A Thought on the Mortgage Crisis - Thanks to Birk’s Law (which was wrong)
I got an e-mail this morning forwarding me something called Birk’s Economic Plan, where a guy with a good heart, but very bad mathematical skills, figured out that they could split up the bailout and give everyone 18 and over a check for (after taxes) about 379,000 instead of bailing out the big companies. The thought was you could take your check, pay off mortgagees, credit, student loans, problem fixed. Unfortunately, he used the wrong key on his calculator, and it’s more likely the government could give each person about 3500 bucks…not enough to do much good. Couples would get double, but still too little. The point is still made that this bail out only helps the average citizen in that the country is less likely to crumble and collapse, but doesn’t change the fact that even with a cap, rich men get more money, we pay more taxes. It sucks every way from Sunday. Here’s a thought, though.
Mortgages can generally be paid off in cash at a much lower amount than the expected lifetime of the loan. How about the government takes these morons and their bad paper and pays off the mortgages? It isn’t going to help the banks much, they count on the interest on borrowed money, but at least they’d have the capital they were supposed to be able to get their hands on in the first place…better yet, pay them at - like .60 on the dollar, and let them sink or swim with what they get.
If there is money left, go after the credit card debts. Put a per-capita cap on it so credit morons don’t leech it all away, but reduce the amount of bad paper from the outside in. In other words, help the citizens, not the bankers, and if the bankers can’t work around that and get back on their feet, we need better bankers. Hell, we need HONEST bankers.
What a pile of crap that, even though we have NO MORTGAGE AT ALL - because of all these rich, fat bastards in the banking industry, the value of all the homes in the US went up - and our home was re-assessed this past year at a much higher value than what we paid for it only about eight years ago. This raised our taxes considerably. It also raised our insurance, to insure against the newly inflated, false value. Now the answer our government has for us is - pay more taxes so we can fix it? It won’t fix OUR problem, we can’t get re-assessed for seven more years.
In any case my point is, simply, that it would do the economy more good for the money to come from the lender’s side of the house than it will to bail out the crippled idiots who got us into the mess in the first place. There’s MY plan…for what it’s worth. I don’t, of course, have the ability or education to crunch the numbers, but I bet there’s a grain of something worthwhile in the thought. Maybe someone will actually read this who has the ability to do something with it.
Maybe I’m way off base, and a million people will explain to me why. Either way, the current plan - for me, in particular, sucks rocks.
End Rant…
-DNW
09/26/08, 7:17 AM |
Thanks David for blogging on this. I don’t completely understand the numbers either, but in my book letting incompetent companies pay for their mistakes is good capitalism.
I don’t go in for anti-Bush rants but I knew years ago that during his administration someone had turned the banks and credit card companies loose — what I noticed was it became legal to charge as much as 24% on credit cards — that’s usury, in my book. Then they made it harder to go bankrupt. All the legal banking fees went up. It became easy to get a mortgage. What was going on?
I’m actually kind of glad this all happened in the last week because people are now aware of what I noticed several years ago. And thanks to you and all the other people blogging on it, we will understand more. And that’s better than ten years ago, when no one would have understood anything.
09/26/08, 7:49 AM |
Thanks Sonja. Another method might be to fine those responsible heavily, create a trust and set up a board to regulate it…re-assess the values of the mortgages one at a time, re-finance them through legitimate banking channels at a reasonable rate, make the bankers eat the difference. Keep the payments low, but lower the inflated values of the homes themselves. I don’t know any of the real answers, but I know - for instance - that if someone like T. Boone Pickens were turned loose on this, he’d be able to find a way to fix it…