So a consensus has been reached, and the American Taxpayer will carry the tab to socialize the housing market even further. I know the Wall Street Journal is saying that the possibility that the government will actually earn money off of this deal is high, my attitude is still that this is a wrong move. The government will have that money spent even before they earn it, and with China telling their banks no more lending to the American government what will happen next?
The other night as I lay in bed trying to sleep, I started to think about this whole mess created by our government's interference with private enterprise. And I came up with a plan that I almost sent to my Senator and Congressman, but knew that it would be a waste of time because it made sense and would actually benefit the country as a whole and drive the market upward, and that is not what government is looking for right now because if you fix a problem it no longer becomes political fodder to rub in the face of your opponent. But I just received an email from a friend of mine which pretty much took my idea with slight variation and I decided to present my fix in this forum for your consideration.
Right now the government thinks that it needs to bail out the corporations of America to save America. All due respect, it's not the corporations that drive American economics, it is the American consumer that drives it. My plan would have the government prepare a very simple one page financial analysis form basically following the format of a typical financial balance sheet. Every taxpayer in America would be required to submit this form by a preset deadline to be considered for this "economic stimulus" package. Within this form the taxpayer would indicate the income coming into the household and balance it to their outlay or their liabilities. This form would be used by the government to determine the need of the family. This would weed out the investors who in a large way created the problem of inflated home prices through speculation and artificial inflation. In my mind they took a chance and they don't need to be bailed out. Technically nobody should be "bailed out" but if our government has an itching to spend some money let's send it to where it will actually benefit the Citizens.
Once the formed is filed with the government there will be a predetermined amount issued to each taxpayer who files the form in accordance with the preset deadline. Any forms filed after will be penalized according to preset amounts. The money will be issued to each taxpayer, but will not be a tax free occurrence. So the government will recapture some of the money probably at the current 20% capital gains rate. This money will be used to pay off mortgages, car loans, student loans, credit cards, and any other debt. Now with this money going back into the system the housing crisis is stopped, the whole credit system will be saved and America will be strong a stabilized economically. What will they do with the freed up income, spend more which once again drives growth in the market. Those who don't own homes will be able to purchase homes and the market is strengthened. Home values stay stable and everyone benefits.
In a way this idea comes from the Bible. In the Law of Moses the Lord commanded the children of Israel to forgive debts every seven years. That mainly was to avoid the sin of usury. Like I said I know this is a simple fix, but it wouldn't cost $700 billion and everybody would be able to breath a little bit easier.
America is great because its' people are great. If its' people stop being great then America will fail. God bless us all during this time of economic upheaval.
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