bailout

March 9, 2010 - Beginning on April 5^th, the next big bank bailout to be paid for by taxpayers will launch. The official name it has been given by the Obama administration is the Home Affordability Foreclosure Alternative (HAFA) program. Unofficially, it can be referred to as Cash of Keys. The program is being paid for by taxpayers and it provides money to mortgage servicers and to troubled homeowners. But the biggest beneficiaries of the program are likely to be lenders who are getting bailed out a second time. The only real difference this time is that the government is attempting to disguise the program as something else.

The basic premise behind HAFA is totally different from other government programs which are designed to try to keep troubled homeowners in their houses. In fact, HAFA is all about getting those same people out of their houses quickly; either through a short sale or a deed-in-lieu.

For the unindoctrinated, a short sale happens when a home owner sells their property for less than they owe on it. A deed-in-lieu is when the homeowner signs over their property to the bank without going through the foreclosure process.

Under HAFA, everyone involved in the foreclosure process will get paid. Banks who hold the first mortgage on a property will receive the bulk of the proceeds from a short sale, but will not be the only beneficiaries. These same banks will receive a $1,000 payment from the government for agreeing to the short sale.

March 3, 2010 - Tomorrow morning, the latest job numbers are due to be released by the federal government. They are expected to be bleak and the White House is now in full-on finger pointing mode. But they aren't pointing the finger where you might think. They're not blaming those pesky Republicans or tea baggers. They're not singling out individual members of Congress that they consider to be obstructionist. No, they are blaming the weather; specifically the snow fall that has blanketed much of the country. Who would have thought that with global warming being such a big problem that snow could possibly result in an additional 100,000 or so job losses? Maybe we should track down Al Gore to explain how this all works!

All kidding aside, the White House is running as fast as it can to distance itself from the latest job numbers and they are blaming the weather. Larry Summers, an economic advisor to the President told CNBC that, "The blizzards that affected much of the country during the last month are likely to distort the statistics."

This morning, President Obama stood before the cameras and announced that the most recent unemployment numbers released show that the economy is improving. According to those numbers, the unemployment rate dipped to 9.7%; down from 10% last month. But at the same time these numbers were released the government also said that there were fewer people employed in January than there were in December. So how is it possible that with fewer people working that the unemployment rate is also down? The answer is that it isn't possible unless the government tinkers with the numbers. And that is exactly what they are doing.

Who says you can't have your cake and eat it too? Someone needs to tell that to the number crunchers at the Bureau of Labor Statistics (BLS). They have found a way to take people off the rolls of the unemployed, even though they are not working. At least, that is what they want you to think. And it is especially what the President and members of Congress want you to believe.

When the BLS compiles unemployment numbers, it adds new claims for unemployment. At the same time, it subtracts discouraged workers. A discouraged worker is someone who wants to work but who has not been able to find a job and who has given up looking. According to the BLS's own numbers, when you include discouraged workers in the unemployment numbers, current unemployment numbers are above 18%. But even that doesn't tell the entire story.

February 2, 2010 - By virtually any standard, the economic stimulus package passed last year has failed to pay dividends in the form of jobs. Unemployment remains at 10% and while many economists are claiming that the worst is behind us, there is little evidence of this on Main Street. If we are in recovery mode, it is a jobless recovery. Yet the Obama administration continues to push for additional government spending - supposedly to create or maintain jobs even though there is no evidence that the first spending package has created any dividends. At the same time, in the administration's new budget, it is cutting funding for NASA's Constellation program. And the immediate effects of those cuts will be thousands of layoffs.

January 25, 2010 - In just a few days, President Obama will give his second State of the Union speech to a joint session of Congress. While it is widely expected that he will shift the focus to his speech to job creation and the economy, it is highly unlikely that he will paint a true picture of the financial position the country is in. Real unemployment rates are higher than they have been since the Great Depression and Congress and the White House have been printing and spending money so fast that it is almost impossible to keep track of. The end result is that the country is broke and that the only way to dig out of our financial mess is to inflate our way out of it. If you think that sounds farfetched, it is exactly what the government did to pay for all of the big government programs of the 1930's; forcing taxpayers to foot the bill for the government's spending splurges.

Most economists will tell you that inflation is a bad thing because it reduces the spending power of your money. And most economists that have looked at the recent spending habits of the United States Government will tell you that so much money has been spent that it can't be paid back without inflation. Essentially the government needs to reduce the value of the dollar so that the dollars it spends today can be repaid with dollars that will be worth a lot less money.