The Fed, State Government, and Housing Market
August 19th, 2007Fed Chairman Bernancke gave the markets a boost by lowering the cost of funds by one half percent. The stock market rallied as a result. Should the Fed decide to lower the funds rate, that would trickle over into the bond market, and long term mortgage rates would go down, providing a much needed stimulus to the national housing market.
The report this week that new home construction was down by 11% in July, and down 21% for the year (following a 17% decline the previous year), should be ample evidence of the need for rate reductions. The fear of inflation is the only obstacle for such a move. The Fed is also watching the increase in home foreclosures resulting from the sub prime mortgage market melt down. This would add more homes for sale to an already flooded housing market. Indications are the Fed considers the housing market downturn as a natural correction following unsustainable sales, and rise in prices. Either way a rate reduction would add more buyers to the market to absorb both record numbers of new and existing homes for sale across the nation.
As the recent Fed action will help the housing market the Illinois government continues to throw roadblocks to economic expansion. Illinois with the fourth largest state economy ranked 48th last year in job creation as the result of the policies, fee increases, and anti-business stance of governor Blagojevich. In the Springfield market there was a net increase in population while suffering a net job loss. Thanks in part to the governor who moved an estimated 1700 jobs from Springfield to his operational headquarters in Chicago.
Following a first term where Blagojevich raised fees on hundreds of state services, licenses, and anything else he could find to tax, Illinois lost thousands of jobs. Then Blagojevich’s proposal to implement a gross receipts tax on the backs of business to the tune of 7.8 BILLION dollars, the biggest tax increase proposal in state history, caused businesses across the state to cease expansion plans while awaiting the budget outcome. Blagojevich also proposed a 3% payroll tax on all businesses with 10 or more employees that don’t pay for health insurance. Blagojvich also proposed selling the Illinois lottery for 10 BILLION dollars which would have cost the state over 600 MILLION dollars in education funding annually.
The outcry from the business community and concerned citizens was heard in Springfield and the state legislature(s) soundly defeated with veto proof votes, all of the governors proposals. In true liberal fashion, if you can’t get what you want through the democratic legislative process, you just do it anyway. Blagojevich has outraged the legislature, including fellow democrats for not consulting them, when he announced he would sign the budget crafted in overtime, but only after cutting so called special interest money and pork by 500 MILLION dollars. He then announced he would fund his defeated universal health care proposal by funding the program with 500 MILLION dollars through executive order, circumventing the constitutional legislative requirements for approval. Blagojevich could only pull off this deception with the complicity of Senate leader Emil Jones who said “The governor and I have made a deal, and I will not call for a vote in the senate to veto.”
This constitutes the liberals hijacking democracy in Illinois. Just as at the federal level, liberals getting liberal judges appointed to the bench to circumvent the democratic approval of proposals at the voting booth, to legislate from the bench, liberals in Illinois are now using executive order. This is not the first time Blagjevich has snubbed the legislature. Blagojevich was defeated in the legislature on stem cell research funding, so he funded the research with 10 MILLION dollars he magically found in state coffers through executive order.
The budget that Blagojevich will sign includes the purported 125 MILLION dollars in corporate loophole closing, in effect raising taxes on businesses across the state. That should help with the states dismal ranking of 48th in job creation. The anti-business fees, rhetoric, tax increases, and socialist universal health care proposals by Blagojevich have the states economy faltering while most other states prosper. It appears Blagojevich prefers his liberal programs over prosperity that would provide the jobs and income for families to care for themselves. Typical liberal creation of dependency upon government to build a loyal voting base. Too bad history shows the governments ability to solve peoples problems, as with the Great Society, does more harm to people, and our society, than good. Just look to the bureaucratic response to Katrina for an example of governmental effectiveness. More government is not the solution, less government is the solution.
While the Fed is making decisions that would help the economy, and the housing market, the governor of Illinois with the complicity of Emil Jones propose and implement policies voted down by their constituents representatives, resulting in economic harm to the very people they claim to want to help. Sheer liberal lunacy at the helm. If you want to see a repeat of liberal governance, elect Hillary Clinton, or Barack Obama, both whom want the same for the country as Blagojevich is doing to Illinois. Bye Bye good economic times. Both want to raise taxes, and both favor universal health care.
I commend the Fed for their positive actions, and condemn the actions of Blagojevich, and Jones. The housing market is set for recovery, everywhere except Illinois, where liberalism rules the day. It appears it will be the survival of the fittest within the economy for the next 3.5 years Blagojevich is governor. Too bad liberals can’t fathom that their policies will harm the economy which provides the money for their supporters who prefer the government be their provider, instead of accepting personal responsibility.
