Bailout Plan?

Is the bailout plan working? How and Why?

This year has been increasingly hard for real estate and realtors as a group. About 1 out of every 5 people blames realtors for the crash of the economic system. I just heard this morning some news that blows me away, of all the loans rescued by the TARP (part of the bailout plan), 50% will re-default. This proves that the TARP will not have any effect on the economic meltdown and will most likely add to it.

As a real estate professional for the last 10 or so years, I have seen people from every walk of life in terms of their financial situation. This meltdown will affect all. Deflation will almost surely come next. This is not all bad, if our economy which was riding at the very top in terms of the whole with almost all the available money in circulation. This crisis will need to come around full circle in order to get to the next level. A full stop, 180 degrees right rudder needs to happen in order to have a base. This base will cause to reset our economy allowing things to have room to grow.

I want to talk about, and write about, is how to avoid this situation again. Its all about leverage. Now lets start by saying that leverage can be good in certain situations. Mostly it only serves to create false equity based on a projected value. This is highly risky thinking because when the item that you have Leveraged, is no longer worth the projected value everyone looses, and when you stop lending money to people who are Leveraged you help the full stop. Right now most people are Leveraged more than they should be with a majority of those beyond repair. So, what is the solution? I dont think anyone really knows, I can tell you that de-leveraging is good for bringing prices and values down for consumers. One of the solutions for the entire economy is reduction in the percentage of profit that business can take from a transaction. Some small, medium, and large businesses are high profit cash production machines. This will be highly unlikely. The other only reasonable solution I see is increased incomes for people. Now people have been working more, spending less time with their families, and quality of life is declining. How can people earn more, when there is less money? Increase wages and put caps on jobs that pay unreasonably high salaries. A CEO of a major company can make tens of millions of dollars a year in salary alone. This could increase the salary of a lot of folks in the down line fairly easily. The big question then becomes how we can do this without being a socialist society. This country was founded for each person to be free, and well its kind of gotten away from that piece. People rely too much on the government for things other than police, fire, and the judicial system. Real Estate has no where to go but up and I believe that areas like Wisconsin Dells, Castle Rock Lake, Madison, Baraboo, Reedsburg, Portage and other towns.
The Bailout Plan is not going to work, not now, and not ever.