By James “Bird Guess

5)…To Temporarily Stop Mark-to-Market Accounting: Lets assume you owe $60,000 on your mortgage loan and 12 months ago your house was worth $100,000. Now imagine if a few homeowners in your neighborhood were in desperate financial situations and chose to sell their $100,000 houses at 50% off ($50,000) for a quick sell. You decide you want to refinance your home and pull out your home’s equity of $40,000 ($100,000 -$40,000), but the bank tells you that your house is only worth $50,000 because that was the last average selling price of the two homes sold in your neighborhood. What!!

Well, this same concept is an accounting principle called mark-to-market, and it has been blamed for accelerating the death of some of Wall Street’s investment banks. For example, earlier this year Merrill Lynch sold $30 billion of mortgage related investment products for $6.7 billion (78% off) to a Dallas, TX based company called Lone Star Funds.

After that historic transaction, banks and investors who owned similar investment products are legally obligated to “write down” or simply discount the value of those investment products or assets. Since many banks and investors were using those investment products as collateral for loans and other investments, they now had to come up with billions of dollars of more collateral since their original collateral (mortgage related investment products) decreased in value because of mark-to-market accounting.

Many of them could not come up with the cash and were forced into bankruptcy, however if they did not have to apply mark-to-market accounting and were able to spread their losses over time, many of them probably could have survived, and this would have softened the blow to America’s financial system.

4)…An Automotive Industry Bailout: How much does it cost to save roughly 3 million American jobs and restore confidence in the American economy? About $25 billion according to General Motors, Ford and Chrysler who have tried to persuade Congress to provide them with at least that amount of financial assistance so they can continue to invest in fuel-efficient vehicles and pay their bills until the economy rebounds, which is expected to be around early 2010.

If the “Big Three” were allowed to fail and file for bankruptcy, it is projected that at least 3 million jobs would disappear, partly because the auto industry is so interconnected and dependent on part manufacturers and suppliers. For example, the Ford F-150 has 4,350 parts made by 270 different suppliers in 26 states, and when sales are down, it financially affects companies and employees nationwide.

Also, Black Americans would be severely impacted since 14.2% of all autoworkers that actually produce vehicles (118,000) are Black Americans. Currently, the national unemployment rate is 6.7%, but for Black Americans it’s almost double at 11.2% and could rise significantly if the auto industry failed.

3…To Make Banks Lend Again: Has anybody seen the $335 billion that the U.S. Treasury handed out to over 85 banks in 32 states? Well, small business owners can’t get lines of credit and consumers are still getting their credit limits pulled. The U.S. Government should penalize banks that are not lending and reward banks for lending

– Period!

2)…A Homeowner Bailout: First, it was Wall Street and Commercial Banks, then it was Automobile companies, but what about American consumers and Main Street who drive this economy? No more waiting! In order to stop the financial bleeding in the housing market and decreasing home values in neighborhoods across America, foreclosures must cease.

The U.S. Government must allow struggling homeowners to refinance their mortgage loans into lower fixed rates, and if necessary, extend their mortgages to 40 or even 50 years. Also, to spark home sales, the government should increase the new homebuyer interest free loan from $7,500 to $10,000.

If both of these actions are done simultaneously, real estate investors will recognize that home prices won’t go any lower and immediately start buying investment property. Potential homeowners will also recognize that homes are as cheap as they are going to get, so they better take advantage of these historically low mortgage rates. But the housing market will not move unless banks loosen up and start lending again.

1)…A $700 Billion Economic Stimulus Package from Obama: Obama’s proposed stimulus package will replace the roughly 2 million jobs lost this year. The package will mainly consist of money available to state and city governments for infrastructure investment projects like repairing roads, schools, and building highways that will spark hiring from construction crews to data entry clerks. More importantly, it will create a sense of confidence and security in the economy despite the horrifying economic news reported daily.

Not only is that all the U.S. Economy wants for Christmas, but it’s what’s needed!