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Party On

I received a pithy e-mail yesterday when I asked for thoughts on the stimulus and housing plans:  SHOW ME THE MONEY!  Like a slightly bashful invitee, I am still gauging my response to the long-awaited request to attend a really large bash.

With regards to the stimulus plan, I partially disagree with an e-mail I received from a friend who is most conservative.  He thinks that major tax cuts to wealthy individuals and big businesses will “get the money in circulation faster, because the rich will spend--not save--and businesses will hire.”  I have no doubt that the rich may spend a bit faster (though a struggling/unemployed parent with an extra $65 is more likely to run to the grocery or shoe store in town while a richer recipient of cash or tax credits may buy a luxury item).  But I responded to him that I recall that the last time we gave breaks to big businesses wages stopped growing and jobs were outsourced to other countries.  While I am a business owner, I don’t see tax breaks as the way for me to stay in business and grow.  Freeing up lines of credit and making financing more available (e.g. releasing TARP billions back to on-going enterprises) is my preferred way of getting business back on its feet.  So the stimulus gets a thumbs-up from me in this area if the TARP money can actually be shaken loose.

As far as housing, I am still pondering and thoughts are percolating rapidly in my mind.  But to come back to the party metaphors, I don’t like to be fashionably late, so I am reacting right away to the portion of the plan which imposes responsibility on lenders to reframe loans, and if they don’t, the plan will permit the courts to modify onerous mortgages. I know, I believe in the sanctity of contract law, but in the same way eminent domain may usurp a landowner’s rights, judicial discrimination should be allowed to overrule a predatory loan.

The $7,500 tax credit?  Well, yea & boo!  Boosting first-time buyers (or those out of the market three years) is great, but why can’t move-up buyers get an assist if their homes are bought by first-time buyers so they can in turn buy the more expensive homes in the market?  Or does the plan (maybe properly) want to discourage some inventory from coming onto the market?  And what good does $7,500 do in April 2010 if first-time buyers don’t have the cash to put 20% down and afford closing costs in March or April or May of 2009?

Seems like there’s $75 billion to keep homeowners in their homes, but I am fairly fuzzy on the details so far, as well as how Fannie Mae & Freddie Mac will make refinancing more affordable.  I am also uncertain as to how far underwater you have to sink before the government lets you drown, and how you go about getting assistance if falling behind resulted in a severe downgrading of your credit score.

I know no one in the administration is waiting for me to wrap my brain around all the intricacies of the plan, and that is fine by me. I’ve got my best clothes on, so let’s get this party started! When I arrive, I may just sample an hors d’oeuvre or two and sit in the corner, but I am sure to be bantering with the guests before too long.

Comments

( 2 comments — Leave a comment )
(Anonymous)
Feb. 24th, 2009 03:27 pm (UTC)
I agree 100% about the $7,500.00. We are selling our house and our buyers will get the money, but we are in contract to buy again and we will get nada. I don't want to sound ungrateful because I know we are all in a pickle and need to shake things up (and I am happy to have sold my house)to get back to normal, but why can't every buyer get the same money?
real_lawyer
Feb. 24th, 2009 06:38 pm (UTC)
I sympathize. I own a business so I am not getting the $65 extra you may be getting in your paychecks monthly. So we are all shut out of some parts but should collectively benefit when things eventually improve. Fingers crossed...
( 2 comments — Leave a comment )

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