Hi Gary - Thanks for your comment. I feel like in general the government is being reactive and not thinking through the long term effects. All those Senators and Reps want to get re-elected afterall, so let's implement a quick fix band-aid and not worry about it because we'll be long gone.

There is no doubt that the House will now pass this bill, with the tax breaks, and extreme pressure from other legislators, and the terror of not passing it, i.e., the 'what if I was wrong' mentality.

What terrifies me more than anything else is this. Starting in 2009, particularly the last quarter of 2009, so many Option ARMs are going to start resetting and recasting. I'm assuming, and it *is* an assumption, that most people who got these type of loans have been paying the bare minimums on the loans, meaning that the recast/reset date will be moving up.

Are those loans part of the package that the government will be buying? They are paying to buy up Mortgage based Securities, and 'some' mortgages. When the Option ARMs recast/reset next year, those securities will be worth even less, since most individuals who have them will see their payment possible DOUBLE!

In speaking with my agent last night, we were talking about this, and he told me that person in his office, someone who is around real estate, may even be an agent himself, just had his Option ARM reset on him, and he went from a comfortable $1,300 a month payment to almost $2,400!

There is a possibility that starting in 2010, there will be an additional $30-50 BILLION ANNUALLY in Option ARMS that have recast to higher payments, where the individuals will not be able to pay them.

If this bill does nothing to prevent that from happening, and from what I've seen, I'm not sure it does, unless the government unpackages all the securities, re-does each of those types of loans, and then repackages them as securities again, and tries to sell them. The problem is, if they do that to help the home owner keep the property, then the value of the security drops dramatically, and they won't be able to sell for the expected profit that they are all telling us we'll get.

And, the U.S. taxpayer will be stuck with a much bigger bill than the $700B they're foisting on us now.

Finally, if there are 300 million individuals in the U.S., each and every one of them would be stuck having to pay $2,300+ dollars to bail out the government. We now have an 11+ TRILLION...that's an 11 followed by 12 zeros dollar deficet already We're about to take that to 12 Trillion. Were are we going to get the money? They say the government can print more money, but that green stuff if your wallet isn't 'money', not really. It's an easy form of currency that people can carry that has an attached value to it. But, if the government simply prints more money, the value attached to the currency drops dramatically.

Can you say 'inflation' and 'recession' at the same time.

A recession is a contraction phase of the business cycle. The U.S. based National Bureau of Economic Research (NBER) defines a recession more broadly as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."[1] A sustained recession may become a depression.

In economics, inflation or price inflation refers to a general rise in the level of prices of goods and services over a period of time.[1] The term "inflation" originally referred to increases in the money supply (monetary inflation); however, debates regarding cause and effect have led to its primary use today in describing price inflation.[2] Inflation can also be described as a decline in the real value of money—a loss of purchasing power.[3] When the general level of prices rises, each unit of currency buys fewer goods and services. Price inflation is usually measured by calculating the inflation rate, which is the percentage change in a price index, such as the consumer price index.[4]

Inflation causes certain adverse effects in the economy. For example, uncertainty about future inflation may discourage investment and saving. Inflation also shifts income from those on fixed incomes to those with variable incomes. Fixed nominal payments (e.g. rents and wages) are eroded if they are not inflation-adjusted. High inflation may cause hoarding by households as they buy consumer durables as stores of wealth.

Economists generally agree that high rates of inflation and hyperinflation are caused by high growth rates of the money supply.[5] Views on the factors that determine moderate rates of inflation are more varied: changes in inflation are sometimes attributed to fluctuations in real demand for goods and services or in available supplies (i.e. changes in scarcity) and sometimes to changes in the money supply (i.e. the amount of units of currency). However, there is general consensus that in the long run, inflation is caused by money supply increasing faster than the growth rate of the economy.[6][7]

Most central banks (who control money supply) are tasked with keeping inflation at a low level. There are a number of methods that have been suggested to control it. Inflation can be affected to a significant extent through setting interest rates and through other central bank actions (that is, through monetary policy). Others advocate fighting inflation by fixing the exchange rate between the currency and some other reference currency, such as the Euro, U.S. dollar or gold (see fixed exchange rate). Another method attempted in the past has been wage and price controls (incomes policies).

Thanks to Wikipedia for those definitions!

A lowered GDP, higher interest rates, and the government pouring, literally, hundreds of billions of dollars into the economy, as well as FOREIGN economies to buy those securities and mortgages literally is an economic meltdown of what we value.

Gary