Demoskratos

Fact #1 – Louisiana is one of the 5 poorest state based on income (Source).

Fact #2 – Louisiana received billions from the Federal Government to aid the ease and suffering of its residents and to help rebuild (Source).

Fact #3 – CBO Director testifies Stimulus will create jobs despite GOP jibberish (Source).

Fact #4 – Republican Louisiana Governor Bobby Jindal criticizes Democratic leadership for big government and spending despite the facts that at time of crisis, generally these actions will (1) help Americans and ease their sufferings and (2) create jobs allow Americans to rebuild.

Jindal – “…Democratic leaders in Washington, they place their hope in the federal government. We place our hope in you, the American people. In the end, it comes down to an honest and fundamental disagreement about the proper role of government. We oppose the national Democratic view that says the way to strengthen our country is to increase dependence on government…”  (Full Jindal Speech Transcript Here)

Even GOP leadership are quick to criticize Jindal.  (Sources:  Associated Press, Boston.com)

So what does Jindal do? He goes to Disney…wait a second, did he take the rail?  (Source)

Here’s the whole article and not just excerpts that the Congressional Budget Office (CBO) claims that they predict recession will end in 2009.

There are major assumptions they are making about public vs. private capital in both the near and long run.

But then again, the very same CBO that advised Congress on the condition of the economy was showing signs of stress but fundamentally sound in 2008 was clearly wrong (page 13, paragraph 2 in this linked PDF also from the CBO office published in the beginning of 2008).

Then some other government agency advised Congress that the US is in a recession since December of 2007 but only realize that in December of 2008.  A whole year late!

Real geniuses in Washington the GOP ignored previously.  Suddenly with Obama in the White House and Democrats the majority, Republicans are now clinging onto these previously ignored governmental advisory agencies every printed word.

We all know what is going on. We just can’t handle the truth. The banks want to keep real estate prices and other “assets” artificially high so they can keep those large interest payments coming in even if it’s only some portion of their total portfolio of loans and the rest are in default.

For the average American, the biggest purchase is their home and their biggest debt is their mortgage, although college tuition has come pretty darn close.

Ever notice that in the early years of a mortgage, the interest portion of each payment is higher than the principal portion? Assuming a 5.125% APR, 30 year fix mortgage, by the time payments start to pay down the principal more than the interest, it is somewhere in year 16. At that time, the principal owed to the bank is still 63% of the original loan amount. The year where principal portion is greater than interest in each payment is further out, if the APR is higher than 5.125%.

Take out your good faith estimate and loan disclosure statements. There should be a dollar figure that shows the original borrowed amount plus the full interest portion over the life of the loan. Some don’t have figures because of the type of loan such as interest only loans which means one never pays off the loan and is essentially renting from the bank who still holds title (title theory of real estate is another ball of wax but we won’t get into for now since it varies by state).

But it doesn’t take a real estate genius to say that home prices now are no longer valued at what they were between 2002 and 2006. However, those who had purchased homes with a mortgage back then are still paying for inflated values hoping real estate prices will come back soon so they won’t feel as bad.  But what happens if they are forced to sell at a lower value than what they owe due to let’s say job loss?  Oh oh.

But the banks don’t care either way since they are backed by the US Government and your tax money via the TARP. Banks can outlast this crisis and will hold you accountable in between. In most states, they will not forgive you on your debt therefore, it’s likely that you will have to liquidate all your assets first including, 401K, IRA, pensions, and savings if you stumble.  Recently, I went to a branch of one of the major banks near me that took TARP money and inquired about refinancing a 5% down with a first and second loan on a $200K condo so about $190K of loans with rates of 6.25% and 7.9%.  And before I finished my fictional condo story, I got the memorized new bank policy decree speech that I can only refinance 70% of the newly appraised value which means I may have to bring $57K to closing for a refinance assuming the price is about $190K newly appraised.  The mortgage representative said further that the alternative is to pay 3.5 points and they will overlook the loan to value ratio.  Say what?

President Obama and Congress are dedicated to keeping the banks afloat longer than keeping individuals afloat.  So as more and more Americans lose their jobs, get their wages cut, lose their benefits and deal with inflation, the Obama administration will continue to keep the banks afloat.

Every now and then, they will throw you a bone and call it a stimulus and hope it will help. I don’t know about you, but I don’t see myself or my wife working at NASA anytime soon, doing construction on a bridge or installing green technology solar panels or windmills in the middle of nowhere because we’re simply not qualified.

I guess it’s not only “trickle down” policy now it’s “trickle down and hope it goes sideways” policy we’re dealing with.

Also, read this blog “The Bad Bank Assets Proposal: Even Worse Than You Imagined” from Ms. Yves Smith of the site “Naked Capitalism”.