It’s been at least a few days since we enjoined the topic of our national distress, so why not brighten our spirits with a little review and update…

What’s going on in your next of the woods?

One very cheerful item that I sincerely hope will help get loans and homes moving is the new $8000 tax credit for the 1st time homebuyer.

Its a tax credit, not a deduction, and its refundable, meaning, I believe, that if you don’t owe any tax, you still get the $8000.

That, combined with your new itemized deductions for interest & prop tax should help get things moving.

Nice.........But it is gone after 12/1/09.

I find it encouraging that this particular plan is highly focused unlike other strategies that are somewhat similar to opening a huge bag of money in front of a warehouse fan and just blowing it everywhere.

This plan will certainly help young homebuyers nationwide, as well as to create demand for housing inventories that are stagnant.  Hopefully, home values will increase, which will increase equity thereby leading to more confident lending.

If the mortgage lenders will use common sense and not be bullied into unwarranted lending, this will help in many parts of the country.

Some areas are in terrible shape though......I read today that public schools in the Detroit area are producing only a 5% rate of students ready for college entrance.

Could this really be true?

Look at what just happened to AIG handing out millions in bonuses to those that screwed up the company with the bailout money!!

This bailout was a BIG mistake at our expense. If they left it alone, things would have eventually fixed themselves. 20/20 did a report on how in the 80’s we had 11% unemployment and the economy was in dire straits. Nothing was done by government and it eventually came around.

We are so screwed up in our thinking, that it is pathetic. When you are so badly in debt, do you go out and increase your borrowing to get further in debt?? This is economics 101. Stupidity reigns!!! Fred Thompson said it best… it’s like telling a fat man to eat more donuts to loose weight!!

Just wait and see what happens as a result of rushing in like fools. We opened the door for major inflation.

Sorry guys...I’m pissed at the idiots in politics...95% of them anyway.

In reply to PeterS:

“Sorry guys...I’m pissed at the idiots in politics...95% of them anyway.”

What is happening at AIG is a joint effort....here’s why:

These bonuses where strategically booked at the time they were booked with 2 specific points in mind.

First, These huge bonuses created additional expenses which further increased the corporate losses.  This, in turn, helped AIG to get larger sums from the government.  Free money....why not....and its perfectly legal......here’s why:

Second, Chris Dodd grandfathered in the clause to the congressional bailout bill that stated that expenses (including bonuses) that were placed on the books before 2/11/09 were to be allowed....thereby making these expenses unchallengable by the government.  This is exactly why the administration will likely fail at stopping this.

Why would Dodd do that?  To me, he’s like a football quarterback intentionally throwing the game.

Why would Dodd do that?  To me, he’s like a football quarterback intentionally throwing the game.

This is a sticky wicket.  As soon as the government legislates something that forces someone else to renege on a contractual obligation, you open yourself up to lawsuit after lawsuit.  73 plaintiffs [that’s just the number of folks receiving AT LEAST $1M] squaring off against the government was likely something with which Dodd didn’t want to have to mess. 

LEGALLY, I think there’s little lattitude; the bonuses were earned and must be paid, regardless of how tasteless it is to us.  The anger against the government for not “STOPPING” this practice is misplaced; the anger should be against the executives and boards of directors that gleefully offered or accepted the bonuses instead of doing the “Right” thing and turning them back.

So, Dodd grandfathering this provision is moot; contractually, the bonuses have to be paid regardless of whether or not that provision was codified.

SpongeBob - 16 March 2009 11:26 PM

What’s going on in your next of the woods?

Detroit/kentucky… my company doing well… bridge loans keeping us busy… we are vendors for all the big3, alot new tooling happening… good for us

ALL REFUNDABLE TAX CREDITS should be CANCELED immediately.

If Obama wants to increase revenue, that’s the first place to look.  Instead, he’s busy trying to force Private Insurance companies to pick up Veterans’ duty-inflicted medical care.  He’s off raising taxes on some tobacco products by over 2500% (That’s no typo...)

Why limit the home buyer tax credit to first-timers?  That’s simply not fair.  Anyone who owns a home should get that $8000 straight to the pocket.  Oh wait, that’s not fair either, since the renters won’t get their “Fair Share...”

Why do they limit it?  Because it SOUNDS sweet and loving like big government.  “We want to be your daddy and help you move into your first home!  Aren’t we just the best?”

And anyone who argues against it will be branded Evil and Greedy.  It’s like wrapping a huge entitlement program under a bill entitled “The Be Kind to Disabled People Act of 2009.” Who would POSSIBLY argue against that, for fear of being labeled a bigot come election time…

Tax Credits are just another form of welfare.

Get rid of the Child Tax Credit (Heck, OctoMom will be getting some serious coin off that this year!)

Get rid of the Earned Income Tax Credit.  It grew to epic proportions under Clinton, and is now the single largest welfare program around, even though Welfare is supposed to be managed at the STATE level…

Get rid of ‘em all!

Is this sour grapes?  Heck, no.  If the gov eliminated the CTC this year, I would have to pay an additional $7000 or so in income tax.  I just need to do what the Welfare class does and stop earning my own money and let the government give me YOURS.

This just strikes a nerve…

Yup,

Its amazing how many ways the government can disguise income re-distribution (welfare)....even the term itself is disguised!

The newest bill being introduced just today will provide a deduction which is matched with a tax credit for starving musicians who invest in new gear, even if they don’t have a gig!

So go buy more gear!

Seriously though, here in CA I am seeing many folks paying thousands less in there property taxes.  Those who bought high, then lost value are able to petition for reduced prop taxes based on the value reduction on the property.

Of course, the resposible buyers who did not refi many times in order to purchase big screen TV’s, big SUV’s, etc. get nothing for their efforts.

I agree with Quest… is a joint effort on both the greedy exec’s & polititians. Do you think we learned from Enron?? Things will never change as long as politicians can line their pockets with money and the corporations keep offering it legally or illegally. That’s why we have so many attorneys in this country. Special interest groups and the such should be banned. Especially Pharmecutical co’s. We are strangled in the ability to make that which is unethical...ethical. That which is right is wrong and that which is wrong is right.

It is old, simple GREED. The movie with Michael Douglass “Wall Street”, which I believe was the name, had it right.

In response to Tony:

“This is a sticky wicket.  As soon as the government legislates something that forces someone else to renege on a contractual obligation, you open yourself up to lawsuit after lawsuit.  73 plaintiffs [that’s just the number of folks receiving AT LEAST $1M] squaring off against the government was likely something with which Dodd didn’t want to have to mess.”

I do take umbrage with this statement and here is why. In order to have a contract, among other components, you must have consideration.  These exec’s’ bonuses must have been in consideration of something.  Certainly more than just sitting in a chair.  I suspect performance measured in various ways was the consideration.

I would bet that the test for consideration would fail in a lawsuit due to lack of performance, thereby negating the bonus contracts.

Just my thought....I really am not privy to the details.

Either way, it is time that Chris Dodd be faced with all out federal US treasury investigations for his un-ending role in all of this....... from his Fanny/Freddie involvement to AIG and Countrywide and the motives and payola he has been taking.

Did you know that for many of his homes (some of them mansions) he recieved below market loans?  For you and me, any below market transaction will result in taxable income....the arm’s length transaction being the benchmark.

Has Chris Dodd reported these gains on his tax returns?  Its time someone look into this.

Quest commented on Detroit Public Schools. Would you believe a 25% graduation rate?
http://www.detnews.com/apps/pbcs.dll/article?AID=/20070613/SCHOOLS/706130409/1003/METRO

The actual rate is probably somewhere near to 70%, as anyone who can, leaves the public system. So even though they start at a public school, they do not finish at one - hence the very low readiness and graduation rates cited.

Cry for the children, but Detroit’s problems are totally self inflicted. Years of horrible leadership and bitter racial division have ruined this once great city.

Bob

Quest, I think we’re agreeing, but arguing two different points.  My statement is that if the Government prohibited AIG from paying out the bonuses, the intended recipients could sue the government for interference. 

You’re saying that they might be able to prohibit payout if the terms of their performance contracts were not met.

Definitely agree with that, but it’s two different things.  I would *HOPE* that AIG isn’t paying out these bonuses if the terms of the agreements weren’t met; that would just be “Reputationally Suicidal.” But who knows.... Stranger things have already happened…

I will go on record, I do believe the auto boys WONT be handing out bonuses.

Im confident.

Given AIG’s record losses, it’s hard to imagine what business conditions could have been written into this contract that would to allow them a bonus payout.. The conditions must have been more along the lines of ‘ability to fog mirror’ or ‘if earth still exists’ or something along those lines..

I concur with Mo on the auto company bonus payouts. Not gonna happen.

Bob

Bob & Tony,

That’s my point.....assuming some performance benchmarks were set to complete their end of the contract, isn’t it reasonable to assume they failed at attaining the benchmark...therefore, no completed contract..... no bonus.  Unless the benchmark was as Bob points out.

By the way, weren’t the autoworkers asked to abrogate their wage and bonus contracts? Didn’t they comply? What is so special about AIG that they should not be asked to do the same thing?

This is just sand in our eyes. The primary objective here is,and I know it pleases some of you, ist overal dismiss and get rid of capitalism as our economic proposition.

This administration and the Democrats in congress,particularly Dodd, Frank, Schumer and Rangle not only created this situtation through Fannie and Freddie,but also benefitted from them in campaign contributions. AIG is merely the “sacrificial lamb”. It was/is, for all intents and purposes, a laundering operation for the politicians.

“We” objected to TARP 1 to the tune of about 70%. They did it anyway and with no conditions.The “three page” proposal to congress that turned into 400+ by the time it was voted on, had the problem embedded in the first three pages. The Secretary of the Treasury, at the time Paulson, had total control over the funds and autonomy over how it was to be disbursed. He, Bernanki,Cox (SEC) and Geitner,then Treasury Secretary in New York doled out the initial 350"B"illion Dollars. In comes Geitner,the tax evader, to take over and,without time to read the bill, ran through the dispersal of TARP 2...with the contracts for the CEOs and their bonuses written in.Want a sticky wicket? Over turn these contracts. It will mark the precedent needed to over turn future contracts.

But “now” these contracts have been “discovered” but was always there thanks to Chris Dodd and Tim Geitner. This outrage is BS. Dodd and Obama were recipiants of campaign contributions FROM AIG...."our money” from TARP 1. BILLIONS went to Bear Sterns,Bank of America,Merrill Lynch, and over seas to the UK, Germany and Switzerland FROM AIG.Credit Default Swaps needed to be covered. AIG took out the policies. Why? Because investers (financial institutions and banks) wanted insurance against loses from unstable investments ie Fannie Mae and Freddie Mac. AIG is merely a scapegoat being used by Congress to deflect the “enough blame to go around” that seems to never “go around” them. Meanwhile, everyone gets to feed the “corporate greed” beast that congress created in the first place.Government doesn’t want to “control” the market. They want to get rid of it. Sounds good! Get rid of those greedy bastards. The only people with money will be those in government. BTW....seems the only jobs being filled are in government. Czars for this and overseers for that....and who pays them? hmmm No job loss problem in government, but I digress.

Banks and corporations “do what they do”. They “make money”."We" get the benefit through savings and some checking accounts,CDs. and the IRAs and 401Ks that sat in our personal portfolios and they invested on our behalf. “We” were making money equal to our participation in the system. It was government intervention that invaded the system and “made” the system issue volitale loans through Fannie and Freddie.

Not only are we now focused on the “chump change” that these Ceos and Executives are getting; hundred thousands to a few “M"illion a piece,but we have taken our eyes off of the “B"illions issued through AIG to say nothing of the even bigger picture of the direction the Omni,Stimulus,Health Care, Energy etc is headed....and at our expense. No debate. No discussion. No alternative considerations. NOTHING! My grandchildren are broke and haven’t even gotten out of school yet.

This isn’t a conservative rant. This is what is happening and I still say that by June, this administration’s problems are going to be with Democrats. Republicans are neutered. You want “greed”? Watch the greed for power in the Democrat Party in congress.
I “Hope” we can all live with the “Change”.
Th-th-th-th-th-a-That’s all, folks.