Bail out home owners, even if it means buying their homes and reducing rents and property prices to realistic levels.
Part of the problem is that home loans were given to people without income verification. It is not just the banks that were engaging in highly dubious activities. It was everyone connected with housing sales - including the purchaser with the no verification (liar) income statements.
In this sense, to bail out home owners one must as you state - buy their homes. There is no guarantee that even this is enough. A home owner must maintain insurance and pay property taxes. Depending on how marginal the participants in this scam were - it is possible a percentage of the homes will be foreclosed no matter what. What that percentage is is unknown to me.
"Reducing rents and property prices" is an interesting phrase. The two are not mutually independent. Rents reflect the price to purchase - it is the bottom line competition to rental. If it becomes cheap enough, one buys instead of rents. Of course a shortage of rental units or a surpless of rental units will adjust the price up or down - but the bottom line is the property prices.
To some extent it sounds like rents may already be falling:
"A comparison of houses-for-rent classified ads in the Aug. 14, 2008 issue of The Mountain News with similar ads one year earlier shows 89 houses on the rental market this year and only 65 the year before, an increase of 26 percent." "`A lot of houses became rentals when their owners realized they weren't selling,' said Sue-Ellen Knapp of Re/Max Lake Arrowhead Realty. And because of the flood of houses for rent, renters can get more for their money." "`What used to go for $1,500 now goes for about $1,200,' Knapp said. Knapp said...that $1,200 a month might translate into a three-bedroom, two-bath home in Lake Arrowhead, while $1,500 could rent a similar home with a garage. The latter property, she said, would have rented for $1,900 before the economy's downturn."
"`A lot of houses became rentals when their owners realized they weren't selling,' said Sue-Ellen Knapp of Re/Max Lake Arrowhead Realty. And because of the flood of houses for rent, renters can get more for their money."
"`What used to go for $1,500 now goes for about $1,200,' Knapp said. Knapp said...that $1,200 a month might translate into a three-bedroom, two-bath home in Lake Arrowhead, while $1,500 could rent a similar home with a garage. The latter property, she said, would have rented for $1,900 before the economy's downturn."
At least in some areas an entirely different problem may be happening - rents may be too low. If they go below a certain point it becomes impossible to maintain a property. At that point it becomes a slum.
This moves into another problem with purchasing homes for people. What about the landlords who purchased 2 - 3 - 6 homes or whatever. Should we buy them all for the landlord?
I don't see any good solutions to this mess. Too much corruption by too many people.
Well if someone is going to be bailed out - agreed, the small guy should be bailed out. A lot were innocent. Those that were not - well better them than the multinationals.
aspiring to genteel poverty
A home owner must maintain insurance and pay property taxes. Depending on how marginal the participants in this scam were - it is possible a percentage of the homes will be foreclosed no matter what. What that percentage is is unknown to me.
You can't save everyone, but you could - possibly - save the economy as a whole.
It would be the difference between controlled demolition and an uncontrolled implosion.
Part of the problem is - literally - the lack of control, which means that no one knows what the limits of the disaster are. The bailout plan is a finger-in-the-dyke attempt to plug some of the holes, and it's not bad as far as it goes - which possibly won't be very far.
It's the system of uncontrolled detached speculation which is the problem. The current proto-meltdown is an effect, not a primary cause.
Replacing explicit control would start to restore confidence by setting some firm boundaries.
So if there's going to be a political change, now is the time for it.
What we're achieving here in our discussions is a foundation which can be used by those necessary visionaries, that undergirds the courage needed to tell the truth and propose a way out. This situation demands the equivalent to real entrepreneurship. Many can write about or support innovation, but true entrepreneurship is very rare. It demands the ability to stand up and say no, willing to walk away from a deal that does not really reflect what you seek... despite the deal being partly worthwhile.
So it is now. The system is so broken, only those with the courage to actually say it can move us forward. I too, like Grandpa, believe the global economic fundamentals are sound, only just not on this planet.
A National Investment Bank (internationally supported) has to be but a main gear in the drive train building a sustainable infrastructure. Simple, except the dinosaur interests like the coal lobby are flailing with all their power to survive by crushing us. An international Apollo program of sustainability, which begins with building insulation and the immediate re-channeling of industrial infrastructure towards wind and solar on a massive scale, is indeed our best hope.
But then there's GE's Wall STreet darling, Jeffrey Immelt yesterday, calling on Congress to ratify the nuclear deal with India, and calling nuclear power " the safest, non-polluting energy generation technology." I don't hear him pontificating about GE's wind turbines (decent but not particularly the heights of the industry), as they only make up some 3% of GE's gross.
But then i've been saying pretty much the same damn thing for decades now. Sustainability is only tens of millions of purposeful jobs globally in an aggressive program to fix this civilization. And windsmiths love their work, because it's satisfying working hard towards a dream. "Hey man, i did 3 turbines yesterday, and climbed 5 times!"
/rant "Life shrinks or expands in proportion to one's courage." - Anaïs Nin
another thing, i have to report i'm certifiably insane. Despite three decades of high-level fighting against the combustion of fossil fuels, i'm going to spend part of this gorgeous weekend in Germany watching the glitz and glamour circus of the fastest Benzin-burning vehicles in the world, now running under the world's biggest and brightest lighting system, as the Ecclestone ecstasy moves to that bastion of future capitalism, Singapore. (OK, i dream of sponsoring Formula 1 cars running on renewably-generated hydrogen.) "Life shrinks or expands in proportion to one's courage." - Anaïs Nin
I'm thinking of doing one on the single malts of Islay.... Vote McCain for war without gain
Treating the disease is impossible without different basic political assumptions.
Yup.
For the Occupier, the "affordability" of reasonable index-linked house rentals means it's more likely that they can pay.
ie affordability = certainty.
For the Small Guy Investor, such property-based Units of index-linked rentals would provide a nice solid home for at least part of his pension portfolio.....
For the Occupier, it is a new "Rent to Buy" option where he can gradually acquire Units of rental values of land held by a "Custodian" (exactly as blue chip stocks are technically held by Custodians like State Street now) until the nominal income on his Units offsets the nominal rental due in respect of his occupation.
ie he is "Paying it Forward".
And if times are hard, then Occupiers can pay rentals in saved Units, not $.... "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
