The Government's attempt at bailing out the economy with the $700 Billion approved by Congress in an attempt to help stabilize the credit markets hasn't gone so well, so far.
Not only did the Government use about $230B to buy ownership portions of various lending institutions (which was NOT what it was initially lobbied for in the first place), which hasn't helped, they have basically decided to sit on the rest of the money, apparently until someone decides something more constructive (or destructive) to do with it.
Again, hardly a way to help the sagging economy or the frozen credit markets.
However, like all good Americans, I have an opinion on what could have been done (and still could with the rest of the money) that would actually help the economy, help the credit markets, and if people were wise, would create real wealth at the same time.
Currently, there are about 50 Million homes with an outstanding mortgage against it (Taken from U.
S.
Census).
The first simple solution would be to just dole out the money on those mortgages, regardless of default status.
Divided equally, that would be about $14,000 per home with a mortgage.
Now, I'm not saying just "give" the money to the homeowner.
It must be used to pay down the mortgage debt.
Even $14K would pay off a lot of those mortgages, and greatly help everyone else.
The lenders would be in better financial shape, opening up the credit markets.
Homeowners could stop foreclosures, possibly payoff some mortgages, get several months of payments paid and/or be in a good position to refinance into a better mortgage, freeing up money for spending (helping economy) and saving (building wealth).
Another option, data taken from Plunkett Research, Ltd.
shows that there is roughly about $14 Trillion in outstanding mortgage balances in the U.
S.
today.
Again, it's a simplified option, but the Government could have used that money to buy down every mortgage in the country by one half it's current balance.
That too, would greatly help the banking/lending industry which would open up the credit markets.
It would put all homeowners in much better shape financially as well.
It would spur a great increase in refinances, which would put all mortgages in better positions and lower payments (creating wealth and helping economy).
It would more than likely completely turn around the housing marketing, too, as a lower mortgage would mean being able to actually sell those homes for their true value (no more over leveraged homes).
And for those in markets not being hit with major value declines, creating a huge pool of money on the sale of the property to put down on your next home (making it possible to find 20% down again).
Yes, these too would have their issues and not everyone would approve.
Still, I think that they would get the job done that it was supposed to be getting done in the first place and would actually be putting the money to use for the people it was actually taken from.
Give me your feedback and let's do what the Government is not able to do!
Not only did the Government use about $230B to buy ownership portions of various lending institutions (which was NOT what it was initially lobbied for in the first place), which hasn't helped, they have basically decided to sit on the rest of the money, apparently until someone decides something more constructive (or destructive) to do with it.
Again, hardly a way to help the sagging economy or the frozen credit markets.
However, like all good Americans, I have an opinion on what could have been done (and still could with the rest of the money) that would actually help the economy, help the credit markets, and if people were wise, would create real wealth at the same time.
Currently, there are about 50 Million homes with an outstanding mortgage against it (Taken from U.
S.
Census).
The first simple solution would be to just dole out the money on those mortgages, regardless of default status.
Divided equally, that would be about $14,000 per home with a mortgage.
Now, I'm not saying just "give" the money to the homeowner.
It must be used to pay down the mortgage debt.
Even $14K would pay off a lot of those mortgages, and greatly help everyone else.
The lenders would be in better financial shape, opening up the credit markets.
Homeowners could stop foreclosures, possibly payoff some mortgages, get several months of payments paid and/or be in a good position to refinance into a better mortgage, freeing up money for spending (helping economy) and saving (building wealth).
Another option, data taken from Plunkett Research, Ltd.
shows that there is roughly about $14 Trillion in outstanding mortgage balances in the U.
S.
today.
Again, it's a simplified option, but the Government could have used that money to buy down every mortgage in the country by one half it's current balance.
That too, would greatly help the banking/lending industry which would open up the credit markets.
It would put all homeowners in much better shape financially as well.
It would spur a great increase in refinances, which would put all mortgages in better positions and lower payments (creating wealth and helping economy).
It would more than likely completely turn around the housing marketing, too, as a lower mortgage would mean being able to actually sell those homes for their true value (no more over leveraged homes).
And for those in markets not being hit with major value declines, creating a huge pool of money on the sale of the property to put down on your next home (making it possible to find 20% down again).
Yes, these too would have their issues and not everyone would approve.
Still, I think that they would get the job done that it was supposed to be getting done in the first place and would actually be putting the money to use for the people it was actually taken from.
Give me your feedback and let's do what the Government is not able to do!
Source...