Leave it up to regulators to ruin it for everyone else.  They get the first right to buy foreclosed properties before anyone else.  That includes families who what to live there.

So what does this mean?  The government will basically get a the good deals and leave the  junk for everyone else.  How does this help anyone?

I think this will in the end hurt the neighborhoods.  Why?  The government is not allowed to make a profit.  They can only break even or lose money.

For Example:  The government gets good deal and they fix it up for a total of $80,000.  Basically they will put it back on the market at $80K and sell to qualified low income families.  Here is the issue.  An investor would be able to sell for $130,000 because that is what the neighborhood can support.  So the government would sell a fixed up house for $50K less than it is worth.  What happens then?  That is a bad comparable home for the neighborhood which will pull the rest of the values down and in the end hurt the neighbors.  How does that make sense?  My opinion is to let captialism work things out (it has so far) and put taxpayer money elsewhere.

Let me know what you think by commenting below.

Interesting article concerning women and investment.  I see several opportunities here for new startup financial companies (possibly women owned) to be more focused on Women and investments.  It seems like there could be something missing in the Man driven industry.

Check it out here and let me know what you think.

How Retirement Investing Shortchanges Women

In a horrible move, our local government has put more regulation on the real estate industry.  They have put regulation on a part of the business that has been humming along now for years and that has helped several banks and homeowners out of a bad deal.  What I am talking about is Short Sales.

Short Sale investors usually flip their deals to other investors or homeowners at a discounted price and make a little money by going through a horrible long and drawn out process of negotiating with banks.  Their money is well deserved and they employ a lot of people both here and nationwide.  There is a lot of paper pushing and it is always not a done deal.  Sometimes the bank just forecloses and takes the house back.

Because of the time and risk involved, Short Sale Investors make good money on some deals.  Sometimes over $20,000 to $30,000 on one deal.  That is well deserved if you have ever tried to short sale real estate.

Now here in Colorado, and probably soon to be in other states, the short sale investor needs to disclose how much he/she is going to make on each transaction.  This is only the case with a double close which is the way that most of them work their business.  They have to disclose to both the seller, the sellers lender, the buyer and the buyers lender how much they are making.  This will for sure start to blow up several short sales because everyone will think the short sale investor is making too much and they want that money.  Or the bank wants to keep that money.  Or maybe both sides just see another opportunity to negotiate.

Lets compare this new law to buying a car at a great deal.  Lets just pretend I bought a Honda at half price at $5,000.  I made a great deal!  Instead of using this care myself I decide to resell this car at $10,000 (which is my right anyway).  Do I have to disclose to my seller that I am going to make $5,000?  NO!  Do I have to disclose to my buyer that I purchased this car at $5,000?  NO!  Do you see the disadvantage I would have if I had to do so?  They would beat me up on my price or want me to pay more, don't you think?

Whatever the case may be, I just think these new regulations will slow everything down and mess up a lot of deals.  For some reason some people in government think that it is not ok for investors to make any money.  It is this investors opinion that these changes are just not American.

See the more on the regulations here: Short Sale Changes

So what is happening to the market now that this tax credit has gone away?

Looks like it was a false market to me - especially on the lower end houses.  There was a flood of buyers into the market when the tax credit was introduced.  I remember thinking, "this can’t last" and "this isn't helping anything over $300,000".  I even remember family members coming to me for advice on how to beat out all the other people scrambling to buy a ugly house that they wanted.  The only reason my family was buying was the “free money” they would get from the government.  Otherwise they would still be renting.  I am assuming that everyone else they where bidding against (which inflated the price by probably $20,000 over what I would pay) where in the same boat.  The only thing that the tax credit accomplished was to sell and falsely inflate the prices on lower end homes under $200,000.  Now homeowners, banks and investors holding onto these homes will be sitting on them for a long time.

I bet at least in my town (Denver) is the lower end homes will start dropping again and keep going down for some time.

See the following article on pending home sales dropping more than 30%!!  That is the most in 47 years since they started tracking this statistic.

Article -> Pending Home Sales Drop Big Time

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Ian Gordon who is a Strategist with Longwave Group stated back in February believes that the Dow Jones Industrial average could fall and fall a lot over the next 3 years.  He thinks that fall could easily be 90% in only 3 years!!!  He states that the US markets will move into a "winter" period of a 50 year economic cycle.  We are now on the 4th cycle in which Longwave believes we are headed down again.  This cycle or "Kondratieff Waves" can easily be traced back until 1789.  See Longwave's interactive graph here: Kondratieff Waves in US

So how long will this winter last?

Gordon stated that the Dow will likely bottom out in 2012.  Not so bad, right?  Wrong.  He thinks this phase could last as long as 2020!!  This is very bad news for stock market investors who invest in long term stock which is most of the investors out there.  Your financial planners will tell you, "just to wait it out, it will come back, it always does."  Well, there is a possibility that it won't and not for a longtime.

A Word of Caution

I would just error on the side of caution and watch out for your own investments, because, no one else will even if they say they will.  Invest in something you can control.  Invest in something that doesn't drop to nothing, fast.  Don't rely on these companies to SAVE you so you can retire.  Don't rely on people who make less money than you to make you rich, because they won't.  Take charge of your investments.

The Taylor Rule is a tool to predict the Fed policy on interest rates.

Here is a great article on how to predict what the Fed is going to do.  I don't think it is an exact science but I do think it is a great gage of whether the Fed will raise or lower the rate.  The Taylor Rate is an equation that uses both a combination of inflation with how the economy is doing.  You get a graph that follows closely with the Federal Funds Rate for the last several decades.  You will see that there is a sign that they need to compensate for the upswing in the "Taylor Rate".  As you know the stock market doesn't take kindly to raising interest rates.  So watch your investments closely.  See the following article on the Taylor Rule.

The Taylor Rule

It is already starting to happen (see article below).  I am not trying to be a fear monger, I just want to give you some fair warning. 

The next several years could be a challenge, to say the least, for currency here in the US. 

Below is something I would do.  I am not giving you any financial advise, I am just telling you what I am doing.

Hyperinflation

If we see hyperinflation your cash will lose tons of its purchase power.  I am getting my cash out of the bank and putting it in something that will hold or climb in value if inflation occurs.  Get it into real estate or gold or silver or some other commodity.  Real estate is a great hedge from any major inflation (you can also rent it out).  If you play your cards right, you could increase your wealth a lot after this market adjustment.  If you don't take action, your hard earned money will lose a lot of value.  If nothing happens then you will be fine.

Because of this type of inflation the stock market to see huge swings also.  I am moving my retirement into something that would curb i.e. Self-Directed Retirement account http://newdirectionira.com.  So hold on tight, something will happen.  I think the government over corrected to stop a depression so the economy will have another major adjustment.

See the following article

South Carolina Lawmaker Seeks to Ban Federal Currency - CBSNews
URL: http://www.cbsnews.com/blogs/2010/02/17/politics/politicalhotsheet/entry6217403.shtml

I am not a financial adviser or have a license to give you any advise so don't listen to a word I say.  I am hearing this from all the people who have more money than me.  I am also watching a lot of major investment funds buy real estate especially here in Colorado.  Do your own research.  If I am wrong, and I hope I am, we will just keep trucking and you will not have lost anything anyway.

Give me feedback if you disagree.  I would love to hear from you.

The self-directed Roth IRA company I use is: http://newdirectionira.com

How Fractional Reserve Banking Increases Inflation

The Tax Loophole Everyone Will Miss

Even though Obama is in office we have Bush to thank for this 2010 tax loop hole.  I think most people will miss out on this one.

The Bush tax cuts, when he was in office, contain a unique clause regarding the Roth IRA in 2010. Specifically, it contains language that makes the Roth IRA available to anyone regardless of their income, but only for one year (2010).  This is a huge advantage for people who know what to do with a Self-Directed Roth IRA.

**In another article I will focus just on the Self-Directed Roth IRA and why I use it myself.

In an effort to extend his tax cuts, the last President agreed to a number of oddities in tax legislation effective this year. One of the strange clauses is a single year cap exemption. In 2010, the income cap of $100,000 will not apply to the Roth IRA. Put in simple terms, you can convert to a Roth in 2010 regardless of how much you make. You can only do it in 2010, not 2009 or 2011.

So what does this mean for you?

If you are making more than $100,000 a year, you now have the privilege to open a Roth IRA or even better the Self-Directed Roth IRA.  But the most important advantage is you can now roll your existing 401(k) or traditional IRA over into a Roth IRA or Self-Directed Roth IRA account.

FYI, if you convert a traditional IRA or 401(k) to a Roth IRA, you must pay taxes on the moved money. However there is another important part of this bill - you can defer half the taxes of that rollover to 2011 and another half to 2012.  So please consult your CPA or Tax Attorney.  Some say you can do part or some but I believe the more money you can cram into a Roth, the better off you will be in the end.  Pay the little tax now on a smaller amount or pay a ton of tax later on a lot of money.  I bet the government would want you to wait so do the opposite.

Roth IRAs

A Roth IRA is a retirement account that offers a lot of advantages. The primary advantage is found in the gains and distributions from the account. Simply put your account is TAX FREE (did I put enough emphasis on that?). So the money is yours Free of Taxes which includes all the GAINS you have made from your investments over the years. This coupled with Real Estate Notes and Real Estate Options in a Self-Directed IRA is an incredible tax advantage.  Just think if you didn’t have to contribute to your 401(k) or IRA anymore for the rest of your life and still make Millions.  With a Self-Directed Roth account that is easier than you may think.

The only criticism of Roth IRAs has to do with income caps. Simply put, a person with a modified gross adjusted income of $100,000 or more cannot convert an existing IRA to a Roth.

So Why Would They Do This?

Ask yourself, “Why would the government put a cap on income like this on a Roth IRA?”  Do they think that people will take advantage of this retirement account?  Do they not want a lot of people using this account as retirement?  My guess – Because they know what they are doing and they know how powerful a Roth is.  They pay top dollar for the smartest PhD’s to make sure the government gets paid.  They know that the Roth IRA is a powerful retirement plan for someone that knows how to use it.  They don’t want to give this power to smart people who already know how to make a lot of money.  The Roth IRA is your way to get out of the system and become wealthy in a short period of time. 

So now that this hurdle with the Roth IRA is gone lifted in 2010, what are you going to do about it?  Now is your chance to open one or roll your funds over.  Do it now, you will thank me later.

What if You Make Less?

You are not left out if you make less than $100,000 a year. You can still open a Self-Directed account or roll your existing accounts over into a Roth IRA and take advantage of deferring the taxes for 2 years.  They could start messing with the income limits at any time so I would rush and get one now in order to get grandfathered in.

Conclusion

Just think if you never had the problem of paying taxes on your retirement. If that was the case, then you really wouldn’t have to make as much money in that account. Which means - you can retire early.

Think about it: There appears to be no reason why the politicians would create a one year exemption to the Roth IRA income cap. It certainly seems a bit fishy, but you might as well take advantage of it, now is your chance.