Stimulating Illegal Immigrants?

This topic has received a lot of media attention lately, and of course is a often severely debated topic.

As many of you know the US government has passed a couple stimulus bills over the last 6 months. Much of this money is supposedly being used to stimulate an economy that has been in worse shape than anyone can remember since the Great Depression. How will it stimulate the economy exactly? Mostly by job creation. The last stimulus bill is estimated to create around 2 million jobs for Americans. The debate arose when it was recently estimated that some 300,000+ of these jobs will likely be given to illegal immigrants. That's a staggering number considering most these immigrants will send a large portion of that money back to their home countries, and are not paying even a cent of income taxes on it.

So the question is, what can and what should be done? This is America, the land of opportunity. Does that mean that these people who have built lives here, although illegally should not be helped as well? These same people are benefiting from the US government without giving anything back via income taxes, while the legal citizens are paying taxes from their paycheck each and every week. There are only 2 ways to really approach these situations.

#1 Seek those who have established lives here in the US illegally.
#2 Prevent the leaks that are allowing the immigrants through the borders

In my opinion Option 2 is really the only humane one. Those who have been living in this country illegally for years, establishing themselves, building a place to live, starting a family, should not simply be uprooted. It should have been the responsibility of the government to prevent these peopel from getting here in the first place. Instead of uprooting those already here, the government needs to plug the border holes, and then legalize those who are here illegally so that they can start paying taxes.

I would love to hear your opinions on the situation. Please feel free to chime in at the Talkgold Debate Forum.

Inflation Increase Could be Staggering

While everyone is worrying about their job, their stocks, their mortgage payments and thei rpersonal finances, there is an underlying problem simmering under the scenes. What is it? Inflation.

Inflation is the devaluation of a currency, weakening it's national buying power. Over the last 20 years we have not really had any problems with inflation, with it averaging just 3-4% per year at most. Having said this, the 20 years prior to that was riddled with concerning inflation numbers. Check out this chart to the left showing the inflation rates since 1885.

As you can see in the 70's and 80's Inflation rates were hovering around 10% per year. That means that if a gallon of milk was $1 in 1979, the same gallon of milk was $1.13 in 1980. That might not seem bad, but apply that to every expense one would have had, and you are talking about a decreasing wealth affect in America.

The reason I brought inflation up is because Warren Buffett beleives we may seen things just as bad, if not worse then we did in the 70's and 80's. Why? Because the world economies, especially the US are pouring trillions of dollars into the economy. You can just throw money at a problem and expect it not to eventually devalue the currency. If we were to see rapid inflation I would guess it would be sometime in 2011. The FED can rate interest rates to try and hold back inflation, but will it be enough? Feel free to leave your feedback at Talkgolds Investment Forum.

When Will The Unemployment Rate Go Down?

If it wasn't bad enough that peoples 401k plans have been cut in half(in many cases almost 2/3rds), 20% of peoples mortgages are higher than their actual homes value, the new unemployment numbers came out this morning. I'd like to say the number is a surprise, but it fell in line with what many experts were expecting.

The Unemployment rate rose in February by 0.5% or 651,000 jobs to 8.1%. Unemployment rates have not been this high in over 25 years. The state affected the most has been California, where 40 out of 58 counties in the state are in double digit territory. Even Silicon Valley who's known for its tech jobs has been hit hard with an unemployment rate at 9.4%

So, where exactly are we headed in terms of jobs? No one can say for sure. Earlier this year many experts were keying in on a peak at around 9.3%. I personally think it will go higher then that. The last few months have average a half a percentage point drop, while the jobless claims are expected to keep coming in for at least another 5-6 months at best. My guess is that we will peak with a national unemployment rate around 9.8-10% sometime by the end of this year before things level off. Remember that Unemployment rate is traditionally a lagging indicator which means there will be other signs of the economy beginning to improve before the jobless rate edges downward. Now the only question is, will President Obama's plans work swiftly, and how long will it take for the jobless rate to fall? It may in my opinion remain in the 8-10% range for 12-18 months, which would lead to a very slow recovery all around, including in the housing market, Wall Street, and consumer confidence.

If you are looking for Online Job Opportunities you can find a few offers posted at the various forums on the net including MMG.

Over 11% of Mortages Late Or Foreclosed

Yesterday I reported to you all that 20% of all US mortgages were under water, meaning that the outstanding balance on the loan was greater the homes value it was borrowed against.

Well today even more startling numbers came out. Over 11% of all mortgages in the United States is either involved in a foreclosure, or is at least 1 month late in payment. Those are staggering numbers. That means that 1 in every 10 people who have a mortgage in the country are unable to meet their monthly financial obligation.

President Obama, yesterday, announce details of his mortgage plan to save up to 4 million families from foreclosing on their homes. He better get the ball moving on this or the vicious cycle will never end. The more foreclosures there are, the greater the supply of housing units on the market, thus lowering the price of the homes when they sell. This in turn makes it even more impossible for the homeowners to refinance or sell their hoem to pay off their mortgage. The cycle will continue until the government gets a plan right.

The experts do not expect to see too much inprovement until as late as the end of 2010 (18 months from now). Feel free to give your opinion at the Real Estate Forum on MMG.

Mortgages Under Water - Over 8.3 Million

Yesterday I did an entry about why foreclosures were occurring at such a rapid pace, and who was to be blamed. Today the government released new data showing just how extensive this mortgage crisis really is.

There are currently 8.3 million households in the United States considered "Under water" with their mortgages. This means they owe more money on their homes than the actual asset, the home, is worth. That translates into one in every 5, or 20% of all homeowners with a mortgage owing more money then their homes are worth right now. During the forth quarter of 2008, an average of 230,000 homeowners fell into the negative each month. Experts expect that if the downward trend in home prices continue, dropping just another 5%, than there will be another 2.1 million homeowners going under water as well. Just last year the value of all the homes in the US fell an estimated $2.1 trillion.

There is some good news coming out today though. Obama and his economic team unveiled more details about their home foreclosure rescue plan which looks to restructure loans for homeowners who are under water, but are still paying their mortgages on a monthly basis. The new plan will allow banks to restructure the loans with a lower monthly payment in hopes that the homeowners will be able to afford to pay it off in the long run. In order to stop the vast economic slide the entire world is going through, I believe the first step is to stabalize the housing market which sparked this mess in the first place.

There is some inetresting commentary on the various Credit markets at the Credit and Loans Forum

What is an Economic Depression?

Ever since this financial crisis started 5-6 months ago, we have been hearing the word "depression" thrown around more then ever. So what exactly is an Economic Depression?

When people hear "depression" they think, economic catastrophy, the Great Depression, bank runs, and financial collapse. The thing is, every depression is not the Great Depression. The us had several depressions in it's history, many not even close to as severe as the Great Depression, but since the Great Depression is the last one the country went through, and happens to be by far the worst, we all associate the 2 terms.

An Economic depression is simply a total of a 10% decrease in national Gross Domestic Product in 4 consecutive quarters. In the Great depression the GDP fell by 30% in just 3 years. To put this in comparison, the US GDP for the forth quarter of 2008 fell 1.625% or 6.5% if annualized. So is a depression the end of the world? Economist now give us a 25% chance of hitting Depression status. In my opinion we won't, but if we do, it will likely be short, and not even close to as severe at the early 1930's.

Look for key indicators such as pending home sales, and a slow down in job losses to see if the trend continues or we fall lower. To discuss the possibilities of a depression and other investment topics check out Talkgold Investment Forum

Florida Real Estate. Has it Bottomed?

For those of you who live in Florida you likely know that real estate values have plummeted in the last 2 years. Although the country is in the midst of of one of the worst housing slumps ever, Florida, particularly southwest Florida has seen it worse then the average US region.

The downturn has affected pretty much every class of house, from the large million dollar water front properties, to the 2 bedroom average sized homes.

So, has the market bottomed here in Florida? That depends on who you ask. Some believe that the bottom has almost been hit, but the market will stay stagnant, at the current levels for years to come, while others believe that the economy in general will turn around by the end of this year, leading to a mini housing boom in 2010 and beyond.

What to look for to find an underlying trend? Look for the supply of existing homes in the region to decrease, as foreclosures slow down. If the supply curve can shift downward, and demand can at least stay the same, Prices will gradually start rising. Remember, there is a lot of cash lying around, and ocne things start lookign brighter, both the stock market and housing markets should rebound nicely. You just gotta be patient.

Where can one find out more info on Real Estate Trends? There are a few Real Estate forums I like. Also Google finance can usually tell you the latest news via feeds.