Before the $700 Billion so called TARP bailout was voted on I sent an email to my Congressman on a much cheaper, more effective and more moral way to cure the problem. The TARP which I opposed in the same email is now recognized as a failure, even by those that voted for it.  

 

Never got a response from the Congressman but I have told about 30 people about it at Christmas parties etc., and every person liked it.  It is maybe the only idea, whether good or bad, that I have floated that has met 100% approval from a wide range of people.  Today on a stock investment chat board two people without any prompting told me that they had sent the idea, particulars and all to their Congressperson with a strong recommendation they implement it.  They did not even know I had contacted my Congressman.  That was the last straw, an idea so enthusiastically received deserves to be put into the public arena.  Here it is:

 

The root of the financial crisis is declining home prices, a supply and demand issue.  We can do nothing about supply unless we start burning homes down.  We can do something about demand.  We do not want to reward bad and foolish behavior, such as giving hundreds of billions to the people that created the problem, such as Merrill Lynch, Bear Stearns and AIG.  This directly or indirectly is what has been happening.   They can not really create demand for homes anyway, but there is a very good way to do that, and reward people who deserve to be rewarded.

 

This is how:  The government in effect already has hundreds of thousands of foreclosed homes on its hands.    There are over 1,500,000 Afghanistan and Iraq veterans already.  The home demand problem which is the center of the problem can be solved by offering a deal too good to pass up to our vets who have done a wonderful job with great sacrifice no matter how one feels about the decisions to place them in harms way.  That offer is to sell them any of the foreclosed homes for 15% below current market value, with a 5% down payment and give them 30 year 4% mortgages.  All the vets have to do is qualify for the mortgage.   So a home in FL, AZ, or NV that might have sold for $300,000 three years ago and is worth $160,000 today would be sold for $136,000 with a 4% loan and $6,800 down.   There would be one rule, if they sell it before 2 years is up, 90% of the profit goes back to the government.  That is to keep those homes off the market for two years.

 

That is such a great deal possibly 500,000 would take advantage of it, producing just what we need, a huge spike in demand.  That would start driving home prices up, which would end the downward self propelling spiral we have been in for over 2 years.   If the vets make a killing on their homes, great!  That means it worked, and they and their families truly deserve it.

 

The current alternative is the government taking over our economy and mismanaging it as they have already admitted is the case so far. 

 

Whereas this idea is simple, will work and will benefit people that truly deserve it.

 

 

Sincerely, Dana Allen