Ah, so this is a diary, eh? Well, sadly, until my diary skills blossom there won't be links, breaks, videos, etc... just the random spillage of thoughts on my first attempt to put them forth to the public. So hello everyone, and here we go...
First an foremost, I'm tired of this myth the Republicans put forth that taxes on the wealthy kill jobs. It's based on this fallacy... taxes reduce profits which reduce hiring. Simple, eh? Almost sounds reasonable. However, there's one basic fact that I never hear mentioned anywhere... businesses don't create jobs.
If you haven't left in disgust already, allow me to explain. Businesses have little to no control over their need to hire employees, believe it or not. It's all based almost exclusively on the consumers, on demand. If you're creating a product and making a profit doing so, taxes reducing your profit won't change the fact that you still need to meet demand and still need your employees to do so. On the other hand, tax cuts for the wealthy won't increase the demand for your product, therefore there's no incentive to hire. Who's going to hire someone they don't need simply because profits are up? The whole idea is silly. But, as stated, jobs are directly tied to consumers. If the demand for a businesses product increases, businesses are required to increase hiring to meet that demand or lose that share of the market to someone else that will. There's no choice in the matter. You hire, or your potential business goes elsewhere. This demonstrates one thing Democrats have known for decades that seems to elude Republicans... the best way to create jobs in this country is to have a strong middle class that creates a high demand for products. The money needs to be in the hands of the most people to have the greatest effect.
This is why the government needs to start buying up bad mortgages. (Heh... didn't see that leap of logic coming, did you?) OK, let's tie it all together.
Let's say that the Federal goverment initially tells the banks "Look, you all have a crapload of mortagages that are in or nearing foreclosure. We're going to take those off your hands for the remaining principle on the loans (or some other negotiated value)." Don't even make this optional. Create a moratorium on foreclosures, have the Federal government instead buy those notes.
Now, here's the governent with this mess o' mortgages needing help. Take them and completely rewrite the loans, based on the principle remaining, at 20% simple interest, with the word "simple" being key to the whole thing. Think about it... just using the defaults we see at this mortgage calculator site we see that a 250,000 mortage over 30 years at 5% costs the consumer a $1,654.55 monthly payment and $595,639.46 over the life of the loan. Compare this to $250,000 at 20% simple interest (or $50,000 total interest, for a total loan of $300,000) and you see that, spread over the same 30 years breaks down to $833.33 per month.
That's over $800 per month back into the pockets of the middle class, especially towards people with the greatest needs. That's one hell of a boost where it's needed most. This will obviously spur an increase in demand which, as we've seen above, is the real way to create jobs.
Now, the whole federal mortgage thing needs to be fleshed out. It pretty much is in my head. For example, instead of payments where the amount is based on the length of the loan, you can have the length of the loan based on the payments someone can afford to pay with a maximum year cap and maximum percentage of income allowed to be used. If you can easily afford $1000 per month, your length of the loan will be reduced. If you can afford $750 per month, it would be increased. But, being fixed interest, you wouldn't wind up paying more. The $300,000 amount above doesn't change. You can also, after the foreclosure mess is cleaned up, open it to everyone on homes valued at, say, $1,000,000 or less, one home per family, primary residence only, yada yada. Let all of America take advantage of this. Allow people the option of 25% simple interest where the additional 5% goes into an interest bearing saving account. The account can be used to make payments in lean times, to pay off the mortgage early when enough accumulates, or even for a nice payout when the loan is paid off. There's a lot of consumer friendly things that could happen. Run with it.
Oh... and lest I forget... the government is collecting this interest. The whole program winds up paying for itself in time and should, if run efficiently, become a positive revenue stream for the government.
But, enough rambling for now. After well over a year of juggling this in my head it's finally on "paper". Be gentle.
