Economic Fix, sometimes simple ideas are best

[soutthpaw]

I have a simple fix for the economy... Do an across the board interest rate reduction of all mortgages in good standing to like 4%. (even if only for 5 years and then refi or revert back to your original rate) this is well above the prime rate so the loan companies/ banks would still make money. ... that will put millions if not billions of $$ back into the hands of American homeowners who will then be able to spend or invest that money in the economy and stock market.... and the domino effect would rebuild the economy from the bottom up.
Second let people buy new homes at this same 5 year rate and lock in a fixed rate after that based or current loan rates..

This would be automatic, not something people have to apply for.... obviously it needs to be government backed or even mandated to all companies that took federal money so it would probably hit 75% or more of all mortgages... I think Fanny and Freddy hold about 50% of the nations home mortgages

On another note,
Not sure the value of AIG but could the government not have let the company go under and then buy all the paper connected to personal retirement savings/ investments and forgo all the speculator/investor complex security stuff and still have spent less than they have given AIG in bailout money???

Let me know what you think:2thumbs:

[Power Hungry]

The biggest problem, at least as I see it, with government intervention in mortgage rates is... well... government intervention. I just don't see how they could swing something like that and provide anything useful without lobbyists for the banks getting in the way.

The other problem is that while I would like to think that people would make smart use of the money they would save on interest, I just don't see that happening. It was irresponsible spending on both the part of the consumer and the banks that got us into this mess in the first place and I don't think giving people even more money to waste is really going to solve anything. It's not that I don't think some people would be smart with it, I just think that too many people would squander the opportunity on immediate gratification purchases.

[bbbxcursion]

Bill's right. People are gonna piss it away on goods made in another country.

[soutthpaw]

You have a point, Didn't something similar happen with the first stimulus check. all the financial adviser folks said save or pay down debt. yet many people went and bought new LCD TV or Tuner Chips heh!:giggle:

I know we used it to pay medical expenses

[bbbxcursion]

I spent it at the booby bar. Gotta support single moms.

[Jackpine]

You have a point, Didn't something similar happen with the first stimulus check. all the financial adviser folks said save or pay down debt. yet many people went and bought new LCD TV or Tuner Chips heh!:giggle:

I know we used it to pay medical expenses

No, as I understood it, things didn't happen that way at all. People actually used it to help pay the bills or they put it into savings (excluding bbxcursion, of course) :ford boob girl smal :o

The HOPE, from our Administration, was that people WOULD go out and spend, on big ticket things like TVs and cars. But that didn't happen.

I DO kind of like southpaw's suggestion though, an across the board reduction in mortgage interest by 1% (down to 4% minimum) for mortgages in good standing makes a lot of sense. Of course, the banks would scream bloody murder, but they might just come out better, if fewer people defaulted on their loans and banks didn't have to foreclose on depressed properties. (They REALLY lose money when they have to "short-sell" a property and they lose even more when they take possession of it and can't sell it but have to pay taxes and other upkeep expenses).

- Jack

[kokopellimotorsports]

To go back further, I don't even know why housing appreciates. It would make more sense to have it depreciate with time like most other things.

Ty

[soutthpaw]

My beef with this whole situation is we are punishing responsibility and rewarding irresponsibility... my idea was to create a situation where the opposite happens...
Jack, I knew people did the opposite of what the government wanted them to do with it. Just couldn't remember of the top of my head what it was.
I think that my idea would put more money in the hands of responsible homeowners; who would use it more wisely that giving a handout to every American....
As for Bill's point Government is already jumped into the whole thing with both feet.. We are not going to get them out any time soon... Government has got bigger under every president for the last 40 years too. ( read that is a news article somewhere)
its about having a smart and streamlined government...( not how big or small it is) One trip to any DMV it a good representation of how government and its various agencies are totally screwed up...

[soutthpaw]

here is a simple analogy the school bully :Wedgie::buttkick: :whack:beats up some kid and takes his :spend:money.. lets give the kid who got beat up detention :chalk:and let the bully keep the lunch money...:Wedgie::buttkick::whack:
Basically what these different financial rescue and stimulus bills are doing:doh:

[Jackpine]

here is a simple analogy the school bully :Wedgie::buttkick: :whack:beats up some kid and takes his :spend:money.. lets give the kid who got beat up detention :chalk:and let the bully keep the lunch money...:Wedgie::buttkick::whack:
Basically what these different financial rescue and stimulus bills are doing:doh:

Somehow the little guy always takes it in the ear (and other, more painful places) doesn't he? I wish there were a way to let AIG, CitiGroup, GM and similar companies fail without hurting all the employees who put their faith in those companies. And, without hurting all the smaller companies that do business with the big ones, like the parts suppliers to GM.

I'm not bright enough to figure out how to do this though. I doubt anyone really is. (If only there were a way to prove "criminal intent" on the part of the executive officers that set up conditions that allow these situations to happen).

- Jack

[Sburn]

To go back further, I don't even know why housing appreciates. It would make more sense to have it depreciate with time like most other things.

Ty

Housing appreciates because the underlying utility value doesn't change. With a few percantage points of the total yearly mortgage spent on basic maintenance, a house is just as good of a dwelling 50 years after it was built.

So the value should go up roughly at the same rate as inflation. That value is the cost of building or replacing a structure plus the infaltion rate over the years.

Also, house values are also determined by the prevailing rents in the area. That's what a bank would look at if you were aksing for a loan to buy a rental property. Prevailing rents are pretty much determined by what the average hosehold monthly income is.

Any more appreciation beyond the above tends to be speculation, i.e., the buyer thinks the value will increase more than the rate of inflation and there will be a buyer when it comes time to cash in. Or, that somebody will pay a premium over renting because they want to own a place of their own.

[88Racing]

Just thinking

Fair-flat tax everyone and everything 12%.
No socialized medicine.
Tax breaks/incentives for corperations who bring jobs and or products back to USA.
The mortgage idea.
Any businesses in USA can't bank over seas. NAFTA countries only.

Just some thoughts.

Lars
:cool_beans:

[soutthpaw]

Just thinking

Fair-flat tax everyone and everything 12%.
No socialized medicine.
Tax breaks/incentives for corperations who bring jobs and or products back to USA.
The mortgage idea.
Any businesses in USA can't bank over seas. NAFTA countries only.

Just some thoughts.

Lars
:cool_beans:
the only one I don't agree with is socialized medicine... the whole use of "socialized" is a political clique (sp)

I believe that healthcare should be a right and not a privilege. as long as healthcare is a business and not a service its going to continue to take advantage of people in the name of profit...
Did you know that Fire departments started out as a business venture. Funded by insurance companies to respond to fires of their policy holders and hopefully reduce the amount of loss. so if you didn't have that policy then you watched your house burn down... At some point government decided we needed to provide this valuable service to everyone regardless of their financial status.

We already have a socialized (meaning ran by the government) medicine. its called Medicare, Medicaid, and VA health care etc...
I do not know what the end solution is, some sort of combination of a socialized system and a private system.. like exists with medicare... you can purchase a supplement plan for more benefits, less out of pocket etc... the key is that everyone is qualified for the plan and pays the same premiums
#1 cause of small business failure is due to medical expenses
People say they don't want government deciding if they should get medical care.. (it already does, see above) How is that worse than the system currently in place? Right now you have insurance CEO's and other corporate types deciding if you health and life is too costly to their bottom line... (many cannot even qualify for private health insurance) Tell me how that is good for patients?
:nurse:

[88Racing]

The only reason I said no to socialized medicine for the general public is this:
Ok so you needed to have dialysis. Through sm your name goes on a list then the wait starts and you may die before getting it. Why? The government will only allow only limited numbers to get dialysis a year. Evrything would have a certain number for each proceedure per year.

Lars

[soutthpaw]

The only reason I said no to socialized medicine for the general public is this:
Ok so you needed to have dialysis. Through sm your name goes on a list then the wait starts and you may die before getting it. Why? The government will only allow only limited numbers to get dialysis a year. Evrything would have a certain number for each proceedure per year.

Lars

That really comes down to how it the system is structured. no one on medicare is denied dialysis if they need it... but you are correct about waiting lists for non-emergent or (elective) proceedures in many countries that have exclusively a socialist type of health care system. That's is why I would advocate for a combined system like medicare and supplemental plans.. :thumbs up yellow: