Saturday, May 10, 2008

A Quote From 1776 That is Just As Relevant Today

"But don't forget that most men without property would rather protect the possibility of becoming rich, than face the reality of being poor." (1776).

That quote is the clearest example of what I am trying to bring to the surface. The Middle Class is disasppearing as a result of voting against your own best interests. As I have said over and over you can't vote for where you hope to be you must vote where you are or it will become impossible to get where you want to go.

Friday, May 09, 2008

The Real American Economy

No longer able to turn their homes for cash, Americans are increasingly using plastic to meet their basic living expenses. But many can't afford to pay the bills.
These days, more and more people are saying "Charge it."

Finding themselves strapped for cash and unable to use their home as an ATM, Americans are increasingly turning to credit cards to cover gas, groceries and other living expenses.

But many find themselves struggling to pay the burgeoning bills at a time when even the basic needs are growing costlier.

"Other sources of money for a lot of Americans are drying up," said Dick Reed, regional counseling manager of Consumer Credit Counseling Service of Greater Atlanta, who sees more clients with mounting credit card debts these days. "Consumers just don't have a place to go to get money. They are digging themselves into a deeper hole not only to pay for normal living expenses, but to make minimum payments on outstanding debt."
I have often said that the American Middle Class as we knew it back in the 60's and 70's has been replaced by a working class with a credit line. This report solidifies that belief for me.

Those who are truly middle class are disappearing at an alarming rate. Just like our government that is borrowing what it needs to keep running so are average Americans.
Government and agency statistics illustrate this troubling trend. The Federal Reserve reported Wednesday that Americans' credit card debt jumped 6.7% in the first quarter of this year to $957.2 billion, This spike comes despite the fact that nearly one in three banks is tightening guidelines for credit cards.

In Atlanta, debtors calling the agency in the first quarter of this year had an average of $29,300 in unsecured debt, primarily on credit cards, up from $25,700 in 2007. They spent $335 on groceries and $242 on gas, on average, in April. A year earlier, those outlays averaged only $291 and $181, respectively.

For many people, racking up credit card debt is not a choice they want to make, experts say. Not too long ago, they could have tapped into the equity in their homes through loans or lines of credit or refinancing. But this debt, which usually carries lower interest rates, is no longer as widely available with the collapse of the housing market.
This is the result of a nearly uninterrupted 28 years of bad economic policies started by Ronald Reagan. The only period that saw a reversal of fortune was during the 90's and the economic boom of the Clinton administration. There philosophy was that a rising tide raises all boats. The Republican idea is that if you give the rich enough they will be gracious enough to piss some down on you. That is a failed concept and one that was helped along by the so called Reagan Democrats. They in effect helped to destroy their own economic futures.

Thursday, May 08, 2008

House OKs Controversial Housing Plan

The House on Thursday passed a contentious foreclosure-prevention package, which still faces a veto threat from the White House and an uncertain fate in the Senate.

In a 266-154 vote - with 39 Republicans voting in favor - lawmakers approved a proposal, sponsored by House Financial Services Chairman Barney Frank, D-Mass., to let the Federal Housing Administration (FHA) insure up to $300 billion in new loans over four years if lenders agree to reduce the mortgage principal.

To qualify, the lender would have to cut the debt to no more than 85% of a home's current appraised value. If the FHA-refinanced loans went into default, the FHA would pay the lender the remaining principal owed.

While 1.4 million loans are likely to be eligible for such a program, the Congressional Budget Office estimates such a measure would end up insuring 500,000 borrowers. The CBO estimates the FHA expansion program would cost taxpayers $1.7 billion.

"This bill is very time limited and limited in specifics to a subset of mortgages and meant to mitigate a market failure," Frank said during the floor debate on Thursday.

Opponents of the FHA expansion contend it's a bailout for lenders, investors and "speculators" who took on imprudent risk. And because participation in the program would be voluntary on the part of lenders, critics contend lenders would only unload their riskiest loans into the federally backed program.

Supporters note that the program is limited to loans for owner-occupied residents, not speculators. They also make the case that lenders and investors would be taking a loss on every loan, and that the borrower would be paying higher-than-usual premiums to the FHA to insure the loan and would share equity in their home with the government.

"No borrower who goes through this process will say at the end of it, 'Boy, that was fun. Where do I buy a ticket to get back on Space Mountain?" Frank said.

Supporters also say if the borrower still can't afford the loan when it's written down to 85% of appraised value, their loan won't qualify for the program. If the bill is a bailout for anyone, they say, it's a bailout for communities across the country, which suffer when home values and property taxes go down because of foreclosures.

Earlier on Thursday, the House passed a bill that would send states $15 billion to buy and fix up foreclosed properties - a measure the White House also opposes.

Frank's bill also includes elements intended to attract the support of Senate Republicans and the White House. Two key ones: modernization of FHA guidelines - for which both the House and Senate have already passed their own bills - and more stringent oversight of Fannie Mae and Freddie Mac, the two government-sponsored enterprises (GSEs) that guarantee the purchase and sale of home mortgages in the secondary market.

Nevertheless, late Tuesday, the White House issued a statement threatening to veto the bill in its current form. Analysts see the move as a tactical one intended to give Republicans more leverage in the negotiations.

That leverage is seen in the Senate, where Banking Committee Chairman Christopher Dodd, D-Conn., and ranking minority member Richard Shelby, R-Ala. are negotiating a housing package that could include GSE reform, FHA reform, and a Dodd FHA rescue proposal similar to Frank's.

When asked if Frank's proposal is something he could support, Shelby told CNN's Jeanne Meserve, "I'd have to evaluate it - how we're going to pay for it., what it's really going to do, do we really know if housing prices have bottomed out."

When asked if it was possible Congress would end up doing nothing, Shelby said, "The best of me says we ought to try to work this project out, see if we can have GSE reform, see if we can have FHA reform, and see if we can reach some kind of accommodation on housing."
It should come as no surprise that the White House would object to helping the homeowner. 30 Billion for Bear Stearns is fine but trying to keep people from becoming homeless could be vetoed. There is a reason that this fool is the most unpopular President in history. Its too bad it took the majority of the American public all these years to see what was obvious from day one.

Tuesday, May 06, 2008

Growing Hunger in America

A sobering look at the true economic distress in our country.
For Phyllis Bean, higher food prices mean going hungry so her 4-month-old baby girl can eat.

The Washington resident's $280 monthly food stamp allotment doesn't last very long these days, even though she gets a free lunch at a culinary training program at D.C. Central Kitchen. By mid-month, Bean is often reduced to eating canned ravioli and peanut butter and jelly so she can afford to buy milk and baby cereal for McKiya. By month's end, her refrigerator is empty.

"When I go to the counter, I have to put some of my food back so I can get her food," said Bean, 21. "I try to buy less meats and more starchy food that will last me - noodles, ravioli, rice, peanut butter and jelly."

Soaring food costs are putting a strain on many Americans' budgets. In the first three months of the year alone, they jumped 5.3%, and that's on top of a 4.9% increase in 2007.

But for those on food stamps, higher prices for milk, eggs, bread and other staples often mean tough choices and empty bellies. Many are forced to forgo fresh vegetables and meat, while loading up on pasta and potatoes. Others are turning to churches, food banks and other charities, which are already strained by the increased demand.

To alleviate the crunch on the nation's roughly 28 million people on food stamps, advocates are calling for Congress to pass a temporary mid-year boost in benefits. They are also fighting for changes in how the monthly allotment is computed to make it better reflect the expenses of today's recipients.

"It's been very tough for families," said Stacy Dean, director of food assistance policy for the Center for Budget and Policy Priorities, a liberal-leaning think tank. "They don't have the flexibility in their budgets so they just don't buy as much food or they buy cheap food or they skip meals altogether. Congress can and should act to help people survive the spike in prices."

One in 11 Americans receive food stamps, according to federal statistics. As the economy weakens, more and more people are turning to this support system. Households receive an average of about $1 per person per meal. Individuals' payments are capped at $162 a month while a family of four can get a maximum of $542 a month.
How can it be that the richest nation on earth has 10% of its population needing assistance to afford food while CEO's, even disastrous ones, receive millions.

The American Middle Class is on life support and without a clear understanding of this phenomenon it will continue to die off. The Middle Class votes against their own economic best interests all the time and the proof is in the growing numbers of hungry within the country.