Fred
M em b er e d
The bailout should not happen.
The people who bought up all this bad debt did so because they knew that there would be a bailout. It's like this.
You wouldn't buy a junker of a car for $2000. It's a bad investment.
But if you know that two years down the road, the government will pay you $4000 as part of the Junk Car Bailout, that changes the equation. You'd buy piles of junk cars and wait for the government to bail you out.
How we're doing the bailout is just wrong to me.
The houses are foreclosed on.
The banks that now own them are failing.
The government gives the banks our money.
So...
The homeowners have nothing.
The government has more debt. (You and I have more debt.)
The banks have our houses and our money.
If the government is going to bail out these companies (they shouldn't) then they should take those houses. Add up what the loan amounts were, and the bailout amount is that total.
The government then resells the houses to individuals. No companies can purchase, and only one house purchase is allowed per individual. The government sets a reasonable value for the homes.
What happens? People take out GOOD loans with the now solvent banks, and buy houses at a reasonable price. The banks won't make subprime loans because they won't be expecting another bailout.
The banks are solvent, and have customers with loans that they can afford to pay back. The people who tried to capitalize off of the sub prime bailout don't profit.
People move into homes. The cost of housing goes down some, which is a GOOD THING. Homeowners pay less taxes, and there are more homeowners and less renters.
The government gets our money back from selling the houses. They then take that money and use it to pay off some of their own debt. (Not really. They buy bombs and drop them on villages in the middle east to protect us from terrorists.)
Everybody comes out doing well, except the profiteers and the villagers.
Does this make too much sense?
The people who bought up all this bad debt did so because they knew that there would be a bailout. It's like this.
You wouldn't buy a junker of a car for $2000. It's a bad investment.
But if you know that two years down the road, the government will pay you $4000 as part of the Junk Car Bailout, that changes the equation. You'd buy piles of junk cars and wait for the government to bail you out.
How we're doing the bailout is just wrong to me.
The houses are foreclosed on.
The banks that now own them are failing.
The government gives the banks our money.
So...
The homeowners have nothing.
The government has more debt. (You and I have more debt.)
The banks have our houses and our money.
If the government is going to bail out these companies (they shouldn't) then they should take those houses. Add up what the loan amounts were, and the bailout amount is that total.
The government then resells the houses to individuals. No companies can purchase, and only one house purchase is allowed per individual. The government sets a reasonable value for the homes.
What happens? People take out GOOD loans with the now solvent banks, and buy houses at a reasonable price. The banks won't make subprime loans because they won't be expecting another bailout.
The banks are solvent, and have customers with loans that they can afford to pay back. The people who tried to capitalize off of the sub prime bailout don't profit.
People move into homes. The cost of housing goes down some, which is a GOOD THING. Homeowners pay less taxes, and there are more homeowners and less renters.
The government gets our money back from selling the houses. They then take that money and use it to pay off some of their own debt. (Not really. They buy bombs and drop them on villages in the middle east to protect us from terrorists.)
Everybody comes out doing well, except the profiteers and the villagers.
Does this make too much sense?