Up Next: Son of the Mother of All Bailouts

Mother of all bailouts

I don't like the plan, but if the economists think it necessary, let me suggest an off-the-wall modification. First make sure the homeowners have the means to pay for the new fixed mortgage. If not, offer them an option to move to a less expensive home they can afford, losing perhaps whatever equity they may have in the one they cannot afford.

Kenneth Jones of PA @ Oct 03, 2008 23:43:56 PM

Don't Aid and Abet my Cousin

My family is made of two different types of people. One side spends their way to hell on credit, the other saves and uses only cash to buy homes, cars, etc. That's right cash. My mother owns everything she has free and clear. My cousin owes 350k with NO EQUITY. Don't bail her dumb a@@ out. She needs to learn the hard way.

Pointer, R of MO @ Oct 03, 2008 16:34:41 PM

Don't Aid and Abet my Cousin

My family is made of two different types of people. One side spends their way to hell on credit, the other saves and uses only cash to buy homes, cars, etc. That's right cash. My mother owns everything she has free and clear. My cousin owes 350k with NO EQUITY. Don't bail her dumb a@@ out. She needs to learn the hard way.

Pointer, R of @ Oct 03, 2008 16:34:33 PM

If we had stuck to capitalism -- a system in which corporate welfare has NO place whatsoever -- we wouldn't be in this mess in thef irst place. We need to get back to that and not fall deeper and deeper into socialism. Before much longer, the United States of America will be more communist than China or Cuba.

How have we let this happen?

Chris of WA @ Oct 03, 2008 16:24:17 PM

Why is it that all these politicians-- and apparently economists as well-- ignore a fundamental financial truth: you cannot make money loaning at 5% when inflation runs 7%. The "official" inflation rate, which hit 6.8% at times this past year, understates the real situation, which could be 6-8 points higher. And as long as inflation threatens earnings, it doesn't matter how much money lenders have. They won't lend it because they can't make money. If you want to free up credit markets, get inflation under control!

As for the bailout, it's nearly as inflationary as it's possible to get. It will triple this year's federal budget deficit, and the money will come from printing more money (the definition of inflation) and/or borrowing (putting the Feds in competition with Main Steet America for the limited supply of lending). How stupid is that?

DJ of UT @ Oct 03, 2008 16:21:09 PM

You can't set market price levels by government fiat. Not indefinitely. If there are more houses than buyers -- and there are, and have been -- then prices will go down. Period. Artificial price supports can postpone the drop, but not eliminate the problem -- that homebuilding outran the rate at which renters were able and willing to become homebuyers.

JohnFromConcord of MA @ Oct 03, 2008 16:04:33 PM

Just pay the homebuilders to stop....

building any new houses for a couple years. Assuming about

a 500K unit per year build rate at $50K in profit apiece,

that could be accomplished for $50 bil.

Do that and eventually, housing prices would stabelize.

KJ of IN @ Oct 03, 2008 16:01:02 PM

Housing bail out

all well and good - until 3 months down the road when they can't pay their mortgage because they don't have a job. What then?

Del of IL of IL @ Oct 03, 2008 15:29:11 PM