Economic Stimulus Package, Part 2
The “Economic Stimulus Package” (ESP) is supposed to “spur” the economy and help ease the sub prime loan “crisis.”
Our real estate and financial markets have been negatively effected because a large number of homes are in various states of foreclosure and many Americans have purchased houses that they cannot afford. This in turn has caused our banks and those who hold these loans to lose money and “write down” their profits since the loans they hold have decreased in value.
Over the last couple of decades it has become easier and easier to buy a house. Home buyers no longer have to pay a 20% down-payment, interest only loans are common, and many people are borrowing more money then their home is worth.
With this in mind our politicians in Washington (From both political parties) have decided to intervene in the housing markets and “help” homeowners.
Believe it or not; here is what our politicians have come up with to help “resolve” the sub prime loan “crisis:”
1. The Federal Housing Authority (FHA) currently provides Federally backed loans to homeowners who are low income, credit risks, or are both. Our politicians have increased the limits so that low income home buyers and home buyers with poor credit can now purchase a house that is worth up to 125% the median home price in the home buyers area. Logic would dictate that this will cause the foreclosure rate to increase since people already have purchased more house then they can afford; however,the Federal Government is going to encourage people to purchase even larger houses.
Can you imagine a low income person or a person that is a credit risk being encouraged to purchase a home that is worth 25% more then the median home in their area? Well, that is exactly what our politicians in Washington have decided to do!
2. The plan increases the size of the loans that Freddie Mae and Freddie Mac can purchase. Currently Freddie Mac and Fannie Mae can only purchase loans that are $417,000 or less. The ESP changes that (at least until December 31st, 2008) so that the limit is 125% of the area’s median home value with a maximum ceiling of $729,750. (This law change only effects 20 Metropolitan areas in the USA). These loans granted by Freddie Mac and Fannie Mae are known as “conforming” loans. Loans on houses above the limits set by Freddie Mac and Fannie Mae are known as “jumbo” loans. A jumbo loan currently averages an interest rate that is 1.125% higher than a “conforming” loan.
The logic behind this is that a large number of homeowners (Mostly those in California, New York, and Hawaii) will be able to refinance their current “jumbo” loans as a “conforming” loan through Freddie Mac and Fannie Mae and they will be able to decrease their payments due to the decrease in interest rate. Since they will decrease their payments fewer of these homeowners should go into foreclosure.
There is more logic to this portion of their plan then the previously mentioned portion. The only bad thing about this is that it will cause Freddie Mac and Fannie Mae to get even larger then they currently are and they are a quasi government organization.
I do not plan on voting for many, if any, incumbents this election. The ESP should be renamed a “Pandering Politician Package!”
Mike Sylvester
Reducing City Costs
Per our city administration,”We can’t cut costs except by laying off policemen and/or firemen”. This is a political cop-out - to scare citizens into believing it.
How about reducing some of the less-important city jobs? Like:
1) Do we really need a Deputy Mayor and his office staff?
2) Do we really need 57 people in our Community Development Office? $2,750,678 in salary and benefits and how many $100’s of million did this one office drop on our city in future property tax obligations in the last year! Just the property taxes from Jefferson Pointe in 2008 that were diverted via TIF nonsense could have added $ 1,800,000 plus the $6,000,000 that was in this TIF before $4, 000,000 of it was spent to illegally buy properties in the Harrison Square area, or a total of $7,800,000 to city income - but no, “we are not going to let those funds be used for anything as mundane as funding our city operating costs !!”
So that “pitttance” of diverted property taxes from Jefferson Pointe could have funded the entire shortfall that our mayor and our controller are predicting will result from the state actions and the council’s previously passed budget “hold”! “But no, we will just threaten our citizens with a reduction in public safety personnel - that will shut them up!”
3) Do we need 44 people in Transportation Administration and Transportation Engineering? Dave Ross is filling both the City Engineering and the Transportation Engineering head posts at present - can’t some of these jobs be combined?
4) Savings should result in the planned merger of City Land Use Management and Zoning Department with Allen County Planning Services when and if this ever happens.
Looking at just Wages and Benefits, per the approved 2008 city budget, the total is $110,969,668. Of this $81,159,259 is for Public Safety, leaving $29,810,668 in the rest. If cuts are necessary, how about cutting both categories by the same percentage - if cut required is $4,500,000, then take $1,208,851 from “other” and the $3,291,149 from Public Safety.
New Video Archive For City Council
Last week I spoke before the city council and asked them to create a new board that would identify ways the city could use technology to improve access. A day later I was contacted by the city’s chief technology officer Clifford Clark and he told me they were in the process of rolling out a streaming video archive for city council meetings. He then called me back the next day and I got to be the first citizen to try out the new software.
Let me say that it’s fantastic. Before last Thursday the only way citizens could watch previous council meetings were to physically go to the clerk’s office during business hours and watch it on their VCR - you couldn’t even take the video with you. So let’s just say this is a massive upgrade from that and kudos to Clifford Clark and everyone else involved in the project.
This is just the beginning of what we can do here in Fort Wayne to improve citizen access. The council should keep the momentum by creating some kind of body to author a list of recommendations the city can implement to continue its progress into the information age…
Golden Pen, Golden Schmen…
In yesterday’s JG the editors continued their never-ending assault against the Code Blue Schools group by giving January’s Golden Pen award to Leonard Goldstein. The golden pen goes to the “most effective letter” but Goldstein’s lackluster letter hardly qualifies as “effective”. If John B. Kalb can let Harrison Square go then the JG editorial board and the yellow ribbon supporters can do the same. You lost - get over it.
FWPtv
A video to explain a little bit about the site and where we want to go with it. Apologies for the annoying Adobe watermark - I don’t have the full version of the software yet.
Economic Stimulus Package
The “Economic Stimulus Package” will require many posts to explain and analyze.
There has been much talk in the main stream media about the “Economic Stimulus Package” that was signed into law last week. It is amazing to me that the “Economic Stimulus Package” was created quickly and with broad bi-partisan support. The vast majority of elected officials in Congress agree that this “Economic Stimulus Package” will both “jump start” the economy and that it is sound fiscal policy.
I think the only reason this “Economic Stimulus Package” was agreed to so quickly is that 2008 is an election year and Republicans and Democrats are doing their best to give money to voters and hope incumbent politicians will get re-elected.
The ESP is not sound fiscal policy. We are issuing more US Treasury Bonds (Many of which are owned by China and Japan) and sending that money to Americans with the hope that they will immediately spend that money in our economy. There are two basic problems with this:
Senseless Economic Stimulus Program
One reason we are in economic difficulties at the present time is because of the high price of oil. We still import lots of oil from Saudi Arabia.
Our elected congress and our president have this bright idea to give income tax refunds (plus some “welfare give-aways” to non-income tax payers, like myself in my retirement years). And this to “jump-start” our economy. Only problem is, to do this our country needs to sell lots more U.S. Treasury notes and bonds so we can accomplish this largess.
And who is buying these? The Saudi’s of course - a process that feeds on itself and will build to the point that all items of value in our universe will belong to the Arabs!
Remember, beginning in 1969, Henry Kissinger, as top presidential advisor, convinced the Shah of Iran to use OPEC as a cartel to enable prices of oil to rise (he said by 10 times) so that he could afford to by our U. S. of A. military hardware so he could continue his dictatorship. (This didn’t work out for the Shah, since his regime fell in 1979).
Welcome to Fort Wayne Politics
I wanted to write a quick post to thank everyone that has made the move with me from Fort Wayne Left. I have a video post that details some of the changes here and our grand vision so I won’t rehash that in this post. But I definitely wanted to thank Marc Wermund - the original owner of the FortWaynePolitics.com domain. I noticed the domain was not in use so I contacted Marc and asked him if he would be willing to transfer it to me so I could launch this new site. Marc not only agreed, but he transfered the domain free of charge so I owe him my gratitude for that.
I took some time designing the site, including colors, fonts, layout, etc -you know stuff most people don’t notice unless it’s screwed up. I did my best with this but I would definitely enjoy feedback (positive or negative) from readers. As time goes on we’re going to hopefully add more and more content so if there’s something you want to see more or less of then let us know.
