My New Blog

September 11^th, 2001 I was outside talking on the cell with my grandmother. The sun was just barely peaking over our rooftop when my husband yelled at me from the kitchen that the World Trade Center was under attack. We sat in stunned silence mesmorized by the real time horror unfolding before our eyes on our own television. We were jarred back into our reality by the ringing phone and the need to wake the boys. This was what our grandparents and great-grandparents experienced when the Japanese bombed Pearl Harbor. Our own parents had this dire feeling of uncertainty that followed President Kennedy’s and Martin Luther King’s assassinations.

My son said I was being a drama queen. Do I go to work? Do I stay home? What will happen next? He said get over it, life will go on. And as always, it did.

The goal behind the attacks was to destroy our economic core, Wall Street, and collapse our great country into irrevocable chaos. Economically the reverse occurred. Our world in 2003 entered into wealthiest, monied time in global history. Our leaders turned a blind eye to the deregulation and the exuberance in the banking and lending industry. The United States was getting their own revenge.

But revenge is best served cold. We allowed the heat to keep cranking with our own home grown devices until we blew up the financial markets by our own hand. Terrorism has many masters.

And again, the soothsayers and prophets of doom got it wrong. We are coming out of the worst financial meltdown on record. After one year, our economy is showing signs of stability in virtually all categories. We are still fragile, with unemployment looming over the recovery but we are healing at an astonishing rate. Banks will still fail, but those are already on the Fed hit list. The housing market is in fluctuation but seems to be recovering. Hey, we all need a place to live. Buyers of mortgages back securities that fled the markets a year ago have reentered and have tentatively began purchasing again. Our leaders are not perfect and they will argue into infinity the correct tweaking of the right and wrong of our economy. That plan is the model that the majority of the countries in the world wish they had followed. It gives us all the right to be drama queens even if it isn’t just about us.

FYI: How about those interest rates! Rumor has it that we may see the rates fall over the next couple of weeks, mainly because investors, other than the U. S. Treasury, have reappeared and are buying the 10 year bonds. Stay tuned.

by Diane Gerdes     The "Economy Cupcake"

Say goodbye to the recession. Fed chair Ben Bernanke made the announcement on Tuesday. But before you rush out to the new favorite total wine store and trade your box wines for the coveted bottles with the pretty labels, consider the following: In previous eras , a recession or a slowdown in economic activity over a long period of time was deemed over when the U. S. had two consecutive positive quarters of Gross Domestic Product( The value of the goods and services produced). For many reasons this recession is different from any other. The main catalyst was that we stopped buying stuff (private consumption) for the first time in 20 years. The fear factor from the media and the soothsayers( I guess they’re called pundits but I like soothsayer better) frightened us into thinking we would be become a land of zombies, so we hunkered down. Also the second quarter Gross Domestic Product numbers are not in the black, they just are not as much in the red as reported in the first quarter, kind of a pinkish color. The Federal Reserve also said household net worth grew by $2 trillion to $53 trillion in the April-to-June quarter. Wow! That is the value of our homes, checking accounts and investments minus our liabilities such as mortgages, credit cards, car payments. Our peak was in the fall of 2007 when our net worth was at $65.3 trillion dollars. If Arizonans’ wealth grew by $38 billion (I think that is $2 trillion divided by 52, but when I went to school my abacus did not calculate trillions) or even $1 billion, we would all be doing the happy dance; so someone has not learned to share. Realistically, if the recession is indeed over for the U. S., it will be a slow recovery for Arizona. The effects of our catastrophic housing collapse will take longer to heal than the rest of the country. So I will stick with my boxed wine and stay away from the flashy wine stores, for now…...

FYI: Investors please stop sending inappropriate undergarments to FHA. Yes, changes are forthcoming. One of the changes will not be the reversal of the Holy Grail of FHA: flipped properties. You may not know that a mortgagee letter is renewed every year allowing bank owned properties to utilize FHA financing. HUD is allowing an additional exemption for properties that are approved through the Neighborhood Stabilization Program in blighted neighborhoods for homes in need of renovations. Someone misread the waiver, so to clarify: FHA is extending the exemption of their very, very strict 90 day flipping rule for homes utilizing the NSP so that the buyers can be eligible for FHA mortgage financing for foreclosed or abandoned homes that are acquired by a nonprofit or previously approved for profit, state and local agencies. “The Neighborhood Stabilization Program (NSP) was established for the purpose of stabilizing communities that have suffered from foreclosures and abandonment.” This is a direct quote from the FHA website. So that foreclosed property you have listed in Gilbert or Peoria may not qualify unless you meet the stern property qualifications. Also boys and girls, the NSP buying guidelines for purchasing are worthwhile, yet severe. It is not easy and takes commitment from the buyers, sellers, and agents. So investors put back on your girdles and suck it up, this probably does not apply to you.