"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

Housing for the Homeless, Inc. (in organization)

The other day, I responded to a comment on Twitter from a knowledgeable mortgage financing friend regarding the current housing situation vis a vis foreclosures. His view is that the "market should find its own level" ; that the Federal Government should not interfere with modification programs, the EHLP program etc.

After some thought, I must agree with him. If the pace of foreclosures returns to normal (once the robo-whatever is done and docs are corrected) and evictions follow promptly, there will be plenty of Housing For The Homeless. There will be no need to build new shelters. Mortgagees can just allow cities to house "The Homeless" in these abandoned/emptied OREO properties. The cities would pay but only by not taxing the mortgagee/foreclosing entity. If the mortgagee does not incur this liability by recording a deed, then more properties will be formally owned by the entity which won the foreclosure sale bid.

Now, one might ask,"Why should the homeless get to live in someone else's house when the someone else just got evicted and became HOMELESS?" Answer: "Well, that's the market finding its level!!!". Further, the new homeless family can move into another "victim's" house as he/they get thrown out! See, that way no one can complain - except "The Investors".

This is the shadowy group (Goldman, Lehman, Bear Stearns, Countrywide, JPMorgan et al) which created the securitizations of the mortgages, and sold and/or bought (and hedged) the resulting "bonds". They are the folks who took a mortgage, put it together with 3000 others, released all of the originating banks/mortgage companies from all liability, and sold pieces of the pool of mortgages as "Mortgage-Backed Security" shares/participations.

A solution to the matter of getting the investors paid during the OREO stage, would be to have the "Newly Homeless" receive a minimum wage pay (because they are out of work which is why they lost the house to start with) to remove all of the black mold that develops in uninhabited housing. To be fair, some of it isn't Black Mold of the bad kind but just regular garden variety MOLD.

So we have the solution:
1. Increase the pace of foreclosures to create Housing for the Homeless
2. Hire the homeless, now in a home, to remove mold
3. This helps the national unemployment problem so there should be some federal money for job creation, which can be paid to the investors as rent from the Homeless
4. The homeless move in, shopping carts, kids and all, and the streets look better, so new companies will move into the formerly empty urban areas because the former homeless have homes and a paycheck
5. The suits against the foreclosing mortgagees should slow, because, the family which just got evicted can move into another family's newly vacant home AND get paid.

The market will find its level. Hopefully it will be above the water table.

Author's Copyright by Richard I. Isacoff, Esq, July, 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/