Five thoughts on Obama’s speech
President-elect Obama’s first speech since the election won’t likely be remembered much by history, especially compared with his upcoming inaugural address. Nevertheless, it was an important moment because it marked the beginning of his new campaign, to sell a massive stimulus plan he hopes will make 2009 the low point for the American economy rather than merely the second year of a more prolonged slump. Here are a few things that jumped out at me as he spoke at George Mason University on Thursday morning.
1. It will be good to have a president who uses moderately big words. I loved the expression “paradox and the promise of this moment” referring to a time when so many are out of work and yet there’s so much work to be done. Maybe paradox isn’t such a toughie, but merely having a leader with oratorical ambition will be a joy for a nation used to being talked to like fourth graders.
2. Obama’s overarching economic themes aren’t so very different from Bush’s. Obama plans to embrace tax cuts, stimulus and even entitlement reform, something he explicitly said in a late debate would have to wait until his second term. These are all themes the current president pursued, some more successfully than others. Obama is showing his pragmatic streak in other areas as well, as John Heilemann recently noted in New York Magazine with regard to Obama’s indicated foreign policy.
3. I wish Obama wouldn’t have said that “our government already has spent a good deal of money” on the recovery. By stressing spending he missed an opportunity to point out that so far what Washington has done most of is lending. The spending essentially starts now, and by drawing this distinction he would have helped his cause.
4. I’m all for transparency, but I fear Obama’s faith in posting government spending online is misplaced. Reporters and other watchdogs have been calling out bridges-to-nowhere for years. Politicians are like used-car salesmen, with apologies to used-car salesmen: extremely difficult to shame or embarrass.
5. Having said that, Obama’s distinction between earmarks and pork as business as usual and what he expects in this legislation was intriguing. When he said, “I understand that every member of Congress has ideas on how to spend money. Many of these projects are worthy, and benefit local communities. But this emergency legislation must not be the vehicle for those aspirations,” he seemed to be acknowledging that it’s folly to think we can eradicate the ways of Washington. Will members of Congress honor his request to refrain from politicking for a bit? Don’t count on it.
Obama isn’t perfect, but he’s off to a good start. I’m encouraged.
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Wall Street watchers think of capital markets and financial players out west as being on the "other" coast. That's not how it's viewed in the Pacific time zone. From the venture capitalists of Sand Hill Road to the bond kingpins of Orange County to the corporate finance department at a certain software company in Redmond, Wash., there's plenty going on "out there." Adam Lashinsky should know. A native of Chicago, he has covered West Coast finance for a decade, with an emphasis on money matters in Silicon Valley. If it involves money and it's happening west of the Mississippi, look for it in Go West. 
To get the economy rolling again we need money to start flowing from the institutions and the housing market to cycle inventory so that there are manufacturing demands. The government has already appropriated the money for lending, but may need to force their leverage to get it flowing.
What I propose they start for a housing stimulus is a program that would pay 2% of the interest for new mortgages (example; 5 years of 2% payments for existing home purchases / 8 years of payment for new home purchases with a $200K maximum). These mortgages could be piggybacked with a secondary loan for those qualified and interested in the jumbo market. This program would only be available for a 3 – 6 month window of opportunity. This would entice people to BUY NOW, instead of sitting on their hands, waiting on prices to continually drop. A person could sell their house as the payment term ends with no prepayment penalty, so that they could retain their equity (building wealth for investment), or they would just continue at the original rate of the loan (building more equity). Incomes should increase during the time of the payment program, which would allow a homeowner the opportunity to meet their original obligations. A program for refi (2% for 3 years?) could also be effective in helping people with a straining mortgage stay in their residence, warding off foreclosure.
One of the pros for the government is that this program would allow for pay out over 5 – 8 years as opposed to dropping a $trillion dollars in a relative short period of time.
As an example, using simple mortgage calculations; A $200K loan for 30 years at 5.25% equals a monthly P&I of $1,104.41. A $200K loan for 30 years at 3.25% equals a monthly P&I of $870.41. A person would only pay 79% of what they would normally pay for this mortgage. The government would pay $2,808.00 per calendar year. If they helped SELL one million homes in this manner, it would only equate to $2.808 Billion of bail per year. This would equate to $200 billion in residential sales, untold return in tax base revenues, the reduction of housing inventories, new construction starts and a stimulation of the manufacturing sector with the new demand for appliances, HVAC units and other housing related concerns.
Stimulation without incentive is ineffective and should also be accompanied by time constraints. You do not see Black-Friday Christmas type sales all year long. There is a reason they happen and are of such a grand economic scale, as they are limited by an event, timeframe and deadline.
Please quit using our money to pander for votes by purchasing them with a $500.00 gratis or $1000.00 tax credit.