Friday, February 6, 2009

What Would My Plan Be?

OK -- so I am against this stimulus plan. It seems to me not to be an immediate injection of money into the economy but an appropriations bill, a wish list of projects. To me, it seems this plan will simply be a repeat of the Japanese attempts to overcome their economic downturn of the early 1990s -- with the same lack of results.

But everyone is afraid of doing nothing following the myth of the Great Depression. It seems to me that what caused the Depression is the opposite of what ii happening now. Following the Crash, the Federal Reserve followed a tight money policy, contracting the money supply and letting banks fail. The exact opposite is going on now. The Fed is dropping money from airplanes and doing everything possible to keep banks from failing.

The real problem now seems to be debt -- we have too much of it. And the answer is not more debt. We need to work on getting out of debt.

So what do I propose doing? There needs to be a short term and a long term view.

Short term, things should be focused on helping those who have lost their jobs. So first concentrate on money for medical and unemployment.

Second, we need to do something about debt. Change the bankruptcy laws to allow residential mortgages to be reduced to fair market value in bankruptcy (such a proposal has been made by Senator Durbin). To the extent needed, change laws to ease renegotiation of properties underlying mortgage backed securities.

Third, to the extent needed to get some direct government projects into the mix, pick a number of immediately available infrastructure repair projects. Things already planned but for which money has not yet been appropriated. Limit it to power grid and transportation repairs. The crisis began with the construction industry, so do something on that industry now.

Anyway, those are my ideas. We will instead get a huge appropriations bill.

3 comments:

William R. Barker said...

"But everyone is afraid of doing nothing..."

Oh, BULL$HIT! You're not afraid. I'm not afraid.

Anthony... DON'T let the media and the Democrats convince you that spin is reality.

"Short term, things should be focused on helping those who have lost their jobs."

Like HOW...??? You wanna be specific?

"So first concentrate on money for medical and unemployment."

Anthony. That's not dealing with the cause... the disease... that's giving pain meds to mask the symptoms. (*SHRUG*)

"Change the bankruptcy laws to allow residential mortgages to be reduced to fair market value in bankruptcy..."

* The bill would allow bankruptcy judges to restructure mortgages on primary residences including principle reductions.

HA! HA! HA! And YOU'RE supposedly a capitalist...??? And YOU'RE supposedly worried about my prayed for military coup based upon fears of a MILITARY dictatorship - yet a DICTATORSHIP of the black robed class is fine and dandy...???

Oh, yeah... and you wonder why I'm so convinced we're screwed. (*SNORT*)

Hey, Anthony... SCREW those bozos who bit off more than they could chew in terms of housing; let 'em be foreclosed upon and then a RESPONSIBLE buyer can take over, getting a great bargain. Why "reward" the irresponsible and "punish" those who DIDN'T act irresponsibily...???

I don't know what kind of "capitalist" you are, Anthony; the kind who shares socialistic policy ideals with the likes of Durbin, Conyers, Dowd, and Schumer it appears. (*SIGH*)

"Third, to the extent needed to get some direct government projects into the mix, pick a number of immediately available infrastructure repair projects. Things already planned but for which money has not yet been appropriated. Limit it to power grid and transportation repairs. The crisis began with the construction industry, so do something on that industry now."

Oh, PLEEEASE...! These are projects that should be financed through the NORMAL budgetary process.

Next...

What... you planning on trading in your ties and wingtips for steel toed boots...??? I thought government policy - from village to state to federal - was to send everyone to college... heck, maybe even to grad school... and you wanna make sure there are plenty of CONSTRUCTION JOBS around for them when they graduate...?

(*SNORT*)

Anthony... while of course we NEED people in construction, and I want them to be highly skilled and fairly compensated, is waving a red flag or raking freshly poured cement your idea of a 21st Century economy...???

Enough with the construction industry! I'm not in construction. YOU'RE not in construction. Sorry... I'm not willing to put construction at the top of the pyramid.

Now... if by construction you're talking building new nuclear plants... building all sorts of energy producing/distributing infrastructure... then I'm with you on that.

BILL

William R. Barker said...

Hey Anthony...

Hey...

ANTHONY THE ATTORNEY...

Did you happen to read...

http://online.wsj.com/article/SB123449016984380499.html

...today?

(Boy... scary how Anthony the Attorney is so often wrong about legal matters while Bill the non-Attorney is... er... usually right.) (*WINK*)

Excerpting...

-- House Judiciary Chairman John Conyers's bill, which is moving swiftly through Congress (and companion legislation introduced by Sen. Richard Durbin) would allow bankruptcy judges to modify home mortgages by reducing both the interest rate and principal amount on the loan. This would be a profound mistake. Mortgage modification would indeed provide a windfall for some troubled homeowners -- but its costs will be borne by aspiring future homeowners, and by any American who uses credit of any kind, from car loans to credit cards. The ripple effects could further roil America's consumer credit markets. --

Ya following, Anthony...???

(*SMILE*)

Continuing...

-- In the first place, mortgage costs will rise. If bankruptcy judges can rewrite mortgage loans after they are made, it will increase the risk of mortgage lending at the time they are made. Increased risk increases the overall cost of lending, which in turn will require future borrowers to pay higher interest rates and upfront costs, such as higher down payments and points. This is illustrated by a recent example: In 2005, Congress eliminated the power of bankruptcy judges to modify auto loans. A recent staff report by the Federal Reserve Bank of New York estimated a 265 basis-point reduction on average in auto loan terms as a result of the reform. --

(*SHRUG*) Economics 101, Anthony.

-- Allowing mortgage modification in bankruptcy also could unleash a torrent of bankruptcies. To gain a sense of the potential size of the problem, consider that about 800,000 American families filed for bankruptcy in 2007. Rising unemployment and the weakening economy pushed the number near one million in 2008. But by recent count, some five million homeowners are currently delinquent on their mortgages and some 12 million to 15 million homeowners owe more on their mortgages than the home is worth. If even a fraction of those homeowners file for bankruptcy to reduce their interest rates or strip down their principle amounts to the value of their homes, we could see an unprecedented surge in filings, overwhelming the bankruptcy system. --

Of course... if one of your GOALS is to increase available billable hours for your brethren...

(*SIGH*)

-- Finally, a bankruptcy proceeding sweeps in all of the filer's other debts, including credit cards, car loans, unpaid medical bills, etc. This means that a surge in new bankruptcy filings, brought about by a judge's power to modify mortgages, could destabilize the market for all other types of consumer credit. --

Oops...

-- More worrisome is the opportunity for abuse. Imagine the following situation: A few years ago a borrower took out a $300,000 loan with nothing down to buy a new house. The house rises in value to $400,000, at which time he refinances or takes out a home-equity loan to buy a big-screen TV and expensive vacations. He still has no equity in the house. The house subsequently falls in value to $250,000, at which point the borrower files for bankruptcy, the mortgage principal is written down, and the homeowner keeps all the goodies purchased with the home-equity loan. Several years from now, however, the house appreciates in value back to $300,000 or more -- at which point the homeowner sells the house for a tidy profit. Nothing in Mr. Conyers's proposed legislation would prevent this scenario from occurring. To modify a mortgage, a borrower would have to enter a Chapter 13 repayment plan for five years. If the homeowner sells his house while he is still in bankruptcy, the mortgage lender can recapture some of any appreciation in its value on a sliding scale -- 80% the first year, 60% the second, 40% the third, and 20% the fourth. After that, however, any appreciation in the value of the house goes into the debtor's pocket. --

SURELY, Anthony... this isn't what you have in mind...?

And, hell, Anthony... Zywicki doesn't even address the basic "rule of law," basic FAIRNESS/JUSTICE issues I addressed yesterday.

Seriously, dude... start GIVING YOUR MONEY away before you join Conyers and the Democrats in calling for judicial communism.

BILL

William R. Barker said...

BTW, Anthony... I realize that my... er... tone is... er... perhaps a bit on the obnoxious... condescending... accusatory and belittling side... HOWEVER...

(*SELF-CONSCIOUSLY CHUCKLING TO MYSELF*)

No offense intended - either on this thread or the one above re: Prayers for a military coup.

It's just that... well... I'm RIGHT!

BILL

P.S. - I gave you a shout-out earlier today on my blog. (*WINK*)