WHAT AMERICA CAN DO TO AVOID A DEPRESSION
A plan offered by a concerned citizen
A plan offered by a concerned citizen
I believe the following plan should be implemented immediately if America is to avoid a long-lasting recession or even a depression.
THE PLAN:
The US government offers every US citizen
a 30-year mortgage at a 1½% fixed rate of interest.
a 30-year mortgage at a 1½% fixed rate of interest.
All financially qualified US citizens, not just those in immediate danger of default, would be able to finance a new or existing primary residence, with a $500,000 lifetime limit of government capital for everyone.
Right now, the US Government is lending money at low interest rates to many companies. Why not lend it directly to the people?
Right now, the US Government is lending money at low interest rates to many companies. Why not lend it directly to the people?
Why the plan will work:
It will stop home prices from falling.
It will prevent most foreclosures and turn the housing market around.
It will let everyone save and spend more.
When the US Government refinances a 7% mortgage at 1½%, it will cut your monthly payment almost in half. On a $200,000 loan, the payment will decrease from $1,330 to $690. And when you save or spend that extra $640 each month, it will stimulate our economy.
It will increase credit availability.
As existing mortgages are paid off with lower rate government loans, the holders of those mortgages will have a cash inflow that will allow them to make new loans to people who, because of lower mortgage payments, will now be qualified to purchase other things on credit. Instead of a trickle down plan to stimulate the economy, this is a trickle up plan that moves funds into the financial system by starting with the people.
It will create jobs.
With increased credit availability and more money being spent, companies will decrease layoffs and expand new job creation.
It will increase tax revenues.
Government tax revenues will increase for two reasons. First, taxpayers will have a smaller interest deduction, because they will pay less interest on their mortgages. Second, as the increase in spending and credit availability stimulate the economy, tax revenues will increase over time.
It will not increase the deficit.
This is a government loan program—not an increase in government spending—so the money will be repaid.
It will reverse the economic decline now underway.
Saving people’s homes while increasing consumer spending and solving the financial industry’s credit crunch will stimulate the economy, resulting in increased tax revenues and a reduction in the deficit. We also believe this plan will increase home values, which will offset some of the financial losses experienced during the past few months..
It will reduce the losses of mortgage holders.
In order to work, the plan would require the government to oversee the refinancing of existing mortgages in a way that takes account of falling market values. The new loans will keep many near-default citizens in their homes; and even though lenders may take losses during the refinancing process, the forced fire sales will end, which will let them reclaim a larger percentage of their capital investment.
It is better than what Washington politicians are doing now.
Although it is possible to poke holes in anything, the foundation of this plan is sound, which is why it will do more than anything being discussed in Washington to turn the economy around quickly and promote prosperity for the coming decades .
It can be implemented immediately.
This plan should be implemented immediately, because the economy is getting worse each day. Washington politicians doled out billions of dollars to big corporations over a weekend. So they should be able to put this plan into action in 30 to 90 days.
US citizens deserve and need this plan.
The American people who helped build this country deserve and need a plan like this—a plan that will help them directly while also stimulating economic prosperity, just like the GI Bill did after World War II.
It will prevent most foreclosures and turn the housing market around.
It will let everyone save and spend more.
When the US Government refinances a 7% mortgage at 1½%, it will cut your monthly payment almost in half. On a $200,000 loan, the payment will decrease from $1,330 to $690. And when you save or spend that extra $640 each month, it will stimulate our economy.
It will increase credit availability.
As existing mortgages are paid off with lower rate government loans, the holders of those mortgages will have a cash inflow that will allow them to make new loans to people who, because of lower mortgage payments, will now be qualified to purchase other things on credit. Instead of a trickle down plan to stimulate the economy, this is a trickle up plan that moves funds into the financial system by starting with the people.
It will create jobs.
With increased credit availability and more money being spent, companies will decrease layoffs and expand new job creation.
It will increase tax revenues.
Government tax revenues will increase for two reasons. First, taxpayers will have a smaller interest deduction, because they will pay less interest on their mortgages. Second, as the increase in spending and credit availability stimulate the economy, tax revenues will increase over time.
It will not increase the deficit.
This is a government loan program—not an increase in government spending—so the money will be repaid.
It will reverse the economic decline now underway.
Saving people’s homes while increasing consumer spending and solving the financial industry’s credit crunch will stimulate the economy, resulting in increased tax revenues and a reduction in the deficit. We also believe this plan will increase home values, which will offset some of the financial losses experienced during the past few months..
It will reduce the losses of mortgage holders.
In order to work, the plan would require the government to oversee the refinancing of existing mortgages in a way that takes account of falling market values. The new loans will keep many near-default citizens in their homes; and even though lenders may take losses during the refinancing process, the forced fire sales will end, which will let them reclaim a larger percentage of their capital investment.
It is better than what Washington politicians are doing now.
Although it is possible to poke holes in anything, the foundation of this plan is sound, which is why it will do more than anything being discussed in Washington to turn the economy around quickly and promote prosperity for the coming decades .
It can be implemented immediately.
This plan should be implemented immediately, because the economy is getting worse each day. Washington politicians doled out billions of dollars to big corporations over a weekend. So they should be able to put this plan into action in 30 to 90 days.
US citizens deserve and need this plan.
The American people who helped build this country deserve and need a plan like this—a plan that will help them directly while also stimulating economic prosperity, just like the GI Bill did after World War II.
Contributor and spokesperson: Dennis F. Paulaha, Ph.D. Economics
603 comments:
«Oldest ‹Older 201 – 400 of 603 Newer› Newest»L am so tired of the companys un amercia wanting help maybe if they would keep the jobs in this country when will they ever learn that to buy here we need the jobs not over seas where they dont buy our products any way. your plan is on the money let the ceo that made 43 million in four years bail his self out.I say help the amercian people not the banks and auto companies.I work two jobs 60hr on one and yake call every other week for 125 hrs just to keep up my home and help my grown kids with there families and the goverment does nothing for me but want more.
Lolita Simmons
I like this idea. The auto guys don't get it. If you keep making a product that a lot of people don't want to buy, you will fail. And because we choose to spend our money on other, better products, don't think that you're going to open my wallet and take my money anyway!
I think that letting the people who hired/voted for our "leaders" have more of a say in situations such as these makes more sense than throwing money into wind tunnels in Detroit. But do you honestly believe that any of these egomaniacal, self-serving politicians would actually listen to their constituents and say "What a great idea; let me propose it to my colleagues."? Not hardly.
I am a military retiree, and politicians remind me of a lot of the officers in the Army - if it wasn't their idea, it wasn't a good idea. They, like most of these politicians, have the mindset that they are smarter than we are and if we the people were that smart, we'd be the ones in office.
I plan to send this link to my Congressman, who happens to live in my neighborhood and is starting his second term and who so far seems to be a down-to-Earth, receptive guy.
I do agree that greed will probably win out in this one as well - what you see on the news is simply an exercise in semantics so it gives us all the impression that this will be another "well thought out and worthwhile plan."
I think these issues also validate another set of serious issues in this country, namely this need to live excessively. Who needs a new TV, computer, phone, ipod, car, etc. every 2 yrs or so?
How about putting an end to "Slow Credit? No credit? Don't worry, absolutely nobody will be refused for a loan!" Then when you can't make the payments on your brand-new $30,000 car with 18% interest, go to a credit counseling service, have them negotiate your debt, fix your credit, then go out and dig yourself another hole! It's too easy these days to get what you don't need or can't afford, and the people pushing it don't care. "Sure I'll sell you a car, then I'll repossess it and sell it again."
Sorry for the rant, but I think if you want to get this plan looked at, you need to also propose that anyone with obvious credit abuses pay a higher interest rate and also be required to roll all of their outstanding credit debt into the loans, and then hold them to a limit that prohibits them from going beyond a certain debt-to-income ratio preferred by lenders.
I don't know or care about the blame as some have pointed fngers, let just get this fixed. This would be an excellent begining...how do we get this on a ballet to vote for it....
I am a conservative, disciplined American. I have a 20% down, conventional mortgage @ 6% and my job moved. No one will buy my house because it is not in foreclosure. They are wrong to think that, but I cannot change perception. I have quietly seethed about people feeling sorrt for others with mortgages they never should have taken to begin with. This is a sensible proposal that is fair to us all. Bravo!
I love it. How can I help make it happen? What's next?
What a novel idea, address the dilema from the American taxpayer's perspective and let the benefit begin from the bottom up. While I agree there may be holes poked in this plan; what a great first draft Dennis! I challenge folks on the Hill to try and touch it - let alone, refine it.
To date, with no real movement on solving the crisis, Congress would be challenged to put its Proverbial "money where its mouth is".
- DSM, Georgia
I do agree with the professor. We, the people, the citizens of the United States of America are the "owners" of that money. I still fail to understand why all the large banks and companies are deserving of a "bailout" when small businesses throughout this great country can't even keep their heads above water. All the taxes at the federal and state levels are what discourage and eventually cause these small, family owned businesses to go under. We have a small family owned and operated business. Because of taxes and the state of the economy, we are down to 2 employees (only part-time) besides my husband and his son. Some months we aren't even sure how we will be able to pay our electric & heat, let alone our mortgage payment.
How much more money would have been saved if the "bailout" had been given to the people of this Great Country? From what I understand, the citizen population of the United States is approximately 385,000,000 people. So that means that the federal governemnt could have given each citizen $1,000,000 and the cost would have been much lower than the $782 billion given so far to thes large banks and companies. The citizens could then pay off their mortgages, buy new cars and put more cash flow back into the economy. The mortgage & lending institutions would have received the money owed to them and the automakers would have been sitting pretty too. And the citizens would continue to stimulate the economy with purchases. without so many of us sometimes wondering where our next meal would come from. My husband wouldn't have to worry if he could keep the family business in the "black" and we'd be able to make our mortgage payments and not worry about losing our home. We don't even have an "official" office, our business office is a small bedroom sized room in our home. That helps keep down the overhead, but we still struggle.
What happend to a "government for the people and by the people"? We certainly didn't have a say in the bailout. What would your plan have been if we had that opportunity.
I think it's a wonderful plan. What can we do to make this happen? I am behind it 100 percent, that way people that are doing the right thing are getting a deal also. These are the people we need to spend money. Thank you :)
The economy is burning down as we know it.. We need these types of deal to survive. (:
I feel this is a great plan if only our goverment would let it happen but there in so big cohounts with the banks they wont.Its all about screwing the middle-class till all thats left is the rich and the poor!!
I love the concept but, whats the catch?
Are there any studies done by a bi-partisan group that show the pro's of this idea outweigh the con's? If there are I would love to see the links.
A suggestion though for the poster of this blog, If you would like public support you should have a link to EVERY congressman and Senator in the US government, so the readers could EASILY contact their elected official and let them know that they want them to support this concept.
Thanks,
Rod from Kouts, IN
This is a fantastic idea. I completely endorse this idea and it just makes common sense. However will the "smart" financial folks who got us in this mess get this? How do you execute this plan?
Absolutely, this is a great idea, but under the current conditions it will stay like an idea only. If it is not acted upon, (without support from a special interest lobbying group: banks? private capital? oil companies? unions? healthcare systems? car companies? firearm and military equipment manufacturers? foreign nation(s)? ), We the American People can only hope (and good luck with that) that writing our congressmen, or to Mr. Obama, maybe will bring back reason to "OUR government for the People and by the People" and make a decision to implement this idea.
JF
What a great idea. We need to inform everybody, so we can get this plan in motion.
I had this idea myself when "the bubble" burst in September. Of course it's not mine either; Mortgage rates in Holland, for instance, are 2%.
I, too, admire you for taking out a full-page ad in USA Today; isn't that about $100,000?
It would be great if "we the people" could actually induce our so-called representatives to actually look at something this reasonable; it WOULD have far greater effect than letting the banks steal another $8 trillion.
But unfortunately, I don't think it coincides with the new world order that Barack and the Boys have in mind for us.
If there's a way to actually get this off the ground, let me know. I'll be glad to help.
Have you sent this plan to the only man who can really do something about it? See what Obama has to say. It sounds like a great idea to me.
Dennis, I agree with your premise. I would only add that the mortgages be limited to the amount of principal owed on the mortgage and that the program be administered by the banks and not the government. We don't need another government agency to screw things up further.
It would be fantastic if the government did something for the people for once. The bureaucrats in Washington only consider favors for their big contributors and lobbyists. Who is Obama's biggest contributors? We are!! For once we have an elected official (President Obama) put into office mainly with money from small contributors. He actually seems like he may create policy with the voters in mind. Let's end the "trickle down" policies and do something that helps everyone.
The Grinch has stolen Christmas for the majority of people in America and around the world. And for one reason has Washington played Santa Claus to the rest. It's called job security. From an OpEd column in the Berkshire Eagle newspaper by Timothy Wright I quote, "Lobbyists from industry will continue to run goverment functions regardless of who gets elected. The only time the goverment listens to the will of the people is when it fears losing power and that is usually during an election, while lobbyists hover over Washington 24/7. Our government will continue to do the bidding of large corporations because we are consumers 24/7 and citizens for a day when we vote. Until we become citizens by threatening politicians with their jobs on a routine basis we will not have a democracy of the people." I applaud the full page ad and agree. I've read many other responses and realize that there needs some tweeking in the plan, but this is the fight. We the people need to be heard. Merry Christmas
Finally somebody said it! This very idea has dominated my water cooler conversations for weeks. I'm absolutely ecstatic to see that there are others who recognize that this could be a pain free solution to a deepening economic crisis. We simply refinance the mortgages. We can return a substantial amount of money back to the everyday household on a monthly basis. This would be like getting a stimulus check every month. Studies have shown that approxamately $600 per month extra would change the lifestyle of a median American household. PEOPLE WILL SPEND MONEY AGAIN. That's not all. A huge amount of real estate will be taken off the market which will then stabilize house values. Housing inventory will come back into harmony with demand, and people will feel safe again. I can't stress enough how urgent this situation is. Malls, hotels, and other commercial properties are teetering as we speak. We must demand real solutions now before it's too late. Speak up.
I am 57, married for 27 years with 4 children. My wife and I have worked very hard (me in corporate America and she in our family business). We pay all our bills on time and overpay as much as we can. Our biggest burdens are our home and business mortgages.
We have now lost over one third of our retirement savings and I will have to work until I am 67 versus 62. Each of our four kids are starting out their American Dream with $50,000 College Loans to repay. What is wrong with this picture?
I agree that we (America) got ourselves into this mess and need to work out the solution. The thing that is really disappointing to me is that I thought by now (57), I wouldn't have to worry about having enough money to live comfortably in retirement.
The thing that makes me MAD is that we arrive in this mess because of the "culture of greed" that infects those in our upper class. From the Corporate Execs to the Financial Boards to our Government Execs. What happened to respect, integrity, morality and setting a good example?
I can see that this plan will need some fine tuning by people smarter than me, but it does make sense and provides a glimmer of hope.
I will support this plan, please let me know how I can help.
I completely agree with your concept. It seems that Washington is looking for the quickest solution possible without having to think about it.
Not only would this plan help the citizens of America, it would solve the credit crisis that the nation is in.
If the US Government enacted this plan it would significantly improve my families financial outlook. My gut tells me it would be a game changer. President elect Barack Obama should seriously consider this plan.
The 1.5% mortgage interest plan mightily overcomes the financial crisis. The plan addresses the issues thoroughly. I would love to see this plan adopted ASAP -- the sooner the plan is adopted, the sooner the economy will be healed. This plan exemplifies a government "of the people, for the people and by the people."
Many interesting ideas many with merit. One concern, what about those who have been financially responsible and have no debt, including homes paid in full. What are they going to get in your plan? Many, not all, homeowners need to accept responsibility for their actions. Would they be giving back monies made if they made a profit on the sale of their home. The plan has merit however it does reward many for poor judgement.
This is an absolutely fantastic idea and we need to make it happen!
What can we do to get this implemented?
Good solid, well thought out ideas.
Unfortunately, govt won't react until it gets much worse than this, with senior citizens rioting in the streets who are homeless and penniless !
My take on What America Can Do To Avoid Depression?
1. More bankruptcies....do the math, if you are ready to retire or any other situation and there seems like no other way, walk away and rent somewhere for awhile till your credit and savings come back.
2. Boycott all things that are way too expensive-major league sports, rock concerts, tv/movies, Starbucks, cars...all these will have to come back down to a reasonable price. Why should pro athletes/movie stars make 100 times more than you?
3. Get the hell out of Iraq/Afganistan NOW !! Spending Billions a day?? Insane. For what, honor? Let McCain pay for it then with his own money !!
4. Secure our own borders, especially with Mexico. If you live in AZ/CA/NM/TX, you know what Im talking about...the violent drug cartels are already hear in the U.S....wake up rest of America, the war on terror is right here, right now !!
5. Put a freeze on the Space Program...spending billions to see if we can find water on Mars?? We can't even take care of our planet now....we are royally screwing that up.
6. Legalize marijuana and prostitution...tax it; regulate it...we could be out of a defecit in 5 yrs or less.
7. Stop giving out millions of loans to foreign governments that will never pay us back; collect on all the overdue payments that are owed to us. Even if we get $29 million back from Ecuador in the form of shrimp, bananas, coal, etc, at least we get paid back something.
HOPE THIS HELPS.....
Great idea, it gets homes built, economy flowing..everyone happy except our leaders in Washington, because they did not come up with this idea. My idea was to give all taxpayers a sum of money for mortgages, new cars, etc. that way the money flows to the banks, and business as usual. I support your plan, Good Luck!
Brilliant! Leverage the power of the people to recover our country and economy.
Please advise what actions we can take to make this idea a reality.
What a Fabulous plan!!! Yes, I am in full agreement. It's really a simple solution, and a shame that it came from a fellow U.S.citizen (a very intelegent citizen I might add) rather than a government official.
Fablous this plan is exactly what america needs, but the politicians will never o for it, because it has nothing in it for them. And we the people are not big business, nor are we the elite like AIG whom has no respect for the taxpayer, or you. I just hope that a higher power can stop this because innocent people are getting hurt.
An intriguing idea, but I see at least one major flaw in keeping the econmic multiplier effect going. Who is going to build, remodel, and maintain these homes? Speaking from experience, if it continues to be illegal immigrants, the money will leave the country, and the economic multiplier effect will be lost. Also, the people who buy the homes will not be able to make the mortgage payments, regardless of how low the interest rate. We need to remember what Henry Ford understood - you need to create and maintain a middle class to keep the ability to purchase products, not just produce them.
It sure sounds promising to me as long as we keep it simple. How can we get this thing going?~Duaner.
I could use the monies generated by paying half my monthly mortgage bill.
Better than a tax break and could certainly come in handy for the Holidays!
I like the concept. But wasn’t that sort of what the banking system was supposed to do in the first place. People including the government loan banks money at a one rate (usually 2 -3 point below market) -- banks add a mark-up (to cover their costs and provide a reasonable profit) and loan it back to people who buy houses and run businesses.
The smart bankers figured they could make more money by lending to more people if they create these derivatives. Then they some people couldn’t pay – we found out the derivatives were worthless and we ended up in the situation we are in. What stops these guys for figuring out another way to screw us?
I like the idea but the only way we can be sure we will not eventually end up in a depression is to regulate the banks again and separate financial industry so that hold people accountable for their neglect –
We did not have a system failure we had a number of CEO's and executives who were negligent in their duties to their own shareholders and because of the impact on human lives -- it was criminal. I believe the CEO of these companies, including should be charged with criminal negligence for destroying our economy.
There are three banks and lots of insurance companies that don’t seem to be in big trouble. The executives at BB&T, JP Morgan and Wells Fargo did their due diligence with their companies and should be rewarded. The government should appoint them to administer these loans – and allow them to reap a reasonable profit for their efforts.
This plan is probably the most sound plan I have ever heard. Dr. Paulaha, you're definitely a genius because this plan benefits everyone. I hope lawmakers in the U.S. Congress listen to this plan because the reality is that this plan provides a quick short-term solutions to our current economic woes as well as a long term solution. It may not necessarily be what those who control the economic interest in this country like (squeezing every penny out of the working class) but at this point they have no other choice either. They're in bad shape too. You either settle for a moderate profit off the working man or you get nothing. Kudos again to you Dr. Paulaha for coming up with this plan.
Dennis,
Thank you for stepping forward with a plan. Stellar proposal! I will contact my Senator and Congressman immediately in an effort to support this feasible idea.
Everyone can help make this happen.
Maine
Thanks for stepping up...
Now it's time for our ELECTED politicians to take this into consideration... no consideration and or action - no vote next time around...
Excellent suggestion. Here are some concerns: Could our Government pass such legislation without adding pork or simply making it more complex to suit the economists? Can the government manage such a program without corruption and without all the bureaucratic red tape?
Can you get this plan into the hands of President-Elect Obama? His endorsement could seal it and ensure its success.
Very interesting, I agree with others as to next steps and who will actually support this type of plan in Washington. I was responisble in my recent housing purchase put a considerable sum down and would love to have my mortgage payment reduced as the worth of my home in Ca has decreased dramatically. I have a stable job and would put the extra money each month towards my children's education funds, retirement and spend a bit thus helping the economy. I will keep an eye on your progress and support your efforts in anyway I can. Good luck to all of us.
Great plan! And to stop people from taking advantage and creating a new housing bubble, you could impose a huge penalty (50% of equity?) for selling your home refinanced under this program within 5 years of refinancing. (Something like that.) Then it would specifically help primary home owners trying to provide a home for their family and not turn a huge profit.
David in California
I suggest everyone who reads this and considers it a wise suggestion should call or write their Congressional rep and respectfully insist that plans starting with the consumer such as this be seriously considered.
You need to get this info to someone who still loves America in the media. Maybe Bill O'Reilly or something. Get it on his show and you can get a much bigger following and political pressure.
Great idea and thanks for paying out so much of your own money to get the word out. I don't see how this could possibly self-serving--other than saving the country you love!
i agree!!! the america taxpayer needs a plan like this. for years our goverment helped big business and forgot about main st even though main street foots most of the bill
While this is a simple solution, it's great way to help the average American. And a fast direct impact to bring out of this nightmare brought to by the banks, hedge funds, wall street 101 !
I hope this will get some legs and walk us of the forest.
Great thinking! I fully and whole heartedly agree that kick-starting the economic engine of the country needs to come from the US consumer/property owner, not from interbank liquidity. As a property owner myself, I would probably equally spend and save the amount of the difference between old/new mortgage. Limiting this to a one-time only situation with a cap is a great way to put some controls on this.
Mortgage companies would see lower profits in the long term but would get a cash bump on all mortgages with the one-time refi fees. Lower profits is still better than no profits!
-Roger
This is a bad idea. I will address all of your arguments in turn.
1.) It will stop home prices from falling.-This is missing the big picture. Home prices are artificially inflated. They must come back down, to stabilize the market. Trying to force them back up to speculative levels, is not only short sighted, but a waste of money.
2.)It will let everyone spend and save more.- I don't even understand where you are coming from with this one. The people are spending that money in the place that needs it the most, the banking sector.
3.) It will increase credit availability.-The reason that the market is in trouble in the first place is that banks were lending money to people who defaulted on their loans. Now you are encouraging more loans to those very same people.
4.) It will create jobs.-There is no proof of this whatsoever. You are basing this argument on the assumption that if people spend money on consumer goods rather than on interest payments that will fuel job creation. Since we're speculating, I would assume that it would cause negative job creation because banks would have less money to lend out to corporations for investment.
5.)It will increase tax revenues.-Banks pay a higher percentage of their income in taxes than normal people do. So if you gave more money to people than to banks a smaller percentage of the nations wealth would be taxable.
6.)It will not increase the deficit.-Of course it will increase the deficit. The reason that the government can lend money to banks at such a low interest rate, and not to people, is because banks can almost always be expected to pay that money back. If you could expect 100% of the people who would take out one of these mortgages to pay it back in full then yes it would not create a growth in the deficit. That is not the world we live in.
7.)It will reverse the economic decline now underway.-On the contrary this plan will harm the most fragile part of our economy, the banks. Much, if not most, of their revenue comes from the interest people pay on their home mortgages. To try to fix the financial crises by attacking the very heart of the financial sector will not help the economy.
8.)It will reduce the losses of mortgage holders.-I don't think this is true. You claim that the banks would do better if they could reclaim part of their loans rather than risk a fire-sale. This is attacking the whole foundation of banking. You have to calculate out the fact that most people will pay back their loans and deduct for the dead beats, that's what banking is all about. Most people will pay back their loans, a government plan to bail out the whole country from their mortgages won't help the banks. Unless some cosmic disaster happened that forced a 100% foreclosure rate.
9.)It is better than what Washington politicians are doing now.-Why do you say this? While I agree that the government is currently being a little irresponsible with our money, the best thing the government can do is to help out the companies that are facing the immediate shock of a market correction. The government just needs to be there to show people that the world is not coming to an end, stop panic and let the country resume its business as usual.
It would be a new America overnight.
What can we do to make this happen?
Great idea. Let's go for it. Unfortunately the government is too stupid to do such a thing. We'd rather bail out banks and corps? Still trying to figure out the AIG bailout. Why?
TK,
Dallas
Don't know whether or not this will work but it can't be any worse than the results we've seen so far. My wife and I bought a foreclosure 9 months ago before the bottom fell out of the housing market and completely remodeled the home. Even though our combined income exceeds $200k, our credit scores are close to 800, and our debt-to-income ratio is less than 10% (not including the mortgage), the bank tried to get us to convert our construction loan to a 30 year mortgage at a fixed rate of 10%!! And this bank was one that received $25 billion from the government bailout. I refused to be so irresponsible as to accept a mortgage with terms that I could not handle, so I went shopping for another lender. I found one that offered a 5.875% rate, but it cost me another $15k in closing costs to refinance. My question is if my original lender got $25 billion to "ease the credit markets", why is there not some requirements for them to offer realistic terms to responsible credit-worthy borrowers? Seems like the trickle down effect won't work if there isn't something in place to force the banks to trickle the money down. Maybe your "trickle up" idea IS a better solution!
part two.
10.) It can be done immediatly.-That just usually means it will done poorly.
11.)The American people deserve this.-You could also make the case that every American deserves a Van Gough painting, that doesn't mean its a good idea.
Great idea.. Please see www.one-man-one-pulse.blogspot.com for thoughts on the auto bailout.
READ ME...
If anyone's interested I shot down this whole idea a few posts ago
taanonymous said... I agree with this plain. It is so simple and would help in the long run not just put a bandaid an the problem.
What can I do to help you get this plan in action?
I've thought about this for the past day trying to evaluate it's true potential. I have uncovered one very serious flaw with this suggestion. IT'S TOO SIMPLE!!! Our government officials are sure to destroy this great idea. After all it doesn't offer enough conflict, confusion and political garble to confuse "we the people." We could end this economic situation in a matter of months with a plan like this. I only wish Dr. Paulaha had taken out the ad space before the election. We could have removed from office those officials who aren't willing to back such a great idea. Every American can clearly understand what is being offered. Gee, what a concept. Wake up America. It's time to contact your representatives in Washington to make this happen. They won't do it on their own. We can show the world that we, the American people, can pull the world out of this recession and rebuild the strength and trust in the American economy and confirm the American Dream!
To the bone head who stated "This is a bad idea. I will address all of your arguments in turn." Go back and reread the ad and I quote "All financially qualified US citizens..." That is the key to this whole program. The Dr. didn't say it was offered to every Tom, Dick and Harry or visitor to the USA that wants the loan and isn't financially qualified. That's what got us into this mess in the first place. The positive impact would start small and build over time. Dr. Paulaha was confident to sign the proposal. I didn't see you signing your counterstatement. Fearful of the repercussions or not confident you know what you're talking about? Brian K.
The proposed plan by Mr Paulaha would immediately restore consumer confidence, stop the falling housing prices, generate jobs in the housing sector which will have a ripple affect and rebuild trust in the financial system, but most of all the plan is transparent. The American taxpayer can benefit from the solution rather than on the sielines waiting for the bill to come due.
Alas and idea that's simple, comprehensive and what appears to be fair. The approach would have to be all inclusive. As a citizen who after depleteing his entire life savings to then result in foreclosure(a year ago) due to a real estate market (listed for 3 years). I ask what would this approach offer a person who can not borrow money for a house for 3 years (from date of foreclosure) due to "regulations" (bank or otherwise)?
I want to participate, am able to participate but I'm prohibited by regulations created by the people who created this crisis in the first place. I'd like to know how I can. (I think there are others in similar situations)
Although I find your plan brilliant, thanks to the wonderful world of lobbying, it will never be passed. Besides, do you think "the powers to be" would let their banks lose that much money? Everyone would pay off their loans and credit card debt. Big banks would never allow this to happen - they have about 700 billion dollars to make sure it doesn't. Also, if you were to provide such a savings for Americans in a country overflowing with products from overseas, whose economy would you really be boosting? WakeUpWalmart.com
Washington and mortgage lenders don't seem to have a clue as to how to solve the problems that they, in fact, created.
I think this solution, while having a few shortcomings of its' own, has merit...at least for discussion.
Carl
It is critical that this plan be put in front of the congress and Pres - elect Obama. Here are some links: whoismyrepresentative.com
www.senate.gov/contacting/index.cfm
www.house.gov/writerep/
www.house.gov/zip/ZIP2Rep.html
http://answercenter.barackobama.com/cgi-bin/barackobama.cfg/php/enduser/ask.php
Bravo! A great idea that sounds like it will work! Makes more sense than the bailouts whose success is questionable. I hope that your plan will be considered!
This is a GREAT idea!!!! I am bitter and angry that our government is helping businesses to prevent failure. I pay my bills and I'm getting deeper in the hole and my house isn't worth anything anymore... The middle income are getting screwed - enough said.
A smart, smart plan. Thank you.
This seems more promising than TARP. It may not be popular with renters.
I hope that congress and the new administration give it consideration. Appreciation to Dr Paulaha for the ad and persistence.
David Armstrong, Durham, NC.
Best idea I have seen yet. HOw do we get this idea to the right people? Let's find a way. This one actually makes sense.
what a great idea for relieving the anxiety we are all in. let's make this happen. john
Lets get it going!!!!Now if we can get everyone that reads this page to take it to there Congress Men and make it happen before many more have lost there homes. There really should be a Freeze on Forclosures until there is a plan. We have bailed out the banks and are still working on the Auto Makers. Now help the peaple. It truely is the smartest plan I have seen Yet.
Excellent Idea! Now we need to take it further. If everyone that takes the time to read this article and post would then contact their elected officials in Congress and encourage others to do the same maby we can snowball this thing into a reality! I'll be the first to contact mine, will you do the same????
This is genius!!! But, how do we get it implemented? I'm emailing Mr. Paulaha right now to see what can be done to get this off the ground.
This should be started ASAP. Also, American car purchases should have a government discount as an incentive. To cover the coat of mortgages and cars, stop sending US dollars to unworthy countries.
Great idea. I support it. How do we make it happen? I know if I had a lower mortgage I would both spend more and be able to save more. Also maybe I could actually be able to afford to send my children to college.
This plan appears to make sense to the American people. Thank you for at least having a PLAN that helps our citizens and not one that just helps Wallstreet, Big Business and Special interests.
Hopefully our politicians that we elected to serve the American People will be smart enough to embrace this. But I have my doubts. They the politicians owe too much themselves. Unfortunetely their debt is owed to Wallstreet, special Interests.
I support this plan. Its beauty is in its simplicity. Despite over 40 years of concerted planning, for the first time in my life, I am between a financial rock and a hard place.
This plan would eliminate layers of government and corporate bureaucracy and prevent a lot of people, myself included, from a financial meltdown.
This idea is far too simple and sensible to become practice. Nobody can receive a huge bonus for implementing it, nor can it be auctioned off to the highest bidder like Obama's Senate seat.
We need a grass roots write-in campaign to get the attention of our President-elect and hie colleagues asking them to consider making this idea a reality.
This sounds like a great solution to the current situation. Maybe not a solution, but it will go along way to help. The ability of homeowners and new buyers to get a low interest mortgage will stimulate the economy in a multitude of ways. With the $500 k lifetime limit it will keep out the investors and very wealthy who really don't need this type of program. I am a small business owner and like everyone else am seeing the effects of the poor economy. We hope to be able to stay in business. We need to push to get this publicised and at least considered, NOW. Even though it will also help the companies that helped create their problems, it will most of all help the people. Which is what it should do.
From Patricia Kawaja
President of the Florida Association of British Business representing thousands of British-American residents and mortgage payers in Florida:
MY COMMENT:
A BRILLIANT PLAN with a simple idea that fixes this widespread problem at a stroke. I see no drawbacks. Implement it NOW!!!
----Patricia Kawaja in Miami
That level of immaturity is only partially self inflicted, poor parenting is the primary reason, parents saying yes, when they need to say no. Growing adults need to be prepared for life as well as it's challenges. When a bird stays in the nest too long and then attempts to fly, it hits the ground or struggles. If the current generation of parents continues as the last our future will be short lived and the current recession will be a fond memory.
So what's the answer? I have two children ages 1 and 3 which I love dearly, its very upsetting when they are crying for the want of something, as opposed to the need. My wife and I have realized and by saving no to them to those wants ( much of time) we are showing love. Many times when parents say yes to a child its not due to the love for the child, its due to the parents inability deal with their own feelings of saying no. An inability to deal with being uncomfortable in seeing the child crying, screaming or using some other tool that kids develop to try and get parents to do what they want.
We, as a society need to start setting a better example, not just for the youth, but for the adults. We need to support one another and have available teams or individuals that can encourage the benefits of deferred gratification and that when you're doing the best thing for yourself doesn't mean it going to feel good, at that moment. Even the highly paid athlete's of today, their compensation is a result of having practiced for years.
The bottom line, there are times when " putting off what you can do today until tomorrow" is the responsible thing to do! Steven B. Schwartz
Great Idea- what can we do to make this happen?
This sounds like a GREAT idea!
Get THOSE people to read it and consider doing it!
Sounds great to me.
Your plan makes a great deal of sense and it makes one wonder why those we have elected to Congress has not already thought of this. Instead of bailing out Wall Street, we should be thinking about the hardworking individual who, because of no fault of their own, are losing their homes thru default. Getting people to remain in their home, getting people back to work, and getting the country back on track should be the primary goal here. Like the dominio effect of the housing industry causing this problem, the reverse can also cure this problem. Question is, "Just how do we get someone in Congress to listen to us and your plan so as to get a bill pass that could start this process that you have proposed?". It is an excellent idea and should be considered.
Am I the only one who wonders where the money would come from?
The purpose of a mortgage is to gather a large sum of money to give to the seller of the property. Actual money actually changes hands. It's not imaginary.
If 50 million Americans were allowed to participate in this, at an average home value of $200,000, that's $10 TRILLION the government has to come up with.
The government gets its money from YOU.
Your mortgage payment would go down, but you'd be taxed into oblivion.
The government is not here to fix all your problems. Stop expecting hand outs for everything!
If you can't afford it, DON'T BUY IT.
Seems like a great solution to me. Let's stop bailing out big business and start helping those that need it the most...the average american. This program would not cost the govrnment anything and it would bolster the economy on an immediate basis as people would have disposal income. Let's hope the geniuses on Capital Hill want to help the people they supposedly work for!
Your ideas make so much sense that Congress would never accept them - but the public sure would!
The crash of our economy is being done by design. The globalists are bringing us into a depression for their own personal gains. They want a one world bank and new world order. The further we fall into the biss the less food that is available the more we will be willing to accept their offer. Keep in mind that we owe the Chinese for all those bad mortgages, and they will want to be repaid. That is when America will be stripped of our assets and we will be left paying back the interest in taxes. We will become a third world nation that is their plan for us. People start tuning into www.prisonplanet.com and educate yourselfs about what's coming. Time is running out for all of us as a nation unless we wake up to the distruction of our nation. Peace to all
Can someone answer the question... WHY ARE WE NOT DOING THIS!!!!! Seems so simple doesnt it Yo congress maybe you should read this
For some unknown reason the media has not noticed this missive. What do you think.
Let us share in the "Boondogle billions for banking, big insurance, and big auto makers."
If we cannot share let's not bank with, or buy the products of the companies that have participated.
I found the article in USA today and posted on Undone - Rick Bahl . As a small business owner I support the idea 100%. Being a Republican from Illinois, I'll talk to my good buddy Mr. Obama and see what he can do to get some support for it! ;-)
Why not send this to the President-elect and all members of Congress, making a demand that they respond to this suggestion. We can discuss it out here away from Washington but the answer lies in the people demanding a CHANGE from Washington!!!
I agree fully. I am very upset that the automakers will now get "bailed out". What happened to free market and let the market fix itself - now we have corrupt CEO getting millions and billions. Outrageous!!! Can I not pay taxes since I DON'T want a penny of it to go to corrupt automakers or banks?!!!
I read your essay and applaud your efforts. This is sound idea and one that would in fact work a helluva lot better than trusting these crooks in Washington DC.
Unfortunately, I am not sure it would correct the way the country is headed. This would allow more money to flow into the sysyem; people would buy more of the same gas guzzling cars because they had the expendable cash. Somehow uyour plan needs to force the car companies to retool and produce more energy efficient cars and relinquish our dependence on oil
I have just sent a comment to Fox News at 'ureport@foxnews.com' asking them to report on this idea.
If EVERYONE READING THIS BLOG would do the same, they might actually do it. Yes, that mean's YOU!
So many people ask what they can do to make sure this idea is heard.
HERE'S WHAT YOU CAN DO: if YOU, yes YOU contact every news organization you can, and every person you can, the word will get out.
But if all you do is ask, and you don't DO anything, then you are part of the problem.
ACT! Spread the word!
With the extra money saved on my mortgage I could finally have a solar system installed which would further help the economy and environment. Too bad BIG government likes to make everything much more complicated than it really needs to be.
Maybe we should vote for you for President. You're the only one making sense. Make sure this ad finds itself on the steps of Congress. I'll stand with you on it.
Excellent idea, but will never happen. This economic "crisis" was designed by the very wealthy to separate the rest of us from our money, ie home values, 401ks, iras. The trillions lost by us went somewhere. Our government gave it to the Banks.Wall Street gets the rest on short sales. If there are actual workers involved in a bailout rescue, they have to beg for the money. Those who support a rescue for our country and the rest of us need to speak much louder and with common purpose.
We know several young couples that this would be a great help for. They are struggling with debt and day to day living expenses.
i totally agree with this program
this is fundamentally a good idea but I think the time frame is too long, particularly since the gov't is now borrowing money at 0%. I would modify it, though. so that a 15 year mortgage could be obtained at 1.5% and a 30 year at 3%.
Further, for those homeowners who are underwater and trying to sell, i would provide a tax credit for the loss incurred on the sale of a primary residence.
This is an excellent idea because it refeules one of the biggest engines of our economy, the housing market. This would help clear out all of the excess inventroy,stabalize home values,get builders building again and increase consumer spending, the real engine of our economy. I hope the right people see this as the great idea it is and ACT on it.
Thanks and Merry Christmas
My 2 cents is why not all those who lost their homes go to the sentate committee and as for a bailout. If the banks and the car companies can go to a committee why not the hard working American people who keep this economy going go there also.
Brilliant bailout for the common man! This is what our so-called "leaders" in Washington should've thought of instead. It's not too late, though, to galvanize People Power in America for this to happen.
VERY IMPRESSED AD!!! It's the first idea that I have seen that makes sense!!!
I'm emailed to my adress book including our senators and representatives. Probably won't do much good with the idiots in Washington but its worth a try....
Anything is better than they are talking about!!
I really like the idea of a tax credit on the loss on sale of a primary residence. There needs to be mechanisms to keep out the speculators and probably limit it to some percentage loss or dollar amount but this would give people the ability to recoup at least some of their loss and re-invest in the economy or apply to the next house purchase.
How much did you pay for that ad malaka?
This is a positive solution that could actually work.
I am dissappointed not more people have responded.
We should be screaming in the streets.
Well done!! At least someone is trying to consider the common man on "main Street" with actually a do-able proposal. I, like many others here, see it as unlikely given our Washington "cronies" who look at a different picture than us once in office. Unfortunately they have been bought to effect "change".
We certainly could use the money and affect change from the ground up in your proposal. Let's get someone in the media interested and on national talk shows talking SOON about this type of solution.
I agree 100%, but what will we do about credit cards, which is the second biggest scam. The mafia offered batter rates, when I was a police officer
Finally a plan to support and benefit the "people"!! Afterall we are the ones who drive the economy. With all the squeezing from groceries to taxes how can they expect us to continue to spend? Why should we continue to bailout greedy companies at yet again our expense when they already profited from us. Sounds like double dipping to me. I think the plan has merit and should be further explored, certainly can't be any worse then what our leaders have developed thus far. To address some of the pessimistic concerns on the blog I think "all financially qualified US citizens, not just those in default" should be clarified. Another benefit to the plan would be that the government would actually profit during tax time because the write-off of mortgage interest would be significantly less. Personally speaking, I would rather have my money through the year to save, invest, provide for my children and let's not forget the ballooning College tuition bills!! So how can we make this happen or at least considered?
This is pure brilliance. I was heading down that same path willing to be satisfied with a 3-4% option. But Most definitely a 1.5% will revitalize the industry.
Great Thinking.
I absolutely endorse this. This should happen immediately. It could resolve a whole bunch of problems and put us back on track. I hope the government takes this to heart and acts immediately. This is a fantastic idea. We could all stand to gain and put the economy in a good way and let it grow naturally.
Great idea lets get this forwarded to our congressmen and make them work for us. In case they forgot that is there puropose in the first place.
Now that is out of the box thinking. I am not sure where the money to pay for the plan would come from but I think it has merit. Law makers should consider it. Just think of the competitive advantage a bank could have by makeing smarter lower interest loans.
Good plan. How do we get such an idea into the hands of Congress? How do we as Americans get such an idea into the narrow minded members of Congress that ideas such as this one are what the American people actually want? Americans don't want a plan that is only going to help out the big corporate world. We need to stop helping out the white collar sector of America and start helping out the heart of America: the blue collar sector. We have spread this article onto our friends and family, I would hope that everyone who reads this does the same.
It *sounds* like a good idea, but I don't think it really is. I'm not an economist but as people have pointed out above this plan will conservatively cost about $10 trillion. The US government does not have cash reserves, so this will double the national debt (in the absence of huge tax increases).
Government will have to borrow the money at a much higher rate than the 1.5% it is lending it back out, and this will be a huge additional burden on taxpayers, to the point where homeowners would see no net benefit in their overall finances.
Am I missing something?
I have personally been calling and emailing my senators and representatives for the past 2 months to do this very thing. I have yet to receive a response. I truly believe this will help the American people and our economy.
I encourage everyone to contact your senator and representative. If enough of us contact them and we can show them this is what the American people want, hopefully they will listen and get it done very quickly.
I'm no economist but I think this plan sounds like a very good solution to the national economy issues. Although i'm not sure the nations leading banks will go along with the idea.I for one could use the break in mortgage interest, and see myself spending the excess money to help stimulate the economy.Hopefully President elect Obama has a subscription to USA TODAY.
Great idea.Need to bring it to the attention of the t.v. media and president elect obama. There should be a restriction on what can be borrowed like a percentage of income so you don't have people that bought twice the house they could afford being bailed out. Easy credit is what got this country in to this situation.
An excellent idea! Great economic stimulus and would result in a substantial reduction in foreclosures (most people would stay in their homes even with poor equity positions if they could afford to).
Existing mortgage-holders would get their money back and avoid write-offs, enabling them to focus on higher-value investments/loans.
The only "losers" will be those mortgage companies who will complain about unfair competition - but they're the same ones requesting bailouts!
Great idea, hope it gets visibility and traction.
Robo
I beleive this is an excellent idea, we need to make it happen! I hope President elect Obama reads USA TODAY. What a way to stimulate this ever stagnate economy.I for one pay my mortgage monthly, but with the ever rising prices of heating my home. The cost of children going to college, food etc. What a releif this would be to most Americans !
My family supports this idea, along with the fare tax proposal put forth by Govenor Huckaby, this makes more sense than anything coming out of Washington.
Judy Burks,
Overland Park, KS
This is, by far, the best idea I have heard to get the economy back on track. I am so disgusted with all of this bailout money going towards businesses who have failed, that I've lost total faith and respect for our political system. Please, someone, take note, of this simple plan that would benefit almost every American.
Great idea but it's too simple for the guys in Washington to accept. It doesn't get money to them.
Great idea - except refininace mania is what got us into this mess. When you refinance your home equity is compromised. In many cases it already is. The SMART thing to do would take the savings after the re-fi and pay down your mortgage-auto-credit card debt. As a Realtor, I've seen dozens of cases where people are mortgage to their eyeballs and won't eliminate cable tv - sell their motorcycle - nicest cell phones. Great theory - with the exception you are giving the to much credit to the average American. Some people are not financially responsible to own a home. The mortgage sharks that told them they could should go to jail.
great idea although i would not limit it to primary residences only. we originally bought our now primary residence as a second home.This mortgage help needs to be available for first or second homes upto the aggregate of $500,000. There is a lot of housing inventory out there that represents second homes and they could use the boost also.
This sounds like a great idea that would work and could be put into place quickly. The only reason it want work, our politicians are to stupid to recognize a solution that would work. If we the voters would quit electing idiots we could get something done. You have a great plan. Thanks.
What homeowner with a mortgage wouln't love to have their mortgage interst rate reduced to 1.5%. I certainly would but the likelhood of the Federal government doing something like this is essentially non existant.
Asking the population to post comments here will not get this plan enacted. Do you have a better method of garnering support for this plan from our legislators who would have to enact it? If so, I would like to hear it and support it.
A much sounder way to invest $700 Billion of our tax dollars......in each other! The ultimate fit to Obama's "redistribution of wealth"! The only "losers" are the greedy SOBs that run the present "mortgage monty" on all of the citizens of this country! I especially like the lifetime cap for a PRIMARY residence! The only issue I have is it should be lower than $500,000; say $225,000. This creates a "reasonable" cap for the "average" home purchaser. And if people want second and third homes they can do it the "old fashioned" way and go swimming with the sharks that have been feeding off the "American Dream" for far too long! Just don't let the banking system "piggy back" onto the Government back mortgages and allow people to buy million dollar homes with the first $225,00-$500,000 back by a 1% Government loan!!
I like this mortgage idea a lot. It would get the economy going a lot faster and the savings go to the public. No bailout for companies that had bad management.Companies had control of their fate. Bailout the taxpayers who did not have control of this failed economic outcome! Consider doing something like this also for people buying cars. Give them 1.5% car loans.
This is one of the few things I've heard that makes sense! It's about time the government starts looking at this country for the people instead of the chosen few.
I would strongly support this proposal to offer every US citizen a 30 year mortgage at a 1 1/2 percent fixed rate of interest. I would offer one suggestion: provide an incentive or make it a requirement for those above a certain minimum yearly income to save a portion of the savings in a 401 type savings plan. R. Metcalf - bobmetc@earthlink.net
One source says the residential real estate market is $8 trillion, or roughly equal to the entire national deficit or 60% of GDP Despite the assurance that this money wouldn't be debt, that money has to flow from the government to the current owners of the property. This is a bailout 10x the size of the Wall Street bailout, for 95% of folks that don't need it (that is, they can pay their mortgage). I think there is a better way to spend taxpayer money.
Wow,So fantastic ,a plan that considers everyone everyone.
Please send this link to everyone, including your senators. Please go to thier website and email them. Spread the news!
We agree with any plan that will help out those of us who find ourselves in this financial crisis. My husband has worked for Chrysler for 35 years. Anytime the Mother Company said "move" we moved. The family was uprooted and we went. We have paid taxes and never missed a step on paying our mortgage on time, every time for over 35 years. In trying to pay for our childrens college education we borrowed on the equity in our house. But we were dumb and found ourselves in a rate that will go up again this coming September 2009. My current mortgage rate is 7.5%. We live in Michigan and our house is upside down..we have no equity left in it. Our 401K decreased like every one else and our health care savings went down 25% in one month. Chrysler is in trouble. We have no hope of being able to re-finance with the current criteria. I would be happy with a 4% fixed rate. We hope that the government has some plan to help us! We will be in the foreclosure line if we cannot find employment when Chysler goes under.
I forwarded this Blog and its comments to Obama for America in hoping that this idea becomes more widespread than it currently is. This plan is simple and is the best start to turning around this economy. It sure would be nice if this blog and its comments end up on the pending desk of Obama and his team. We as the people might be able to plant a simple seed, and hope it grows into reality.
Agreed!
I admire you taking the time to place this in the USA Today. I fully support this and endorse the idea.
Mike
Great Idea! Mr. Paulaha. Thank you for putting a PLAN out there for our consideration. As stated hereabouts, we must demand media and government attention to this approach NOW. I would suggest starting the process with the immediate purchases of all foreclosed homes by the former owners or new buyers. Also, rescue those in the forclosure process. Then, open the plan to all those to buy/refi. And why not the auto industry too? Provide subsidies for the purchase of new US made vehicles on the dealer lots along with support for trade-ins (and destruction)of older, gas-guzzling, polluting vehicles.
Now it's my turn. I'm sending this page link to everyone I know and my congressional reps.
I am going to forward this blog to my congressman. I hope the word gets out and everyone starts the same trend.
Your plan to avoid a depression sounds good to me. It's finally a solution for the people. I think the credit card companies should have lower finance charges no higher than 3%.
Finally!! A solution that makes sense. I vote yes.
Everyone needs to forward this. If we get enough people involved, Congress cannot ignore it.
This plan is great but unfortunately, passing a plan like this would not benefit any lobbyist group and that is the way Washington works.
This plan would work and since it is the taxpayer's money they are giving to these people, why not.
Who wants the government owning your home?!?!?!?!?!?
Why should someone buy a car if they don't need one?!?!?!?
Please use the below websites to contact your elected officials. Send them this blog link. Also, send it to the Media.
http://www.senate.gov
http://www.house.gov
It is amazing that one person came up with this solution, but our entire government does not have the abiltiy to see past the problems of corporate America.
Under "why the plan will work" you stated "the holders of those mortgages will have a cash inflow that will allow them to make new loans to people who, because of lower mortgage payments, will now be qualified to purchase other things on credit." That's what got us in the mess we are in now! People need to quit living on credit and only buy what they can actually afford! There has been total financial irresponsibility.
Wow!!! Actually a new Idea that doesn't only benefit big business. The plan is simple and good for everyone rich or poor.Excellent thinking outside the box.I hope this makes it to Washington. If not our country is soon to be a third world has been!
Finally, wisdom from simplicity. Trouble is, lawyer type politicians understand only legal-speak sollutions that complicate matters even further.
I've had the same thoughts as you. Thanks for getting them out where "wisdom" for solutions are needed and hard working Americans are helped -- for a change.
John, D.Min.
The first, simplest and most effective action that would immediately resolve this economic crisis would be for Congress to order the curtailment of the obscenely generous benefit packages provided to Federal,State and Local employees; anyone whose income is derived from tax dollars.The private sector can no longer afford government.
Bill D.
I like it a lot. There will be nit-pickers, but there always are. Simple and sensible is always the best way.
This would the Auto problem. I would have extra money to buy a new auto. It would help me with the loss in value in my home
This is such a reasonable idea. If you look at rewarding good behavior this is the way out of this mess. We are bailing out banks with 700 billion yet with very little sense of control over what they will do with the money. I had a thought about this also where the gov't dispersed $ to citzens in good standing from the bailout dollars to be used(required) by us to payoff mortgages and stimulate the economy. Your idea will have the same effect. What do we need to do next to make this happen now!
I will send a link to all my co-workers and associates about this great solution. Just like what T.Boone Pickens did with the oil price hike, we will petition our senators and representatives to act on these issues. We will remind our politicians and the Barack Obama for America legions that the will of the People is the Supreme Law of the land.
Brilliant, let's get it done.
I have always thought that there must be a way to give the money to the citizens so that we can spend the money to keep the corporations alive, instead of the government giving it to the corporations directly. This sounds a good plan.
Middle class America supports the richest of the rich and the poorest of the poor in our country, and we bear the the largest part of the tax burden. Eventually the workhorses will wear out and then who will pay?
Healthcare costs are one of the major reasons for bankruptcy in this country because technology has surpassed common sense and compassion. A major contributor to that cost is malpractice litigation which has become a cash cow for opportunistic attorneys and consumers who think that doctors should be like gods and never make mistakes.
I own nothing but the clothes that I wear to work at the local hospital and a few pieces of antique furniture handed down from my relatives. There is no retirement to watch and worry over even though I've been a fulltime employee for 31 years, so the whole Wall Street thing doesn't much matter in my book. What matters is being able to afford the cost of food and fuel. America is in survival mode. Hopefully Santa Claus or the Dali Lama will bail us out just like the executives of the big 3. I have no faith in the American government at this point.
This sounds like a great plan and would be a great plan if left "untouched". The problem I have with it is that whenever Politicians have access to programs they will manipulate it to serve their own purpose (votes - office - power) they will find ways to claim that it is "unfair" to this group of people that they must have X% down or why should those people that make more than these people pay the same rate etc etc etc....
Also I do not trust the government to run anything efficiently; the 1.5% rate will be adequate to fund the program at first but will soon become top heavy and changes will be needed to continue the program and soon the program becomes another tool for social engineering and political gain.
The Problem with politics is that its full of politicians.
Outstanding idea! I studied behavior economics in college and have been looking for a solution to this housing crisis. This is the best idea I have seen so far.
Dennis your a genius! Can we get the politicians to listen to common sense? Recent events tell me that unless a liberal thought of it, or it's going to put money in a policians pocket, the answer is no. Another example of the minority ruling the majority. What a shame that the leaders of our country believe that 1+1=3.
Lfiore
all it takes is one good idea and this is the best one i have heard so how do we as americans get this ball rolling who do we contact and how do we make enough noise so our message is heard and why was this website in the fine print it should of been big and in bold print stand up America and take your country back
This idea deserves a serious look. What has been done so far is NOT WORKING. I'm afraid something like this is too simple for the Washington bunch. For all of America I would like to see this brought to congress and seriously considered before we are totally bankrupt. Many blessings.
I think the key here is that the homes financed would have to be HOMEOWNER OCCUPIED, and that this would be SUBJECT TO VERIFICATION, and that a person would only be allowed to FINANCE ONE HOME AT A TIME. In this way, landlords do not profit, & HOMEOWNERS are given some leeway. With these caveats & safeguards in place, I like this idea. I especially like that the Borrower would not have to be "in default" or have a bad credit rating to qualify---There are LOTS of people like me with EXCELLENT (FICO over 800) credit ratings, who pay their bills on time, who cannot spend one more dime to "stimulate the economy" as all my money is spoken for.
I agree with everything you say - the government has no idea how to help the people, they only help themselves and their cronies in big business - tell me how I can help - c
I think this would drastically make things better, but I think we're forgetting a big group of people here: the people that took out loans they could afford and DIDN'T foreclose. I'm from california and I lived in a neighborhood where many people took out loans were the saw vast amounts of cash quickly, but when the time came to begin paying off the loans, they couldn't. Why? Because the interest was so high and they had already refinanced (yet again). Not to be a stickler, but until America changes its spending habits, nothing is going to help.
I think you have an excellent plan that needs to be seriously studied.How do you take this to the next level? should we start to contact our Senators and Congressmen ? Thanks for your investment but may I ask are you being helped by any lobbies like realtors or home builders? I still would vote that we should consider this idea. John B.A. Economics, successful business owner.
This is the best original idea I've seen yet in terms of reversing the course of our impending depression.
The retail banking and finance world has self-destructed due to its own corruption and this seems to be a viable replacement - and could even be extended to personal automobiles and even credit card accounts.
The GOPs will scream "socialism" but VA and FHA loans have already set the table for this!
Great idea!
Many comments say what can be done to implement it? A start would be to contact your Senators and Representatives, which I plan to do first thing tomorrow morning.
The best idea I have ever seen. If our politicians do not implement a trickle up bail out, then it would appear they only care about their special interest.
HOW TO DO IT...
Many bloggers say "great idea, but how can it be implemented?"
There is one way it could be done. Consider: Washington politicians are corrupt as the day is long. They're not going to vote for something that their rich handlers do not condone. This will only come about if there is enough of a unified voice pushing for it. And how does that happen? Answer:
We call on large, existing organizations that have millions of contributors / members - such as Amnesty International; Doctors Without Borders; Union of Concerned Scientists; American Civil Liberties Union; Natural Resources Defense Counsel to each contribute one or two of their Board of Directors to form a new organization. The new org is called TOGB - for Take Our Gov't Back. TOGB will:
> Create a new platform that will be for the people and by the people. That platform will not only craft a plan such as the one being discussed here, but other important items such as:
There has been a myth propagated by government officials and the mass media that suggests there is no money for the elderly, the poor, for health care, environmental, education, and social programs. In truth, there is plenty of money, but we must go back to those who hold the purse strings to demand they once again pay their fair share. In an article entitled,
How the Rich Rob the Poor and the Politicians Make It All Perfectly Legal, Nicole Colson writes:
"Over the three decades leading up to 2000, the 90 percent of U.S. households on the bottom end of the income ladder saw no increase at all in income on average, after adjusting for inflation. The top 10 percent, on the other hand, nearly doubled their income on average over the 30 years.
… In his book,Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super-Rich--and Cheat Everybody Else, journalist David Cay Johnston details how the tax system itself is helping to enrich a tiny elite at everyone else’s expense. By 2002, the portion of federal revenue coming from corporate taxes had fallen to below 10 percent--down from approximately 33 percent during the Eisenhower administration. While the rich are paying far less in taxes, to make up the difference, both Democrats and Republicans have systematically shifted the tax burden onto the shoulders of everyone on the lower rungs of the income ladder. (1)
Hence, taxes will be increased on the largest and most wealthy corporations and citizens, but not on anyone making less than $250,000 per year for a family of two. Instead, the tax burden on both the middle class and poor will be substantially reduced to reflect the lower rates of the 1960’s, adjusted for inflation.
Corporate welfare and tax loopholes for wealthy individuals and large corporations will be eliminated, and they will once again be held accountable to pay their fair share.
The gross profits currently made by corporations and executives in health care, insurance, biotechnology, weapons, pharmaceuticals, etc, are a result of excessive executive wages and unfair tax advantages that have been at the expense of hundreds of millions of other Americans. Putting reasonable limits on these gross profits is the only way to keep the excesses of a few from robbing the rest of a hopeful future.
This future president must seek a constitutional amendment to eliminate all sources of corporate influence and money in government except, of course, taxes.
The minimum wage will be increased to be a living wage again.
High interest rate credit cards that keep people poor, and even unable to eat reasonably, will have their interest rates reduced down to a more manageable 9% interest for families earning less than $150,000 per year. Mortgages that balloon to a rate higher than 6% interest will be reduced to a maximum fixed rate of 6%.
etc.
TOGB will endorse future congressional candidates and presidential candidates who demonstrate integrity and who are willing to commit to the platform endorsed by TOGB.
The agenda created by TOGB can be voted on and supported by the many millions of contributors of the member organizations.
Through TOGB, we can throw the dirty dogs out and put candidates in power who are committed to cleaning up Washington and giving the gov't back to the people.
Until the next elections, however, these many millions of Americans who are informed by TOGB through the ACLU, Amnesty International, Doctors Without Borders... with their existing member email lists, can be coordinated to take powerful steps to influence the government and business. Things such as boycotting companies that are working against our interests.
I have created a website which details the basic TOGB plan, but it needs exposure and support to get it off the ground. The website is www.TOGB.org
And you can sign a petition here:
http://www.thepetitionsite.com/1/take-our-government-back
Great idea. Send your coments to your congressmen.
I agree with what Kirsch said. It avoids setting up a government bureaucracy to manage the existing mortgages.
You have a solid idea. How do you plan to get this to a point where the government is pressured into debating it?
Len
We agree that this plan is excellent. It is simple, thoughtful and appears to be a real solution though there may be some issues to be resolved. anon.
Just off the top of my head this occured to me.
If this happens I suspect the rates paid on fixed investments would also go down accordingly. What happens then to the millions of retirees who actually did things right and had these type of investments to take care of themselves.
It seems no matter what you do, it will hurt someone, and it does not seem fair at all to hurt the ones who were actually acting responsible, not the idiots who overborrowed.
I've called my dad. I've told my friends. I've printed copies for my wife to bring to work for her friends. I've emailed congress and i've never done anything like this. Thank You!!!!!! to who ever paid for; contributed to; passed on; or helps this excellent plan get the attention it greatly deserves
Great, I'm all for it!
What about the greedy realtors and mortgage brokers that will never keep their percentage low enough to make this work? They will add on and make the costs too high and bring it back up to the current rate level.
Has anyone ever met a reasonable realtor / mortgage broker that just wants to help out his fellowman?
Great Idea! All the greedy and
"advertisers" in the finacial and
"Money" industries can take a hit
also. A man who makes 90 million in
six years in the Money industry is
severely over-compensated. It also
is a gross insult to all the working people in this nation.
This plan has a lot of very good benefits. It is a much better investment of OUR bailout money than giving it to the same people (the financial industry) that got us into this situation in the first place. Putting our taxes to work dealing directly with the homeowners that are in distress is a much better idea than giving it to banks in the hope that they'll use it to provide mortgages instead of just lining their own pockets - AGAIN!
In your (the author's) opinion, what are the flaws in this plan? Please provide risks and alternatives.
I LOVE this concept. It has a very sound rationale. Lets not forget that it WASN'T all the governments fault first. People taking sub-prime loans with balloon payments on houses they new they couldn't afford was a bad idea. BUT..the idea of the government ALLOWING this to happen through deregulation is also a negative. I had "heard" that the current administration basically halted some states from barring such loans!! (hearsay and rumor,..but?)
It seems obvious that "free economics" doesnt work and that, whether we like it or not, we live in a socialist/capitalist society.
Only with regulation to prevent greed at government and institutional levels (ie, banking and Wall Street) can we have something representative of a "free" but monitored economy.
While trying not to point fingers, as there is pointing to be done on both sides, the current administration and government has failed the American People horribly. The abuses of power, and cronyism has been absurd. The rate at which the national debt has skyrocketed,...almost like a disease. And now, thanks to the constant deregulation and greed we see at almost every level of government and corporate America, we are IN the worst recession/depression since the "Great Depression". Notice I haven't even mentioned the war in Iraq,..oh,...whoops.
Currently,..in the 700 billion dollar bailout, we have seen that corporations have used the money to pay dividends to share holders and to purchase smaller banks in disarray. And sponsor trips to spas!! Yet, a 15 billion bailout to ensure automakers continue to employ near or over 1 million people may be too much!! Nice. The money that was to be used to jump start the economy has gone to make even larger banks that we "cant afford" to let fail. While some insurance companies are buying banks to get "their fair share" or the bailout.
More Greed Anyone??
Your solution stands. It puts the money back in the hands of the people, and WILL jump start the economy again by putting more money in the pockets of those who spend! While allowing banks to recoup their money from said loans.
Yes,..there are some issues to resolve as some have pointed out. But I would much rather see the government helping the people rather than the companies and corporations that helped get us into this quagmire in the first place. I will be sending a link to this site to my state representative,...as i hope all that care enough to read and reply to this article will also.
Respectfully,..an Indiana Native
Thanks!!
I LOVE this concept. It has a very sound rationale. Lets not forget that it WASN'T all the governments fault first. People taking sub-prime loans with balloon payments on houses they new they couldn't afford was a bad idea. BUT..the idea of the government ALLOWING this to happen through deregulation is also a negative. I had "heard" that the current administration basically halted some states from barring such loans!! (hearsay and rumor,..but?)
It seems obvious that "free economics" doesnt work and that, whether we like it or not, we live in a socialist/capitalist society.
Only with regulation to prevent greed at government and institutional levels (ie, banking and Wall Street) can we have something representative of a "free" but monitored economy.
While trying not to point fingers, as there is pointing to be done on both sides, the current administration and government has failed the American People horribly. The abuses of power, and cronyism has been absurd. The rate at which the national debt has skyrocketed,...almost like a disease. And now, thanks to the constant deregulation and greed we see at almost every level of government and corporate America, we are IN the worst recession/depression since the "Great Depression". Notice I haven't even mentioned the war in Iraq,..oh,...whoops.
Currently,..in the 700 billion dollar bailout, we have seen that corporations have used the money to pay dividends to share holders and to purchase smaller banks in disarray. And sponsor trips to spas!! Yet, a 15 billion bailout to ensure automakers continue to employ near or over 1 million people may be too much!! Nice. The money that was to be used to jump start the economy has gone to make even larger banks that we "cant afford" to let fail. While some insurance companies are buying banks to get "their fair share" or the bailout.
More Greed Anyone??
Your solution stands. It puts the money back in the hands of the people, and WILL jump start the economy again by putting more money in the pockets of those who spend! While allowing banks to recoup their money from said loans.
Yes,..there are some issues to resolve as some have pointed out. But I would much rather see the government helping the people rather than the companies and corporations that helped get us into this quagmire in the first place. I will be sending a link to this site to my state representative,...as i hope all that care enough to read and reply to this article will also.
Respectfully,..an Indiana Native
Thanks!!
I would love to have a lower house payment and more disposable income. I can see how putting the power back in the consumers hands is the best way to stimulate the economy.
What are the next steps? How can we get Washington to see this is the best solution?
I think this is a great plan and a great alternative to 'donating' lending institutions a blank check with no rules regulating its use. I support it and can get behind it. I am left with one question unanswered - - How can this grass roots movement continue to grow and be heard??
Does the US Govt have the funds to capitalize this project?
How much money would be required to fund this initiative?
Does nationalizing the mortgage industry give the government more leverage or control over it's citizens?
I like the idea in principal, who doesn't want a cheap mortgage. There are alot of questions.
This sure looks like a good idea to me. Why are we continually rewarding the people who keep screwing us by cleaning up after them? The banks have been taking advantage of people for years with outrageous fees and practices, both in the form of predatory lending practices and credit card interest rates and fees. They are the ones who kept lending money to all of those morons who paid $500K for a 50 year old 1100 sq foot house. They also knew that once the mortgage rates went up these same people couldn't afford the payments. What did they think would happen? They have profited from the closing costs,fees and interest paid on all of these mortgages and now that they are in trouble because of their creative accounting and bad judgment, we are bailing them out by giving them more of our money. We are also to blame - how much crap do we need to buy? To even pretend that we can continue to live on credit is outrageously stupid. The government keeps telling us to go out and spend money to keep our economy strong, which shows us just how smart they are - how do they think we got into this mess in the first place? Let's invest in ourselves for a change by using our brains, our voting power and our control over our own money.
Did anyone bother to do the math? If rather than each citizen, each household did that, then, say 100,000,000 of the 111,162,259 households (2007) at an average $210,000 mortgage (average home price is 264,000) would amount to $21 trillion, close to half the global GDP.
That would surely heat up home prices as we all the bid up for as much house as we could get, and divert a lot of money away from other things.
I think this is a generally sound and logical idea that deserves serious consideration. What I don't understand, quite frankly, is how does my existing mortgage holder get their money on my unpaid principle? So, in other words, if I owe the bank $200,000 does this plan suggest the bank get a lump sum payoff of $200k from the government and then I start paying the government back at 1.5% interest? If so, on one hand, while I am sure the bank would love to get that $200k back in hand, they would be giving up decades of interest off of me, albeit they may earn more long term by reinvesting that cash. Also, where does the government come up with the cash to make all of these payoffs? Surely there will be a mad run by American Homeowners to take advantage. There seem to be some kinks in the plan but all addressable, I think. Dr. Paulaha needs to get the bank/mortgage industry to agree and endorse this plan with gusto so that Congeress gives the plan the attention it deserves!
Thanks for taking the time and money to publize your idea!
This is a great plan and would definitely stimulate the economy because if people are paying less for their mortgages.....they will be spending more with consumers. How can we make this happen?
Here is the link I found to submit this to President Elect Obama...
http://change.gov/page/s/yourvision
I have also contacted my congressman and senators from the great state of Missouri. I hope many, many more people contact their elected officials also!
This sounds more fair than just giving relief to people already in foreclosure. I like the idea of it being across the board. I look forward to hearing more about the proposal and who in the leadership is supporting the plan.
The key here is getting this to Obama and congress and the senate. This is a great idea but you need to get this to the ones who will listen and can and will do something about it and keep pursuing it...don't just leave it at a full page ad in usa today......this must be told over and over again so something will be done.
Let's do it. Need to take out another add directing "the people" to write their Congressperson and Senator to act on this idea
My brother, a real estate broker in the hard-hit Phoenix area, and I were having this conversation just yesterday; why should people that are struggling to make payments on their 7% mortgages in a timely manner every month be punished, while people that default are rewarded with better deals? I fear that, if a plan like this is not implemented, the next mortgage crisis to hit the banks will be mortgage-holders that purposely stop making their payments just so they can renegotiate the terms. By the time the banks deal with the missed payments, investigating the mortgage-holders to validate their claims, prosecuting the ones who are trying to defraud, etc., they will have lost millions/billions more. That's only one of the reasons that this plan makes so much sense. Stop the bleeding now and get this economy back on the right track. Let's do it!
What a wonderful plan. Much too simple for the corrupted Congress to follow-up with. There would be no kick-back from the lobbiest on such a GREAT plan, I mean it is apparent that they now sell Senate seats!
We need to make sure all of the US Congressional Represantatives and Senators see this. This is an absolutely fantastic idea and we need to make it happen! What else can we do to get this implemented?
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