Please wait while I set my soap box down. I am about to give my opinion on this disgusting turn of events by our government.
The Fed lending rate cut, for the most part, bails out the Banks.
The short term Fed rate is the rate Banks can barrow from the Fed resulting in them making more money. As a general rule they do not reduce the rate they are charging the consumer resulting in more interest spread or profit. If their money costs less they make more money. If the bond market becomes nervous about inflation mortgage interest rates on loans could actually increase as a result of the Fed cutting rates. The cutting of short term Fed rate helps save Banks from their bad investments. The Fed isn’t really interested in helping ”the average guy on the street.” They are interested in helping the Bankers club and all the upper crust of the investment society.
You will see results on your credit card bills , ARM’s and HELOC’s that are tied to the Fed. bank rate. This will not help people with teaser rates that can not afford the new rate adjustments. These home owners and investors will still loose their homes. This is still a major problem that will not be mitigated by interest rates as poorly written loans cannot be fixed from the borrowers side. These properties will have to be taken back and resold.
If the government wanted to help the average man and the economy. They would give a one time tax credit to go out and buy real estate in 2008. Maybe offer a one time tax write off of up to 5% of the total purchase price of the property as a direct tax write off. Example: you buy a house for $200,000 you get a tax credit for $10,000. That means if you are in a 33% federal tax bracket you could earn $30,000 and pay no tax on that money.
This plan would motivate the average guy who is currently sitting on the sidelines to go out and buy a house!
This would help fix the foreclosure rate by stopping this downward spiral of foreclosures with no Buyers. This would mitigate the losses to the mortgage industry, slow or stop falling real estate prices, stimulate the building industry and the U.S. economy in general.
The Fed and the Government in general is to busy trying to protect the Bankers and Wall Street Investors, they aren’t looking at the larger problem of how to fix the hole housing industry which would change the economic conditions here in the United States and thereby the whole world.
It is the same problem we have had in U.S. for the past 50 years, protect the corporate contributors to elected officials and send the little guy down the river. If we were ever able to eliminate election contributions perhaps our citizens could start looking at the candidates and the issues rather than slanted advertising reducing our elections to a popularity contest.
This has never been more transparent than in the present Executive Branch of our Government with Vice President Halliburton (Cheney).
The Bush plan of sticking $500 in taxpayers pockets is not going to induce people to go out and spend. What will they buy with $500 dollars? More Chinese products at Wal-mart. How will that help our economy? We have to benefit those people willing to help our economy not the foreign deficit.
Reward those that will go spend in industries that will get the basic economy going and fix the problem areas. The rest of the economy will follow. By focusing on tax incentives for real estate we will be fixing the problem.
It’s time for our elected official to turn into leaders, not bickering bureaucrats. Leadership is something that has been sorely absent in American politics for a long time on both sides of the isle. Congress and the White House needs to take a look at who they are and gather the courage to help OUR Country, not our Corporations, not our Foreign Investors, not their own interest or campaign contributors.
Our political leaders VERY QUICKLY need to gather the patriotic courage of our forefathers and do what is right for the people and our Country. If we do not put our own house in order how can we help anyone else.
If they fail in this task, we may very well see ourselves in the worst situation since the Great Depression.
For the Latest in Las Vegas real estate call Max at 702-334-2200. Or email me at:Max@MaxSellsVegas. com. Your comments and questions are welcome.
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