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

[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!

I know we used it to pay medical expenses

[bbbxcursion]

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

[Jackpine]

Originally Posted by 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!

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 beats up some kid and takes his money.. lets give the kid who got beat up detention and let the bully keep the lunch money...
Basically what these different financial rescue and stimulus bills are doing

[Jackpine]

Originally Posted by soutthpaw

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

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