General Economic Situation – National, State, Municipal

Quantitative Easing (QE)

Budget "mess"

Military, international impact

1. Real estate "bubbles" not unusual; occurs on an average about every 18 years. The farming real estate market is expected to be the next "bubble" to burst, with the projection that it will devalue properties at about 40%.

1. Current economic situation very tenuous. Two million homes foreclosed which is about five years of foreclosures in inventory.
2. Buyers of homes without the risk and nothing down are now known as "renters with title." Major factor in the foreclosure largess; devaluing of homes, neighborhoods, and communities.
3. Homes in the $200,000 price range for our Kansas City area is the current "sweet spot" for ease in selling.
4. Consumer risk adverse to debt; states and municipals are "running on empty" with higher taxes, reduced pensions, and reduced services. Municipalities can not go bankrupt.
5. American’s payment behavior not helpful to housing market: (1) keep phone in service (2) main credit card, (3) mortgage payment.
6. Changes occurring: improved individual savings, government-induced banking changes, credit purchasing patterns, growth in student loans because government now in loans control.
7. Less being spent on credit cards. $700 billion, down 5% since the recession. Spending isn’t where it needs to be to help our economy.
8. Business uncertainty with the changes in government, current governmental finance futures, CEO holding for knowledge of what’s next.

1. Project 9.2% unemployment by 2011 year end. Need to have jobs grow at 472,000 a month where we’re now only growing at about 200,000 a month.
2. Delinquency record of 537 days. 30% of foreclosed loans not received payment in over two years.
3. "Sand" states are the most affected: Arizona, Nevada, Florida, Georgia, and California. 70% in Nevada.
4. Federal, State, and Local---must scale back spending
5. Military needs research and development, to replace equipment and do high-priority operations.
6. State budget: Municipal budget "stimulus money" is going away. Must disclose pension liabilities that are unfunded, our actual debt.
7. Midwest Home Sales: normal was about 250,000 a month; now 35,000 a month---215,000 decline per month. In Arizona and Nevada, it’s a 400,000 a month decline; Florida and Georgia, it’s a 500,000 a month decline.
8. Congressional Budget Office. Scores a bill as it is presented. We need to ask questions when someone cites the CBO. No adjustments are allowed; assumptions are made on the score.
9. Do we have the willpower to take action? Will we be able to "gore" the American "sacred cows"?
10. Decline in United States world power. So much potential for bad things to happen. Debtor is slave to the lender. IMF is no friend to the United States. "The unthinkable is now thinkable."
11. Navy exists to protect commerce
12. Concern about the strait for oil near China.

QUANITATIVE EASING 1 AND QUANITATIVE EASING 2

1. #1—Federal Reserve bought mostly mortgaged backed securities…push down long end yield curve
2. #2 – Federal Reserve buying 600 Billion in Treasuries to push money into the system. This ends in June of this year. What happens?

SUGGESTED READING:

Library of Economics and Liberty (libertyfund.org)

Any Laissez-Faire books

STRATFOR (globalsecurity.org)

Yvonne Starks, Corresponding Secretary, for Recording