Sauro Economic Recovery Plan
Every one has an opinion
about an economic recovery plan,
some are to deep inside, that
their view of what causes the
economy to have boom and bust
times is obscured by many
things, greed among them. Other’s are so micro
analytical that they loose site
the big picture. Most of us are
of the “Common Sense Business”
variety of people. And it is
from that point of view that I
approach my opinion and plan.
To say there are problems
with the way the world has been
doing business is a gross
understatement. However, it’s interesting to
see how well and for how long
things can go if left
unquestioned. Real Estate and the credit
markets were moving along
swimmingly for the last decade.
In 2005, I was asked repeatedly
in interviews “When wills the
Real Estate Bubble Burst”. Then starting in February
2007 the question was about sub
prime mortgages. Our global media driven
culture is instrumental in
helping to grow self fulfilling
prophecies. The credit crisis started as
a question. What is the real
value of the sub prime assets? And because of the Mark to
Market Rule this question took
on new meaning for those who
could profit from doubt.
In
August of 07, that doubt spread
globally overnight. The question
of value gave buyers of these
assets an opportunity to buy
them at a big discount. Many of
these markets were
interconnected to each other,
such as the Derivative’s
market. Hence, everything came
into question and a fear began
to build. Fear, A very powerful
emotion. Fear has a paralyzing
effect on people and in turn on
the markets.
We are a 24/7 information
culture. Our news flow in
constant, And we tend to believe
everything we here and see in
the media. What’s interesting is almost
everyone I speak to says the
same thing. They can’t believe
that we’re doing this to
ourselves. Even more
frustrating, they can’t believe
the government has not taken the
right steps for a recovery. No
surprise there.
Sometimes, the solution to a
problem can be right in front of
your face. It was government
involvement back in the late
90’s that that set the stage for
this problem when they asked
Wall Street and lenders to
develop loans that could
increase homeownership.
So why do some think that
government can fix the problem
now.
No
one denies that the economy
will go the way of the real
estate market. To date,
nothing has been done to
stop falling real estate
prices.
The
United States has the most
valuable real estate in the
world.
So
why isn’t our Government
standing behind it.
Read
More
-
Regaining Confidence and
Liquidity in the Global
Credit markets
The Mark to Market Rule.
Instruct Rating agencies to
re evaluate assets.
The
SEC Mark to Market Rule and
the poor asset valuations by
ratings agencies are
responsible for the credit
crunch.
Read
More
-
Fannie Mae and Freddie Mac
Fannie Mae and
Freddie Mac are the agencies
responsible for buying
mortgages from the nation’s
lenders. Bailed out from the
government and getting an
additional $500B in bond
purchases by the government. These quasi government
agencies are only helping
some of the markets.
Read More
-
Tax Breaks for Small
businesses
Small businesses
account for approximately
70% of the work force.
Read
More
