Thursday October 2nd at 4:00 pm Senator Bennett hosted a phone call with economic leaders across Utah, including the President of the Utah Auto Dealers Association, Pres. Of the Utah Manufacturing association, Various home builders, Utility Companies, and the Salt Lake and St. George Area Chamber of Commerce.
Senator Bennett discussed the bill that was rejected Monday September 29th. The bill was revised with 2 changes and later passed the senate floor the following Wednesday. It was successfully passed through the House of Representatives Friday October 3rd. This is what we have come to know as the 700 billion dollar bail out.
The first change to the original bill was:
~ A group of tax extenders that will freeze tax increases for 5 years
~ FDIC bank insurance increase from $100,000 to $250,00
With these two additions the Senate and House were able to ratify the bill and push the bail out forward.
Senator Bennett described the Economic issues the country is currently facing.
~ No mortgages are being purchased on the secondary market. For example our local banks aren’t able to sell mortgages to larger banks to free up funds for new loans.
~ Without intervention from the Federal Government this would be a hard and long recession. The senator confirmed “make no mistake; we are in a full recession”.
~ This is not a wall-street problem, this is EVERYONES problem.
~ Investments affected: Pensions, money markets, IRA’s, Stocks, etc.
Highlights of the “bail-out”
~ Tax freeze for the next 5 years, saving the American public $100 billion of proposed tax increases.
~ It will take 30 days from last Friday for any Federal monies to begin being dispersed.
~ No more than $ 50 billion per month will be dispersed
~ $700 billion = 5% of total US Mortgage debt
~ Total US mortgage debt = $14 Trillion
$700 billion bail-out
~ Worst-Case scenario: $50-$100 billion loss
~ Best-Case scenario: $50-$100 billion gain
~ Most likely outcome: Break even
Why the US Treasury?
~ US Treasury has “patient debt”. They do not have a board of directors or Stock holders to answer to. Money can be returned over a longer period of time without consequence.
~ US Treasury will issue treasury bonds to the banks in exchange for “Toxic Debt”
~ “Toxic Debit” refers to less than favorable mortgages (i.e. Loan that is 45-60 days delinquent)
~ US Treasury will issue monies via “reverse auctions”. The Treasury will offer a percentage for mortgages and the banks will either accept or reject the offer.
To conclude:
It was confirmed by Senator Bennett that we are pretty much at the “bottom” Within the month the monies will begin to flow and the economy should start to turn upward.
Investors who are in the “know” are investing heavily in the market, signifying the bottom of a “bear market”
We have nowhere to go but up. This is a grassroots effort to get the word out. You won’t hear this from the media
Towards the end of the conversation, the focus changed quickly to energy crisis. Saudi Arabia is #1 oil producer. Russia is #2. US are #3. If environmentalists would allow – the tar sands in Utah and the oil shale in Colorado ALONE could independently (nothing outside US) produce up to 100 years of US fossil fuel demands. The US needs to be energy independent. “The oil bubble just burst”.
The senator has asked humbly that Chamber Members pass this message of hope along to your peers and employees.
