'The
90% Solution'
Knowing the real
problem is the first step to the right answer..
Picture this:
Imagine the U.S. economy is a large sailing vessel. But it's obvious
that it has taken on tons of water and looks like it's in danger of
capsizing. It doesn't matter if there's a big wind behind the sails.
You could have a gale force wind and it wouldn't help. In fact, it
might just drive the ship into the sea. What the ship needs is to
unload the water that's weighing it down. Until the water is gone, no
other 'stimulus' will help.
Here's
the Point: IF you don't fix the Housing Crisis, nothing else matters.
There is no way to restore the U.S. economy until this problem is solved,
period.
It's too big a part of the functioning economy. The '90% Solution'
solves
this problem.
Why is this so difficult?
Every politician is desperate to find the solution to 'jump-starting'
the economy. Experts on every side will tell you our economy is
stalled, treading water at best, waiting for something to happen
(Euro to collapse?). Every- one knows we need to do something,
yet no one wants to hear that it might cost them a little pain to truly fix
the problem.
How
do we know fixing this problem is the answer? Simple. How big a part
of the economy is real estate? How many jobs are positively affected
when people buy houses? How many are negatively affected? The answer
is many, many people!
Just a partial list would
include the following: Roofers, painters, plumbers, carpet and
flooring guys, electricians, framers, landscapers and nurseries,
building supply stores, the manufacturers for roofing shingles,
paint, plumbing fixtures...you get the point. Then, there's all the
gov't inspectors, the real estate agents, the mortgage providers,
banks, attorneys, etc....and all the clerical staff for all these
businesses! It's a ton of people...millions! A great many of whom are
now out of work.
There is an answer. It's
not totally painless, but it can be profitable for a lot of average
folks. And, what's more important, everyone will understand how it
works and why it will work. It's a simple, common sense approach and
seeing real-time progress in this area will instill some much needed
confidence into U.S consumers.
These are the
facts:
(1) Banks are sitting on
over one (1) trillion dollars in cash, but won’t lend
to businesses or, God forbid, mortgages (read: your balance sheet
probably needs to look better than theirs to get a loan!);
(2) Big
corporations are sitting on over two (2) trillion
dollars in cash, but don’t want to invest it or hire new workers.
Fear of government intrusion thru excessive and costly regulations,
the housing crisis and the looming specter of Obamacare and its
terrifying potential cost have all but paralyzed job growth in the
U.S.;
[Note: The Supreme Court
will hopefully kill ObamaCare; the next election provide the solution
to excessive gov't intrusion/regulations, etc.; Housing must be
dealt with by us.]
(3) The Housing Market is
still on life-support, yet everyone acknowledges that until this
problem is solved, we will be left with a ‘jobless recovery’,
which means there will not be sufficient consumer demand to
create a truly growing economy.
(4) Obama’s government
has now spent trillions of dollars attempting to 'stimulate' the
economy, yet unemployment still hovers stubbornly over 9%. Real
unemployment (including those who want to work, but have given up
finding a job and can no longer receive government unemployment
benefits) is closer 15%. That’s about 15-20 million
folks. How is that not a 'depression'? I'd like to hear an
economist explain that! to them!
Reality
Check in Real Estate
a. 25% of current
homeowner’s are ‘under water’ in their mortgage (it means you owe more on your
mortgage than the house is worth on the market...soyou can’t sell it to
settle the debt).
b.
Plus, there’s a growing ‘shadow inventory’ of bank-owned
properties and foreclosures estimated at 4+ million units that haven’t been
sold...and this ‘inventory’ will grow through at least 2012.
c. According to CNNMoney “...there were nearly 2.9 million foreclosure notices filed during the year (2010). That was a record high, and that’s another 1.7% above the record high set in 2009! In all more than a million people lost their homes in 2010.
d.
According to the latest Census Data, 11 percent of homes in the U.S.
are vacant, empty, just sitting there! That’s 18+
million empty homes. This isn’t
just a social problem, it’s an economic and social catastrophe.
There is no chance
for home prices to rise if these properties come on the market. Yet,
they won’t rise until they do come to market and are sold.
Why? People are smart. They won’t buy or invest if they believe the
best prices are still to come! This stalemate plus our government’s
ineptitude is what is causing the logjam. It could take years (5-10
years of low prices!) to work off this inventory. How long can banks
afford to just keep them on the books? With the Fed’s shameless and
endless subsidizing (euphemistically called ‘quantitative easing’),
evidently longer than we thought!
Bottom
Line: The obvious
strategy of the 'Fed' is to keep the banks afloat until the housing
market can turn around and the foreclosed homes can be sold at a
profit or, at least, less of a loss. The only way to keep them afloat
is to let them make money some other way. That’s what has happened.
The Fed has been lending them money at virtually no cost, they invest
it and make enormous returns. This is the ultimate version of 'crony
capitalism' and everyone knows it. It's unconscionable.
Is
There No Solution?
Yes. But, not with the
banks discovering a new-found belief in the great ‘American Dream’
and starting to lend to help rebuild our economy. Likewise, the Obama
government won’t be able to cure the problem no matter how much
they spend. The Fed has done all it can to buy time for a recovery,
but they have only managed to perch us on the precipice of an
economic disaster that could become a national catastrophe. Besides,
their resources are about gone, with little to show for it but a $15
Trillion dollar deficit.
The Wrong
Solution:
The
Obama government has failed in all its attempts to stimulate the
economy for one simple reason. Their efforts are all aimed at the
wrong people. They are aimed at the needy 10%, not the
productive 90%. This effort is doomed from the start. Why?
The needy 10% are needy
for all kinds of different reasons, but for many the main reason is
they need is a job! They're unemployed. They don't need hand-outs,
they need income. A government 'stimulus' program is just a
short-term attempt to apply a 'band-aid' to a wound without stitching
it up so it can heal properly. First, the wound has to be cleansed
and stitched, then a band-aid will help. The 10% are not the
problem, so it's foolish to think they can be the solution.
The
only way to solve this problem is to enlist the aid of the
‘90%’. It’s the ‘90%’ that can lead us out
of this mess. But they have to be acknowledged and incentivized to do
what needs to be done. Well, who are the ‘90%'ers’?
The
‘90%’ Solution:
The ‘90%'ers’
are the 90% of
Americans who are still paying their mortgages, who still have jobs,
whose $15 Trillion dollar investment portfolios could be enlisted to
help heal our broken economy. How? By
unleashing old-fashioned, American capitalism on them...and make it
worth their while to do it! Make them a deal they can’t turn
down... because so far, they’ve turned down every deal they’ve
been offered.
Why?
The answer is
because the deals being offered are directed towards the ‘needy’
10%, not the 90%. Once again, the government is trying to
subsidize the ‘needy’, as if that will fix the problem. It won’t!
Only the 90%’ers can fix it. They have 15 trillion dollars
in personal wealth. They are the only group with enough
resources to solve the problem. What do we need them to do?
Answer:
We need the 90%'ers to buy and rent these properties.
We
need small investors (even small 'friends & family' investor
groups) who will buy and rent individual homes for profit. It
is simply a fact that real estate has created more real wealth for
more people in the U.S. than any other business. Clearly, big banks
and GSEs (who hold this inventory) don’t want to be in the rental
business. It has to be an entrepreneurial venture and it has to
motivate masses of people to absorb the massive amount of foreclosed
homes. We need individuals and entrepreneurs to band together to form
small businesses and step in and fill the gap (as they so often
do!)…and make a profit doing it.
In turn, they will not
only stabilize the housing market, they will create millions of new
jobs and restore millions of others. They will also make good money.
This will in turn, generate new investments and more profits to pay
tax on. This is what the country needs, a 'grassroots' solution to a
nationwide problem. This focuses us on the real problems...jobs and
housing!
Is anyone listening?
For
more details - Contact: ____________________
