Feb 23 2009

A Mortgage Bailout That Would Really Stimulate The Economy

Published by at 5:21 pm under All General Discussions

I have decided to occasionally propose solutions to our economic problems that make sense (first two can be found here). Th first proposal is on exempting kids from income and payroll taxes, the second is on how everyone must chip in.

Now here’s the 3rd:

Bail Out The Good Home Owners, Let Them Spend Their Mortgage Payments: The Democrats and DC elites have it all backwards. Instead of bailing out the folks who screwed up (lenders, banks and buyers) bail out those of us who were responsible and made our payments. Instead of spending $9.5 million on a 1 mile bike path, buy out all of us who are doing well with our mortgages.

By paying off our mortgages you reward good behavior, the banks and lenders get an infusion of much needed cash, and those of us who are rewarded will start spending the money we use to allocate to our mortgages to investing, spending and saving! This plan would shore up banks, stabilize real estate, provide people something of value to offset the recent depreciations and stock market slide and it would stimulate the economy all at once.

Those who are stuck can get a little breather from the banks in terms of percentage rates, but no hand outs or do-overs. Maybe they will be bought out by those of us now free of our own mortgages we took care of all these years.

When we have all these Tea Parties, remind DC that is it us who played by the rules and performed responsibly who deserve the bail out first. The dupes and fools who screwed up should be at the back of the line.

15 responses so far

15 Responses to “A Mortgage Bailout That Would Really Stimulate The Economy”

  1. MerlinOS2 says:

    Just remember that since this started in the early days of CRA all that has been done as a result is to move about 2% of the country from rentals to ownership.

    Heck of a deal on all that isn’t it?

  2. MerlinOS2 says:

    Another alternative.

    Multi Nationals have trillions of dollars sitting in overseas subsidiaries that they have accumulated as profits there, but there simply are not enough solid investment options locally to put the amount of cash they have to work.

    Drop or severely lower the tax rates on repatriation of those funds to this country to get rid of the penalties to bring those dollars back on shore and let the companies fund their own renewal and not future generations and the deficit.

  3. kathie says:

    We bail out delinquent home owners so property values of neighbors don’t fall. Empty homes will eventually be filled when values hit bottom. Why not let it happen.

    AJ can you unravel the deficit?
    Obama is saying he is going to cut the deficit that Bush left, it is $1.3 billion. How did it get to $1.3 billion? I know that Bush spent $350 billion for banks, TARP, we will get it back I think. What are the numbers, please does anyone know?

    Does that mean that Obama is not counting as deficit the $786 billion and the $75 billion for mortgages and $40 billion for Auto industry? What is Obama’s responsibility, we have no budget for 2010, or even for 2009 not all of the budget has been passed.

    Bush’s deficit of $1.3 billion, what is it from?

  4. kathie says:

    I just saw a picture of Broward county Florida. Thousands of people waiting in line to get help with their mortgages. Who sold those houses to those poor people. Who ever it was needs to be put in jail.

  5. tarpon says:

    The only problem with your suggest, rewarding the ones who know how to be responsible, is it does not fit with Acting President Obama’s reparations plan.

  6. kathie says:



    Inside Story on Septembers Financial and Economic Meltdown- Video
    The Market Oracle ^ | Feb 20, 2009 | Submissions
    Posted on 02/23/2009 3:07:10 PM PST by An Old Man

    On Thursday, Sept. 18, 2008, the astonished leadership of the U.S. Congress was told in a private session by the chairman of the Federal Reserve that the American economy was in grave danger of a complete meltdown within a matter of days. “There was literally a pause in that room where the oxygen left,” says Sen. Christopher Dodd (D-Conn.) As the housing bubble burst and trillions of dollars’ worth of toxic mortgages began to go bad in 2007, fear spread through the massive firms that form the heart of Wall Street. By the spring of 2008, burdened by billions of dollars of bad mortgages, the investment bank Bear Stearns was the subject of rumors that it would soon fail.

  7. AJStrata says:


    I know, the idea suffers from an abundance of common sense, hence it will not be considered.

  8. WWS says:

    Kathie – the thousands of people in Broward County were waiting for Section 8 rental vouchers, which will let them rent at about 30% market rates. The mob started to get ugly when it became clear that only a fraction of them would get anything.

    What a ridiculous way to run a program – whatever thug is tough enough to shove his way to the head of the line gets a reward, and everyone who plays by the rules gets screwed. Signs of the times.

  9. kathie says:

    OK I found it. About our debt.

    President Obama will try to convince the American people on Tuesday night that he is going to “cut” the deficit in half while he actually increases it. Even if you put all the blame for last year’s deficit ($454 billion) on President Bush, ignoring the fact that Democrats controlled Congress, it is dishonest to blame him for the deficit projected for this year ($1.3 trillion).

    Yet that is exactly what President Obama plans to do. He will tell the American people that he “inherited” a $1.3 trillion deficit even though he has pushed for and won $350 billion for Wall Street and $1.1 trillion for the stimulus bill.

    We won’t hold our breath waiting for the media to hold President Obama accountable but if he truly wants to cut the deficit in half, he needs to find a way to get it down to $227 billion, which is half of what he actually inherited. And he should do it by reducing spending, not raising taxes. Raising taxes is the last thing our economy needs right now.


    Here are the federal budget deficits for the past eight years and the projected deficit for this year under President Obama. As you can see, the deficit was coming down toward the end of President Bush’s second term before it shot back up. Not only did Democrats take over Congress and write the spending bills for Fiscal Year 2008, they also worked with President Bush to spend $350 billion on the Wall Street bailout. The massive deficit in FY08 is a bipartisan failure, but the deficit in FY09 is a direct result of President Obama’s policies and his unwillingness to control big spending Democrats in Congress.

    FY2001 — Bush / GOP House / Dem Senate = $128.2 billion
    FY2002 — Bush / GOP House / Dem Senate = -$157.8 billion
    FY2003 — Bush / GOP House / GOP Senate = -$377.6 billion
    FY2004 — Bush / GOP House / GOP Senate = -$412.7 billion
    FY2005 — Bush / GOP House / GOP Senate = -$318.3 billion
    FY2006 — Bush / GOP House / GOP Senate = -$248.2 billion
    FY2007 — Bush / Dem House / Dem Senate = -$160.7 billion
    FY2008 — Bush / Dem House / Dem Senate = -$454.8 billion
    FY2009 — Obama / Dem House / Dem Senate = -$1.3 TRILLION (estimate)

  10. WWS says:

    AJ, there is a serious plan that actually could be done which would help everyone fairly.

    Simply: allow everyone to refinance, fees paid by the feds, at 4% interest for 40 years. The benefit needs to be universal – no favoritism. Some people would benefit who shouldn’t, but I find that acceptable if *everyone* benefits. Payments would drop dramatically for everyone who owns, and home prices would stabilize. Also, allow a reappraisal and set the new principal value at current market value. Let the fed make up the capital losses the banks will have to take and recieve stock in return – we’re doing that anyways already, so that’s no actual loss. This is a far better alternative than letting it happen through bankruptcy, which would be catastrophic on many levels.

    This would fix the current mess in a very short time. It would be expensive, but would it really be any more expensive than the failed policies we’re already embarked on?

  11. Redteam says:

    WWS, excellent plan, which means it won’t be considered. I’m relatively sure Obama isn’t looking for a plan that will work, just one that will create more chaos. Fits in better with socialism

  12. conman says:


    Let me get this straight about your plan. The U.S has approximately $10 trillion worth of mortgage debt. We don’t know what percentage of that debt is held by the “good homeowners”, but let’s be generous and say its only 50%. So your plan is a $5 trillion bail out. How can you complain about a $800 billion stimulus package while at the same time advocating handing out $5 trillion? How will paying off the good homeowner mortgages do anything to resolve the bad mortgages which caused the current economic downspiral?

    I hate to say it, but this aspect of your plan is so out of touch with reality its shocking. I challenge you to find a single economist that advocates this plan. It is, however, a good lesson about how easy it is to criticize a plan until you actually have to come up with an alternative plan.

  13. conman says:


    While I think your plan may be a plausible alternative, the main problem is – who is going to lend the money to everyone to refinance? None of the banks are lending right now and will not do so until we resolve the bad mortgages. They certainly would not lend money to those with upside down mortgages. So where will the money come from?

  14. kathie says:

    Welcome back Conman…….thought you had bit the dust for awhile.

    I just couldn’t pass this up. I know, I miss George Bush.

    Obama Approval Rating Below W’s, Disapproval Higher (Matching February Gallup Polls of first term)
    Gallup and polling Report ^ | 2-24-09 | February Gallup Polls
    Posted on 02/24/2009 2:48:02 PM PST by icwhatudo

    The bitter election of 2000 vs Hope and Change. An election supposedly “stolen” vs a supposedly new era of “The One”. You’d think comparing the early February Gallup poll numbers from President Bush and Obama’s first term would show one being supported more while the other had higher disapproval numbers. You’d be right….but might be shocked at who had the better ratings:

    No Opinion-17
    Gallup From Feb 2001(scroll down to second poll from bottom- 2/19-21/01)

    No Opinion-16
    Gallup from Feb 22 2009

  15. […] As I proposed earlier, before a dime is considered for people who screwed up, the country would do much better to reward those who have been holding up their end of the bargain: Bail Out The Good Home Owners, Let Them Spend Their Mortgage Payments: The Democrats and DC elites have it all backwards. Instead of bailing out the folks who screwed up (lenders, banks and buyers) bail out those of us who were responsible and made our payments. Instead of spending $9.5 million on a 1 mile bike path, buy out all of us who are doing well with our mortgages. […]