Someone please explain why most commentators keep saying…things will get better in a matter of months.  We are in the 13th month of a recession (which was just announced during this 13th month.  But all I keep hearing is worse and worse news.  Now retail season is over and store closings, layoffs and lack of shoppers will create a new round of economic damage to our economy.  Doesn’t anyone else see we are heading for a depression (if we aren’t there already). 

Credit card debt is staggering and rates of 22% are now considered wonderful, what with banking companies allowed to charge 39%.  So how can anyone get out of debt? 

Mortgages were down to 5% and are now drifting upward to 5.25%, but who can get those mortgages?  I am trying to help a man who was a mulit-millionaire last month and is now as poor as can be, having lost it all in the Madoff rip-off.  He has a 770 score and cannot get a mortgage, because his tax returns show he had invested in the Madoff fund.  So because his only assets left are unencumbered real estate, he cannot get a mortgage.  So we seek other ways for him to survive. 

I believe the world will see a turnaround when we all start helping one another, rather than the anchor I saw last week who, after the story about the people not paying credit card debt or mortgages, said “Well at least I’m paying my bills”.  Well I’d like to hear him after he’s fired, whether he will continue to pay his bills.  I have a client who is a Doctor.  He did not get paid on the payday (Christmas eve)…Forget bonuses, he did not get paid.  He received an email saying cash flow was too tight and Doctors and management would not be paid.  As he said he can pay his bills for a month or two, but he better get paid within that time, or he won’t be able to pay his bills.  So no holier than thou attitude anymore.  We need to realize that we’re all in this together.

 If a house goes into foreclosure and is sold to a bottom fisher for 1/3 the value as it had a year ago, then the entire neighborhood hurts from that sale.  Wait til you want to sell or you want to refinance, the valuations will take into consideration that price.  What is a bank to do?  They should offer any deal on any mortgage to keep it alive.  I spoke to a client last week about his real estate holdings.  He runs a second generation family business which owns strip centers in the Northeast.  He told his broker community last month I’ll accept any offer.  A broker emailed him with an offer and an apology for such a low ball offer, hoping that the landlord will not be angry for wasting his time.  The landlord wrote back that if the Tenant is willing to sign a lease within one week, the offer would be accepted.  The landlord’s attitude was that if one store goes empty and a second and a third his strip will be empty as shoppers will not want to shop in a “dead” mall.  So he’ll take a small percentage of his asking price for the first three years of his new lease to keep the center looking filled.  He also has substantial credit lines available so he can do the up front work and make a profit on that money spent by getting the tenant to repay that with the 10% Landlord’s fee and interest if paid over time.  This is a man thinking about how to profit in this economy. 

It is time for all bankers to start to make deals with homeowners.  Cut principal.  Cut interest rates.  Keep the deal alive.  Shorten the term.  Allow homeowners the opportunity to live and find a way to prosper for a few years.  Then when the economy finds its new level, see what shakes out from there.  This is no time for a bank to own property…They can sell it for 30%.  Let the homeowner pay 75% at 3% rather than foreclose and get 30%.  It all makes sense to me.  Credit card companies have to claim amnesty to all.  Rebate all interest over 9%.  Cancel all late charges applied during the second half of 2008.  Apply that rebated amount to equally reduce payments over 2009 and you will see how well most people will pay their bills, which will allow the holder some breathing room. 

I received my first Landlord’s ten day notice to cure from a client of mine today.  My client owes tens of thousands of dollars on a lease.  That sounds like a lot of money, however, the tenant is only in default for November and December rent.  If I were the Landlord I would be calling and saying let’s make a deal.  Who is going to fill that space if he goes through with the eviction?  When someone does come in months from now, what percentage of the 2006 rent will that Landlord get?  I believe that Landlord will win the case and evict my client, but will lose the battle and the war.  My client will find another space at 50% of the present rent, and the Landlord will lose several months income and then end up making a deal for 50% of the present rent with a new tenant.  I’m sure every reader can advise the Landlord what to do today.  But this landlord is not so smart. 

As far as the auto industry…The Government should give them Hundreds of billions of dollars…but only for R&D toward electric cars and hydrogen cells.  That’s what we need, and that would make them #1 in the industry. 

As far as the TARP funds, get an accounting.  Get to trials against management, let jurors, the taxpayers of America decide whether the money borrowed by every single bank or Wall Street institution, was used in accordance with what the taxpayers thought.  Not what Paulsen and some Banker friend didn’t write, but what we all thought the money was to be used for.  I bet the day the indictments come down, you will see open credit in America.  But until then, big wigs will spend on acquiring other institutions, and paying big salaries and bonuses to once again help the fortunate few, rather than the hurting American taxpayers. 

Finally, to President Obama (figuring he won’t read this until after January 20…)  I like the idea of building new roads, bridges and re-creating the infrastructure of America.  However, we have been an economy of services and some percentage of Governmental largess must go to the members of the service community not making it today.  Small business owners, small professional firms, teachers, hospital workers or municipal employees, all of us need help too.  I know no one is going to hire me to lift a shovel to carry dirt from a road side bed.  But they might hire me as a professional for that is what I have been.  I hope to be that successful professional again.  But in this new economy there are no guarantees.  There is only hope that all will be well.