When will the economy get better?
The credit crisis has affected everyone in the United States and is now spreading around the world. The Obama Administration just signed a $787 billion stimulus package that is supposed to end this economic downfall. The only problem is that Wall Street does not seem to respond to the news. The Dow Jones Industrial Average continues to fall despite all the efforts the government is making. Job losses continue to mount and government funding at the state level is drying up. Obama keeps telling us the economy is going to get worse before it starts to get any better. The American people, including myself are tired of hearing the same speech and continue to watch the economy further deteriorate. The biggest question on my mind and everyone else’s mind is when the economy will get better.
I do not believe that the economy will get any better until the government gets the housing crisis under control. The losses from the housing market continue to bog down the balance books of our nations largest banks. Bankers are afraid to lend more money because of the massive amounts of losses that they are experiencing in the mortgage industry. The sub prime mortgage market has damaged the economy beyond control. The government should buy up these “toxic assets” from the banks and work and figure a way to work with homeowner’s so that they can keep their houses. The problem is that many of these people have purchased homes that they simply can not afford. These people need to be flushed out of the market and replaced with homeowners that are able to keep up with the payments. Banks will be able to start lending money once bad assets have been cleared off their balance sheets. In the meantime, the government can hold onto the unoccupied housing inventory and sell it off as times get better. The people who could not afford their homes must become renters once again.
The other major factor affecting the economy is the lack of consumer credit available. Everything from retail sales to automotive sales has seen significant losses in sales volume since the credit crisis began in September of 2008. The problem is the lack of investors purchasing consumer backed securitized assets. The problems in the mortgage market have spooked investors away from these types of investments. The Obama Administration is supposed to unveil the TALF (Termed Asset Backed Loan Facility) to help unfreeze consumer credit. They have expanded this program from $200 billion to $1 trillion. Under the TALF program, the government is supposed loan money to investors who are going to purchase asset backed securities such as auto loans, student loans and credit card loans.
I am trying to figure out the TALF program but I do not completely understand how this is going to work. The only thing that I do understand is that the only way we are going to get this economy back in shade is to unfreeze the credit markets. The ability to sell these asset backed securitized investments on world wide market is going to be crucial. Unfortunately, the shenanigans of many an unethical mortgage broker has scared away investors from asset backed securitized investments. Once the housing market stabilizes investors will start to move towards these types of investments. It will be up to the Obama Administration to do anything possible stabilize housing and instill confidence in investment markets once again.
The credit crisis has affected everyone in the United States and is now spreading around the world. The Obama Administration just signed a $787 billion stimulus package that is supposed to end this economic downfall. The only problem is that Wall Street does not seem to respond to the news. The Dow Jones Industrial Average continues to fall despite all the efforts the government is making. Job losses continue to mount and government funding at the state level is drying up. Obama keeps telling us the economy is going to get worse before it starts to get any better. The American people, including myself are tired of hearing the same speech and continue to watch the economy further deteriorate. The biggest question on my mind and everyone else’s mind is when the economy will get better.
I do not believe that the economy will get any better until the government gets the housing crisis under control. The losses from the housing market continue to bog down the balance books of our nations largest banks. Bankers are afraid to lend more money because of the massive amounts of losses that they are experiencing in the mortgage industry. The sub prime mortgage market has damaged the economy beyond control. The government should buy up these “toxic assets” from the banks and work and figure a way to work with homeowner’s so that they can keep their houses. The problem is that many of these people have purchased homes that they simply can not afford. These people need to be flushed out of the market and replaced with homeowners that are able to keep up with the payments. Banks will be able to start lending money once bad assets have been cleared off their balance sheets. In the meantime, the government can hold onto the unoccupied housing inventory and sell it off as times get better. The people who could not afford their homes must become renters once again.
The other major factor affecting the economy is the lack of consumer credit available. Everything from retail sales to automotive sales has seen significant losses in sales volume since the credit crisis began in September of 2008. The problem is the lack of investors purchasing consumer backed securitized assets. The problems in the mortgage market have spooked investors away from these types of investments. The Obama Administration is supposed to unveil the TALF (Termed Asset Backed Loan Facility) to help unfreeze consumer credit. They have expanded this program from $200 billion to $1 trillion. Under the TALF program, the government is supposed loan money to investors who are going to purchase asset backed securities such as auto loans, student loans and credit card loans.
I am trying to figure out the TALF program but I do not completely understand how this is going to work. The only thing that I do understand is that the only way we are going to get this economy back in shade is to unfreeze the credit markets. The ability to sell these asset backed securitized investments on world wide market is going to be crucial. Unfortunately, the shenanigans of many an unethical mortgage broker has scared away investors from asset backed securitized investments. Once the housing market stabilizes investors will start to move towards these types of investments. It will be up to the Obama Administration to do anything possible stabilize housing and instill confidence in investment markets once again.
Labels: asset backed securities, auto loans, credit cards, credit crisis, TALF
Credit Card / Financial news blog post by Todd Holliday at 7:34 PM 