Voodoo Up Economic

Implications: No one noticed the stimulus for hell and now we get a new one.

Analysis: Since the economic balance/surpluses of the prior administration, which economists warned - ‘don’t spend it it may not be real’, the country has been head long and whoopty-do on spending.  Greenspan and the Bush administration encouraged homeowner spending and lowered interest rate as the stimulus.  Go borrow - buy something.  I know that when I bought my house the going interest rates for the common guy was 14% and qualifications were hard.  Since 2000 home/equity loan advertisements are on every media - radio, TV, newspapers and door-to-door, knob hangers.  I even had a guy jump my fence and argue with me -  as the police arrived - that I give them my house on a “nothing down” buyout or take a loan from him.  What has happen is the disappearance of enforcement of law and common sense in exchange for the greed of lenders and scheme artist.

Law - I had a story told to me, for which I have full faith that it happen just like it was told. A short loan was solicited to cover a quick financial short fall and get some pocket cash.  The loan was for $50,000 for 3 year at a fixed 7.5% - not much more than a car payment.  His house was put up for the equity loan - paper signed - done deal.  A few days later the borrower went to the lender for his check - no check said the lender couldn’t get the loan through, the lender said.   Disappoint the borrower starting looking around - he had great credit and equity in a house he bought 25 years ago and in a great neighborhood.  About a week later the borrower gets a call from - the same lender - saying that he could now get him that loan but it would be $75,000.  The lender said that  because the borrower had been shopping for a loan and this - somehow - effected the borrower’s credit - and oh- someone had put a mechanics' lean on the house for work done prior to the house being built for $10,000 and that that would have to be paid off out of the loan.  So he took the loan at a fixed 12% plus fees.  To make a long story short - the borrower started getting calls on the $50,000 loan from the investor who backed the loan.  The borrower said he never got any proceeds from the $50K loan and had been making regular payments on the original 30 year loan plus on the $75,000 he got when he couldn't get the $50k loan.  It was a scheme - the lender raised the first $50,000 from an investor on the borrower's credit - using photo shop failsafied the filings to the county register and sent the papers to the investor, keep the $50k, signed the borrower to a new loan which was had by another investor, kept the money on the non-existing mechanic lean which the lender filed at the recorders office under another name- and - the payments by the borrower - will they were paying both loans.  Soon the the gig was up.  The two investor were out their money, the property was foreclosed on and the lender closed shop and move out of the county and started again 30 miles away.  Did we say the DA has not enforced the claims by either the investors or the borrower nor for the doctored-up notarized official papers filed at the county recorder's office.  And do we have any idea on how many more law suite will be popping up - the borrower and the two investors were not the only ones dumped on.  The loans, more than likely, got bundle to a major bank or investment house who, through their desired negligence, just found out and will be filing with the FDIC or become a paper wash to some other government entity covering a failing financial institution - Bear-Sterns ring a bell.  Had the laws been followed with enforcement the $600 stimulus package wouldn’t be going to the homeless borrower’s lawyers.  The bet is the lender doesn’t have any money to collect on.  Oh that $600 bucks - someone just filed ahead of you on your income tax return with a new address - check is in the mail.

Stimulus - to do what?  Like my friend who borrowed on his house and others, the original cash back stimulus loans bought cars, refrigerator, washer/dryer, remodeling, vacations,  the first semester of college for kids or his own education for a better job and business upsizing.  That is all gone - spent on stimulating the economy while his job goes to China or India.  My friend  will never see the money lost to the investment industries high-rolling damn-the torpedoes attitude.  What is lost - is - lost forever.  The common guy who got rolled up in this is - a hair cut put off, a new shirt not bought, a restaurant not visited, an empty gas tank to travel, a vacation canceled, a child out of books for school, a factory closing and a banker without a job.  Although trickle-down economics, voodoo as it may have been, never really got to the bottom except by stimulus loans.  Nonetheless, the stimulus loans of yesterday - will yield an economic plume going bad rushing upwards not to be corrected on a $600 check that may, I said may, arrive in a month or two alone.  Failing credit will be enormous and racing upward.  No one will be offering an out or credit repaired like the TV ad.  So what did you have in mind for a stimulus package -  Shares in Enron - worth about the same.

Notwithstanding that there are a lot of people doing quite well now a days, as those before them did in the depression of the 20s, the trick now is to stay afloat until the Carpathia's stimulus package and credit repair services sail closer for the rest of those not so fortunate.  The stimulus package being what it will be - the road is going to be long for the little guy and they are the economy.  See you in to thousand and what.