Wednesday, October 01, 2008

The Common Sense Fix

Here is an email Dave Ramsey sent out that makes complete sense on how to fix the economic situation we are in. The one thing I'd add is that whatever amount Congress uses, $50Billion in this proposal, that they offset it by cutting the exact same amount in government spending so we are not adding to the federal debt. Feel free to take this and send it to your Congress critters.

Here is Dave's Common Sense Fix:

Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three steps:

Common Sense Plan.
A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.

B. In order for a company to accept the government-backed insurance, they must do two things:

1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.

a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.

b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives.

2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.

C. This backstop will cost less than $50 billion—a small fraction of the current proposal.


A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.

B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.


A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.

B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down.

This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to stand up, speak out, and fix this mess.


Nick said...

Obviously not enough praying was done.

Those Congresscritter crooks are now trying to put us on the hook for another $110 billion on top of the original $700 billion.

Somehow, that extra $110 billion price tag brought MORE Republicans to the table.


Anonymous said...

That's what I'm talking about!
It makes too much sense for the morons in washington.

Mike's America said...

Unfortunately we have just been stuck with another big government trillion dollar boondoogle that may not even solve the problem.

As long as there remains almost NO accountability for the idiots that got us into this mess in the first place we are likely to repeat it.

When ENRON collapsed, thousands lost their savings and the top Execs went to JAIL. Raines and Johnson who worked at Fannie Mae who fraudulently skewered the accounting and stole millions now help Obama.

The most massive coverup in US history is going on right under our noses and no one is saying a word.