a road to economic recovery

Thanks for tuning into my blog. This is an opportunity for me to explain my ideas and to discuss my creations.

Some of you may have touched this blog by accident and have no interest in any thing I write about and that’s okay.

Today my message is about the economy.

There isn’t a news cast anywhere that doesn’t mention the economy in some fashion. Here in the US our fearless leaders just passed a $700B bailout. I wonder how that bailout will be used. I wonder if it will help the middle class people struggling to pay their bills. It has been said that this loosens the reigns on the credit market allowing banks and investors to loan money. Well, isn’t that what got us into this trouble to begin with?

What if people no longer had to borrow money? Great idea right? Yea it’ll never happen. Well, let’s suppose that Americans could borrow money at a reasonable rate of return.

I’m going to go back to where I left off yesterday.

I have 300B dollars in a fund. What do I do with it? With it, I can buy one million $300,000 homes. Would that clear up the foreclosure problem? It might be a start.

I live in Central Florida, the epicenter of the mortgage crisis. Here there was a flood of “investors” buying over priced homes with the hopes of seeing them increase in value and flipping them for a hefty gain. It happened over and over again. Then we all know what happened. The supply was exponentially larger than the demand and the bottom fell out of the market.

Here in Lake County Florida we’ll see 20,000 foreclosures before we’re done. In three years they expect 20,000 foreclosures, yes, I do believe it deserved repeating. Wait, there have only been 6,000 to date. That means there is still time to save more than 10,000 home owners from the credit destruction of foreclosure.

Let’s talk about jobs.

This company, whose name I have yet to divulge will need hundreds if not thousands of employees. We’ll need some high level executives, we’ll need middle management and we’ll need many, many more. I know this is something I cannot do on my own. What would it take to buy 100,000 homes in Central Florida? You need buyer’s real estate agents. You need inspectors, appraisers, and maintenance and trade professionals. Each of them would be paid handsomely they have to be. If my calculations are correct $2,100,000,000 would be paid out in commissions to real estate agents, $500,000,000 would be paid to home inspectors, $300,000,000 paid to appraisers. It’s hard to calculate the amount paid to maintenance and trade professionals. At least $3,000,000,000 infused into the economy of Central Florida. Money these fine folks would use to buy goods and services, pay bills and perhaps invest. Invest back into our company, it is job security. This infusion of cash would impact all segments of the economy and would create additional jobs and businesses.

How will home owners be affected?

Home owners hold mortgages that are beyond their means and need immediate relief. Most of these home owners bought their homes in the boom of the market. They might have purchased a home for $300,000 and the value is now $150,000. What should we do for them? Should we capitalize on their misfortune and buy the home in a short sale for $150,000 and cause them to have to pay the taxes on $150,000 in income. (they will get a 1099 from the mortgage company and will be responsible for the income tax as the government considers it income) Could you imagine, you cannot make your $3,000 house payment and you sell your home for half of its worth and then you have to pay more than $30,000 in income tax on that transaction? How does a short sale help anyone? It doesn’t.

So, short sale isn’t a solution. If you are faced with foreclosure and trying to decide between short sale and foreclosure and you don’t have the cash to pay the taxes, you are better off with the foreclosure. Here’s some more bad news, either option destroys your credit.

On top of the mortgage payments you have mounted an enormous amount of consumer credit (credit card debt) and you cannot afford to pay that either. You probably have car payments that you are late on and you might even be facing repossession.

What’s the solution?

It’s time I told you the name, “Save the USA” or SATUSA. SATUSA is designed specifically to rescue the economy of this country and while it does it will inadvertently rescue the world economy.

So your home was valued at $400,000 when you first considered buying it and you negotiated to $375,000. You had a $75,000 down payment and your mortgage is $300,000. Now that you haven’t been able to pay your other obligations as well you now have a credit liability of $400,000. You are about to lose everything and you think your only option is bankruptcy. SATUSA will buy your home for $400,000. Now your mortgage is paid off and you can pay the $100,000 in credit card debt. You can rent your home from SATUSA or you can buy it. If you rent it the payment would be $1,667.00 plus insurance and taxes. If you buy it the payment would be $2,222 plus insurance and taxes. Most people with $100,000 in consumer credit debt and a $300,000 mortgage are paying more than $6,000 a month in payments. SATUSA would cut the payments in half.

So that seems like a lot of risk for SATUSA. SATUSA is committed to serve the American people. It is committed to fix the economy.

The effect on an individual whose income has diminished and his payments have increased would be astounding. The effect on his creditors would be astounding. They would have cash again and would be able to loan it, pay interest etc. The bad news for the banks and creditors is that there is a new kid in town and he’s undercutting their prices and taking their customers. Sorry to say, banks as we know them may be a thing of the past. The people who run the banks would transition into jobs in SATUSA.

SATUSA would extend this program to many facets of life in the US. Businesses could be funded by SATUSA. Education could be funded by SATUSA. Many opportunities could be funded by SATUSA.

SATUSA would expect that Americans buy American. Buying foreign products and outsourcing are paramount problems associated with our economy today. Jobs in manufacturing and customer service have been lost and need to be replaced. SATUSA will dedicate itself to the recreation of manufacturing plants to serve the American public. John McCain said that the American workers are the best in the world. I agree. I don’t agree that that was what he meant when he said, “the fundamentals of our economy are strong.”

So SATUSA will fix housing and will fix manufacturing. SATUSA will bring outsourced jobs back to the USA. SATUSA will be very strong. It will be strong because of its owners. SATUSA owners are the best in the world. SATUSA owners have a stake in the economy. SATUSA owners have a stake in the USA.

Who are SATUSA owners?

There is a $700B bailout that was just passed through our government. It is a top down plan and from where I sit it seems to be a lot of the same. If you break down that bailout by the number of tax payers in this country it comes to nearly $3,500 per tax payer. If you were asked to pay for the bailout by writing a check, could you? I didn’t think so. I couldn’t either. I would write a check for $7,000. I don’t have that kind of money.

Instead the government is printing the money and borrowing it from foreign countries, therefore increasing our national debt. It seems to me like a backwards solution and it is. If SATUSA was to get $3,500 per tax payer what do you think it could do with it? First everyone in financial trouble could be rescued. SATUSA could invest in products, services and programs to raise the middle class not stifle it. SATUSA isn’t asking for $3,500 per tax payer as a gift. The government is. It writes new laws and we pay for them.

So how is SATUSA going to get the money it needs to do the great things it plans?

This might be where I lose you. We are the United States of America, we are 300,000,000 people strong. We are individuals with freedom and rights beyond any other country on this planet. We are free to choose what we do. It’s been said, “All I have to do is die and pay taxes.” And the avoidance of both has become the American way. In a quest to be wealthy many Americans avoid taxes. So, when politicians say they are going to reduce taxes it gets our attention. The national debt doesn’t affect “Joe Six pack” or “hockey moms.” They do not feel the burden except in those imported items they buy. If SATUSA can reduce the imports they buy it will make the US stronger and reduce the nation debt.

Let’s average here and say SATUSA is able to collect investments equal to $1,000 per American taxpayer. That would equal $300 billion. That would mean SATUSA could buy 1,000,000 homes at risk of foreclosure (average home at $300k). This is an accomplishment no single person can do on his or her own, together we have strength.

How could SATUSA collect that much money? Naturally, it would take time. It could be very fast (weeks) or it could take months. It depends on how quickly the word spreads and how quickly the company can be set up.

The quickest way to spread the word is with the internet. Forwarding a message to get people involved is the key way. Then as money comes in SATUSA would use the media to spread the word.

SATUSA would start in Florida where maybe 100,000 homes face foreclosure. The initial $30 billion would change the direction of the pendulum.

So, 100,000 families in Florida are now paying less than half of what they were paying in obligations. They have the ability to spend more and stimulate the economy. Or maybe because of their good fortune they would invest some of the difference into SATUSA, therefore, growing the funds available for other areas of the country. The word would spread and SATUSA would grow.

ROI (Return on Investment)

It is important to take care of the investors. Investors in SATUSA will benefit in many ways. They will see new jobs, new products and new opportunities for them. Most importantly they will see a return on their investment. Initially the return will be slim, and we strongly suggest that investors consider SATUSA a long term investment. The return on $300 billion over 30 years is a minimum of $150 billion or $5 billion per year. The point of SATUSA is NOT for a cash ROI it is to save our economy and to create jobs and bring wealth back to the American people.

The more that goes into the fund the more investments SATUSA can make and the more it can get a return. SATUSA is not intended for short term investors. It is intended to be a bottom up approach to solving our economic woes. You may not ever double your
money.

I will continue this tomorrow.

WHAT WILL HAPPEN TO OUR COUNTRY?

Yes, indeed I am shouting from atop the highest mountain.


Over the last three weeks I have been watching carefully what is happening to our economy and I am frightened. Really, I am frightened. I am not old enough to have seen the likes of a depression. I've been depressed but I don't think that counts. I don't think that Zoloft will help our country like it did me.


On a blog earlier today I mentioned that I had a plan. I would like to get my plan out to a lot of people and I know the mechanism to do just that. The internet. Frankly, I do not have the financial where with all to launch a marketing campaign to get an idea to the public that might not have wings.


So, this is my medium.

There I have explained my motives, now let me explain the idea. Ready?

First, excuse me as I just watched the debate and then the Daily Show and the Corbert Report, its late and I may make a mistake or two. If you see something I need to fix I a sure you'll point it out. Here goes.

What if a private organization could accumulate enough money to buy all of the failing mortgages in the country? Is that a new idea? Does anyone have enough money? Well privately no one single person could accomplish such a task.

What would happen if someone could? Would that save the economy? Let's say every single mortgage at risk of foreclosure was absorbed, could that help?


Here are a few of the benefits.

1. Banks would get the money.
2. Real estate agents would get paid. (stimulating the economy)
3. Service personnel such as inspectors, contractors and landscapers would benefit.
4. Title companies and real estate lawyers would benefit.
5 Many other entities would make money off of the sale of all of the distressed property.


The bad news is all of the home owners would be "homeless" or displaced. No, not under my plan. Under my plan they would have an option of renting the property back sparing moving and relocation expenses or they could buy it back at a significantly lower interest rate.


Here is an example:
A fixed 30 yr. mortgage for $300,000 is somewhere between $2,800 and $3,200 a month. the amortized value of that $300,000 home divided by 360 payments is $867.00. My company would charge $1,250 a month plus insurance and taxes for a rental. If the owner wants to continue to own and can afford the following $1,634 plus insurance and taxes we would extend the offer to them to own the property.


So that sounds really cheap right? Well it is 50% and 100% profit. Why would a business need more than that?


So let's assume that this extends to $300B in investment to rescue all of the ailing properties. What would it take to buy that property?


Well, I am too tired to explain it. I'll have to get back to it later today. I hope you can wait.



Mike Doran