About Downey's Pico Rivera

Baffled by all the political posturing? If I were running for public office, here is what I would do since having Mastered Real Estate and Economics 101;

1. Reduce the Capital Gains tax to 5%, what this will do is encourage those that are holding long term capital gains to sell.

First of all, what is considered a capital gain? Some people think this is only for the rich, think again. A sale of stock, mutual funds or bonds fall in that category, as well as other long term gains, such as a real estate investment, apartment building containing 1 to 4 units, is also considered a capital gain.

Most people don't realize it, your home could be a capital gain if you made more than the allowable profit, as an example; you bought a home for $85,000 and you sold it for 420,000 there would be a $335,000 profit, and depending on your own status, that could be a taxable event. Another example, lets say I owned a rental unit, I am tired or the headaches of managing it, I want to sell, there is a good chance I might be incline to sell, because I want retire after owning it for 15- 20 years, however, after looking at the consequences of the Capital Gains Tax, I would be very reluctant to do so, or I may opt to stick it out and let my heirs worry about it, or use a IRS 1031 exchange to defer the taxes by buying another property, hoping the management headaches go away.

Basically speaking, capital gains taxes reduces the governments ability to collect revenue. Capital gains taxes are currently at15% on the Federal side and 15% for California, plus depreciation that may be due. and are scheduled to rise in 2011.

However, should Congress lower the capital gains tax substantially this would encourage property owners to sell, who are inclined to sell. By lowering the capital gains taxes, this would have an enormous effect on the economy by raising revenue to the federal government, as well as the States, like California, who are facing budgetary problems.

Imagine increase revenues, by simply reducing their capital gains taxes, more revenues created by simply reducing taxes. Raising taxes can be counterproductive. More is less, and Less is more!

With the Capital gains tax being so high, most people are very reluctant to sell because of this.

Paying lower capital gains taxes encourages income property owners an opportunity to sell, cash in, retire and do what they want to do, pay less taxes and enjoy life, or invest in other opportunities, joint ventures that create jobs. This is something to really think about.

2. Eliminate the Taxes on individual savings accounts held by banks, savings and loans, up to $100,000 in tax free income with an inflation index to keep up with inflation. This would encourage more people to save. Imagine using the Tax laws to create incentives for people to save money.

Lot of people would be pouring money back in to the banks, making them healthy again. Banks would be in a better position to provide mortgage money for those who want to buy homes or refinance their existing homes, others can get a car loan, or even finance a college education. We should make the tax laws help our nation, not cripple the economy.

The cost of credit is much too high, like credit cards for example, they need to be reflective of the risk as well as, a reasonable rate of return for the investor banks, yet not gauge the consumers wallets.

3. Regulate the interest rate that banks pay on regular passbook savings accounts at 1% less than the 10 year Treasury Note Rate, currently published at 3.83%, that means all regular passbook savings accounts would be paying 2.83% to their depositors. What this does, it provide banks with liquidity for banks to lend on.

Currently many people are looking for a safe havens for cash, including many mom and pop investors, who lack the sophistication of the stock market.

4. With respect to the Bailout and foreclosed homes that would be on the federal governments books as bad mortgages. I would allow these foreclosed homes to become part of a special recapture equity pool, in which the Government would Lease these bank owned properties with an Option to Buy. I believe this Lease Option Program could ultimately save the government tons of money, by turning a negative asset (bad mortgages) into a performing asset. These properties will have a tenant maintaining the up keep, as well as paying rent, at above the market rents. At the time the lease has been exercised, the tenant would have a portion of the payments credited back to the tenant (20%) of the rent collected, can be used as a down payment, if the tenant fails to exercise their option to purchase or fail to comply with the lease provision, they forfeit any option money. They must also go through a rigorous housing counseling program, where they will learn how to budget and manage their finances. If they fail to attend classes or fail to pay the lease in timely manner, they lose the opportunity and forfeit any option money. every month they were late that they may have been entitled too.

Tenants still must also qualify with periodic accountability sessions, to insure they know how to manage their financial affairs. They must also sign an acknowledgment and agree to the terms prior to entering into a lease option contract, and taking procession of the property. They would still need to qualify for the lease financially to have a reasonable assurances of qualifying for a mortgage by the end of their lease option period. In no event, is the tenant entitled to any portion of rents collected, if they fail to qualify for a mortgage due to acts of ill responsibility. After attending these home buyer certification courses, they will be better prepared to handle a mortgage payment. This encourages success of obtaining home ownership, because they earned it. This also makes it a win for the taxpayers and it gives those who want to buy in the future with an opportunity to own their own home. The government wins, by receiving rent money while the equity eventually rises if the tenant fails to exercise the option to buy. The tenants are guaranteed they have the first right of refusal at today's prices, the community wins, as there is no blight in the neighborhood, and the taxpayer wins by returning a bad asset to a performing asset. That's a Win for

Carlos R. Arvizu Sr

TheDOn1950@aol.com

I may enter the political Arena in 2010. If you think I should, please let me know. Thanks

If GM,Ford, and Chrysler are to survive this economic recession, they need to make serious decissions as to the future of their companies, as well as their workers. they also provide jobs to other supporting services that provide parts and other related accessories.

GM, Ford, and Crysler also employ a lot of related industries. Steel, Alluminum, sheet metals, plastics, molding and a whole host of supporting companies that provide jobs to America. If these automakers go under, so do a lot of other hard working folks.

What these automakers need to do is conscentrate on is what seems to be everyone's problem, not enough sales to support itself. So what do you do? You cut expenses. That's an enivetable fact of life.

The trade unions have made it vertually difficult to keep these automakers in business. They must realize it may be necessary to make concessions or lose their workforce to foreign automakers who can afford to build outside the US and sell here in America.

Short term loans may pay the bills temporarily, but that can also be a prescription for disater also. America needs real soulutions to fix the problems. Stimulus solutions work if they can stimulate growth. Just giving you a loan to temporary get you over a minor hurdle is not the same as slumping sales, credit problem, recession and poor consumer confidence in the economy. It's like borrowing from Peter to Pay Paul, eventually, your bills will catch up to you, sooner or later, unless you have a workable plan to solve the underlying problem. Slumping sales, and consumer confidence, and a lack of credit.

Possible solutions to fix the cash flow problem are;

1. Reduce the workforce by early retiring older workers without a golden parachute. Trade stock into a 401K in liew of a golden parashute. That ultimately would be more than adequatle, especially with low stock prices and growing future returns as the company grows. This would reward the retirees for their hard work and sacrafice of an early retirement.

Union consession maybe necessary to allow New replacement workers at a lower pay wages to start over the next 5 years. Giving these companies breathing room to survive and grow.

2. The Federal Government needs to provide a tax credit or deduct the interest for those buying an American Made vehicle. That would truly be an incentive to buy American, which would indeed be a stimulus.

3. Workers who can give management ideas that can lead to money saving ideas that leads to increase production or real cost savings should be rewarded.

4. Management needs to workabke solutions for the good of their workers and their stock holders. (Employees are stockholders)

5. Consolidate plants that provide duplicated tasks.

6. Build a better automobile that proves good value.

If the company can't survive, no one survives.

Carlos R. Arvizu Sr

theDon1950@aol.com

I plan on running for politcal office within the next 2 years. If these Ideas make sense to you the reader, please let me know. These are solutions, not rederick. Thank you.

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1. Eliminate taxable income from Passbook and Certificate of deposits held in banks and credit unions and other federal and state chartered banks up to the $100,000 in tax free income per year. Make it mandatory that banks raise the minimum interest earned to at least 2% for regular passbook savings accounts. Banks can then increase the Certificate of Deposits interest rates according to the their profit margins. The free market then would allow cash flow, that provides for mortgages, consumer loans.

2. Increase the FDIC Max Guaranty currently at $100,000. obviously raise fees for the cost of FDIC coverage.

3. Reduce the Federal Capital Gains Tax to .05%, this would generate cash flow into the treasury by encouraging those who have long term capital gains to cash in their gain and turn over money. This would have an enormous effect in raising revenue to the federal government. This would also encourage States that have capital gains taxes in line with the federal government to raise state revenue. More revenue, helps not only the federal government, but also the state and local governments operate much more efficiently without the additional burden of raising taxes that can be counter productive.

4. Encourage American Consumers to buy American. A tax credit goes along way to drive the dollars spent goods and services produced by the American public. It creates jobs, and that's good for the economy. Goods that are made by foreign companies that have at least 40% made in the U.S. should fall in that category and taxpaying consumers should be able to deduct interest or get a tax credit to buy American.

5. Raise the FICA to a maximum ceiling from $102,000 to $500,000 on personal incomes. It makes no sense to allow the social security system to go bankrupt on the seniors and the future generation of seniors who help build this country. It makes no sense to allow the social security system to go bankrupt, which will affect every senior and future generations of seniors.

6. Mandate Automakers to build an energy efficient automobile with strict deadlines and incentive that make sense by allowing them special tax credits for doing it. This will help us in the long run to reduce our dependency from foreign oil. If were going to bail out the economy, we can use real incentives that are productive and not a false give away, that put us into debt without producing any real stimulus.

Stated income Programs was not the reasons why mortgages went bad, they been out since the mid 90's. Most people don't understand how the entire money system works. The real problem began with the Federal Reserve, as the housing market flourished, so did the economy. as 2002,2003. when the market continued to heat up, the Federal Reserve did the correct action by raising short term interest. However, they went over board, by raising short term interest rates for 17 months consecutive months without thinking of the consequences, and took a wait and see attitude for almost a year and a half. The economy started on a downward trend as the real estate was slowing to a crawl, so did the economy. What the federal reserve did, was inaction. This Wait and See attitude let the United States and the World economy go bust, and it got out of control.

What the Federal Reserve should have done is a little to late , but needs to be said anyway.

1. The Federal Reserves should have stopped raising the fed funds rate by the last quarter of 2005. By continuing to raise short term interest rates, this help fuel the fire that Wall Street was not prepared for. The two tiered type mortgage loans provided by Wall Street, also known as 80/20 mortgage's or 100% financing, was directly tied to the Home Equity Lines of credit, that was directly effected by the raising the fed funds rate. This was the avalanche that ultimately help put us in this mess.

2. The Federal Reserve had an obligation to inform the money markets that provided capital for mortgages, that they may want to curtail or cut back on riskier type mortgages.

3. The Federal Reserve should have warned the GSE that it may become necessary to raise the Conforming Loan Limits, that was at the time set at $417,000. Fannie Mae, and Freddie Mac, as well as FHA had provided cash flow to the primary mortgage market by way of selling mortgage back securities to fannie and freddie.

Our Economy has been based on credit, ever since Pres. Nixon, took us off the gold standard back in 1971, without the secondary market providing needed capital back to mortgage industry, those banks, savings and loans mortgage holders that help provide financing for many first time buyers, as well as move up buyers, and helping existing homeowners to refinance to lower their mortgage payments, remodel their homes, etc., This Secondery Market helps recycle mortgage money to keep it solvent and flurhing, without it, homeowners, mortgage holders would be doomed for calamity, and that exactly what's been part of the problem.

This Financial snowball got out of hand, when the Federal Reserve, Politician's and the newsmedia got involved, so did panic. We normally have a 1% to 2% Delinquency rate that forces people into the Foreclosure process due to death, illness, divorce, unemployment and other calamities as well as those ill-responsible people who don't take paying their bills seriously. Looking at the problems we face today, could have been avoided in many ways.

4. One of the actions that the Fed. Chairmen was to act hastily in the decession to eliminate stated income programs. Many professionals, and Business Owners used these programs without problems for at lease 12 to 15 years when they appeared. The Federal Reserve needs realize that it hurt middle America. They need to ease up on the restriction as far as stated income for professionals, and business owners with sufficient assets to match the flow of income. Most business and professionals carry losses that may be difficult for most underwriters to understand because of complicated tax laws that provide various treatment, yet the flow of income is present. The big part of the equation, is at least 20% to 25% of all the mortgages that are originated each year, were from the business and professional community, and the majority experience very little in defaults. Entry level home buyers, allowed by Wall Street, to use this program, in conjunction with 100% financing, that was created by wall street, along with unscrupulous mortgage lending practitioner that helped defecate this program to many good hard working professionals.

If we are to get out of this mess, we need to think with our logic, not panic. At this point, were to deep in the hole, and the rest of the world. I don't often agree with the President, but we laid our cards on the table, and too late to turn back now. Let's fix the problem. Thank's Rush. Please pass this along to your readers and John McCain.

Carlos R. Arvizu Sr.
Downey, California
TheDon1950@aol.com