It might help short term if the Government payments get out in a hurry. Unfortunately the jobs it creates will probably be federal, state and local government jobs. The federal jobs won’t go away and will continue to be paid on a permanent basis with federal payments. The states and local Governments will have to pay for their employees after year one and they don’t have the money. Private side jobs will be temporary and last till the money runs out assuming The Government can get the money paid. It seems that all the shovel ready jobs and not ready and no one in the states knows which project to fund first. Infrastructure payment will take years. The long term effect might produce some jobs but only temporarily. This demonstrates the Federal Government cannot create long term jobs in the private sector..

The budget could have a long term and useful effect on the economy if Obama handles it right. A dead and gone famous economist, Milton Friedman made an observation (paraphrasing); He characterized the Federal Government as the payer of taxpayer funds and the collector and borrower of funds. Basically that is all it does. How it does this is critical to the US economy.

If the Government increases payments it must get the money by raising taxes on those who pay taxes or borrowing the money or printing money. Therefore increased payments on one side and increased taxes on the other side set off and have no real effect on the economy. This gives to those that donʼt pay taxes and takes from those that pay taxes. The economy remains in balance, it has just been redistributed from the tax payers to the non-tax payers. The Government has created NO NEW JOBS, just NEW PAYMENTS.

Who can create new jobs that are permanent? The people who pay taxes. The people that reduced the jobs because sales and income were off in the recession. What incentive will get these people to create jobs? A LOWER TAX RATE; until sales improve. The people who donʼt pay taxes create no jobs, they just get more payments. The Government canʼt create new jobs by making more payments. In fact the Government should be reducing payments. Jobs are the critical factor in the economy now. Increased jobs mean less Government payments.

So thatʼs Obamaʼs solution. He should veto the budget bill if it comes to him. He has the authority to re-propose a budget bill that slashes Government spending and cuts taxes. Payments are cuts easily made, cut out the pork, freeze spending at last yearʼs level, cut Government salaries by 20 percent across the board. Trust me, nobody will quit. This will let him cut taxes and spur investment in new jobs, which will further reduce spending. This will be the most popular budget in history.

Obamaʼs second dilemma. The mortgage bail out. There are three major players in this. The private Investment market, Fannie Mae and Freddie Mac are one set of players, the second player is the Government, who changed the credit underwriting rules and pressured player one to do the deals. And the third is the borrowers.

We want the first two sets of player to take the responsibility for their actions and to be fair not generous to the borrower who was bilked by swollen Market values and large loans. Here is how Obama does it. He proposes that a comparison be made between the size of the mortgage and the new market value of the house.

To the extent that the mortgage amount exceeds the new fair value of the home, each of the first two players (who have the money) should pay down 50 % of the difference. Player one takes a small loss matched by player two. Player one now owns a mortgage that is equal to the market value of the house, so it can carry it as at full value on his balance sheet. Player two makes a one-time payment and is no longer involved. Player 3 can either walk away with no liability or attempt to refinance the mortgage through player one at a lower payment, rent the house from player one or occupy the house while player one attempts to sell the house at the lower value..

And here’s Henrietta:
http://www.youtube.com/watch?v=-88Il-4nby0

So there you have Obama in Fort Myers yesterday, straightforwardly telling Julio and Henrietta that’s exactly what the Democrat National Party will do for them–just as quickly as it can and as much as it can.

Obama’s telling Julio and Henrietta he’s going to “offset” their social security “tax” (which, because neither Julio nor Henrietta pay any Federal income tax, is the only wage-based Federal “tax” each pays) while transferring to them much more income from the minority of voters who pay virtually 100% of all Federal income taxes.

Let alone the fact that Julio and Henrietta’s social security “tax” isn’t a “tax” at all but, instead, merely their income-based installment payments on the annuities Julio and Henrietta are purchasing from the Federal Government to support themselves when they are too old to work (or would be, if the Federal Government hadn’t been embezzling Julio and Henrietta’s annuity installment payments for at least a generation now).

So what the Chief tells this Julio and this Henrietta is what all the Julios and all the Henriettas of the world want to hear.

Their Karl Marx has arrived–their Vladamir Lenin, Mao Ze Dong, Che Guevara, Fidel Castro, Hugo Chavez, and Jesus Christ all rolled up into a second coming of the heavenly socialist savior who will redeem the capitalist world by destroying all the evil white-male vestiges of Northern Europe’s unjust Enlightenment.

The message of Thomas Jefferson this isn’t.

It is, instead, the message of the Reverend Jeremiah Wright after a good long political scrubbing and a nice new suit of socialist duds–all dressed up, looking cool, smelling good, and headed for a blowout party.

Julio has a vote.

Henrietta has a vote.

As a homeowner and successful professional with little downtime for a gueling 30+ years employed in corporate America, for the first time I’m facing a seemingly insurmountable climb up a sheer wall in obtaining employment. In late 2008 the company where I was employed for almost five years was abuptly put on hold after the banks froze their AAA credit due to the financial crisis. In a panic all but a few (myself included) were asked to leave without warning.

My bad was buying in to the euphoric market climb since the dot-com bust, and over-leveraging myself. The cash assets I saved for a rainy day at Washington Mutual are going to be paid by a strapped FDIC, oh, hopefully in the next two years? Of course the reason I saved cash in an insured bank was to provide a “fail-safe” mechanism to avoid foreclosure in the event the unthinkable and seemingly impossible scenario occurred.

The FDIC is so back-logged that I may not get the cash for two years, far after the banks have foreclosed and my credit is ruined. My only hope is to get a job, a task that for 30+ years has occurred within 2-3 months. In my fourth month of unemployment, with bills requiring a six-figure income that could have been service for two years by a Washington Mutual bank account the FDIC should pay out in about two years, I must get a job or sink like a rock.

Compounding the situation is that the bank holding my 401K funds, a last resort, will not give me a distribution because they are in financial trouble. One bank is holding my emergency savings intended for the rainy day that I prayed would never come (figuring I would end up transferring these funds to my retirement account one of these days). The other bank is holding my massive 401K cash funds. Adding insult to injury, I was so cautious that in 2007 when the mortgage crisis began, I sold all my mutual funds at the top of the market in my 401K plan, and transferred them to the Wells Fargo guaranteed reserve! In a worse-case scenario, I could take a distribution from my 401K and pay the 10% penalty. Who would have guessed the largest bank in the world would delay paying my distribution indefinitely because I’m in a long line of people demanding distributions from 401K plans?

So here I am, like a paying passenger thrown off a cruise ship in the middle of the Pacific. A thousand miles from the nearest land mass, adrift, there’s a hole in the raft (the hissing sound keeps me awake nights) and shark fins are everywhere. I’m in this kind of dream-like fog mentally because I’m shocked beyond belief that someone whom everyone might agree did everything “right” is in no better shape than someone who did everything “wrong”!

In light of this situation, an issue regarding the mortgage meltdown and government stimulus package remains unresolved. Perhaps your understanding of the Federal Reserve and financial system controlled by the government will help me understand this issue?

On the CNN web site as a comment to one of their news articles on the bailout of homeowners, I posted the following comment:

“Cancel all mortgage debt to-date. If Obama is dead serious about stimulating the economy, he will work with Congress on a bill to cancel all mortgage debt nationwide, incurred up to the date of the bill’s passage, and basically start the housing economy at zero. From that point forward, the free markets can determine the new price of real estate. It will not cost Obama or the United States economy anything to forgive all mortgage debt and restart the housing market. A new day will dawn.”

My request to you is to explain to me what is wrong with my comment?

Although I’ve prided myself in understanding the system, what has gone terribly wrong in the economy has shattered my assumption that I know how the system works.

I don’t understand why part of the stimulas cannot include cancelling all mortgage and credit card debt. A friend exclaimed to my suggestion, “Are you out of your f*ng mind?” Why am I out of my f*ng mind? Money is a construct. Please indulge me, and perhaps other curious readers with a morbid curiosity about how my suggested scenario would play out, and explain the mechanics and logistics behind Obama’s taking my suggestion. Let’s assume for the sake of argument (and I know most might think it’s an insane stretch) that Congress went along with including this suggestion in the stimulus bill, and banks cancelled all mortgage and credit card debt (up to the date of the bill’s passage). People receiving unemployment now have only to pay their utility, gas, food and a few miscellaneous expenses. Forgiven credit cards are cancelled and they must reapply for new credit based on stricter criteria. Mortgage debt is cancelled so aside from property taxes (likely reassessed) they remain in their homes. Real estate across the board plunges in terms of dollar value to prices not seen since the early 20th century.

Please continue this scenario based on your understanding of how the economy, Federal Reserve system, government and tax system, etcetera, actually works…

Thanks in advance for your time! I know you’re busy and this would really mean a lot to me if you could answer this message to the best of your knowledge and belief. I know it might sound strange but as a successful professional who has earned in the six figures for over fifteen years (until late 2008) I’m really serious in not knowing the “answer” to these questions.

I think its probably best for us all just to say… when its your turn in the Whitehouse…steal whatever and whenever possible… and then call it “Government Whatever” which is then protected by the very same laws it writes, creates and invents… for themselves and their buddies to profit and prosper by!
http://news.yahoo.com/s/bloomberg/20090209/pl_bloomberg/agq2b3xegkok

Not a bad gig…once you think about it…it is your money…not their own!

http://www.federalreserve.gov/newsevents/press/monetary/20081006a.htm

The Fed is now paying interest on reserves to it’s member banks. Where does the Fed get it’s money? Correct me if I’m wrong, but I believe it is the taxpayers.

Conclusively, American taxpayers are paying interest to banks on their own reserves that are required through the Fed’s fractional reserve banking policy. This is in addition to the 6% these banks earn just for being a member bank.

But this is just a new “tool” for the Fed’s to stabilize our markets and get credit flowing again I suppose. I am no economist, maybe someone can explain to me how this will help? It just seems like we are moving money from the poor and middle-class taxpayers to the bankers and upper-class.

I think I will venture a guess on this one, good sir. This increased government income is being used for increased defense spending (I prefer to call it Offense Spending).

Another interesting note, and this is old news, but what a deal JPMorgan Chase got when they were able to buy Bear Stearns at 2$ a share and with the help of a loan from the Federal Reserve itself.

http://edition.cnn.com/2008/BUSINESS/03/16/stearns.morgan/

It is also interesting to note that the CEO of JPMorgan Chase is one of the Board of Directors for the Federal Reserve Bank of NY.

http://www.newyorkfed.org/aboutthefed/org_nydirectors.html

With the purchase of WaMu as well and strong backing from the Fed, I think JPMorgan Chase will remain quite a powerful corporation for years to come! Also, since people will naturally call me some kind of “conspiracy theorist” or “nut-case”, I would like to point out that everything I have “said” is based on observations and facts except for my hazardous guess to Lews proposed question.

For some reason you appear to have an attitude and for that I am sorry if I offended you. Clearly neither of us really know what is actually going on inside the government and or where all this money is going and or to whom and or what interest rate our true debt is at.

I do not believe I ever stated I knew or know everything and I believe this is why I solicited your input. I do understand just how busy you are and we all are and just how valuable all our time is… especially when we are all attempting to survive in this world of mounting debt. This debt just does not seem to go away for most of us peasants…or at least for those that are the producers and or income earners that acquire property through loans. Even the property that our homes sit on is just leased to us…property tax….never goes away and seems to only go up year after year.

If we were to go to the new Amero and the North American Union the government would
have to consolidate all these banking institutions…like they are doing now. Here is a video to check out…not sure if it is all true…but you might like it.
check out this video

If you ever find out the real percent please let me know…and I wish you the best.

To know the truth is to know power of the lie… often disguising it.

I asked you what I thought was a question that you could answer…It appears that you can not give me the total percent or percentage of debt interest to be payed back for every dollar generated as debt and or borrowed to finance the countries “federal government operations and debt” and or current projected borrowing practices. It is said we have 59 trillion in future not financed obligations already coming. So this is not a game or an interpretation of some kind of a game that I am playing…I am looking for the truth. If we owe 60 trillion what is the true interest to be repaid…6%+ or what?

I understand that some people think money grows on trees…and based on what I have seen this government and federal reserve do recently…they surely do. So these actions will affect every future generation for many years to come…if not… then the system needs to be dismantled because it is funny money that they are printing for those in power control positions only…while we the actual holders of the debt….get nothing. Get the point Sherlock!