Media outlets all over the Internet are screaming this morning about the minutes from last month's Federal Reserve meeting, which were released yesterday. The discussion from that meeting shows that the Federal Reserve Board members expect unemployment to rise "significantly" into 2010 and that they believe the gross domestic product (GDP) will fall in 2009.While most of us hope these dire predictions somehow prove not to be true, deep down we know that the Fed is probably right. No one has called this another Great Depression, but it certainly looks more and more like what happened in the 1930s. Our financial institutions need bailouts to survive. Job losses continue to mount. At least the banks did get those bailouts so we're not seeing lines of people trying to get money out of banks that can't (as was a common scene during the last depression).
At the Fed meeting, Governors reviewed statistics we already knew that 1.9 million jobs were lost in the first 11 months of 2008 and 475,000 more jobs would be lost in December. Reports today from ADP indicate job losses in December in the private sector may top 690,000. Now that the Federal Reserve has lowered interest rates to near 0%, their primary tool has been used up, but they are using other monetary tools to keep cash flowing.
Will Barack Obama's economic stimulus package minimize these stark, depressing projections? Can anything be done to turn this around more quickly than the Fed now predicts? Obama yesterday indicated that deficit spending will be in the trillion dollar range for several years to dig us out of the mess. But, if it is what mess will follow as the baby boomers move into retirement and depend more on federal outlays for Social Security and Medicare?
Lita Epstein has written more than 25 books including, "Surviving a Layoff: A Week by Week Guide to Getting Your Life Back Together."
Reader Comments (Page 1 of 1)
1-07-2009 @ 2:30PM
petchi said...
yeah, i'm absolutly agree with the text.
i think that the current moment is like 1929 and Fed is doing the same things to save the economy, keyne's politics.
http://www.ofpolitics.org
1-08-2009 @ 4:34AM
SuperBob said...
Save your cash, get out of stocks, invest in canned food, gold, tools, guns, and ammo.
1-08-2009 @ 3:57PM
Basilovecchio said...
Please have anyone you wish review and edit if you wish.
But for the sake of all PLEASE POST
How about earning $300 billion for health care and Social Security as well as multi-tasking:
1.Firming housing prices,
2.Create affordable housing ,and
3 SOLVING the mortgage crisis.
YEAH BUT HOW COULD THIS REALLY BE POSSIBLE???
NO ONE CAN DISPROVE IT-COULD IT POSSIBLY BE RIGHT????
Feds to announce New Plan:Take Action Now for Troubled Asset Relief ?
Legality and funding of GSE is already in place.
ACTION:Solve $6.1 Trillion crisis without issuing new money and make a profit
for the taxpayers.
RESOLVED:ALL "underwater" loans and foreclosed homes to be purchased at 110% of FAIR MARKET VALUE.
Loan to be marked "paid-in-full"
Purchase will be made with the use of 10 Year US Treasury Bonds at 2.5%.Not with money,but with bonds that become cash in 10 years.
Legislation is already in place for GSE agency to do this and also funding is already approved.
NEW LOAN is a special "EVERYBODY WINS PLAN" loan
A loan that has 10 year fixed payments (120) with a payment of the balance of the loan by a new 30 year fixed mortgage,thereby retiring the 10 Year Bond.
Because of the low cost of the funding(12/31/08 @ 2.08%)now @ 2.5% with the special long term payback "EVERYBODY WINS".
Even the taxpayer!
TERMS FOR THE NEW LOAN:
120 fixed monthly payments that consists of (A) payment of total interest,
(B)15% of principle
; ; (C) 5% taxpayer profit
Payment number 121 is made by a third party lender that will gladly give a new 30 year mortgage
at a fixed rate for the 85% balance,marking the 10 year bond paid-in-full"
Example:$110,000 "EVERYBODY WINS LOAN" to cover home valued at $100,000
A...Total 10 years interest.......... $27,500
B...15% for principle reduction.... .$16,500
C...5%..TAXPAYER PROFIT.....$ 5,500
TOTAL.......................................$49,500
paid by 120 fixed equal payments of $412.50 each. (wow how affordable is a $110,000 mortgage at $412.50/month?)
Then the 10 year treasury bond is paid-in-full since a new 30 year f ixed mortgage is acquired for the $93,500 balance.
To calculate payment for 10 year portion use a factor of 3.75 per $1,000.
Example if loan amount is $274,000;payments of $1027.50.($274 X 3.75 = $1027.50
"EVERYBODY WINS"
LENDERS: cut their losses substantially and go about the business of making money
from what may have been mandatory reserves.
BORROWERS:perhaps,a wrong ,made right?AFFORDABLE HOUSING.And
as a side benefit for the other 90% of homeowners,now prices are not only stabilized at 10% above the "vulture's prices",but also can start to increase in value.
TAXPAYERS :when did you ever get a RETURN ON INVESTMENT?
City and state revenue base,firmed and increased.
THOUSANDS OF BENEFITS CAN BE DETAI LED.
ONE DOWN SIDE- there is no vengence.We can however take the time to discover how this happened ,fix blame,and take action.
------Take Action Now for Troubled Asset Relief of Homeowners!!!
THIS IS MY DREAM HEADLINE,PLEASE MAKE IT PART OF YOURS.LET'S GET A DATE ON THAT HEADLINE,"Feds Announce Plan..."
Best Solutions Fl
Real Estate
9804 S Military Trail E-10,Boynton Beach,Fl 33436
email: bestsolutionsfl@aol.com
Please edit / correct,send me a copy,thank you.
Wed, 24 Dec 2008 7:53 am
Subject: Short add on to Answer to your questions
The MOST difficult part to explain is that NO NEW MONEY is required.The mortgages are converted into bonds.The 10 year Treasury bond.We do not have to go out and sell $6.1 trillion-they are already " purchased" by the lenders.
No inflation,no increase in money supply,its just an already existing asset conversion,just "EVERYBODY WINS".A business plan that stabilizes housing=2 0pricesand makes the mortgage very affordable and creditworthy.
P.S. if rates go up .25 still no problem,change factor by adding $20.10.(120 payments to collect the $2,500 needed to pay increase 10 years interest).Rate on 12/ 30/08 @ 2.08%
Se nt: Tue, 23 Dec 2008 8:10am
Subject : Answer to your questions
Subject: RE: Thanks for your help. Feds to announce Plan