Monday Markets - The 3 Percent Solution

We’re getting that pullback we expected - let’s hope it doesn’t go too far! The watered down version of the stimulus is already spooking the markets and I am firmly in the camp with those who think we should be committing more, not less, to boost this economy.  The opposition naysayers seem to think that only money spent by people getting tax refunds  (see cartooon from last stimulus)  goes back into the economy but, to the extent that some of that money is saved or used ot pay off past debts - it is wasted from the point of view of STIMULATING the economy.  Government spending, on the other hand, is just that - SPENDING.  Whether it is hiring a person to do a job who was previously unemployed or buying laptops for schools, stimulus spending does work as advertised so killing appropriations for NASA (as was done this weekend) only serves to put less money in Aerospace firms and killing Food Stamps (also chopped)  only serves to give less money to supermarkets, food retailers and farmers - not to mention the people who starve to death in order to cut a Billion off a Trillion dollar spending bill … It’s hard to look at the original list  and try to find the logic in what was completely cut: Head Start, Education for the Disadvantaged, School improvement, Child Nutrition, Firefighters, Transportation Security Administration, Coast Guard, Prisons, COPS Hiring, Violence Against Women, NASA, NSF, Western Area Power Administration, CDC and Food Stamps or to see how reducing Public Transit by $3.4Bn (people have less money so let’s take away their buses, which are bought from GM and cut driver jobs so even more people have to walk) or School Construction by $60Bn (which would have created tens of thousands of jobs) really accomplishes an improvement over the first bill. Of course, like the TARP, the headline spending of $800Bn is nothing compared to the TRILLIONS that will be committed by the Fed and, hopefully, some of that relief will actually find its way to struggling homeowners this time.  I am advocating a 3% solution - giving a 3% mortgage to anyone in America who can make the payments .  For a person with a $200,000 mortgage at 8%, this would drop the monthly payment from $1,467 a month to $843 a month (42% less) and even a 6% mortgage ($1,199) would drop 30% at 3%.  Would knocking off 30-40% of your monthly mortgage help…