Hi Bethesdamanman, My apologies then, Dave. I thought that I had recalled you posting on the other board that mortgage rates would stay low for years and years, and that we would never return to the high rates of years past. My error. Eeeesschhh .... well.... actually... kinda sorta, YES.... your apologies in this case are NOT warranted. Herein lies a case of "text failing where a verbal conversation *may* have worked better." I've never said rates would stay low "well... forever".... I HAVE said rates (30 FRM rates to be precise) will unlikely climb over 7% in our lifetimes. I *STILL* stand by that.... albeit, I am now offering that we are entering a territory of government-induced inflation at levels I (perhaps naively) thought the United States political system was above. If we continue down the path of dollar-dilution that we've begun accelerating along, there are only two end-game results; A) we reverse course back out of it before we self-destruct in revolution, B) we self-destruct (and the devil we do not know is always a potential problem.) *IF* we successfully reverse and dig ourselves out of the hole of trouble our most recent past and our current government administrations are hell-bent on digging us into... there are only two ways of "sopping back & vacuuming up" the diluted unbacked funny-money that has been injected out into the system; A) The Treasury collects more taxes than it provides to the government to spend, and/or, B) The Fed increases interest rates higher than its blended payout on the treasury bonds (and then some... the greater the positive income spread to the Fed, the more painful to the "fixed-income retired crowd" which is our baby-boomer bubble... who will rally with AARP-sponsored pitchforks.) Both A & B will be met with *MASSIVE* resistance from the only crowd that the poloticos *KNOW* will consistently show up to vote, and have almost unlimited spare time to write, call, email, and generally pester the daylights out of the politicians; The Seniors. SO.... I've learned to never rely on "common sense" when it comes to anticipating "government logic" (an oxymoron if there ever was one.) Obama has enlisted the original architect of option B... Paul Volcker... as a "senior economic advisor." ("Senior" may (MAY) work somewhat to our advantage here... as Gramps Volcker *MIGHT* have some age-gained sensitivity to his classmate comrade's plight.) Volcker is the one who decided to fight inflation in the 1970's by driving short-term interest rates up to the 20%'s... The late '70's and early '80's result was that Volcker recaptured (in a VERY painful way) the excess liquidity (flooding of funny money) our country created by going off the gold standard and adopting a "weak dollar" policy through the 1960's. WHAT WILL WA DC DO??????????????? I dunno.... (I know what I pray/chant/meditate they will do...) *IF* the government (both the loonie left & jackthug right) get OUT of the way of the naturally balancing markets... then my expectations and predictions stand, with virtually my 100% confidence. My fears are that the United States idea of a market-based capitalist self-righting system has been a grand and wonderful social experiment... but that the human frailties (compounded in mob psychology) are sabotaging the underlying DNA strands that made it possible to stand. My COMFORTING REALIZATION... is that despite my egoistic pride for being part of a "successful system".... even if that system turns out to be a decaying failure, INDIDIVIDUALLY I and my family, and those I guide, can still retain their own personal success and quality of life. Cheers, Dave Donhoff Leverage Planner

Don't know if there is a perfect answer. But flushing more money down the toilet is not the big fix for sure. Lets see...the little guy has created too much debt, has lived beyond his or her means and can't pay their bills. So we need the bailout, so the little guy can borrow more money, continue to live beyond their means and create more debt that they can't pay? Sounds like the bailout, is more of a Ponzi scheme not meant to bailout the taxpayer, but instead reamout the taxpayer as it makes the rich...richer. Would an alcoholic be fixed if he inherited a whiskey factory? Would a limitless supply of free alcohol cure what ails him? Or would it just increase the sickness? We have learned nothing from our bailout mess. We can see this from the debate on how to water down the 'mark to market' accounting standards. Instead of restoring high financial and accounting standards, we are further relaxing them, in effect increasing the sickness that got us here. I would add that any accounting standard that discards mark to market accounting would be off my screen for investments. Even with mark to market, we have all these accounting lies. Can you imagine how it will be when asset values can be assigned by the holders of those assets with no reckoning with what the 'actual market value' of those assists are? One of CNBC's commentators chewed out Rick Santelli a while back telling him there is 'no time' for discussion of ideology in the bailout crisis. We must have the $700 billion NOW! At CNBC they seem to think that if money is just thrown at the problem all will be fine. If there is no time to change the underlying sickness in our broken capitalist system, how will more alcohol fix the alcoholic...or in this case more money fix the dishonest, greedy thrives of Wall Street CNBC? Every once in a while CNBC offers some words of wisdom other than the poker playing, crap shooting, compulsive gambler mentality of trading that you promote. Rick Santelli offered one such pearl of wisdom when he said the powers that be in America need to 'take their medicine like men' and stop trying to avoid the penalties of their financial shenanigans at all cost. To avoid taking their medicine is just making matters worse. Fix the underlying sickness before you loan out a dime. Take your medicine like men CNBC as well as thieves of Wall Street. Don't give taxpayer money out, not a dime - loan with high grade collateral and interest. But only loan if absolutely necessary. But don't force the taxpayer to buy toxic waste that no one in their right mind would buy. Put the rich, greedy, lying bastards of Wall Street on the line and not the taxpayer that can hardly make ends meet. Paulson had over 30 years on Wall Street. Paulson is said to be worth half a billion dollars and we never heard a peep of warning out of him until the crisis was full blown. This seems to be a case of honor dies where the interest lies.

Several things about this upset me. I was one of the people needing a non disclosure loan to get a home. Long complicated story behind that but I deserved a chance and my credit rating was well above 700 so I was a decent credit risk. I hate to think that they will totally eliminate all non disclosure loans because they can help some people. But... when I got my loan I was well educated on the loan process and knew exactly what I was getting into and knew for sure that I could repay the loan. I have never been late with a house payment in about 30 years. We bought a home that our income would let us repay. Many of the people in this mess did buy way over there heads and were duped by the lenders. Maybe, there should be something in this new plan to teach the idiots that took out the bad loans more about credit and how it works, especially for home buying. Also, why should the people that had overinflated ideas of what they needed or wanted get a bail out and the rest of us that have worked so hard to pay our bills be left out? That is kind of like punishing your well behaved child for the panks of the more poorly behaving child. It is totally unfair!!! Have you heard the logic that we (the home owners not in default) will benefit because our home values will be higher than if we foreclose on all of the bad ones? That is a true statement but still I would like to have a more luxurious home and be forgiven for getting in over my head because I would benefit more from the bail out than the guy who worked hard and spent wisely! Everyone is paying for this mess one way or another but it would be nice if the ones that played by the correct rules got a penalized less than the ones who created the problem.

As a Californian, I can certainly vouch for the fact that our budget could use some trimming here and there, but broadly speaking, I think the governor's warning is a very real one. It's a cash flow issue, not necessarily a mismanagement/bloat issue; states are used to juggling financing to make the numbers work out---same challenge some businesses are having with making payroll when they can't access credit for stock purchases. California's also the largest state people-wise (by a long shot---36M to Texas' 24M) and has an annual budget of $145 billion, so $7 billion is just under a month's worth of expenditures, versus smaller states where it sounds like a much larger number. While I'm not a fan of how many great programs took a hit in our long-overdue-but-finally-passed budget for this year, I do respect the governor's efforts to try to balance the books and make the numbers work. I expect his warning to the feds today is just a harbinger of more to come from other similarly-strapped states that simply haven't spoken up yet. (That said, the CA housing market also took a huge hit from the recent crash, which has a dramatic effect on county and city funding for programs---puts the state in a tight spot when you're talking about nursing homes and school kids....and yes, they really are; those facilities have already had funding frozen once this year while the budget was in limbo, and people were really caught off guard, since public facilities tend not to have rainy day funds of any sort.) Just food for thought.