The key to most problems is the old "KISS" principal (Keep it simple stupid).
While the pundits and "experts" create a host of complicated concepts to rescue the economy (ne - bailout) all are designed more to protect one special interest or another as much as solve the problem.
Below is a simple yet dramatic plan to stop the bleeding and allow time for the structural changes in our economy (meaning a rebirth of the middle class) to allow for a true resolution.
My proposal:
Immediately pass federal legislation with the following mandates:
- All residential mortgages in the US, on primary residences that are in arrears, are immediately designated as current with the next required payment due in 90 days.
- Any payments in arrears and the 3 payments going forward are added to the end of the mortgage (i.e. if you are 6 months in arrears then a total of 9 months are added to the term of the mortgage so one that had 20 years left in the above scenario would now have 20 years and 9 months left)
- All mortgages that qualify under the requirements above with an interest rate over 5% will be reduced to 5% for a period of 3 years
This concept is simple and goes to the root of the problem. It would keep a vast majority of people in there homes and immediately stabilize the economy long enough to fix the real structural problems.
There is one major flaw that would stop it from working.......it is to simple and straightforward.