I see lots of people bashing the bailout plan...

...but not many people offering a solution. What do you think should be done (assuming you disagree with the Obama's plan) to get our economy back on track?

1) enforce the regulations that are already on the book.

2) start making examples out of people that are doing things by the book. I don't mean a pat on the back and a slap on the wrist.

3) Freeze and eliminate all redundancy programs.

4) reduce taxes, especially corporate tax.

5) No pork projects for 2 years.

6) Make banks renegotiate all mortgages to conventional loans.

7) Rewrite Bankruptcy law where it is fair to consumers and businesses. Too many businesses offering credit to high risk people. Banks shouldn't be that crazy.

8)Freeze credit card interest rates to 3% for 2 years to give time to customers to get out as much debt as possible.

9)Give tax credits to companies that open up manufacturing jobs.

10) Realize that IRS refunds checks are a good form of stimulus.

I don't think the government should do anything. Letting this downturn play out will make the economy stronger than ever, in 18-24 months. Propping up failed businesses and banks will only lengthen the recession. Doubling the debt via the porkulus bill will do far more harm than doing nothing at all.

[edit on 8-2-2009 by stevegmu]

First of all, we need to see people going to JAIL. We need to put the fear of punishment into those who have played fast and loose with pension money, etc. I want to see CEOs in orange jumpsuits.

Secondly, all bailout money should come with strict regulations about how it can and can't be spent. There should be laws enacted against arcane derivatives and financial instruments like like CDOs that were responsible for the mess. Until and unless this happens, bailout money is just throwing fuel on the fire. This would involve a sweeping restructucring of the entire concepts behind the financial system, such as fractional reserve banking, etc. Basically, reserve requirements need to be increased to a large extent and the types of investments that can be made must be heavily regulated.

Thirdly, a bailout of a private bank or financial institution by the government means it essentially becomes a government institution. If this is going to happen, I want to see financial workers getting paychecks that are more in line with the paychecks of government workers (which is what they essentially will have become). That means no more bonuses, and chop a zero or three off the end of CEO salaries.

That's for a start...

Give the bailout money to small businesses that contribute to hiring 70% of the work force along with We the People and you want stimulation of the economy then you will have stimulation by creating more jobs and more purchases. Also the government can further reduce taxes to put more spending money in We The Peoples pockets. Give the money to the banks and puff it is gone with no accountability.

Folks this is We The Peoples money and the government is spending it like drunken pirates on shore leave. No accountability, only during elections if the stimulous money failes to stimulate economy. What happens if the $Billions$ in bailout money does not work does the government say we are sorry or does the government say we need more bailout money, we need more bailout money and we need more bailout money?

This latest bailout proposal package gives everyone and not just first time home buyers a $15,000 tax credit if they purchase a home. What if housing values continue to fall to 10 or 20 cents on the dollar what good will the $15,000 tax credit for buying a home be worth to the economy?


[edit on 8-2-2009 by amari]

reply to post by amari

This latest bailout proposal package gives everyone and not just first time home buyers a $15,000 tax credit if they pruchase a home.

What good is that credit if people can't get a loan? Government puts this in like they are trying to help but most Americans will never be able to get this credit.

I say no more bailout money unless the bank/corporation provides the same relief to the people who need it.

[edit on 8-2-2009 by jam321]

The thing that caused this entire financial disaster was the housing crisis. If the housing crisis is not fixed, nothing will work. The first Bailout Bill was supposed to help alleviate the housing crisis. It did not, because the banks kept the money, instead of using it to provide loans and mortgages, or mortgage relief.

Jesus told a parable 2,000 years ago, which directly applies to this situation:
Matthew 18:

23“Therefore, the kingdom of heaven is like a king who wanted to settle accounts with his servants. 24As he began the settlement, a man who owed him ten thousand talents was brought to him. 25Since he was not able to pay, the master ordered that he and his wife and his children and all that he had be sold to repay the debt. 26“The servant fell on his knees before him. ‘Be patient with me,’ he begged, ‘and I will pay back everything.’ 27The servant’s master took pity on him, canceled the debt and let him go. 28“But when that servant went out, he found one of his fellow servants who owed him a hundred denarii. He grabbed him and began to choke him. ‘Pay back what you owe me!’ he demanded. 29“His fellow servant fell to his knees and begged him, ‘Be patient with me, and I will pay you back.’ 30“But he refused. Instead, he went off and had the man thrown into prison until he could pay the debt. 31When the other servants saw what had happened, they were greatly distressed and went and told their master everything that had happened. 32“Then the master called the servant in. ‘You wicked servant,’ he said, ‘I canceled all that debt of yours because you begged me to. 33Shouldn’t you have had mercy on your fellow servant just as I had on you?’ 34In anger his master turned him over to the jailers to be tortured, until he should pay back all he owed. 35“This is how my heavenly Father will treat each of you unless you forgive your brother from your heart.”

In the modern parable, the master is the Congress/Taxpayers, and the master's servant was the banks, while the fellow servant is the unfortunate homeowners who have fallen behind on their mortgages. Too bad that Congress never bothered to read the Bible.

Do you really think that the master's servants will change their behavior?

Giving loans to people to buy houses they couldn't afford in the first place is one of the reasons behind the 'crisis'. The government shouldn't be helping anyone buy houses at this point.

The Genesis Plan by Karl Denninger is a very workable solution.

Don't misunderstand, we are still going to have a recession - we need it, the inflated prices of too many things need to be corrected through the natural process of recession.

But the Genesis plan will fix the banking/credit situation.

reply to post by ProfEmeritus


The housing crisis is an accounting problem IMO. Is a small one bedroom house in California really worth 250,000 dollars? As a matter of fact our whole problem is an accounting fiasco. Everything is based on estimates and can be manipulated to reach any goal desired. Even our own government plays around with the numbers. Do you truly believe we are only 11 trillion in debt?

The housing crisis is an accounting problem IMO. Is a small one bedroom house in California really worth 250,000 dollars? As a matter of fact our whole problem is an accounting fiasco.

However, the millions of people that have lost their homes is more than an accounting problem. The banks could have easily sat down with each person in danger of foreclosure, and renegotiated a new mortgage, extending the timeframe, and setting a fixed rate of say, 5%. (Remember, the banks are getting virtually free money from TARP, and virtually interest free loans from the Fed. 5% fixed mortgages could easily turn a profit for them. Most of the foreclosures were due to resets of the ARM mortgages.

No bashing here, the current plan is doomed to fail, because like so many government actions it does the majority for government.

The best thing they could do is take the 900 BILLION divide that up amongst all taxpaying Americans, cut a check for each, give them 8 weeks to spend it as they choose, or lose it.

It may not be a long term fix, but it will certainly give the economy a big push in the right direction, possibly providing enough momentum to sustain a long term recovery.

Originally posted by jam321
reply to post by ProfEmeritus

 

The housing crisis is an accounting problem IMO. Is a small one bedroom house in California really worth 250,000 dollars? As a matter of fact our whole problem is an accounting fiasco. Everything is based on estimates and can be manipulated to reach any goal desired. Even our own government plays around with the numbers. Do you truly believe we are only 11 trillion in debt?

If it was known the real debt figure is some where around 72 $Trillion$ dollars just in The United States Of America. The total World debt is somewhere around 480 $Trillion$ dollars and we thought Monopoly was just a game. Every economist and government has their own interpretation of what the real debt figure is Worldwide and in their own country.

[edit on 8-2-2009 by amari]

reply to post by ProfEmeritus


I agree 100% and admit that greed is involved.

One thing is for sure, housing will be harder to qualify for once this ordeal is over.

YOU ASKED... So I shall repeat.... Here is or was the Solution!

Solution 1: Complete Economic Reset that (would have) cost less - www.abovetopsecret.com...

Solution 2: Economic Security and Energy Independence all in one -
www.abovetopsecret.com...

Direct "Fed to Consumer Mortgage Recapitalization" or "Debt Recapitalization"

My plan was for mortgage holders / consumers to borrow mortgage money directly from the Fed directly at 0.5 %. This is a fraction of the interest that we are currently being charged by the banks.

By taking the 0.5% Mortgage "Recapitalization" from the Fed directly, we pay off our mortgages in full to the banks and the banks now have the capital of millions of "paid in full" mortgages and cannot complain about mortgage write-offs and defaults (if you haven't looked, go to a mortgage calculator and put in 7% or whatever your mortgage rate is... now try it with 0.5%).

At 0.5 % our monthly mortgage payments are about half of what they were. (STIMULUS PACKAGE DONE)

Now, The banks get these Mortgage pay-offs from millions of mortgages and they should have all the money they claim is needed to alleviate their asset shortages AND mortgage backed securities since all mortgages will be paid in full.

This is not a refinance and does not require surveys and assessments, this is strictly a "mortgage recapitalization" with a hard $300.00 "origination fee". (This can be adjusted, below is a quick example of how this origination fee would be used to assist our troubled city & state governments, as an added bonus it puts the local politicians on our side as it solves the current budget crisis at the local and state levels well.)

$50 is paid to a bank / finance organization who is providing the paperwork and processing.
$75 is paid to your city / municipality / county (Local Government)
$75 is paid to State you live in. (State Treasury)
$100 goes to the Federal Government.
(So this plan also helps the local / state governments that are in a pinch)

So which plan is better, another 1 or 2 Trillion on another stimulus package or a "long term" stimulus every month by halving our own mortgages? This is not charity, we are still on the hook for our principle plus 0.5% and the risk of default is almost 0.

Now - Legislate the REGULATION needed to prevent this from happening again and going forward. Once "existing" mortgages are "recapitalized" and the recapitalization project is completed, the banks can then pick up mortgage origination again.

Win / Win / Win

OK, Put current plans of action against "Plan B" side by side. We (would have) printed less money (In the long term as we have no idea how much they will spend on "project based" stimulus work programs" and we get the stimulus needed with Plan B.

[edit on 8-2-2009 by infolurker]

reply to post by infolurker


I must say I like your idea quite a bit. What would happen to people who default with the government?

You should send this idea to your Congressional representatives.

Now that we have solved the housing crisis, onto a real stimulus. This morning, I heard a very reasonable idea on one of the news programs. Instead of this $820 billion stimulus government boondoggle, send every taxpayer a pre-loaded debit card, with say $500 on it, and the stipulation that the amount must be spent on goods or services, and cannot be deposited in a bank. Have an expiration of the balance of December 31, 2009, forcing people to spend it, or lose it. Next year, do the same thing. That will REALLY stimulate the economy, and in stead of letting the government decide how to spend OUR money, we get to decide how to spend OUR money.

I did, and every major talk show host a few months ago... no dice.

There is no default... similar to "student loans" you cannot default on this debt once or if you agree to "recapitalize".

We blew 8.5 Trillion on nothing... this would have cost much less BUT bankers prefer to keep the mortgages they can make pay and "write off or pass off" the junk to the taxpayer so it wouldn't happen without public outcry.

It makes sense and a "stimulus" would have already been done, Mortgage defaults gone, banks needing money eliminated, state and local governments assisted....


Basically a complete "reset" to where we were... now regulate to make sure the "bubble doesn't happen again and guess what... .we would be out of this mess.

Oh gee.... we can't have that! To many people (or a few) making a crap ton of money with this "blank check" we just wrote.....

I cannot believe that our government is so incompetent that they are relying on the same clowns to solve the problem that got us in this boat in the first place.

If I did my job as well as they do, I would be fired and blackballed from ever working in my profession again.

[edit on 8-2-2009 by infolurker]

reply to post by ProfEmeritus




Big mistake the sub prime loans did not cause this crash. You need to learn what our currency is and no its not backed by gold. Our currency is a debt based currency meaning its printed out of thin #ing air then its loaned out so it gets into the market. It does not take a lot of intelligence to figure out when consumers get over the top with debt that the system will come crumbling down. All the money goes up meaning it will eventually end up in the elites hands. So they have to keep creating and loaning out money to keep the system going .....

reply to post by infolurker


I came up with a program very similar to yours during the first round of bailout talks and sent it to each and every representative of my state, including some in the state government. All I got as a response was the generic "Thanks for your input. Although I didn't even read what you sent, please vote for me on November 4!" Needless to say, I stayed home.

I used to think that my ideas must be flawed in some way that I was incapable of realizing, after all the people in Washington are far smarter than I am, right?

Nope, turns out they just have a bit more avarice than I do.