A Real Bailout

[NewAmericanPolicy]

I am not going to waste time going into detail about how the United States (The Gov't, The Federal Reserve, The Corporate Mess, etc...) have robbed taxpayers ($800 Billion to $8 Trillion) and will continue to beat this country into the ground. Instead of doing that, I am going to throw out a different option (one that will never be accepted) and I wanted to get some feedback on it.

As we all know (or as we have been told) the bailout/rescue is needed because the housing market created "toxic" investments which are now worthless. One must imagine that we should attack this problem at the root. Instead we have decided to throw huge amounts of money (created out of thin air) at companies to keep them going. What if we actually did go after the root of the problem? An interesting solution is quickly revealed.

What if the gov't decided to not just throw money into company bank accounts, and instead actually bailed out the consumer. Now I understand how unfair that would seem to many (I didn't buy a house, why help someone who did but can't afford it, etc...) but I am willing to bet that all of us would rather watch individuals get help as opposed to massive corporations that a majority of us just can't stand.

So the theory would then be this: The gov't would buy each asset (house) at the amount owed. So for example if a person took still had a balance of $300,000 on a house purchased for $350,000 the gov't would purchase that, in full, from the company. The mortgage (toxic asset) would now be paid (in full) and the asset is no longer toxic. The company (bank, holding company, etc..) although not getting the "expected" profit, will at least be paid in full.

The next step would be the gov't tearing up the original paperwork, moving to a set rate (3% or such, making a small, but not insane profit) and pushing it over a 30 or 40 year period, giving people plenty of time and ability to pay of the house, along with clearing up the financial system.

Now why is this not a discussed alternative, when the best we can do (or so it seems) is to just give away money that we will never get back?

 

[JordanL]

Because lawmakers in Washington do not want to overcommit.

If you suggest ideas, i. e. things to do instead of amounts to spend, you are committing yourself to the success of that idea, which may have nothing to do with the ideas merits.

It also stems from the fact that lawmakers are idiots. I'm not using a pejorative, I'm using a noun. They are privileged, pampered, unknowlegeable individuals -- the left and the right.

Because of this, unless a person is literally standing in front of them explaining their case, it simply doesn't occur to them to consider their concerns. For most politicians, elections happen as if by magic in a computer somewhere, and there aren't real people connected. E-mails are simply walls of text, conjured out of thin air.

This hasn't been run with because politicians literally are incapable of comprehending the idea.

 

[danberkeley]

I am not going to waste time going into detail about how the United States (The Gov't, The Federal Reserve, The Corporate Mess, etc...) have robbed taxpayers ($800 Billion to $8 Trillion) and will continue to beat this country into the ground. Instead of doing that, I am going to throw out a different option (one that will never be accepted) and I wanted to get some feedback on it.

As we all know (or as we have been told) the bailout/rescue is needed because the housing market created "toxic" investments which are now worthless. One must imagine that we should attack this problem at the root. Instead we have decided to throw huge amounts of money (created out of thin air) at companies to keep them going. What if we actually did go after the root of the problem? An interesting solution is quickly revealed.

What if the gov't decided to not just throw money into company bank accounts, and instead actually bailed out the consumer. Now I understand how unfair that would seem to many (I didn't buy a house, why help someone who did but can't afford it, etc...) but I am willing to bet that all of us would rather watch individuals get help as opposed to massive corporations that a majority of us just can't stand.

So the theory would then be this: The gov't would buy each asset (house) at the amount owed. So for example if a person took still had a balance of $300,000 on a house purchased for $350,000 the gov't would purchase that, in full, from the company. The mortgage (toxic asset) would now be paid (in full) and the asset is no longer toxic. The company (bank, holding company, etc..) although not getting the "expected" profit, will at least be paid in full.

The next step would be the gov't tearing up the original paperwork, moving to a set rate (3% or such, making a small, but not insane profit) and pushing it over a 30 or 40 year period, giving people plenty of time and ability to pay of the house, along with clearing up the financial system.

Now why is this not a discussed alternative, when the best we can do (or so it seems) is to just give away money that we will never get back?

no. you are the seventh new member to suggest that idea. your plan is fundamentally flawed.

 

[FunkBuddha]

Maybe I don't understand, but how can this method be used to make more debt slaves out of consumers? It sounds like this would help people get out of debt. how would that help out our debt based economy?

Oh, and how would this plan help Paulson's buddies?

j/k

 

[pinkmandy]

So the govt would own the title to individual homes? Hmm...that makes me wonder what "rights" the govt would retain on your/their property. Maybe they wouldn't even need warrants anymore. Plus we could create yet another agency like the Homeowner Regulation Agency. We could also double the tax on homes when they sell or someone dies in return for their generosity. Really- what does it matter if the bankers or the govt own the homes? Are they such distinct entities that it would really matter?

The govt could buy up our homes using counterfeit money that bankers originally lent to us on paper.


I like option 3. Bailout nobody and dismantle this phony system.

 

[krazy kaju]

How about we stop playing God and let prices adjust to their market rate? The reason we had a huge boom in housing, natural resources, and capital goods was because of an easy credit policy led by the Fed. The reason we had a bust was because price inflation, which was the inevitable result of the easy credit, brought the market into a downwards spiral as people could no longer to make housepayments, entrepreneurs couldn't pay off their loans, etc. A huge government spending spree on housing won't do anything positive. It will encourage banks to make bad loans and people to borrow irresponsibly, while it will increase inflation in the long term and therefore hurt the economy even more.

 

[PatriotLegion]

The best help was for all tax payers should have been a tax holiday! That would have been the best first measure!!

As for the companies and corporations in trouble should have filed bankruptcy so they can fix all there mistakes and start anew and the tax payers can save and spend with the extra money in there pockets....

 

[Acala]

You don't get it

The government doesn't WANT the people out of debt. It wants them MORE IN DEBT because that is where the money supply comes from and the profit for the banking cartel. As far as the Fed and the government are concerned, the problem is not that we borrowed too much it is that we slowed down on our borrowing. For the house of cards to stay up, inflation must continue. Go shopping! Hahahahaha!

 

[PatriotLegion]

The government doesn't WANT the people out of debt. It wants them MORE IN DEBT because that is where the money supply comes from and the profit for the banking cartel. As far as the Fed and the government are concerned, the problem is not that we borrowed too much it is that we slowed down on our borrowing. For the house of cards to stay up, inflation must continue. Go shopping! Hahahahaha!

Of course they want you in debt, the masses are easier to manipulate when they are about to lose there house and in thousands in debt!

 

[acptulsa]

Oh, and how would this plan help Paulson's buddies?

j/k

No, you're not kidding, and there's nothing to smile about. You hit the nail squarely on the head. The short answer is that is the only kind of bailout they'd consider if they represented us. Draw your own conclusions from there.

 

[raiha]

LIMITED Government.