepted the concept that if nothing is done, then Sequestration would come into play - putting everything on hold but with HUGE penalties.

This basically means that budget cuts and revenues generation (taxes) would be forced into being. No turning back. Congress passed the law and the President signed it. $500Billion would come out of spending (defense and social services programs including medicaid etc) and $500Billion would be recovered by eliminating tax breaks in place since G.W. Bush was President, and one or two dealing with payroll taxes that this administration got passed. NO ONE THOUGHT IT WOULD HAPPEN. It was to scare a solution into concurrence by all sides. The cuts would be so drastic and the effect on taxpayers so big in increased payments that a deal would be worked out well before the election or right after. Probably one Political Party thought is would win control of both Houses and maybe the Presidency as well.

We have 16 working days before the end of the year when we fall over the cliff (Congressional calendar of course - I count about 47 which allows for Christmas and Thanksgiving but...). What does it really mean? RECESSION. The cut in federal spending and the increase in taxes which will cut personal and business spending will kick us back to 2009. Unemployment over 9% again - maybe as high as 11%, businesses closing due to no one being able to buy much at all.

The irony - the utter insanity - we would start stimulus packages all over again. It might take a year but that's it and then we'd be back in the same boat. Problem: If we defaulted, our cost of borrowing from other countries (China) would skyrocket. When we "borrow" we SELL TREASURY BONDS. Right now the interest rate we pay on bonds is under 2% for the most common time period - 10 years. We might have to pay 5%-7%. That would keep us in the hole for the rest of the boomer generation's lifetime.

Why do we do this to ourselves? Some would say that "We have THE answer": Cut Spending on the "welfare state" stuff. Well, there is no ONE ANSWER. That idea is just ideology/belief that has nothing more holding it up than does the other main group who say "Don't Cut" but tax the wealthy and eliminate duplication and waste in government.

THE FISCAL CLIFF IS THE U.S. CUTTING BUDGETS WHETHER PROGRAMS ARE NEEDED OR NOT AND RAISING TAXES BY LETTING TAX BREAKS EXPIRE. NO MORE, NO LESS
Author's Copyright by Richard I Isacoff, Esq. November 2012
rii@isacofflaw.com
http://www.isacofflaw.com

"Danger Will Rogers...Danger" *

Steven Pearlstein, a columnist for the Washington Post wrote about the "Global Economy Comes To The End Of Its String" and went on to explain, quite "readably" why it's happening. The column, in the 8/6/11 online edition, discusses the fact that we are cycling back to 2008 levels (maybe), because we never fixed the underlying problems with ours and the global economies. The only issue I would have with the characterization is that we are finding it increasingly difficult to separate our economy from the global economy.

As was written in the prior post here, the U.S. has been spending more than it's been making. We have relied on foreign countries, like China, to continue to buy our Treasury Bonds, which is just lending us money. That's what the whole "Debt-Ceiling" debate was all about. It took Congress 3 months to decide if we would be allowed by law to borrow more so we could keep operating our Country without a DEEP cutback in services, like Defense, Medicaid, Parks, EPA protections, Federal Aviation Admin., and on & on & on.

Brian Wolfman posted a short piece of the article on the Consumer Law & Policy Blog and asks at the end "So, what's the chance that will happen given what we've just seen in Congress?" Here is my response:

"You ask, somewhat rhetorically, about the chances for Congress to adopt policies like those Mr. Pearlstein outlined and accept his analysis of the "how we got here". If you know how to bring back from the un-living (on earth anyway) Sam Rayburn, Tip O'Neill, Dwight Eisenhower, Louis Brandeis, Earl Warren, Hugo Black, Ronald Reagan, and Gerald Ford, we might have a chance. As partisan as some of those folks were, they put the Country first when the chips were down (don't really know what that expression means but...).

The current Congress is so ideologically focused and unyielding in their world view, that they belong back to a time when the "world was flat". Common sense tells them that if you go to a beach and look out to the horizon, you can see that the world is flat. That was the prevailing common sense. Oh, and, of course, from Wasilla, AK you can see Russia (I tried with military issue binoculars, from the highest point in Wasilla, in March of 2010, on a clear day, and could NOT see the "Hammer and Sickle").

We are truly at a turning point for the Country and the world. The EU (European Union) is as divided as our Congress, so they will be no help. At least here, the big issue for BOTH Congressmen and Senators is GETTING RE-ELECTED in the same country. The pandering to lobbyists and ideologues must stop. The hard core Tea Partyists are at least true to their beliefs, but remember the flat world.

The future looks grim. Voters cast out the evil-doers in the mid-terms. The world economic crisis was only in part our fault. We allowed the most selfish politicians and "bankers" to run us into the ground. No regulation, no brakes, no-mind to the constitutional interpretations of the past, and a skilled manipulation of the concepts of a "free-market economy" ruled for 8 years. But, this coincided with Europe deciding to try getting along. No one hired a Cat Herder.

Maybe if we remember Peter Pan's plea that we all believe in Tinker Bell (metaphorically only) our economic system will survive. If it doesn't and we don't begin to rebound quickly, we are facing a future that we have fought 2 world wars, our own revolution, a civil war, and the "baby-boomer wars" for nothing.

*from the CBS Show -"Lost in Space" - fitting!

Author's Copyright by Richard I. Isacoff, Esq., August, 2011
rii@isacofflaw.com
http://www.isacofflaw.com

We Have Been Sent To The Minors

I work in the private practice of law dealing daily with the economic realities of average people who have average problems and with those who have extraordinary financial problems. Having had the responsibility for the investment of as much as $145M, I continue to pay attention to the financial markets on a daily basis. This posting is to try to explain what has happened in the lowering of the credit rating of the Country's "sovereign" debt (meaning money the Country itself has borrowed - think Treasury Bonds) from AAA to AA+. Just like in baseball, we have been sent down to the minors.

By now, the entire world, knows that the United States has lost some of its credit-worthiness. Standard and Poors, known better by "S&P", in its role as a debt rating agency (a company that determines what debt is safe for investment and what is risky and how risky). The fact that the other two major raters have not taken any action "against" the U.S.'s risk seems to be of no importance.

In the world of investments PERCEPTION IS REALITY. That's true in many areas of life but especially in this one

The downgrade was apparently caused not by economic factors but rather the dithering of the Congress in deciding to do anything about the debt-ceiling and deficit reduction. With the complete polarization of the 2 ½ parties currently "in charge", little was done to address the systemic problem of our growing debt and its root causes.

It's easy to state that the Obama administration did or didn't do this or that, or that Bush allowed deregulation to go too far (think SEC and securitization). But, in reality should that have affected the credit worthiness "rating" of the sovereign debt of the U.S.? Probably NOT.

The Congress, through a myriad of laws and regulations wanted/tried to rein-in the Rating Agencies and hold them accountable for the financial meltdown. Remember it was these same agencies that rated Mortgage Backed Securities as AAA paper. That they were/are paid by the "investment banks" who did the securities to sell bonds to make $$billions has escaped the review of the markets now in panic over our AA+ rating. Rather than this being an assault on the problem with our deficits and trade imbalance, it seems more like S&P trying to exert enough pressure to get Congress here, and Parliaments in the EU to back off assigning liability to Credit Rating Agencies.

S&P was the only agency to downgrade. S&P was the agency most involved in giving the "seal of approval" to the MBS and CMBS bonds. S&P stands to be the biggest target if liability is established for the incorrect/negligent/disregard for underwriting standards rating of those bonds. It's worth repeating that the securities firms securitizing the loans and selling them for huge profits paid the rating agencies large fees to rate the bonds.

Michael Shemi wrote an excellent column in the August 4, 2011 edition of American Banker's blog "BANK THINK" ( http://tinyurl.com/3s4tn7n ) where he discusses the moves to lessen the restraints and assignment of liability to and on the credit rating agencies. As he put it "Lastly, the continuing crises surrounding sovereign debts and national deficits from Greece to Portugal to the United States are affording rating agencies another opportunity to boost their own importance. By threatening the imminent downgrade of the ratings for these countries, the rating agencies keep their names in the news and constantly rattle the chains of issuers, regulators, and investors."

Of note is the matter of the probable divestiture of S&P by McGraw-Hill which owns it - "spin-off" because of S&P's enormous profitability. It needs publicity. It needs a crisis to show its importance and absolute need.

The U.S. economy has problems but also the capacity to overcome those issues if Congress can stop the "Texas steel cage death fight" over ideology". It's almost as if each political party and each faction thereof wants credit for causing the next recession. The rating agencies need to be held accountable - but so does Congress; and so do WE the people. We desparately need a coherent plan to reduce the deficit over the next decade by $4trillion and then another $10trillion in the decade following. Budget cuts? Social Security cuts? NO!! Tax reform - so rich folks pay a share commensurate with their annual income. Raise the age for Social Security benefits starting in "X" years - maybe from 62 (early)and 65/6 (regular-full) to 63 and 67/8 respectively.

If the WORLD saw us with a plan to eliminate the deficit totally in 20 years with a big push in the first 10, all would be well again.

Author's Copyright by Richard Isacoff, Esq, August 2011

rii@isacofflaw.com
http://www.isacofflaw.com

Brief Recap of Major Financial Issues

There used to be a TV show, weekly, called appropriately "THAT WAS THE WEEK THAT WAS". It provided a satirical review of the weeks happenings - especially politics. Kind of like a fast paced, hit-a-run version of John Stewart. Actually, "The Daily Show" is a modern day iteration. This Is The Month That Was:

FORECLOSURES
1. Foreclosures still moving at a brisk pace. Some slowing but due to paperwork issues. The mortgage servicers, led by the Mortgage Backed Security Investors, want to foreclose, and actually do so, even when they do not have the legal rights. IT GOES LIKE THIS :
a. You get a loan from the "We Saw You Coming Mortgage Company"
b. The mortgage company has already sold the loan to a large bank
c. The holder of the mortgage only (not the note, the I.O.U.) is company called MERS, short for Mortgage Electronic Registration System. This is mortgage industry registry to avoid recording mortgage transfers
d. The loan is "sold" into a Pool of 3000 other loans paying the Bank for its investment in your mortgage. The Bank now has no risk - this explains why no one cared about loan quality and why there were bizarre loan products like the "Pick-A-Payment"

e. The pool is sold as a BOND - just like a corporate bond- where investors buy $10,000 or maybe $1mil of the total which can be $2billion+ The reason to purchase is to get a higher than bank savings account interest return without much risk (good luck!)
f. If a borrower falls behind in payments, the manager of the pool of loans (called the investor) decides whether to modify the loan or not
g. The Fed Gov't set up the Making Home Affordable program to help homeowner get modifications but DID NOT REQUIRE ANY LENDER/INVESTOR MAKE ANY MODIFICATIONS

CONSUMER PROTECTION

1. There was a Consumer Finance Protection Board established so one agency can "ride-herd" as a REGULATOR to be certain that consumers don't get swindled. Here's where that is:

a. The CFPB is to stop "Predatory Lending practices", credit cards that have hidden fees (like the 0% interest for 1 year including balance transfer except for the 4% or 5% fee, not interest on the transfer)-see last posting for full explanation, and excessive fees to Banks for using a debit card.
b. The Republicans in the Senate have vowed to refuse to allow the appointment of ANYONE to the top spot at the CFPB unless the powers are reduced and there is a committee running it

2. Banks are lobbying to reverse the Law that will limit how much they can charge the merchants for each customer use of a debit card. Right now if you buy a $2.00 coffee and "swipe" your debit card to pay for the coffee, the store might get charged $0.40. No wonder prices for small items like coffee and hamburgers are so high

JOBS
1. Jobs are still being created, 50,000 this past month but that is only 1.2% of the unemployed
a. No real manufacturing starts to create jobs
b. Housing market dead - too many foreclosed and repossessed homes to let prices rise so no one can sell, Banks own too many houses, no reason to build a new house hoping someone will buy it
c. Mortgages are extremely difficult to get so even if you want to buy, who will lend you the money. No building-No Jobs.
d. Outsourcing to other countries bigger than ever

ECONOMY

1. Economy is not defined as how much we are earning or how much things cost or how confident consumers/businesses are feeling

a. Economy is the system to move goods and services. Essentially how will supply and demand is working
b. Economics is the study of the economy - not a science and there are as many theories as there are people studying the economy, therefore being Economists. So when you hear about "The Top Government Economist said that..." it's just his opinion. It is not a real science. It's a social science based on opinions and theories

2. Our trade imbalance grew. This is the measure of how much we import versus export. We import much more than we export.

a. The trade imbalance affects the value of our Dollar as compared to other countries currency
b. Things got better with Japan because few cars are being imported due to the disasters that hit Japan
c. Things got worse with China - they buy a fraction for us of what we buy from them.

That's just a brief round-up of 4 topics of concern to us all

Oh, I almost forgot - there is the Federal Debt Ceiling -that is the maximum amount the Government can borrow. We will be "MAXED OUT" by August. Raising that limit is also being held-up by Congress. If it doesn't get raised, we end up defaulting on our loans (payment of interest and principal on such things as Treasury Bonds. Then the value of the dollar compared to other currencies will drop by 25%-35% OR MORE immediately. Think things cost are expensive now? How about $7/gallon gas or a $40,000 Base Model Toyota

Author's Copyright by Richard I. Isacoff, Esq, June 2011

rii@isacofflaw.com

http://www.isacofflaw.com/

The Greatest Depression? Ask Rep. Neugebauer (R-TX)

Rep Randy Neugebauer, Chairman, House Financial Services Oversight Subcommittee, said it is time for the government to admit its foreclosure prevention efforts are a failure and should be shut down. The Texas Republican said such programs are counterproductive and are preventing the housing market from bottoming out, which is necessary before recovery can begin. (1/24/2011 from the American Banker)

Now, there is a real solution to the foreclosure crisis! Bite the bullet - displace hundreds of thousands of homeowners, let the inventory of bank-owned properties (OREO) sky-rocket, let the housing market drop bottomless and that will allow us to have an economic recovery. The sad part about Rep. Neugebauer's assertion is that he may be right in the long-term, but at what IMMEDIATE & CURRENT COST!

The program is not working - no news there. Why? Because the government regulators and policy makers do not want to to tackle the "investment banks" and the "investors" in mortgage-backed securities ("MBS")to tell them they WILL modify loans. At this time, no one can order a lender, mortgage servicer, investor, Pool Trustee, or any one else that it/she/he MUST modify a loan.

Everything is voluntary and the decision makers are in a position that they cannot lose. even if the market "bottoms out" as the Rep. from TX suggests it should. The Sponsors of the MBSs and the investment banks that put the packages together and sold them have already been paid or are so high up the MBS hierarchy of payees, that unless the value of every mortgage in the pool of mortgages becomes utterly worthless (no value at all to the houses securing the mortgages which comprise the MBS), THEY WILL GET PAID.

From an "economic" point of view (see the 1/13/11 posting), the Rep. makes sense. From a financial point of view it does not. From a human point of view it would be "The Nightmare from Wall Street". Remember "economics" is the study of an economy which is merely a system to deal with supply and demand. The concepts are simple but the implications are not. This is a case where the theory is great and accurate in its long-term view. But, getting from here (where/when we need modifications and for the Government to help all of us struggle through the mess) to there (where the market, the economy can correct itself) is a 20 year span.

Perhaps the Rep. has not taken into account the mass disruption of the pensions which hold funds that hold mortgage-backed securities. Or maybe he has forgotten that if there is no confidence in the value of the MBS, which is really set by its stability and ability to pay the return it's promised, the value will drop to $0 or something close to it. In reality, the houses that would be lost in foreclosure will retain significant value, even if that is only 20% or 30% of the mortgage balance. When the next generation comes along, it will be able to buy a vacant house for 40 cents on the dollar from what was owed on the mortgage. What will it cost the current homeowners on a nationwide basis?

Factor in those who lose houses to foreclosure and then the rest of the homeowners, from low-income to upper-middle class income, who manage to keep a house now worth half (1/2) of what's owed, and you have a "financial" (not economic") crisis. The economy will have way to much supply, and literally no demand for years.

Recession? Nah, the Greatest Depression

Author's Copyright by Richard I. Isacoff, Esq, January, 2011

rii@isacofflaw.com

http://www.isacofflaw.com/

Economy Getting Better? What Do You Have In Your Wallet?

The latest news and business reports say that "the economy is improving. All economic indicators show..." If that is true, and not just hype, as the commercial for a credit card asks, "What do you have in your wallet?"

How can the jobless rate waiver between 9.8% and 9.5% and there be more than 450 unemployed persons (still receiving unemployment or registering at an unemployment office) for every job opening, if the economy is improving?

Well, WHAT IS THE ECONOMY? What does "THE ECONOMY" mean? The "hard and cold" definition is simply the management of resources of a community, region, country, etc. Put in other terms, it is a system of producing, distributing, and consuming wealth. Perhaps this definition would be better - "economy encompasses everything related to the production and consumption of goods and services in an area" (pick the size -city, state,country,world etc).

Economic purists would probably prefer "the system for the production (or acquisition), and allocation of limited resources". Put simply the Management of "SUPPLY AND DEMAND".

So, when you hear, "the economy is improving", all that means is that the system of managing goods and services, including such items as commodities (wheat, gold, orange crop (really)), "stuff" like cars and their production, houses both new and existing, is getting under control. Supply and demand for whatever is being managed better. There is no one person, nor any government agencies in charge of managing all of that. Entities like the Federal Reserve, the Treasury, Congress, and BUSINESS, each and all control parts of the management.

So, "THE ECONOMY IS IMPROVING" has little immediate change for individuals. "Things" are getting better (managed better) but that has no affect for you or me. Maybe in 5 or 10 or 20 years, but not NOW.

Oh, and "The ECONOMISTS SAY that ..." Who are the ECONOMISTS. They are people or groups of people who study ECONOMICS which is the study of the ECONOMY.

ECONOMICS is a SOCIAL SCIENCE, (not science like chemistry, or physics, or biology) that studies the economy. Adam Smith in his 1776 publication "The Wealth of Nations" described the economy as a self regulating market system that adjusts to fulfill the needs of the populace - from his point of view, LAND, LABOR, and CAPITAL are the three factors/components contributing to a nation's wealth. Because of the competition to use the limited resources of a country/area/town , those with money will buy the resources and use them profitably which will result in a balance of all uses so the owner will get the biggest return. Smith's concept goes on to argue that it is in the owner of the capital to use it for the public good in order to get the best return.

Okay, so the Economy is getting better means that the government has a better understanding of what went wrong and an idea of how to fix it. Fixing it means that a balance will be reached between supply and demand. There will be no glut of houses for sale, nor high unemployment, because there will be a demand for goods and services, because people will be working to provide goods and services. Sounds like a circular argument. It is, but each time you go around, you move up just a little bit.

Look, in simple terms, the "economy" tanked when everyone realized that there was no true value in certain stocks and bonds - that they were being bought and sold based on assumptions that were wrong. In essence, the little boy cried out, "Mommy, the emperor has no clothes". The end of the world? NO! The end of what was thought to be a managed system of supply and demand? YES!

The economy is getting better - government is regaining control over the supply and demand and production and distribution of good and services. It will take time and no one knows how much time.

The question for PEOPLE is not about the economy, it is about "IS MY MONEY SITUATION GETTING BETTER OR WORSE?"

Author's Copyright by Richard I. Isacoff, Esq., January 2011

rii@isacofflaw.com

http://www.isacofflaw.com/