Six Days Under A Tarp – Occupy Wall St. NYC – Zuccotti Park

Is The Sun Setting On Our Economy, Not If We Join Together and Change Our Future!!    I spent from 9-30-2011 to 10-5-2011 in NYC and with Occupy Wall St. at Zuccotti Park. I arrived Saturday about 1:30 AM  EST from LAX on a Delta airplane. After riding the subway the rest of the night I located the Occupy Wall St. Group at Ziccotti park at first light. It looked like the Occupy group had received  a soaking from the rain that had fallen that night. They were all under colored traps. It was wet, cold and a lite drizzle of rain was falling. I found out later that it is best to cover yourself completely to stay dry and warm by breathing the warm air under the tarp.   My name is Leonard C. Tekaat. I am a retired small businessman, financier, investor, author, and economic scholar, with over forty years experience in the world of home financing and housing investment. I have a special life-time California teaching certificate. I am 67 years old and a great-grandfather. I am the Chairman of a special Committee For Economic Reform and A Better Economic Future. I have been working, since the early 1980s to change the guiding policies of our economy. I was an Occupyier before Occupy was cool and didn’t know it. In 1981 I started writing a book, during the first Great Recession, Inflation The Economy Killer–How to create, control and stop high inflation, which discusses a flaw in our economic guiding policies that were created during the early twentieth century and have been used extensively since the 1960s in our economy and the world economy. The book was published in March of 1982 by International Economy Publications. This flaw in our guiding policies is what is causing the wealth gap to continually widen between the 1% and the 99%.   We are the creators of “The People’s Economic Recovery Plan”. The Plan is posted at www.recoverygovforthepeople.wordpress.com/ and www.foreclosurecrisissolved.wordpress.com/  The Plan is a practical private sector recovery plan that does not cost the tax payers a dime. It is not a soak the rich scheme. It is not a big government welfare program or a make work stimulus plan. It does not propose raising or lowering taxes. It does not increase the deficit. It will lower the deficit by increasing the growth and productivity of the economy, by making the economy more efficient and by increasing the opportunities for the people at the bottom of the economic ladder to work, to increase their wealth, and more importantly, retain their earned wealth and stabilize and maintain their standard of living!    I arrived at the Park at about 6 am Saturday the 1st of Oct. 2011. I started the morning by checking things out and reading the cardboard signs that were taped to the walls and laying on the ground. There were a few police standing on the sidewalk and sitting in cars across the street. It was quiet except for an occasional delivery truck accelerating from the traffic lights on Brood Way and at the other intersection at the other side of the park. About 7 am people began to stir. I found a place to stash my carry on bag and settled in.   The six days that I was with the Occupy Wall St. group I slept on the ground on a small back pack air mattress, under a tarp. I slept fairly well. Most nights I didn’t get to sleep until around 12 am, because of the activity and noise level. There was music being played, dancing going on, General Assembly meetings and continuous conversations between occupiers, visitors and supporters. The park was alive with the passion of democracy and economic debate. The air was filled with the love of humanity, mother earth and the universe.    I ate the same food they ate, which was good and healthy food, thanks to the kitchen work group. OH, I guess I’d better fess-up I did give McDonalds a little business. All the Occupiers, homeless people and I send our Thank You, to all the donors. All your donations are greatly appreciated. I went to the bathroom down the block at McDonald’s. We all would like to thank the owner, employees and manager of the McDonald’s franchise for their patience and effort to accommodate our needs and immediate pressures. There were no showers available other than the rain. I didn’t see anyone strip to take advantage of that opportunity. The security forces at the airport had taken my half empty toothpaste and my half empty shaving cream can, so I had to replace them at the store.   The time that I was in the park was spent talking to Occupiers, and news reporters about the People’s Economic Recovery Plan. There are two parts to the Plan. The first part is to revive the economy and put people back to work by increasing aggregate demand. With aggregate demand increased, businesses large and small will start hiring more people to satisfy the increase in customers. The second part encompasses changing the guiding policies that create the deep recessions and high inflation cycles that are so damaging to the middle class and the working class’s financial condition. The continuing cycles of high inflation and deep recessions continues to increase the gap between the 99% of the population and the 1% supper rich.  Through the lobbing and election contributions, big business and the big banks have gained the ear of Congress even though the people on the lower part of the economic ladder out-number the supper rich 10 million or more to 1.   It is my belief that it is better to create an economy were people have the opportunity to provide for themselves. In this way they can work to increase their wealth to close the gap between the rich and the poor. Currently the guiding policies create deep recessions and high inflation cycles or dangerous speculation bubbles that pop and create deeper recessions like the one we are currently experiencing, where many of the people on the lower rungs of the economic ladder lose everything they have earned after many years of working to increase their standard of living.   Of all the people I talked to, even the police officers, that are also on the economic ladder, agreed the Plan would reduce the unemployment and foreclosure rate and improve  the efficiency of the economy to create real wealth and maintain the standard of living for all of the citizens of our great nation.   I was interviewed on camera by 4 or 5 national and local television stations. I met and talked to Matt Miller from Bloomberg News, Dylan Ratigan, from MSNBC, Paula Reid a digital journalist with NYC, CBS News and other host and reporters from other stations. I gave them all additional written information about the Plan and also contact information. I have not heard back from them yet.   Some people gave me their business cards so I will be able to contact them later. I talked to newspaper journalist that did not give me their name or contact information. I should have asked, but it was very hectic with the crowds, and the news people looking for stories to beat their publication deadlines. There were reporters from other countries that were involved in getting the story they wanted.   There were website owners and video cameras everywhere, recording this historical plea for help and understanding from the citizens of the USA that are hurting the most from the financial crisis, that created the Great Recession of  2008. For every Occupier that was staying at the park, they were a representation of the tens of hundreds of thousands that could not get to the park, that had lost so much by way of the financial crisis and the Great Recession.   I marched with the Occupiers down Broad Way and across Brooklyn Bridge. I watched helplessly from the top of the bridge walk-way as a group of marches were stopped and then blocked from the rear and between the bridge and a fence. We learned later that 700 people had been arrested for walking peacefully on the side road after following a few policemen down the road. I was in the front section of the group that had taken the correct route.   I moved to the very front of the march where the grandma brigade , in their yellow vests, was marching. I managed to get beside a policeman and explain my recovery plan to, after he asked what I was protesting about. I told him I wasn’t there to protest anything, but to draw attention to the problems of our economy and society. After I explained how the Plan would work to him, he agreed that the Plan was better than what the Federal Reserve and the Federal Government were doing, because their plan had not created a strong enough recovery to decrease the unemployment rate very much and it put everyone  further in debt to the government.   I talked about the Plan at a couple of General Assemblies, where people are able to express their views, make announcements, suggestions, and report on the activity of the working groups. I explained to them that I had traveled more than 3000 miles to join their demonstration and provide them with the information, I thought they needed, to form a united voice to improve their world and their children’s future. I proposed that a working group be put together to formulate policies that would decrease the unemployment and foreclosure rate, which will improve the economy, housing is inter-twined with so many other parts of economy and societal problems. I had to leave before this occurred because of pressing responsibilities at home. But other groups have been formed to tackle the increasing economic and societal problems facing the people of our nation.   I had the opportunity to speak at the news conference that was held in front of NY City Hall. There were a small crowd of reporters and about 6 to 8 people that spoke. When it came my turn to speak I explained that the people at the bottom of the economic ladder were the people most affected by the deep recession and how we could improve our economic policies, to change the policies that were causing their misery. I explained how the “Big Boys” the “Political Connected” and the “disadvantaged got the “Gold Mine” and the middle class and the working class had gotten the “Shaft”.(Bill). I explained that they, sooner than later. were going to pay for the mess the Government, Big Banks, irresponsible home buyers and refinancing homeowners had created, with higher inflation or higher taxes.   The day before I was to catch a plane to come home, I paid Staples Office Supply stores to print and laminate two sets of posters that copied the flier for the PLan and the About Page on my web site titled ” Is the Sun Setting On Our Economy”. Because of complication it took all day to create the posters, so I did not get to display the posters that day. I made arrangements with Ian and Kathryn, a nice couple I had met at the park that understood how the Plan would work. They were willing to get involved and display the posters each day they were at the park. They said they liked the plan because it was a plan that has a balanced approach to economic recovery and all parties involved were giving a little to facilitate an economic recovery.   Wednesday the 5th of Oct. 2011, I had a reservation for the flight home at 11:15 in the morning. I figured that I would have to leave the park by 8:30 to take the subway and the bus to get to Laguardia Airport on time. I missed my flight on the flight from LAX and I didn’t want to repeat that mistake again.   The morning I was to leave I woke up at about 6 am. I figured I had sufficient time to set up one poster display before I had to leave. I used the posters I didn’t give Ian the night before to set up a display on the sidewalk next to the center steps facing Broad Way. While I was setting the display up several pedestrians stopped and read the Petition and the Setting Sun page. Some of the people were in a hurry and did not have time for me to explain in more detail the Plan I was purposing. The two men I was able to talk long enough, to give more details, liked the Plan and were willing to support it. One of the people I talked to was George Tillman an Affiliated Broker MLS with Eagle Real Estate out of Memphis TN. After he learned more about the plan he agreed it would help the real estate market and improve the economy. The other person I talked to in length about the Plan was John A. Haerty. He works in NYC, in the global investment sector. He was well versed on economic principles and said he understood what I was doing, and that he would support the Plan, and sign the Petition.  He also said, “He would tell all his friends and contacts to do the same.” I talked to him again on the phone, on Thursday, the day after I arrived at home. He said, “He had a little trouble logging onto the White House site to vote on the petition but he was going to try again after I gave him all three web addresses.” I had posted two additional petitions the White House site. He said, “That the prospect of changing the Pledge Of Allegiance  was an interesting idea. He said, “ He would checkout the other petitions and probably sign them after he read them.”   The majority of the Occupiers at the park were in their mid twenties or younger. There were older generations there also. They truly believe in what they are doing. They must, to endure the conditions that they are living with in the park. At no time did I feel that I was at risk. All the Occupiers I talked to were smart and eager to express their views. They were pleasant to talk to and were helpful.   I would like to give a special thanks to Brendon, He is one of the security personal, a tall well build, bald headed young man with military training, that helped me in many ways. He stands at the entrance of the media center answering questions politely and with patience to all that inquire and want to tell their story. I told him my story and he understood the Plan perfectly, the benefits of it and what it could mean to our nation if implemented, He became a supporter of the Plan. He surly is a premium Occupier.   On the trip home I met Kay Long in Memphis TN. He was in the seat beside me on the flight to LAX. We got to talking. He said he was unemployed at the moment, and was collecting unemployment insurance. He mentioned he had worked as a real estate appraiser during the bubble years of the housing bubble. He told me that he had been to a dedication of the rehab of an old walking bridge in Arkansas, that was hosted by his best friend, that was attended by former President Bill Clinton and his wife Hilary. He was very proud of the pictures of him and  the former President together. They looked like they were enjoying themselves. They had big smiles on their faces and Bill had his arm high up around Kay’s shoulders. Kay said that it would be good for me to get to met his best friend after I explained the Plan to him, Kay liked the Plan a lot. He posted the WH web page address to were my petition , on his facebook page. He wrote on his wall that he supported the Plan and the Petition 100 percent and asked all his family, friends and contacts to sign the petition and then post the information on their facebook pages to have their friends sign the Petition. Kay was very nice. He was smart and I would like to get to know him better. We exchanged contact information, so he could contact me after he talked to his best friend about the Plan. He thought it should go right to the WH as soon as possible. Since his best friend has political connections he figured they could make it happen. I will be calling Kay back in the near future after he gets caught up with his sleep. He was very tired on the fight back.   I enjoyed every minute of being at the NYC Occupy Wall St. I wish I could have stayed longer. I am going to try to gain support to occupy Fannie Mae. Fannie Mae and Freddie Mac are the bottle neck that is keeping millions of underwater mortgages from being modified and homes from being bought and sold. If they would agreed to purchase the mortgages with the terms I outlined in two of the Petitions, the banks would offer the new mortgage terms to the primary home buyers and home owners that want to refinance their mortgage. If they restructured (refinanced) all the mortgages they hold in their portfolio, the economy would improve, the unemployed would be employed and the Federal Debt would decrease without large cuts. I am going to need your help and all the members of Occupy Wall St to change economic policies, to increase economic opportunities so the working class and the middle class can work to improve their financial condition, helping to end the misery and decrease the large gap between the impoverished 99% and the riches 1% in our economy. Larry liked the idea of changing the Pledge to include the words responsibility and opportunity on my facebook page: www.facebook.com/leonardctekaat/    I need everyone to be proactive, and click the link, and sign the Petition at  http://www.change.org/petitions/stop-the-unnecessaryforeclosures-and-uneployment-crisis-with-new-mortage-terms We will need all the support we can get to make it happen, so share this info with your friends, family news media, and contacts. Go to www.whitehouse.gov/ click the contact the President button and leave a link to this article, or the Petition. If he gets a flood of links someone will pass it on to President Obama, or one of his economic advisers. We can do this! Let’s make the Petition link go viral! Share the following link with everybody!  Sign the petition to make a real difference in our future! http://www.change.org/petitions/stop-the-unnecessaryforeclosures-and-uneployment-crisis-with-new-mortage-terms   Thanks Leonard C. Tekaat Occupy Wall St. Occupier member, in full support of the movement, For inquires or comments firstoccupier@yahoo.com

Why Do We Have A Recession Every 8 to 10 Years?

If you go back, and examine our recent economic history, you will find that since 1952 our economy has experienced a recession about every 8 to 10 years. Eight to ten years is how long it takes for our economy to become over leveraged with credit obligations before the Federal Reserve “takes away the punch bowl” as they say. When the Fed tightens the control of credit, the resulting higher interest rates causes our economy to return to the recession cycle.

A recession will occur after a period of too much economic expansion, high inflation, or an economic bubble has grown too large, and has popped, as in the current Great Recession.

Economic bubbles, and high inflation are cause by the excessive use of credit in our economy. The economy becomes unbalance by to much demand (money)being created in the economy, insufficient competition, or not enough  goods, and services are being produced by the economy.

The question is, What is the best way to re-balance the economy, higher interest rates used by the Federal Reserve, 0r the income tax?

My vote goes to the income tax. The Zero Inflation Taxation Policy will make our economy more productive, and more efficient in preventing poverty.  It will help lower the amount of taxes needed to support social programs. It maintains demand more closely to the production capabilities of our economy, and maintains normal consumption demand during the economic cycles of high inflation, and deep recessions.

Instead of waiting for the Federal Reserve , the US government, or State governments guessing how to balance the economy with higher, or lower interest rates, changes in the tax code, or other policies, which are all monetarily, or politically motivated, the economy itself would automatically self balance the economic guiding policies, and tell us, the people, when it needs more money (demand) in the economy, or less demand (money) in the economy.

If the economy had excessive demand occurring, the excessive demand would be reduced from the top of the economic ladder with the income tax. Currently demand is reduced from the bottom of the economic ladder, with higher interest rates, when inflation is occurring, which increases the cost of the medium of exchange, which the enterprise system needs to function. Higher interest rates increase unemployment, and bankruptcy in the small business community, and in people’s lives. With excessive demand reduced from the top of the economic ladder, by the income tax, normal production and consumption can continue without raising cost, and the price structure of our economy, which raises the cost of our products and services. This process in turn reduces the competitiveness of our products in the world markets. Higher interest rates increase poverty, government interest cost, and social liabilities. which increases our taxes, as more people become government dependent.

The Zero Inflation Taxation Policy would work like this. During a recession, or normal economic times the income tax code would remain as it currently is. Except to lower the rates as our economy became more efficient, and more people are included in the private sector of the economy. If inflation started to occur, based on a true Consumer Price Index , that included a more complete basket of goods and services, the interest deduction would be reduced based on the inflation rate. At the same time the tax on savings, and debt investments would be decreased by the same percentage amount, based on the inflation rate. As inflation subdued, the percentages would change back to O%. This would maintain the balance of the economy, without creating a recession with higher interest policies used by the Federal Reserve. People at the end of the year would balance the economy by paying a little less tax, or a little more tax based on the how the economy was operating. The correction in values between money, and hard capital assets would remain in closer balance each year instead of having a recession to re-balance the values, as we are going through now, with the Great Recession of 2008 . Thus, solving the problems of deep recessions, and high inflation cycles.

Using the income tax to control inflation, and inflation expectations will help raise the standard of living of all our citizens, decreasing poverty, and closing the wealth gap with work, and by keeping people employed. 

 

Sign the Petition to improve our economy at the following link. http://www.change.org/petitions/stop-the-unnecessaryforeclosures-and-uneployment-crisis-with-new-mortage-terms

Take the Mortgage Survey. Have a say in your future, Then Read Solution to Foreclosure Crisis Parts 1 & 2 and other articles.

IS THE SUN SETTING ON OUR ECONOMY?  NOT IF WE JOIN TOGETHER AND CHANGE OUR FUTURE!

 

To the Middle Class and Small Business Owners:

We must improve the economy and increase opportunities so people can provide for themselves and their families. Currently the chances that a person will succeed are being reduced every day.
The economy must improve and the unemployment and foreclose rate must decrease by fifty percent. Interest rates must not rise or we will create another recession!
The people of our nation have gone through two and a half years of economic hell. Not much has changed for the middle class and small businesses since the Great Recession of 2008 started. The unemployment rate has not improved very much, foreclosures are increasing, and the enterprise economy is very weak.
My name is Leonard C. Tekaat. I am a retired economic analyst and economic scholar. I have over 40 years’ experience in the financial world of home financing, small business and investing in the housing market.

We have the opportunity to improve the lives of millions of American families, if we restructure people’s mortgage correctly, without any cost to the government or the taxpayers.

 
It is true that housing has become more affordable as prices have come down. Yet we still do not have a viable primary home market. There is a weak primary home market, because we are not using the correct mortgage terms to improve the housing market. We must change the way we are trying to improve people’s disposable income, their financial condition, the housing market and the economy. Federal government deficit spending is a flawed economic recovery policy.
What is needed to improve the housing market and the economy is a mortgage with new terms that will increase people’s confidence and disposal income, over a long period of time. With increased confidence and mortgage terms that fit today’s economic conditions, the economy will improve. The new mortgage terms will improve millions of people’s disposable income and it will bring people back into the economy and the primary housing market.

With increased aggregate demand in the economy, primary home prices will stabilize and then slowly increase in price. With equities increasing, instead of decreasing, financial institutions will be able to offer more favorable terms, but with new policies in place to help prevent economic bubbles from occurring.

For more detailed information about The People’s Economic Recovery Plan and the Zero Inflation Taxation Policy go to www.foreclosurecrisissolved.wordpress.com or www.recoverygovforthepeople.wordpress.com

I became involved in changing the policies that guide our economy because responsible middle class families are losing their homes and are becoming government dependent. I want our children and grand children to be able to realize the American Dream of a better future for their posterity.

The “Big Boys” and the “Moneyed” got the “Gold Mine”. The middle class and small businesses got the “Shaft” (bill). The middle class and small businesses get to be unemployed, foreclosed upon, go bankrupt and shut their business’s doors.

While big businesses and the federal government get to restructure their credit obligations’, small businesses and the middle class are shut out of the recovery process by not being able to have their credit obligations restructured.

If you are sick and tired of the people getting the “SHAFT” lets work together to improve the middle class and small businesses’ financial condition; the backbone of the American economy. When small businesses and the middle class are down the economy is down.

Sincerely
Leonard C. Tekaat

Please answer these questions. Then copy the survey to your e-mail and send to so we can send the results to Congress.  economysflaw@yahoo.com the author.

Do you own a home? Yes_____ no_______

Did you lose a home to foreclosure? _____Yes ______no

Is your home’s mortgage underwater? ______Yes ______no

Would you support a financial policy change that would lower your mortgage balance each month until it equaled the value of your home? _____Yes ____no

Have you thought about giving your home to the bank because the mortgage is under water?_____Yes ____no 

Do you want to keep your home if at all possible. ____Yes _____no

Do you itemize your income tax deductions? _____Yes _____no

What sector of the economy do you work in? Government ____ Enterprise ____ Financial____

Are you unemployed? _____Yes _____no

Do you receive a benefit check from the government ____Yes _____no

What is your approximant income level? ________________

Will you give up a portion of, or all of the interest deduction for consumption, business and investment reasons during the inflation cycle, for more stable interest rates, lower long-term interest rates, and a more stable enterprise economy? ____Yes _____no

If it were made available would you agree to and benefit financially from a restructuring of your primary home mortgage with the following terms?

Starting interest rate would be 3%. Interest rate would increase 1/4 % a year until the mortgage interest rate reached 5%. and then remain at 5% until the loan was paid off. If your mortgage were underwater the financial institution would forgive an additional principal amount, each month. equal to 30% of your total principal and interest monthly payment until the home’s value equaled the unpaid balance of the mortgage, or ten years which ever was the shortest time. There would be a modest fee to cover the cost of creating the modification agreement.

Yes___________No_______________Why___________________________________

Currently the government holds a majority financial stake in Fannie Mae and Freddie Mac, two private government sponsored financial corporation. The government is “by the people and for the people“. Therefore we the people own a majority stake in these two corporations. We should have a say in the mortgage terms and foreclosure policies of the mortgages that these corporations hold, control, or buy. Ninety-five percent of our home mortgages are held or controlled by these two corporations! We the people should use our financial institution to create a long-term sustainable economic recovery.

Banks are responsible for collecting the payments and enforcing the terms of the mortgages. They service of our home mortgages.

The new mortgage terms will stabilize the primary home market, reduce future foreclosures and increase total demand in the economy, which will decrease the unemployment rate. With total demand increased it will cause the foreclosure inventory to be sold in a much shorter time than has been predicted. If we can financially strengthen F&F and the economy, the taxpayer will not lose any money from the loans made to F&F. Fannie Mae and Freddie Mac will be able to pay back, to the US Treasury, all the money that it has loaned them.

Will you petition the government to encourage Fannie Mae and Freddie Mac to offer the new mortgage terms to the people for their own benefit and for the benefit of the qualified middle class and all existing people that have a mortgage held by Fannie Mae and Freddie Mac?  Yes_________ No __________ Why__________________________________________________________________For more detailed information on the Peoples Economic Recovery Plan and the Zero Inflation Taxation Policy go to www.foreclosurecrisissolved.wordpress.com/ and my other websites. The People’s Economic Recovery Plan will not cost the taxpayer a dime.

Message To Tea Party Leaders and Members-How to become a major party.

Is The Sun Setting On Our Economy? Not If We Join Together And Change Our Future!!
Thank you for visiting. Please click the Like button, leave a comment, and subscribe so that I can send you new posting, and keep you up to date. Thanks again. Leonard C. Tekaat

If you are unemployed, your home is being foreclosed upon, or are just sick and tired of getting the “shaft”(tax bill to clean up the mess the “big boys” made), join a growing number of people that want to change the guiding polices of our economy to increase opportunities so they can provide for themselves and their families, and provide America a better financial, and societal future.

The middle class does not want to become government dependent. We have worked hard to be self-sufficient. If the Financial Institutions and government continue on the path we are on, it will mean the demise of small businesses, and the middle class. We need people that are not afraid to stand up to be heard. To take a proactive position about their future, and the future of their nation. Join the R.E.B.E.L.S. it is free.

Please get involved for your children, and their posterity’s future. There is a better way to improve our economy than to put them into debt to the Federal Government, which will ruin their chance at the American Dream of a better future for their posterity. Our e-mail is economysflaw@yahoo.com Connect on www.facebook.com/leonard.c.tekaat/ Our Tweet handle is: “recessionkiller”, join the conversation,

Go to: www.foreclosurecrisissolved.wordpress.com/ for The Middle Class’s Rebuttal Speech To President Obama’s State Of The Union Address and The letter to The Federal Reserve, How The Fed Can Do More Harm To The Economy. The People’s Economic Recovery Plan is at www.recoverygovforthepeople.wordpress.com/ and at www.economysflaw.wordpress/ you will find over 25 articles, including Zero Inflation Taxation Policy. Is President Obama Making A Mistake, The Means of Exchange, Repeating the Mistakes of The Great Depression. You will find a more detailed copy of the article that appeared in the Bakersfield Californian on Feb. 14, 2011, “Solution To Foreclosures Will Decrease Unemployment And Government Deficit” at www.foreclosuresolution.wordpress.com/ or www.foreclosurecrisissolved.wordpress.com

Message To Tea Party Leadership and Fellow Members:

The Tea Party needs to present to the people solutions to the major problems that the middle class is facing today, primary home foreclosures, unemployment and a weak enterprise economy.  A positive message that our young adult citizens will be able to find jobs will increase the ranks of the Tea Party Patriots.

Yes, cutting the size of all governments is good. Yes, cutting waste and abuse is good. Cutting programs that are not authorized by the constitution is good.  If the programs that need to be cut are not eliminated by Congress, the programs to be cut should be determined constitutional or unconstitutional by the courts.

All of these cuts may or may not strengthen the enterprise system. The cuts may make it worse for the middle class until the enterprise system can return to its former strength. The enterprise system will need to return to the productive growth and strength the system will need to be able to employ the people that are currently unemployed, and the people that will lose their jobs because of the cuts.

The process that the cuts will help strengthen the enterprise system and create jobs in the private sector must be made clear to the people. The Tea Party Patriots, or conservative Republicans have not released a written policy statement on this subject yet.

If the Tea Party only supports cuts in programs, it will not strengthen the Tea Party, because people must realize that the cuts will create more unemployment and more foreclosures as people lose their income, and then their homes.  The families and people that lose their jobs will blame the Tea Party, and the conservative Republicans when they lose their income and their homes.

If the Tea Party offers solutions to the foreclosure and unemployment crisis, along with the cuts, it will become a major political party. By supporting the policies that are outlined in the following article, the policies will strengthen the enterprise economy, and increase the membership of  the Tea Party Patriots.  We wil become the party that support the middle class and small businesses.

Please read the following article article.

Economic Analyst Creates Solution To Unemployment and Foreclosure Crisis

New Mortgage Terms Will Increase People’s Disposable Income. Decrease Mortgage Payments, the Unemployment Rate, Government Deficits, Principal Balances, and Strengthen Our Financial Institutions

It stands to reason that if we can increase a large portion of the population’s disposable income without deficit spending or creating too much money, inflation expectations would not be created. With confidence in the value of the dollar increased and stabilized we can get on with the business of raising the standard of living of all our citizens. We can turn our attention away from hording gold and other commodities to protect our wealth. Real economic growth can be obtained. Full employment can be achieved and the federal and state deficits can be decreased by increasing the growth of our economy.

 
The People’s Economic Recovery Plan does not cost the taxpayers a dime. It does not require the federal government to purchase the bad mortgages or help homeowners with their mortgage payments. Nor does it require the federal government to pay the banks to modify the mortgages. It only require the people to stand up and be heard. 
The Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac, has operated since 1968 as government sponsored enterprises (GSEs) 
Fannie Mae was created in 1938 as part of Franklin Delano Roosevelt’s New Deal. The collapse of the national housing market in the wake of the Great Depression discouraged private lenders from investing in home loans. Banks and mortgage investors are doing the same thing during the Great Recession. Fannie Mae was established in order to provide local banks with investor money to finance home mortgages, in the secondary mortgage market, in an attempt to raise levels of home ownership and the availability of affordable housings and financing.

 
Fannie Mae and Freddie Mac are currently the major players in the home finance and foreclosure crisis.

 
These financial institutions own or have control of the majority of our home mortgages.
They are the financial institutions that determine what the interest rate and terms of most mortgages will be. The banks service most of our home mortgages. The banks collect the mortgage payments and enforce the terms of the mortgage contracts.

 
We the people should make the best use of Fannie Mae and Freddie Mac, to help facilitate a long term sustainable economic recovery.

 
First of all, let us introduce ourselves. We the people, are the middle class. We don’t ask very much from our government. We work hard to become self-sufficient. We want a fair shake from our enterprise economy, and our financial institutions, Fannie Mae and Freddie Mac.

 
We want a mortgage, and economic policies that allow us to succeed. Currently we are fighting an up-hill battle; many of us are losing the battle and have become government dependent.

 
We want to keep our homes. If we can restructure our mortgages with terms that make sense, we will continue to make our mortgage payments, and not allow our homes to go into foreclosure. The new mortgage terms we want will reduce government deficits, the unemployment rate, and improve the financial condition of the financial institutions that serve our economy.

 
We want the Zero Inflation Taxation Policy to be enacted. This change in our income tax code will affect all consumers, investors and businesses. We do not want our economy to create another worldwide economic crisis. This policy will discourage the excessive use of credit during the inflation economic cycle. The excessive use of credit when equity values are increasing too much causes most financial economic crises.

 
How will new mortgage terms and the Zero Inflation Taxation Policy help our economy?
Many economists argue that we must reduce the unemployment rate first to solve the foreclosure crisis.

 
This assumption is wrong. It is the other way around.
Aggregate demand and people’s confidence must be increased over a long period of time to have a sustainable economic recovery.
.
The foreclosure and underwater mortgage problem must be addressed first to improve the unemployment rate and total demand in our economy.
How we go about increasing aggregate demand is very important for the future of our economy.

 
If we can increase aggregate demand without increasing the money supply too much, as deficit spending stimulus programs do, the dollar will increase in value. With confidence in the value of the dollar restored, we can then get on with increasing the standard of living of all our citizens, not hording gold or other commodities to protect our wealth.

 
If done correctly, a restructuring of the middle class’ mortgages with a lower starting mortgage interest rate, and a principal reduction plan will increase total demand, which would allow our economy to recovery with less money creation than with deficit spending programs.

 
The new mortgage terms must also be acceptable, and beneficial to mortgage investors, and the financial institutions. If it is not beneficial to them, they will not embrace the new terms, and offer the mortgage to the public.

 
Currently the financial institutions are offering the homeowners the 5/1 Adjustable Rate mortgage. People don’t like this mortgage because the interest rate can go up each year after 5 years.
The new mortgage, will have a lower starting interest rate than the current 5/1 Adjustable Rate Mortgage. The interest rate on the new mortgage will increase at 1/4 percent a year, and stop increasing at 5 percent.

 
This change in the 5/1 ARM will increase primary homeowners disposable income substantially the first year, and then taper it off as the economy improves, and employment increases.

 
For example, a family with a six percent mortgage interest rate. The new mortgage would have a three percent starting mortgage interest rate. If they currently have a $1500.00 monthly interest payment, the interest payment would drop to $750.00.

 
These terms would be available to every primary homeowner, with or without an underwater mortgage. If you multiplied that $750 dollar increase in purchasing power by millions of people, aggregate demand on Main St. would increase enough to facilitate an economic recovery from the middle up.
The new mortgage terms will allow underwater mortgages to have their principal balances reduced monthly, equal to an additional 30% of their monthly mortgage payment.

 
The monthly reduction in principal balances is good for the economy in general, for the financial institutions, and for the homeowners. If the homeowner can see that sometime in the near future, the home’s value will equal the unpaid principal amount of the mortgage, they will not add the home to the foreclosure inventory.

Well that’s all great for the homeowner. How do mortgage investors and the financial institutions benefit from the plan?

The benefits of the new mortgage terms to financial institutions and mortgage investors are the following:
1. The home and the mortgage will become more valuable with the homeowner remaining in the home, and continuing to make their mortgage payments. Also the homeowner will be protecting the home, and maintaining it.
2. By reducing the principal balance monthly, the financial institutions do not need to mark down the mortgage to the current value of the home. The mortgage remains a performing asset, and maintains a higher value than a non-performing asset, a foreclosed home, or a short sale.
3. By maintaining most of the value of the mortgage on their books, the financial institutions do not need to continue to re-capitalize themselves with federal government debt.
4. The home’s value will, sooner than later, pass the unpaid balance of the mortgage as the home increases in value because of the increase in aggregate demand. In other words, the collateral’s value will stabilize and then increase. The increase in the value of the collateral will strengthen the financial condition of the financial institution.
5. Even though the interest rate has been reduced for the first year, and then increase for 6 years, the financial institutions will be collecting interest on a much larger loan than if they sold the home at market value, and put a new mortgage on it.
6. The financial institutions do not have the added expense of a foreclosure, a sale, the home’s security, property taxes, damages, repairs, insurance and legal cost.
7. The principal reduction process for the underwater mortgages will only last 10 years, or until the home’s value equals the then current possible selling price of the ‘s
8. With an increase in total demand, it may take much less time to balance the supply of homes to demand. In that case the lien holder will not need to subtract very much off the unpaid principal amount.
9. The plan will allow the primary home market to stabilize in a much shorter time than has been predicted.
10. Many mortgages can be restructured without much cost, with a modification agreement letter sent to the homeowner by the financial institutions that hold unsecuritized mortgages.
11. There is no need to re-qualify the homeowner before the modification letter is sent.
If the homeowner fails to make the new lower payments, then serve them a foreclosure notice.
12. With aggregate demand increasing, employment opportunities will increase. This should make it possible for the homeowner to get a job before the home is foreclosed.
13. Most investors and second lien holders would prefer restructuring the mortgage, under the new terms, to a foreclosure, short sale, or a refinance. The reason being is that with a foreclosure, short sale, or a refinance, the mortgage will be reduced to below the current market value of the home. Any part of the mortgage above the current value of the home will be lost.
14. The foreclosure inventory will be quickly sold to primary homeowners. To qualify for the new mortgage terms the home must be owner-occupied. With the foreclosure inventory reduced, housing prices will stabilize, and then slowly rise.
15. When a person buys a new home or pre-owned home, the buyer will have to qualify using the maximum 5% interest rate, but their starting interest rate will be the same as everyone else.
16. With the economy operating at full potential the financial institution will make more money than if the economy is in recession.
Currently the only way the banks will loan money to Main St. is if the Federal Government guarantees the loan. Under the current monetary policies can you blame them? They don’t know when the Fed will raise interest rates again and cause another recession. The Zero
Inflation Taxation Policy will correct this situation. It will stabilize interest rates and reduce the cost of long term loans because the savings and money investment rate will increase during the inflation cycle, without increasing the cost of credit.
With the new mortgage terms the collateral prices will stabilize and prices will slowly increase. Banks will again be able to make loans to Main Street.

 
With the new mortgage terms available people can have their mortgages restructured without the financial institutions increasing the money supply, or the financial institutions going through a lot of unnecessary paper-work. The state and federal governments’ deficits will decrease, and full employment will be obtained. The foreclosure crisis will be resolved.

 
WAIT A MINUTE. ISN’T THIS HOW WE GOT IN TROUBLE THE LAST TIME. WERE NOT INTEREST RATES TOO LOW FOR TOO LONG? NO … We got into trouble because a credit bubble was allowed to expand for too long until it popped.
The financial institutions and mortgage brokers were talking people into signing a mortgage that the buyer couldn’t afford to pay as the interest rate changed on the mortgage. The stimuli in the income tax code for people to go into debt and the high primary home annual appreciation rates made people too eager to sign these mortgages with bad terms.

 
Interest rates were not too low before the financial crisis occurred.
Before the credit crisis occurred, mortgage interest rates were 100% above the Consumer Price index.

What was wrong was the Consumer Price Index did include the cost of owning a home, only the cost of renting a home. So when we had inflation in home prices of 30% a year, the Fed said the inflation rate is 3% and the mortgage rate is 6% there is nothing wrong. There is no bubble in primary home prices. The Fed or Congress did not attempt to deflate the bubble. A few months later the bubble popped and market crashed!

If the financial institutions say that a 3% starting interest rate is too low. I would like to point out that 3% is the same amount above the Fed Rate, when the Fed rate was 2.75% and mortgage interest rate was 5.75%. The markup is a little over 100%.

With the Fed Rate at .25%, the 3% mortgage interest rate is marked up 12 times. If an automobile manufacturer built a car for $20,000.00 and marked the car up 12 times, the sale price of the car would be $240,000.00. With the mortgage interest rate a 5% that is a twenty times markup. The car would sell for $400,000.00.

 
My point is that the banks are marking up trillions of dollars of debt. This is why the banks were able to pay the TARP money back so quickly. The financial institution’s profit margin is currently very large.

 
How do we get the financial institution to realize that the new mortgage terms will be beneficial to them and would make them profitable again?
Fannie Mae and Freddie Mac are currently the major players in the home finance and foreclosure crisis.

 
These financial institutions own or have control of the majority of our home mortgages.
They are the financial institutions that determine what the interest rate and terms of most mortgages will be. The banks service most of our home mortgages. The banks collect the mortgage payments and enforce the terms of the mortgage contracts.

 
When I talk about the financial institutions, I am referring to Fannie Mae and Freddie Mac. Currently our government is the conservator of these financial institutions. The government is by the people and the government is for the people. Therefore Fannie Mae and Freddie Mac are under the conservatorship of the people.

 
Taxpayers have a majority financial stake in these financial institutions. Therefore the citizens of the United States own these corporations and should have a say in their home foreclosure policies and terms of the mortgages they own, control or purchase.
We the people should make the best use of Fannie Mae and Freddie Mac, to help facilitate a long term sustainable economic recovery.

 
Fannie and Freddie should make the business decision that in the long run restructuring or refinancing all the mortgages would be a good business move. Congress or the people should inform the financial institutions about changing their policies. Congress is the voice of the people. If the US Congress won’t do it, then the people should peacefully picket the corporations until they change their business policies.

By improving the financial condition of the middle class we will strengthen the financial condition of the financial institutions. If we can make Fannie Mae and Freddie Mac profitable again the taxpayers will not lose any of the money that we have loaned them. 

The government has passed many regulations to help prevent another bubble from occurring. The solution to preventing another bubble has not been enacted yet.

 
For more information Google three words “foreclosure crisis solved” to go to my websites.

 
Be sure to read part two of this article.

 
Sincerely

Leonard Tekaat
Leonard C. Tekaat is a retired economic analyst and economic scholar. He has over forty years experience in the financial world of home financing, small business. and investing in the housing market. He is Chairman of a special Committee for Economic Reform and A Better Economic Future.

Part 2-Message To Tea Party and Part 2-Economic Analyst Creates Solution To Unemployment and Foreclosure Crisis

Solving The Foreclosure Crisis

There are two parts to the People’s Economic Recovery Plan. For more detailed info. go to www.recoverygovforthepeople.wordpress.com/

The first part I have already explained to you; get the economy growing again by creating jobs in the private sector by increasing aggregate demand, without deficit spending or expanding the money supply too much.

The second part is more important than the first part.

In the past, problems arose when we slowed down the economy with the incorrect tool. The incorrect tool is the Federal Reserve’s higher interest rate policies.

Instead of the Federal Reserve using higher interest rates to slow down the economy, we should first use the income tax to keep the economy balanced. I don’t mean we must increase the amount of taxes the government should collect.

We need to put the ZERO INFLATION TAXATION POLICY into effect. I will explain why we need this policy and how it works later.

When modern recessions occur in our economy, they are almost always preceded by the excessive use of credit and the concept of the citizens that their money is losing purchasing power (inflation psychology).

To prevent another bubble from occurring we must understand how economic bubbles occur? As the economy heats up, equities increase in price. With higher collateral prices, people are able to get more credit from financial institutions. The new money is either spent, or invested, which increases profits and causes higher prices, because of the increases in the money supply, and aggregate demand. This creates the “herd effect”, as more, and more people join in to obtain the easy “paper profits” that can be had.

Let me ask you a question. Why were people willing to pay the extremely high prices for primary homes? Why did the bubble occur in the primary home market and not as much in the rental home market?

In the late nineteen nineties there was a recession beginning to occur. The Federal Government was running a surplus in their budget. There was talk about deflation occurring. To stimulate the economy Congress passed and President Clinton signed a new guiding policy, (tax law) that allowed people to profit greatly from the sale of their primary home.

Remember you have to have a trigger to start a bubble. That trigger is always easy “paper profits.”  The air in the bubble is excessive credit use or leveraging.

The primary home price bubble was created by several things coming together.

The first, and which I believe to be the most important, is the change in the income tax that allowed up to $500,000.00 of capital gains on the sale of a person’s primary home to be tax exempt. This tax policy gave the seller a good reason to sell and the buyer a good reason to buy. The buyer was expecting to reap the same tax free money in a couple of years as the previous owner had done. (Untaxed “paper profits”)

The Fed would have had to raise interest rates to 45% for a person to have the same return on a money investment or savings account, if the home had an annual increase in price of 30%, as we had in 2002 through 2005.

Is it any wonder the Fed Chairman said, “If there is a primary home price bubble, we will fix the economy after the bubble pops?” They could not do anything about the primary home price bubble if they had tried, without crashing the entire economy, which he didn’t want to take the blame for.

Some other things that contributed to the primary home price bubble are:

1. The change that allowed underwriting standards to be lowered on primary home mortgages. Wall St. created the Collateralized Debt Obligation.
2. The Federal Reserve’s inability to put a halt to the feeding frenzy in the primary home market.
3. The government’s desire to increase home ownership; let the risk to the economy be dammed.
4. The policies that allowed the banks to keep their profits but pass the cost of the bad loans to the taxpayers, through Fannie Mae and Freddie Mac
5. People all over the world looking to invest their money at higher interest rates and in safer positions.

Profit is not a bad thing. We all want and need to make a profit. It is when it becomes a feeding frenzy that creates a danger to the economy, as it did with the primary home price bubble.

Currently Congress allows the Federal Reserve to handle monetary matters. The Fed and its member banks have control of the money supply. The very same people that profited from the un-balancing of the economy, and the excessive money creation schemes.

It was not beneficial for the Federal Reserve System and Wall St. investment banks to stop the economy from running over the cliff. They get more business as people realign their investments to the crash. They then earn more commissions as the economy recovers.

The Fed uses higher interest rate policies to slow down the economy when inflation is occurring.

Using higher or lower interest rates to control inflation and inflation psychology is very slow and inefficient. Changing interest rates takes a long time to affect the economy. By the time they take effect, the economy can be in trouble again.

Higher interest rates are bad for the economy because they reduce demand from the bottom of the economic ladder by increasing unemployment, foreclosures, and personal and business bankruptcies. Then large and small businesses close their doors, and lay off their employees, reducing demand further.

When the economy recovers, there are fewer employment opportunities, and less competition in the market place.

With less competition in the market place, we quickly return to where we started from, but with less supply, and more demand. 

More people have left the private sector, because it is so unstable, and have joined the government dependent ranks to receive a paycheck, or just a check, with no work involved.

Our businesses have moved overseas because of our inability to control the ever-increasing cost of doing business in the U.S., the cheap labor cost overseas, and the tax advantages we give them in our tax code. They have left their fellow citizens high and dry, with fewer employment opportunities.

People need productive jobs to maintain their standard of living, not credit maneuvering procedures using leveraged fiat money. Fiat money maneuvering is what our nation has been using more and more, since the world went to floating exchange rates, to prevent its bankruptcy.                          

The businesses that have moved their production to foreign countries are abandoning the ship like rats do when a ship is sinking.

Our economy will not continue to sink if we join together, and change the policies that guide our economy. We are still the largest economy in the world. I am sure that we all want it to stay that way.

The lesson that needs to be learned from all this, is that we cannot continuously stimulate the economy with tax incentives, and not end up going over the cliff. The tax incentives must change as quickly as our economy changes from the recession cycle to the inflation cycle. 

This process of larger and larger loans can be slowed down if you use the correct tool. The correct tool is to take the profit out of the madness in the very beginning of the occurrence. We need to change our guiding policies to maintain our economy as an engine of prosperity for all our citizens.

It would be much better for our economy if we used the income tax to remove excessive demand created by people that want to profit from inflation or they want to protect their money from inflation and taxes, when inflation first begins to occur in our economy, than to use the higher interest rate policies of Fed.

Taking excess demand out of our economy caused by inflation expectations from people at the top of the economic ladder, with the income tax, will maintain balance in the economy without raising cost. Normal production and consumption can continue to take place as the income tax fights inflation and inflation psychology.

Our economy creates the most jobs, and increases in people’s standard of living when it remains in a slight upward imbalance.

In other words, we need an economy that has stable prices and stable interest rates.  We need guiding policies that creates an economy where businesses and our citizens can make long term plans. An economy where  “real wealth” is created, not “paper profits”

Inflation is created when there is insufficient money in the saving pool, because new money must be created when the savings pool is empty. 

With the Fed and the Federal government pumping money into the economy, very soon there will be too much money in the economy, chasing too few products and services.

Economic activity does picks up. The economy will be coming out of the recession cycle again.

After the recession cycle, when equity prices are increasing, the banks will make every effort to loan the money out as fast as they can. This causes the economy to heat up, and inflation to be created. The Fed will then raise the cost of the means of exchange (credit), making it too expensive to use to facilitate the exchanging of goods and services.

Without a reasonably priced means of exchange, to facilitate the exchanging of goods and services, the Main St. economy slows down because of the extra cost to do business. Unless people can increase their income to pay the increases in prices, a recession is created once again. If people are able to increase their disposable income by the use of credit, or increases in wages or other income, the higher prices are incorporated into the price structure of our economy.

But the added cost of the means of exchange (credit) causes the cost of production, and consumption to increase, causing prices to rise again. The price structure of the economy increases across the whole economy, just like if you had another commodity that affected almost every step in the production and sale of products, like oil or energy.

If interest rates go up from five percent to six percent that is a 20% increase in the price of the means of exchange (credit). If oil went up 20% from $80.00 a barrel, the price would jump to $96.00 a barrel. These increases in prices would soon be reflected in the price structure of our economy. When prices and wages increase in our economy it makes our exports uncompetitive in the world markets. We then lose jobs and businesses in our economy and some of our businesses move overseas.

It is very difficult for an economy to lower its price structure, because of all the underlying cost that makes up the prices of goods and services. The economy repeats its cycles again, and again, similar to a dog chasing its tail. The price structure of the economy goes higher and higher. The banks collect more interest and fees based on larger loans and mortgages. The government collects more taxes based on higher wages and prices.

Our current monetary control policies create a higher price structure in our economy.

It would be much better for our economy, if we had an automatic adjustable tax policy, than a bank controlled adjustable interest rate to control inflation and inflation psychology.

The Zero Inflation Taxation Policy would not raise production and consumption cost. It would increase the savings pool during the inflation economic cycle. It would stabilize interest rates, and lower the cost of long term credit.

It is more important to have stable interest rates than a static tax policy. If the income tax is a balanced tax, people will maintain a balance in their financial affairs.

We will reduce the chances of creating another bubble in the economy, by changing our higher interest rate policies for the Zero Inflation Taxation Policy to help control inflation and inflation psychology.

Basically the Zero Policy works like this: As inflation begins to occur, the tax on interest earned on debt investments and savings would decrease, based on the true annual inflation rate. At the same time, the interest tax deduction would decrease based on the true annual inflation rate. In this way the excessive use of credit during the inflation cycle would decrease. The value of money would increase during the inflation cycle, without increasing cost, and the price structure of our economy.

The economy would stay closer in balance, and production would have the time, and the money it needs to balance supply with demand. Our economy would become more efficient, and competitive in the world economy.

If prices of equities increase more than 1 or 2 % a year, we must increase underwriting standards, and percentages of equity to loan amounts. This pertains to all of our commodities, and equity markets.

When prices are increasing more than 1 to 2 percent annually, it is a sign that too much money (debt) is being created.

After the Zero Inflation Taxation Policy is put into effect, Interest rates would be determined by a market unaffected by inflation psychology, or the income tax.

The income tax’s stimulating policies would be automatically neutralized at the correct time in the economic cycles of our economy with the Zero Inflation Taxation Policy. The time that they are neutralized would be determined by how our economy is performing, not by a 541-member politically divided committee that can’t come to a decision until the economy has already gone over the cliff.

Can you imagine managing a business with a 541-member committee? This is why micro managing our economy will never work.

Our economy is dynamic. It is continually changing through the economic cycles of recession to inflation. Our guiding policies are static. For our economy to become an efficient engine for prosperity our guiding policies must change as quickly as our economy changes. The guiding policies must not be biased to one economic activity or investment over another. The long term capital gains tax should be the same percent rate for all long term capital gains. The income tax must be a Fair Tax, but not a static tax.

Financial institutions have a very difficult time when the Federal Reserve uses higher interest rates to control inflation, and inflation psychology.

When the Fed causes short-term interest rates to increase, this action by the Fed reduces the value of the banks’ loans, and the banks’ costs go up.

Even if you have a rise in prices of only 3% a year, over a ten-year period, prices will have risen thirty percent in ten years.

This means that the person holding money (debt) as their store of wealth has lost 30 percent of their purchasing power. The money has gone down in value by 30%.

The people who have hedged themselves against inflation, hopefully they have invested in something that has gone up in value by 30%.

In any case, this imbalance of value must be corrected at some point, or no one would ever invest in a debt obligation. Our credit economy would collapse.
The Zero Inflation Taxation Policy improves on this situation.

Instead of waiting 10 years to have a recession to correct the imbalances of value, the correction would occur at the end of the year.

One person would pay a little more tax, and the other person would pay a little less tax if inflation were occurring. The government would not receive an increase in tax revenues unless we had real growth in our economy.

If a recession was occurring or the economy was not in balance, the stimulating effects of the income tax would be in full force.

The Zero Inflation Taxation Policy is a kind of guarantee of sorts.

The government and other borrowers would not be continually encouraged to create money and not hold money as an investment.

Businesses, investors and people in general would know that, if they created too much money, creating the inflation cycle, they would have to pay a little more tax. The holder of the debt would have some of their purchasing power returned by paying less tax until the economy balanced itself.

Real growth in the economy is what we’re looking to achieve, not an artificial economy based on an ever increasing fiat money supply.

If you Google “foreclosure crisis solved”– Remember those three words “foreclosure crisis solved”, you will find my websites.  You will find more information on the Zero Inflation Taxation Policy.

We don’t need more federal government deficit spending, or quote “investments” as President Obama outlined in his State of the Union Address.

After the economy improves, these “investments” should be made, if necessary, to improve the productive capabilities of our economy, after we pay down the national debt and deficit, and have the excess savings pool to pay for them.

This is how Japan, China, Germany, and other countries have made their public investments. They have used excess savings to improve their infrastructure.

When the bank account is empty, it is empty!

President Obama, will you do what you said you would do? Will you listen to a better idea on how to improve our economy? If you support this economic recovery plan it will cost the taxpayers very little, because it does not require the government to purchase the bad mortgages to restructure them.

Under the terms of the new mortgage most foreclosures are unnecessary, and government liabilities will decrease!

Fellow citizens, if you like the idea of solving our economy’s problems with a smaller deficit, and a more common-sense approach to helping our economy to grow, please say so.
STAND UP AND BE HEARD… LET PRESIDENT OBAMA AND CONGRESS KNOW WHAT YOU WANT!!! YOU WANT POLICIES THAT ALLOW YOU TO SUCCEED!!

The “big boys”, “the moneyed”, and “the disadvantaged” got the “gold mine”. The middle class, and small businesses, they get to be unemployed, foreclosed upon, and go bankrupt. They then get their taxes increased to pay for cleaning up the mess, the big boys made.

If you are SICK AND TIRED of getting the “SHAFT”, quote (bill), join with us, and help improve your future, and your posterity’s future.

TELL YOUR FRIENDS, NEIGHBORS, AND CONTACTS OF THIS alternative recovery plan, to the government’s deficit spending economic recovery plans.

Sometimes people must unite, and peacefully assemble to have a loud enough voice to be heard over the roar of the special interests that have access to our political Representatives.

If the middle class does not inform the financial institutions, and the government of the correct way to improve our economy, to bring about their financial recovery, and the economy’s recovery, the government, and the financial institutions will continue to contribute to the demise of small businesses and the middle class.

May God bless the middle class with the new mortgage terms; God save America if they are not so blessed. 
God bless the middle class people of the United States of America with the wisdom and strength to stand up, so they can make themselves heard!

Copyright by Leonard C. Tekaat, 1-30-11 All rights reserved

Economic Analyst Creates Solution To Unemployment and Foreclosure Crisis – Part 1

New Mortgage Terms Will Increase People’s Disposable Income. Decrease Mortgage Payments, the Unemployment Rate, Government Deficits, Principal Balances, and Strengthen Our Financial Institutions

It stands to reason that if we can increase a large portion of the population’s disposable income without deficit spending or creating too much money, inflation expectations would not be created. With confidence in the value of the dollar increased and stabilized we can get on with the business of raising the standard of living of all our citizens. We can turn our attention away from hording gold and other commodities to protect our wealth. Real economic growth can be obtained. Full employment can be achieved and the federal and state deficits can be decreased by increasing the growth of our economy.

 
The People’s Economic Recovery Plan does not cost the taxpayers a dime. It does not require the federal government to purchase the bad mortgages or help homeowners with their mortgage payments. Nor does it require the federal government to pay the banks to modify the mortgages. It only require the people to stand up and be heard.

 
The Federal National Mortgage Association, nicknamed Fannie Mae, and the Federal Home Mortgage Corporation, nicknamed Freddie Mac, has operated since 1968 as government sponsored enterprises (GSEs)

 
Fannie Mae was created in 1938 as part of Franklin Delano Roosevelt’s New Deal. The collapse of the national housing market in the wake of the Great Depression discouraged private lenders from investing in home loans. Banks and mortgage investors are doing the same thing during the Great Recession. Fannie Mae was established in order to provide local banks with investor money to finance home mortgages, in the secondary mortgage market, in an attempt to raise levels of home ownership and the availability of affordable housings and financing.

 
Fannie Mae and Freddie Mac are currently the major players in the home finance and foreclosure crisis.

 
These financial institutions own or have control of the majority of our home mortgages.
They are the financial institutions that determine what the interest rate and terms of most mortgages will be. The banks service most of our home mortgages. The banks collect the mortgage payments and enforce the terms of the mortgage contracts.

 
We the people should make the best use of Fannie Mae and Freddie Mac, to help facilitate a long term sustainable economic recovery.

 
First of all, let us introduce ourselves. We the people, are the middle class. We don’t ask very much from our government. We work hard to become self-sufficient. We want a fair shake from our enterprise economy, and our financial institutions, Fannie Mae and Freddie Mac.

 
We want a mortgage, and economic policies that allow us to succeed. Currently we are fighting an up-hill battle; many of us are losing the battle and have become government dependent.

 
We want to keep our homes. If we can restructure our mortgages with terms that make sense, we will continue to make our mortgage payments, and not allow our homes to go into foreclosure. The new mortgage terms we want will reduce government deficits, the unemployment rate, and improve the financial condition of the financial institutions that serve our economy.

 
We want the Zero Inflation Taxation Policy to be enacted. This change in our income tax code will affect all consumers, investors and businesses. We do not want our economy to create another worldwide economic crisis. This policy will discourage the excessive use of credit during the inflation economic cycle. The excessive use of credit when equity values are increasing too much causes most financial economic crises.

 
How will new mortgage terms and the Zero Inflation Taxation Policy help our economy?
Many economists argue that we must reduce the unemployment rate first to solve the foreclosure crisis.

 
This assumption is wrong. It is the other way around.
Aggregate demand and people’s confidence must be increased over a long period of time to have a sustainable economic recovery.
.
The foreclosure and underwater mortgage problem must be addressed first to improve the unemployment rate and total demand in our economy.
How we go about increasing aggregate demand is very important for the future of our economy.

 
If we can increase aggregate demand without increasing the money supply too much, as deficit spending stimulus programs do, the dollar will increase in value. With confidence in the value of the dollar restored, we can then get on with increasing the standard of living of all our citizens, not hording gold or other commodities to protect our wealth.

 
If done correctly, a restructuring of the middle class’ mortgages with a lower starting mortgage interest rate, and a principal reduction plan will increase total demand, which would allow our economy to recovery with less money creation than with deficit spending programs.

 
The new mortgage terms must also be acceptable, and beneficial to mortgage investors, and the financial institutions. If it is not beneficial to them, they will not embrace the new terms, and offer the mortgage to the public.

 
Currently the financial institutions are offering the homeowners the 5/1 Adjustable Rate mortgage. People don’t like this mortgage because the interest rate can go up each year after 5 years.
The new mortgage, will have a lower starting interest rate than the current 5/1 Adjustable Rate Mortgage. The interest rate on the new mortgage will increase at 1/4 percent a year, and stop increasing at 5 percent.

 
This change in the 5/1 ARM will increase primary homeowners disposable income substantially the first year, and then taper it off as the economy improves, and employment increases.

 
For example, a family with a six percent mortgage interest rate. The new mortgage would have a three percent starting mortgage interest rate. If they currently have a $1500.00 monthly interest payment, the interest payment would drop to $750.00.

 
These terms would be available to every primary homeowner, with or without an underwater mortgage. If you multiplied that $750 dollar increase in purchasing power by millions of people, aggregate demand on Main St. would increase enough to facilitate an economic recovery from the middle up.
The new mortgage terms will allow underwater mortgages to have their principal balances reduced monthly, equal to an additional 30% of their monthly mortgage payment.

 
The monthly reduction in principal balances is good for the economy in general, for the financial institutions, and for the homeowners. If the homeowner can see that sometime in the near future, the home’s value will equal the unpaid principal amount of the mortgage, they will not add the home to the foreclosure inventory.

Well that’s all great for the homeowner. How do mortgage investors and the financial institutions benefit from the plan?

The benefits of the new mortgage terms to financial institutions and mortgage investors are the following:
1. The home and the mortgage will become more valuable with the homeowner remaining in the home, and continuing to make their mortgage payments. Also the homeowner will be protecting the home, and maintaining it.
2. By reducing the principal balance monthly, the financial institutions do not need to mark down the mortgage to the current value of the home. The mortgage remains a performing asset, and maintains a higher value than a non-performing asset, a foreclosed home, or a short sale.
3. By maintaining most of the value of the mortgage on their books, the financial institutions do not need to continue to re-capitalize themselves with federal government debt.
4. The home’s value will, sooner than later, pass the unpaid balance of the mortgage as the home increases in value because of the increase in aggregate demand. In other words, the collateral’s value will stabilize and then increase. The increase in the value of the collateral will strengthen the financial condition of the financial institution.
5. Even though the interest rate has been reduced for the first year, and then increase for 6 years, the financial institutions will be collecting interest on a much larger loan than if they sold the home at market value, and put a new mortgage on it.
6. The financial institutions do not have the added expense of a foreclosure, a sale, the home’s security, property taxes, damages, repairs, insurance and legal cost.
7. The principal reduction process for the underwater mortgages will only last 10 years, or until the home’s value equals the then current possible selling price of the ‘s
8. With an increase in total demand, it may take much less time to balance the supply of homes to demand. In that case the lien holder will not need to subtract very much off the unpaid principal amount.
9. The plan will allow the primary home market to stabilize in a much shorter time than has been predicted.
10. Many mortgages can be restructured without much cost, with a modification agreement letter sent to the homeowner by the financial institutions that hold unsecuritized mortgages.
11. There is no need to re-qualify the homeowner before the modification letter is sent.
If the homeowner fails to make the new lower payments, then serve them a foreclosure notice.
12. With aggregate demand increasing, employment opportunities will increase. This should make it possible for the homeowner to get a job before the home is foreclosed.
13. Most investors and second lien holders would prefer restructuring the mortgage, under the new terms, to a foreclosure, short sale, or a refinance. The reason being is that with a foreclosure, short sale, or a refinance, the mortgage will be reduced to below the current market value of the home. Any part of the mortgage above the current value of the home will be lost.
14. The foreclosure inventory will be quickly sold to primary homeowners. To qualify for the new mortgage terms the home must be owner-occupied. With the foreclosure inventory reduced, housing prices will stabilize, and then slowly rise.
15. When a person buys a new home or pre-owned home, the buyer will have to qualify using the maximum 5% interest rate, but their starting interest rate will be the same as everyone else.
16. With the economy operating at full potential the financial institution will make more money than if the economy is in recession.
Currently the only way the banks will loan money to Main St. is if the Federal Government guarantees the loan. Under the current monetary policies can you blame them? They don’t know when the Fed will raise interest rates again and cause another recession. The Zero
Inflation Taxation Policy will correct this situation. It will stabilize interest rates and reduce the cost of long term loans because the savings and money investment rate will increase during the inflation cycle, without increasing the cost of credit.
With the new mortgage terms the collateral prices will stabilize and prices will slowly increase. Banks will again be able to make loans to Main Street.

 
With the new mortgage terms available people can have their mortgages restructured without the financial institutions increasing the money supply, or the financial institutions going through a lot of unnecessary paper-work. The state and federal governments’ deficits will decrease, and full employment will be obtained. The foreclosure crisis will be resolved.

 
WAIT A MINUTE. ISN’T THIS HOW WE GOT IN TROUBLE THE LAST TIME. WERE NOT INTEREST RATES TOO LOW FOR TOO LONG? NO … We got into trouble because a credit bubble was allowed to expand for too long until it popped.
The financial institutions and mortgage brokers were talking people into signing a mortgage that the buyer couldn’t afford to pay as the interest rate changed on the mortgage. The stimuli in the income tax code for people to go into debt and the high primary home annual appreciation rates made people too eager to sign these mortgages with bad terms.

 
Interest rates were not too low before the financial crisis occurred.
Before the credit crisis occurred, mortgage interest rates were 100% above the Consumer Price index.

What was wrong was the Consumer Price Index did include the cost of owning a home, only the cost of renting a home. So when we had inflation in home prices of 30% a year, the Fed said the inflation rate is 3% and the mortgage rate is 6% there is nothing wrong. There is no bubble in primary home prices. The Fed or Congress did not attempt to deflate the bubble. A few months later the bubble popped and market crashed!

If the financial institutions say that a 3% starting interest rate is too low. I would like to point out that 3% is the same amount above the Fed Rate, when the Fed rate was 2.75% and mortgage interest rate was 5.75%. The markup is a little over 100%.

With the Fed Rate at .25%, the 3% mortgage interest rate is marked up 12 times. If an automobile manufacturer built a car for $20,000.00 and marked the car up 12 times, the sale price of the car would be $240,000.00. With the mortgage interest rate a 5% that is a twenty times markup. The car would sell for $400,000.00.

 
My point is that the banks are marking up trillions of dollars of debt. This is why the banks were able to pay the TARP money back so quickly. The financial institution’s profit margin is currently very large.

 
How do we get the financial institution to realize that the new mortgage terms will be beneficial to them and would make them profitable again?
Fannie Mae and Freddie Mac are currently the major players in the home finance and foreclosure crisis.

 
These financial institutions own or have control of the majority of our home mortgages.
They are the financial institutions that determine what the interest rate and terms of most mortgages will be. The banks service most of our home mortgages. The banks collect the mortgage payments and enforce the terms of the mortgage contracts.

 
When I talk about the financial institutions, I am referring to Fannie Mae and Freddie Mac. Currently our government is the conservator of these financial institutions. The government is by the people and the government is for the people. Therefore Fannie Mae and Freddie Mac are under the conservatorship of the people.

 
Taxpayers have a majority financial stake in these financial institutions. Therefore the citizens of the United States own these corporations and should have a say in their home foreclosure policies and terms of the mortgages they own, control or purchase.
We the people should make the best use of Fannie Mae and Freddie Mac, to help facilitate a long term sustainable economic recovery.

 
Fannie and Freddie should make the business decision that in the long run restructuring or refinancing all the mortgages would be a good business move. Congress or the people should inform the financial institutions about changing their policies. Congress is the voice of the people. If the US Congress won’t do it, then the people should peacefully picket the corporations until they change their business policies.

By improving the financial condition of the middle class we will strengthen the financial condition of the financial institutions. If we can make Fannie Mae and Freddie Mac profitable again the taxpayers will not lose any of the money that we have loaned them. 

The government has passed many regulations to help prevent another bubble from occurring. The solution to preventing another bubble has not been enacted yet.

 
For more information Google three words “foreclosure crisis solved” to go to my websites.

 
Be sure to read part two of this article.

 
Sincerely

Leonard Tekaat

 
Leonard C. Tekaat is a retired economic analyst and economic scholar. He has over forty years experience in the financial world of home financing, small business. and investing in the housing market. He is Chairman of a special Committee for Economic Reform and A Better Economic Future.

Solution To Foreclosure Crisis Will Decrease Unemployment And Government Deficit

Is The Sun Setting On Our Economy?  Not If We Join Together And Change Our Future!!

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If you are unemployed, your home is being foreclosed upon, or are just sick and tired of getting the “shaft“(tax bill to clean up the mess the “big boys” made), join a growing number of people who want to change the guiding polices of our economy to increase  opportunities so they can provide for themselves and their families, and provide America a better financial, and societal future. The middle class does not want to become government dependent. We have worked hard to be self-sufficient.

If the Financial Institutions and government continue on the path we are on, it will mean the demise of small businesses, and the middle class. We need people who are not afraid to stand up to be heard. To take a proactive position about their future, and the future of their nation. Join the R.E.B.E.L.S. it is free. Please get involved for your children, and their posterity’s future. There is a better way to improve our economy than to put them into debt to the Federal Government, which will ruin their chance at the American Dream of a better future for their posterity. Our e-mail is economysflaw@yahoo.com/  Connect on  www.facebook.com/leonard.c.tekaat/ Our Tweet handle is: “recessionkiller”, join the conversation.

Go to: www.foreclosurecrisissolved.wordpress.com/  for The Middle Class’s Rebuttal Speech To President Obama’s State Of The Union Address and The letter to The Federal Reserve, How The Fed Can Do More Harm To The Economy.  The People’s Economic Recovery Plan is at www.recoverygovforthepeople.wordpress.com/  At www.economysflaw.wordpress/  will find over 25 articles, including Zero Inflation Taxation Policy. Is President Obama Making A Mistake, The Means of Exchange, Repeating the Mistakes of The Great Depression. You will find a more detailed copy of the article that appeared in the Bakersfield Californian on Feb. 14, 2011, “Solution To Foreclosures Will Decrease Unemployment And Government Deficit” at www.foreclosuresolution.wordpress.com/ or www.foreclosurecrisissolved.wordpress.com/

The following article appeared in the Bakersfield Californian on 2/14/2011, our newspaper for Bakersfield, California.

Solution To Foreclosures Will Decrease Unemployment And Government Deficit

My motto has always been, “Prepare for the worse, and hope for the best.” Concerning the state of our economy, I believe “hopping for the best” will not suffice. We need to take a more proactive approach.

What the Federal Government and the Federal Reserve has done in the last two and half years has had limited success. We have added trillions of dollars to our national debt and are running record deficits, yet we have not been able to lower the unemployment rate very much, or decrease the ever increasing number of foreclosures.

The Fed is falling back on its old tricks of increasing inflation psychology to increase economic activity. This inflationary policy increases poverty and government liabilities in the long run. It does not increase the real wealth of our economy which is needed to increase the standard of living for all of our citizens.

Many economist and political representatives will argue that to solve the foreclosure crisis, employment must improve. This is wrong! It is the other way around. The solution to the foreclosure crisis will decrease unemployment and lower the States’ and the Federal Government’s deficit.

Everyone will agree that businesses do not hire people until they see more people willing, and able to purchase their products, and services. Before a business owner will hire additional people, it must make financial sense. Businesses are not the welfare department. They must make a profit to stay in business.

Everyone will also agree that aggregate demand must be increased to have an economic recovery and increase employment. It is very important how we go about increasing aggregate demand.

To accomplish increases in aggregate demand, people’s disposable income, and confidence must be increased, to facilitate an sustainable economic recovery over a long period of time.

The federal government and the Federal Reserve have been trying to increase aggregate demand by increasing banks reserves, and government job creation.

Increasing banks reserves did not work to increase aggregate demand, because the money is not being lent to Main Street. It is being lent to the federal government to fund its deficit, and Wall St. which is causing the stock market to go up, and commodities to increase in price.

What needs to be done to reduce the federal deficit, reduce unemployment, solve the foreclosure, and underwater mortgage problem, is to create a mortgage with new terms that increases the middle class’s confidence and disposable income. The new terms must also be acceptable and beneficial to investors and public, and private financial institutions in our economy, so they will embrace them and offer the new mortgage terms to the public.

Space in this venue does not allow me to go into more details of the new terms of the mortgage. If you google “foreclosure crisis solved”, or my name “Leonard C. Tekaat” you will find the solution to increasing the middle class’s disposable income, and confidence without more federal government deficit spending, quote “investments” as President Obama outlined in his State of the Union Address. You will also find “The Middle Class‘s Rebuttal Speech to President Obama’s State of the Union Address” and a letter I wrote to the Federal Reserve, titled “How the Fed Can Do More Harm to the Economy. My four websites are listed at the end of this letter.

What I can tell you is that the People’s Economic Recovery Plan does not require the government to purchase the bad mortgages, or do most of the mortgages need to be discounted, and sold to investors. The plan cost the taxpayers very little, and saves the government billions of dollars.

The private and public financial institutions will become stronger. Fannie and Freddie will begin to heal and will not need any more bail out funds from the government.
Sometimes people must unite, and peacefully assemble to have a loud enough voice to be heard over the roar of the special interests that has access to our political representatives.

If the middle class does not inform the financial institutions, and the government of the correct thing to do, to bring about their financial recovery, and the economy’s recovery, the government and the financial institutions will continue the demise of small businesses and the middle class.

May God bless the middle class with the new mortgage terms; God save America if they are not so blessed, and God Bless the middle class people of the United States of America with the wisdom, and strength to stand up, and make them-selves heard!

Leonard C. Tekaat is an economic analyst and economic scholar, and author. He is a former candidate for California Congress. He is Chairman of a special Committee For Economic Reform and A Better Economic Future.