Downey, CA

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

May 31, 2008

What can be done to help California and Nations Budget Crisis?

Our nation has been facing serious budget issues, and because California is one of the largest economies in the nation, our state is experiencing an exceptionally hard time. For many of us, it has become a delicate task to make ends meet. Even the everyday things, such as driving our cars to work and making sure there's enough food on the table, have become a bit of a juggling act. Many of the problems have been caused by our very own state and national governments paying too much attention to special interest groups instead of the taking care of the important issues.

The three biggest problems facing the United States government and California in particular:

1. Over-spending. Government spending is out of control, and we simply cannot sustain being in the negative for so long without serious consequences. It's like a bridge that has a crack in the support beams. Over time, the crack will get bigger and bigger, and eventually corrupt the safety of the support beams, causing the bridge to collapse.

2. Over-regulation and misappropriation of funds. For example, the state of California spends approximately 39% of their budget on education. If the Department of Education is allocated two-hundred million dollars this year, educators and administrators will find a way to spend every last penny of it because they know they won't get that same amount next year if they can do it on less. It's a self-defeating system in which they have to spend it or lose it.

One of the ways the state raises money for the education budget is through the state lottery. The lottery is a renewable source of income, and the money brought in from it is supposed to help supplement the education budget, but that's not what's happening. If the lottery brings in one hundred million dollars, the legislature will take that one hundred million dollars out of the original education budget instead of adding to it. What a system.

Oftentimes, money is spent in areas it really does not need to be spent. There are a lot of bureaucrats who drive state-issued vehicles to and from work or use them on their own time, paid for by the state. Most of us drive our own personal vehicles to work, which is what these bureaucrats should be doing as well. State-issued vehicles should really be limited to on-the-job use. What makes them different?

This is just one example of misappropriation of funds supplied by an inefficient administration.

Another way money is misused is through the millions of dollars spent each year for printing election materials in languages other than English. As a U.S. citizen, you are entitled the right to vote. However, you should be able to read and write the national language in order to do so. It is the responsibility of every citizen to assimilate to the national language. It is important to maintain and hold onto your culture. That's what makes this country great, but the national language of United States is English. If we were voting in Japan or France or Mexico, we would be required to read and write in those nations' languages in order to be able to vote in their countries. We should require the same of our own voters instead of wasting millions of dollars on voter materials in other languages. This is just another abusive spending practice created by politicians to gain more votes. This boondoggle of a system only serves to help bankrupt our economy.

The California Freeway system is an area that wastes millions of dollars in energy costs and costs associated with car accidents, injuries, and insurance claims for damages due to the carpool lanes. The carpool lanes, especially in Southern California, are a tremendous problem for many of us. Countless accidents occur each and every day because the carpool lanes are poorly designed. It's hard to get into or out of them without causing some sort of traffic jam or accident, which ends up costing Californians millions of dollars. These carpool lanes would be much more efficiently used if they were opened for use by everyone during non-peak traffic hours. This would help cut down on the harmful emissions released from idling cars, which burn more fuel (and we could all stand to spend less on fuel). Opening the carpool lanes would also generate a more free-flowing freeway and help eliminate the already overwhelming traffic congestion.

3. Not enough financial cash flow. Instead of borrowing from Peter to pay Paul, we need to be able to raise revenue to support the services we need in order to live or we need to reduce spending in order to maintain an equilibrium. This can be done by raising taxes or finding ways to generate more renewable revenue sources. Raising taxes is generally a politician's first solution to raise the money to pay for services. This way, they don't have to think outside the box. So, how can the state of California (or the federal government for that matter) raise revenue without massive tax increases, and at the same time make already-established taxes be more productive for the economy? That's the sixty-four million dollar question.

Believe it or not, some taxes actually create a deterioration of revenue. As an example, 80% of income producing properties owners are over the age of 50, and many of these owners decide not to sell their properties because of the high capital gains taxes, which currently sit at 15% for the state of California and 15% for the federal government. These landlords just hold onto their investment properties because of the high amount of taxation involved with cashing out. The bad news is that capital gains taxes will double in the near future, making it even less likely that the state will be able to build revenue.

If the government actually lowered the capital gains tax to about 5%, however, it would be much more beneficial for the state. If, for example, 100,000 income property owners elected to sell and cash out under the 5% tax rate, and the average taxable gain was $200,000, that would generate $10,000 to the state per owner for an overall one billion dollar gain. It would also generate more revenue from property taxes, as the buyers of those 100,000 properties would now being paying at a higher tax rate than the previous owners due to the appreciated sales prices. That's a lot of money the state could put towards something more useful, without have to raise any taxes at all. It would actually create a renewable revenue source that could create a vast amount of money for the state on an on-going basis.

Another revenue-building resource can be found in the gambling industry. The amount of money gambling produces is tremendous. If taxes were raised on gaming establishments at 20 cents for every dollar collected, it would generate enough cash flow to support a functional, substantial health care system in not just California but all of the United States. The gaming establishments could then reduce the payouts to maintain a profit, meaning that the house controls their own profit margin. It would be foolish for the State of California not to take an additional share of taxation from the gaming industry to help pay for the many services that are in desperate need of financial support.

The actions of our state and national governments, political leaders, and special interest groups have almost bankrupt our country's economy.

When a government cannot pay for itself, it robs our nation of the spirit of democracy and leaves an open door to revolt and revolution. As a society, when we cannot afford the basic necessities such as food, clothing, fuel for our cars, shelter for our children, or basic medical care, then the system has run out of control and needs to be changed. It's time to elect new leaders and hold them accountable to the laws they make, the laws that we have to live with.

Carlos R. Arvizu, Sr.
Pronounced R.V.Zoo
TheDon1950@aol.com

Comment and Perspective on the Real Estate Market

Carlos R. Arvizu Sr.

Contributing Writer

Communication and Panicking in the Market Place

Regardless what market your in, the stock market, real estate market or the Lending Market, sometimes we need to stop and rationalize what's going on.

The problem in this day in age, is that too much communication that causes confusion. Were bombarded with everyone's varying opinion Radio, T.V. Newspapers, Magazines and the Internet, you name it, it's no wonder why we have so many indecisive decisions clouding up our vision. Just this morning my wife had a panic attack about the money in her 401 k retirement fund. She is getting mixed signals from every directions, and is in a panic, and doesn't know what she should do.

On the lending side, I was talking to a prominent loan officer, she says that she had several people who heard that the interest rates were dropping (confusing the short term Fed. Funds rate with the 30 year fixed rate), in particular, several clients, wanted to wait for the rates to drop lower, instead of locking in a good rate, the rates went up considerately, and unfortunately several of these clients lost a good opportunity for lower payments.

On the real estate side, I don know how many people are setting on the fence to buy, waiting for that great deal, unfortunately, some of these people won't know when the real estate market has bottom out, until it's already past them going up again.

Warren Buffet, a Billionaire and one of the smartest business people, said this;

"Buy from Pessimist, and Sell to Optimist."

Which means, if opportunity presents it's self buy now, and profit from panicking people. Stay cool, don't panic. Now is a great time to buy real estate, and get a good loan.

Carlos R. Arvizu Sr.

Pronounced (R. V. Zoo)

Prudential California Realty/

The Mulhearn Group

562-755-3856

This morning, the Director of the Federal Government Sponsored Enterprise, Jame B. Lockhard, finally agreed to allow FannieMae and FreddieMac to set the Conforming Loan Limits higher than the current $417,000. Unfortunately, it's taken 18 months of huges sacrafices for the real estate and mortgage industry to get to the brink of total disater.

Why it takes so long for these people to make a decision is beyond me. It's very frustrating for homeowners, who are trying to buy or refinance. History teaches us valuable lessons, I not sure if politicians, short term economist, and the news media ever stop to rationalize the long term affects on their opinions, that affect our daily lives.

Carlos Arvizu Sr.

Prudential California Realty

TheMulhearn Group

562-755-3856

How fragile is the real estate market in comparison to the rest of the world of economics, and what does it take to get us back on track to stabilility and eventually growth?

To answer that, we must understand how all the componets work.

The Federal Reserve System and the Secondary Market (FannieMae and FreddieMac) which is operated under the Government Sponsored Enterprise (GSE), these two entities have a direct influence on our economy.

The Federal Reserve Systems controls the money supply that influences banks who borrow from them and other banks, short term interest rates, such as adjustable rate mortgages, hybrid type loans. They also affect consumer loans, home equity lines of credit, construction loans, cars loans, and also has a direct influence on the prime rate charged to the banks best customers.

FannieMae and FreddieMac are operated under the Government Sponsored Enterprise, they're main objective is much like an overdraft protection to a checking account, as a way for the financial community to maintain liquidity in the mortgage market and maintain an equillarium to the credit market.

This system works well, as the need for mortgage money is forever assisting not only first time home buyers, also move up buyers, as well refinancing home owners, who also benefit from FannieMae and FreddieMac purchasing loans on the secondary mortgage market, this systems provide the flow of monies to the primary mortgage market that conform to their established conforming guidelines.

Under these guidelines, pools of loans are graded by the types of loans, interest rates, due dates, rate of return etc. These pools are a mixture of perfoming assets, as well as non performing assets. These pools are also known as Mortgage Back Securities. These MBS are often purchased by investors, who may want a certain rate of return on their money, such as a retirement fund, 401K's, etc., in many cases, these pools provide a safe rate of return.

When both these entities are allowed to operate in unison, the economy can maintain growth, keep inflation in check by controlling the money supply.

So what happened? Why are we faced with so many problem loans, and really, how bad is it? Why is the economy in such a mess, and cofidence very low?

Raising short term interest rates 17 consecutive times consecutive and waiting to see what was going to happen took a tremendus toll without counter balancing the fed funds rate could have soften the landing of home prices losing values.

A changing of the guard with the Federal Reserve Chairman Ben Bernake taking over, and delaying of taking action to restore order.

The last piece of the puzzle is a mechanical part of the process, by that, raising the conforming loan limits that allow the secondary mortgage market to provide liquidity in states that are considered high cost states, like California, and New York to name a couple.

As an example, When you make it difficult for home buyers to buy, whether they are first time buyers or not, refinancing or move up buyers, you restrict the flow of money, this is the life blood of the economy. Like turning off a faucet that flows water to the things that grow, without it, it can not grow, it dies. That's exactly what happened.

Look at what a slow down of the real estate market actually does, if a person can not sell, buy or refinance, this ulltimentally filteres down to national level, as well as a state level. look at states like California, who depend on property tax revenues for everything, schools, health, and other services. You can't run it efficently without the flow of money.

Subprime was just the source of the fuel, Monitary policy, in effect was the match that lit the fire. The Federal Reserve is now taking a pro active stance, Congress finalally understand part of the problem, by raising the Conforming Loan Limits, now it's up to the consumers to take advantage by looking at the opportunity that now exist.

Homebuyers have a short window of opportunity to buy now with attractive rates and lower home prices, it won't last long. This was a mechanical correction, that needed to be done 18 months ago, .... it's a SHORT TERM GIFT OF OPPORTUNITY TO BUY NOW.