What is going to happen when the Government give aways go away?

The government decides to get involved in business we all have to wait and see if our blessings turn to curses. The crazy "successes" with the Cash for Clunkers program sold thousands of cars, hopefully, actually paying the dealers eventually as well. However, what I am interested in seeing now is what happens to car sales over the next 90 days or so. Will the buying fever keep things warmed up, or has the government give away burned through anyone who was willing and able to buy cleaning out the pipeline for months to come?

There are about 40 days left for first time buyers to take advantage of the 8,000.00 tax credit on homes. This too has been a great success as people are smartly taking advantage of the best opportunity to buy a home maybe in history, with record low mortgage rates, and without rising Real Estate pricing. Anyone who misses out on this will be long kicking themselves for their blunder. This has really ignited the sales of homes in the price range for first time buyers, and it is rolling into the move up market for those who sold their homes to them, buying up the next level. Hopefully this rising tide will keep rolling up through the price range for a while at least. However, what happens once this is over? What will the pipeline look like then?

My biggest concern short term is that buyers have been conditioned to wait for the next government give away before moving forward. There are things that could be done, none of which would cost government also known as you and I as taxpayers a dime. Let's look at a few ideas.

Ideas to Stimulate Housing Market and Economy


1. Eliminate Mark to Market Accounting System and replace with Rolling Three Year Averaging to create immediate liquidity in financial markets.

Sarbanes Oxley Act brought this in 2002. On Sept. 28th 2008 it was offered that we can eliminate Mark to Market if they choose to. It would free up nearly 800 billion in liquidity immediately.
Mark to Market creates an artificial accounting system that simply doesn’t work in a downturn. It causes all assets of financial institutions to be revalued at fire sale prices as if forced to sell at the bottom of the market.
This causes the financial institutions to hoard their cash to show higher liquidity to protect themselves from auditors shutting them down. It has been said that if Mark to Market had been in place in 1992 nearly 85% of USA banks would have failed, and if not in place now, maybe none of the current failures would have happened.

2. Pass H.R. - 600 to bring back Seller funded Down Payment Assistance Programs.

Seller Funded Down Payment Assistance Programs were removed by HR-3221 July 08.
Seller Funded Down Payment Assistance Programs such as Nehemiah, and AmeriDream opened the possibility for nearly 50,000 American families across the country every single month to purchase homes that are blocked from home ownership without it.
This is tied to FHA fixed rate loans, it has been endorsed by HUD Secretary Steven Preston after tiered risk pricing, and strong penalties were added to stop manipulating appraisals by raising pricing to add in the “gift” funds.
There is strong support for this bill in the House; we just need to get it through the Senate.

3. Reduce Capital Gains Taxes.

To stimulate more investment, and turnover on investments.

4. Make 2003 Tax Cuts permanent. You can see the numbers on one of my previous posts.

Every time tax rates are reduced the economy has grown, and the Federal tax revenues increase dramatically. This happened under John F. Kennedy, Ronald Reagan, and George W. Bush.

6. Reduce Corporate Taxes.

To stimulate the private sector to invest in growth, and create a more competitive environment for US businesses to compete with foreign competitors.

7. Develop and support an Adult financial education program.

To allow Americans to have a working general knowledge of basic financial skills.
Make basic financial education program required in every high school teaching basics of budgeting, how to balance a check book, basic investment knowledge.


None of these programs increase government spending.