Economic Update

Just this past week, Fed Chief Ben Bernacke actually suggested that banks just write off these high risk loans. What does that mean - just say to someone with a no-down payment loan of $300,000, just pay back $150,000 of that...pay us SOMETHING, and that will be fine. Isn't that great for the rest of us making our mortgage payments on time?

Banks and government are being duplicitious in this scheme. By keeping the economy flooded with cash by cutting interest rates, they are killing us with inflation. Now, the Fed suggest, just write off the loans for people who can't afford to pay them.

What will happened to the secondary mortgage market for you and me? Yeah, that's right, prepare to pay 8,9,10% for mortgages. You think Banks are going to lose all that money and not look for repayment somewhere else?

So, banks, lenders, and the losers who played a game with interest only-now downpayment loans are going to get a bail out on our backs? It is amazing...with no downpayment, you have people literally just walking away from the houses. They have no money invested in the home, and the bank is on the hook. So they are just walking out of these houses and leaving the keys. No ramifications for them other than some bad credit.

What is wrong with this country? How did we get here? Yet the government and the Fedeal Reserve are going to prop up the economy, while driving up inflation for what purpose? To stave off a recession.

I am in the camp that we need to let the economy work this out. Banks will need to work through the mess they created. Some may not make it. We enter a small recession, markets will stabalize, and it will play out. Then we can move forward.

All we are facing now, is a recession, with a deflated dollar, increased energy costs, and inflation on the rise. Stagflation around the corner - remember the 1970s?