Article

2010-07-05 Economy

Ambrose Pritchard: With the US trapped in depression, this really is starting to feel like 1932

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Posted by 3dc 2010-07-05 15:55|| || Front Page|| [4 views ] Top

#1 "The economy is still in the gravitational pull of the Great Recession," said Robert Reich, former US labour secretary. "All the booster rockets for getting us beyond it are failing."

And Reich is a donk.

The American people sense the feel-good propaganda charade out of Washington. I sense a massacre in the November 2010 elections.

Posted by JohnQC 2010-07-05 17:05|| 2010-07-05 17:05|| Front Page Top

#2 A little ditty to put us in the mood for 1932 !

Posted by Goodluck 2010-07-05 19:06|| 2010-07-05 19:06|| Front Page Top

#3 or how about this one from 33

Posted by Guillibaldo Unusing2147 2010-07-05 21:03|| 2010-07-05 21:03|| Front Page Top

#4 And we are in a 1932 situation for the same reason we were in one in 1932. Government is treating the symptoms and not addressing the cause. We had a program whose purpose was sold as buying toxic assets that bought no toxic assets. It simply dumped cash into bank reserves and left them holding the under water mortgages.

Here is a program that could fix things:

Allow banks to modify under water mortgages for current market value +20%. Allow the banks to write off the difference in principal. BUT you attach a lien to the deed that says that if the property is sold for more than the mortgage value, the bank gets any amount in excess of the mortgage value up to the original mortgage value. The banks would then pay a 10% tax on any windfall they collect.

For example:

You have a mortgage for 600,000 on a property that is now selling for $300,000. Bank adjusts the loan to a $360,000 mortgage and places a special lien on the deed for $240,000. You pay on the mortgage. Now lets say you get the mortgage paid down to $200,000 and sell the property for $400,000. The bank gets $40,000 (400,000 - 360,000 ... the difference between selling price and adjusted mortgage) and pays $4,000 to the govt in tax. The owner walks away with $160,000 (360,000 - 200,000) of equity to use to purchase a new home.

We are currently in a situation where people can not sell a home that they can no longer afford or no longer need (maybe they have taken a job in another town). This would remove the incentive to walk away from mortgages, allow a homeowner to pay down the mortgage and build equity will allowing the mortgage holder to benefit from a future rebound in the market.

Posted by crosspatch 2010-07-05 21:11|| 2010-07-05 21:11|| Front Page Top

#5 Could smart rantburgers like this Crosspatch with the plan, please please please write some very high up folks with your ideas, not just here. Just don't entitle it "Gov't For Dummies, A Reference for the rest of Us." :-D

The not so smart in the higher echelons can't fix the problems because (among other reasons) they ain't smart enough to know how. Seriously, write somewhere besides here. One never can tell when a politician might just adopt an idea they weren't smart enough to think up themselves.

Posted by Ford Maude Elle 2010-07-05 21:24|| 2010-07-05 21:24|| Front Page Top

#6 One never can tell when a politician might just adopt an idea they weren't smart enough to think up themselves.

Recent research shows a key difference between those who call themselves Liberal/Progressive and those who call themselves conservative is that the former have absolutely no understanding of finance and economics, unlike the latter, regardless of profession or field of endeavor. Unfortunately, those at the top of America's executive branch are all L/Ps for a few more years, and sending them good advice isn't likely to break through their preconceptions. On the other hand, the more clever Congresscritters might just find a felicitous explanation useful as they work to persuade their fellows.

Posted by trailing wife 2010-07-05 22:43|| 2010-07-05 22:43|| Front Page Top

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