10.23.09

10.23.09

          Jobs, Jobs, and more Jobs.

          That is what it is all about. If you don’t have a job you can’t pay your bills, and you don’t have money to spend on much more than feeding your family, if that. You now become a burden to society in general. You go onto the unemployment rolls. Your mortgage goes into default, you no longer have health insurance, and you sure can’t afford new clothes, new furniture or anything else new.

          Instead of spending most of their time trying to revamp Health Care, the Congress and the President need to focus on the one thing that needs to be done before anything else. Job creation is the number one thing that has to be addressed first and foremost. Quit wasting your time trying to fix things that don’t need to be fixed till later. And don’t raise taxes. Taxes take money out of the hands of the public and put it into the hands of the government. If the money that was spent on helping Wall Street firms and banks was spent on efforts to jump start the economy we would already see real signs of recovery.

          You may think that the news Friday on the ‘existing home’ sales was a good one. When you examine it closely you will see that 31% of those sales were foreclosures. Added to that roughly 40% of sales in September were to buyers scrambling to get in under the wire before the $8,000 bonus program for 1^st time home-buyers expires. The concern is that sales will tumble again, as happened to auto sales once the ‘cash for clunkers’ program ended.

By the way, there are some disturbing reports regarding the 1^st time buyer program. I have heard from a number of 1^st time buyers who closed on their homes a couple of months ago and expected to receive their $8,000 bonus immediately. But they have yet to receive it and are being told it will be another month or two before they do. And at a hearing on Thursday the Treasury Department reported that the legitimacy of about 100,000 claims for the bonus is being questioned. That can be kind of scary for those who were assured by real estate agents that they qualify and cannot afford the home without the bonus to pay off credit cards or whatever.

          What makes it compelling that we see later data on home prices is a startlingly gloomy forecast by famed banking analyst Meredith Whitney. Whitney says home prices, which have already declined 33% nationally from their peak in 2006, is set to begin falling again. And not by a small amount, but by another 25% from here. Few real estate experts think that we have seen the bottom in housing prices. But Whitney’s forecast is seen as too gloomy, even alarmist. Yet, credit-rating firm Moody’s expects a further decline of 10% from here. There are already more than enough people owing more on their mortgages than their homes are worth. So a resumption of price declines would certainly not be a positive for the economy.

          We are still 100% in CASH going into next week.

Till next time

The MTA Staff