If you exclude Social Security/payroll tax, then 38% of Americans are not paying their "fair share" since they are not paying any federal income tax, yet at the same time demanding programs/entitlements paid for by the other 62%.

The SS surplus has been used for decades to pay for all of that too. 

And also how you consider what people actually get from the government. The government is a pact that we all benefit from regardless of whether we get "entitlements" or not. You drive to work on the roads built, maintained, and policed by the government. Therefore, NONE of your income would be available to you without the government. You keep your money in a bank that's insured by the government; that money might very well be all gone today if FDIC insurance didn't prevent runs on banks. If you lay it all out and look at it, there's very little that any of us would have if it weren't for the infrastructure set up by the government--something we've all created together for the common good.

So, basically, given that we'd really all be turned totally on our heads and have roughly nothing but what we could grow in our backyards and defend with our own individual might, how do we determine "fair share"?

The more you have, the greater the percentage of what you have is over and above what you COULD have if there was no coming together of the people to form government. If you're living on the street and begging, basically, you could have essentially the same thing without government. (OK, so you'd be living in the woods...) If you make a living based on what your labor is worth, you're not too much better off than you'd be without the pact. If you're making $10,000,000 a year off of well-educated employees, investing in the government secured stock market, profiting from inventions protected by patents, etc, virtually 100% of your income is derived from your pact with the government. Your fair share is significantly higher than someone who hardly benefits from the pact at all.

Let's assign some small value to what one could do without the infrastructure. Let's say it's equivalent to $15K/yr. We could argue about that, but that argument would be peanuts compared to what anyone's definition of "rich" would be.

So, if I make $30K/yr, then about half my income is really due to the pact with the government. If I make $10,000,000/yr then $9,985,000 is due to the pact with the government.

What's the most anyone gets in entitlements? I guarantee you that it's not anywhere near what a "rich" person (regardless of where you draw the line on "rich") person makes minus the $15K or so they'd be making without government.

Why is it that conservatives only point to entitlements as proceeds from the government? Every penny we make over what we could make without the pact is taxable to help preserve the pact.

Conservative should mean that you want the pact to do less. Liberal should mean that you want the pact to do more, so there's still room for a distribution of beliefs of small vs. large government. But this nonsense that "fair share" is somehow based on a flat percentage has got to go. I'd like to see how much money some fat cat vice president of a pharmeceutical company would be making without patent law.

We learn. We change. That's progress. If we don't do that, well, we're GWB.

We want to live in a civilization, we have to pay for it. People and corporations with money stashed in The Cayman's so they don't have to pay taxes here, while still enjoying all the perks of citizenship here don't fit my definition of being a good citizen of this country.

That's be like... stabilizing the banks AND stabilizing people... two birds, one stone... almost... progressive... Mustn't entertain such crazy fantasies.

edit

Next thing you know you'll be complaining about Congress's socialized health care plan & moaning about how we the peeps are left groveling in the dirt month after month,  year after year, decade after decade. 

I saw an Obama ad played on the channel I was avoiding watching the debate on last night. It show the pepsi/att rising sun thingee logo in the middle of a long line with arrows at both ends. On one side, he faithfully reproduces the "on one extreme, government run health care" & on the other... You know, I was too blown away by the fact that he repeats that horrid rightwing meme & allows it to stand without question to see what the other side supposedly pointed to... But his point was that he's for "common sense" "right down the middle" which translated into "reasoning with insurance companies" & forcing them to cover pre-existing conditions. 

Riddle me this- you're sick & you cannot work. Therefore you cannot pay your legalized extortions premiums. Therefore... nevermind. Outrage, it's the new outrage.

Not that I'm going to vote for Obama, but McCain may have lost my vote with this hairbrain idea.

Let's see if I have this straight....

Someone like my wife and I buy something on a fixed rate 15 year mortgage at 5% that is easily within our budget and don't splurge because we don't really need any more.

Meanwhile, Homeowner X with far less income maxes out on his qualification with an adjustable rate mortgage and gets something that is 2-3x as expensive as our home, gets into trouble and upside down on his equity, and now expects the fiscally responsible homeowner to bail him out???

And then later gets to pocket a nice-sized profit when their housing area (most likely in a more volatile market) recovers??

F*ck that!

You also would be anti-HOLC (per Hillary?)

I believe (and please correct me if I'm way off base here) that this suggests a 're-engineering' of the original mortgage, based on the homes decreased value, rather than the inflated value at purchase.  I don't think it requires You to do anything, really.

Of course, outrage at the whole mess is always appropriate, and I'd never deny anyone that. :-) 

everyone is worried about and angered by bailing out zillions of irresponsible McMansion mortage holders, not, apparently, beside themselves for bailing out McBillionaires worldwide, doncha know?!

I'd love to see the percentages of lower income predatory lending loans as opposed to the percent of smirk & mirrors types of loans. Anyone try driving around Wilmington or Scranton lately? Not exactly putting on the ritz.

I know, let's punish the poor, because money & fiscal seaworthiness equals morality. Conduct an illegitimate war off the books, cut taxes in a time of war & sinking prospects, never pay a bill, siphon off all tax money to private multinationals, socialize all the risk, privatize the profit, gut the state but hey, it's the damn poor again. No matter what we don't do, they just stay poor, dammit! It's like they're pigging up all the sub-par low wage jobs "'Mericans" "don't want to do," splicing two & three together at a time and they still can't afford to put gas in their Hummers! <<snark.

Don't you understand? YOU are being punished, your tax dollars raided because AMERICANS wanted HOMES! NOT because BANKS loaned recklessly & speculated! It's the people's fault! After all, people set the loan terms, right?! Sigh.

I keep forgetting.  Thanks for sorting that out for me. 

Time for some pillow embroidery, just to keep me in check:

"No matter what we don't do, they just stay poor, dammit!"

I think it'll look good with gold thread on deep maroon velvet.

With tassels.

Here is what Hillary said -

http://clinton.senate.gov/news/statements/record.cfm?id=303208

Basically, understood her to say that her plan was to change the high APR mortgages into something more 'affordable'. She didn't say...Hey, you bought a house for $500,000, now it is worth $300,000, so we're going to let the fiscally responsible eat that extra $200,000 and get you into a lower rate mortgage than they have for the new valuation of $300K. And when the house goes to $500K, feel free to pocket a $200K profit tax free without any obligation to those other taxpayers. That's what I'm understanding McCain's proposal to be.

I'm seeing a re-valuation. I can't see how it's a bad thing, as all homeowners are in the same boat, no matter what their mortgage statement says, or their ability to meet interest/principal payments.

Bottom line is I'm seeing it as the basis of a plan to keep people in their homes. And, this just in:

Long History for Proposal on Mortgages by McCain

NYT | By JACKIE CALMES | 10/8/08
Snip -
The mortgage renewal idea actually originated with Senator Hillary Rodham Clinton, said Charlie Black, a senior adviser to Mr. McCain. And Mrs. Clinton, who proposed the idea in a recent newspaper column, borrowed it from a Depression-era New Deal agency, the Home Owner’s Loan Corporation.

As Mr. McCain’s campaign described his program, it would be available to mortgagors for whom the property is their primary residence, who can prove they were creditworthy when the original loan was made and who made a down payment. “Lenders in these cases must recognize the loss that they’ve already suffered,” a McCain campaign summary said.

Under the plan, it added, the Treasury would buy unaffordable mortgages directly from mortgage servicers and, in a reflection of the properties’ diminished values, renegotiate “manageable, fixed-rate mortgages that will keep families in their homes.” Mr. McCain proposes that the roughly $300 billion cost would be covered by the $700 billion bailout law.

does appear to propose what you are saying.

That's definitely a lousy idea.

Far better would be keeping the homeowners debt the same, but offering much longer term mortgages, so that their payments would be reduced. I'm thinking 35 years, 40 years, 45 years, 50 years, and maybe even longer terms, as and if necessary to keep people in their homes until it makes sense for them to sell those homes. That way, when (if) their big houses do really appreciate in value and they sell them and pay off the mortgage - the rest of us will not have subsidized their principle investment, nor will we have rewarded their selection of such large homes.

This system could even be offered to all of us, whether or not we are approaching default. That way, if someone really did need a larger house (for a large, growing family), they might be able to afford the monthly payments. Of course, anyone who gets saddled with such long-term mortgages has to realize they will be paying virtually nothing at all on principal for at least half the length of the mortgage.

Nick Kelly

Wes Clark could still secure America as a national security candidate.

Yup.  All I'm hearing for the last week is "What about the homeowners?  Why do we bail out the fat cats at the top, and let the rest of us go to hell?  It's socialism for the rich and capitalism for the rest of us!  Wah! This sux!" 

As far as I know, I haven't been traveling between parallel dimensions, So apparently, I'm completely nuts.

Okie-dokie.  Making appointment with doc for tomorrow - will specifically request psychotropics. 

It was a terrible idea to simply bail out the fat cats. They needed to pay a price.

It would also be a bad idea to simply bail out those who made bad mortgage decisions. The taxpayers money should not be used in a way that enables them (only) to make huge profits somewhere down the road.

Yes, I understand that we've already done the fat cat bailout without making them pay any price. But that does not justify similar treatment for anyone else. Selfish behavior should always cost something. In my view, the Congress is not yet done with all of this, not by a long shot; and I hope (dream) that they will eventually get around to making those fat cats pay some sort of price.

Anyway, I do favor a HOLC approach. However, I agree with defoliate that it must not give undue rewards to those who decided to live in McMansions they now cannot afford. That's why I suggest the alternative of longer mortgages (as well as reasonable fixed interest rates).

Nick Kelly

Wes Clark could still secure America as a national security candidate.

Wasn't in a position to purchase until I was 40.  At 30 years, I'll be three to five years past retirement (heh - retirement - another construct rapidly approaching mythical status) before I'm able to reach the end of that particular mortgage road.

Longer mortgages? Sure.  Why not.  Why should death preclude one from setting up electronic auto-payments from beyond the grave?  Why, I hear there's some great employment opportunities in the after life in civil service and such. 

Still waiting for a better suggestion.  Not holding breath for any solution that's gonna please everyone though.

And as far as "all those people in McMansions."  I'm fairly certain that the majority of homeowners in crisis right now aren't living in McMansions.   

up to my eyeballs. I'm also in a relatively small house (2000 sq. ft.) in the cheapest neighborhood in town in order to be able to afford the mortgage payments. Hey, I'll most likely die before this mortgage is paid off.

Look, I'm not saying longer mortgages are a good thing. I'm saying they could be an equitable way out of this. Longer mortgages, along with lower interest rates would enable homeowners to stay in their homes until they could afford to sell them, pay off the remaining mortgage to the government (at no cost to the taxpayers), and possibly do what I did, which is downsize, refinance, and relocate to make retirement possible.

I have no numbers on the sizes of homes going into foreclosure, but I am pretty certain that most of the homes sold using those ARMs and unethical loans were new homes in new developments. Here in Colorado, at least, those have been getting larger and larger just about every year. That's what I'm referring to as "McMansions" (i.e. not exactly real mansions). Those real Mansions, which typically are over 6,000 square feet, are still well out of reach of most people who actually needed mortgages to buy their homes.

Nick Kelly

Wes Clark could still secure America as a national security candidate.

Nick-- your idea is very close to what FDR did about 75 years ago with the HOLC.

It worked well, and it didn't cost the taxpayers. It can work that way again.

Let's look at the thought of longer term mortgages from a different angle by looking at a foreign example around FDR's time. Starting around 1887, and continuing until 1922, most Irish families entered into UK government interest subsidized 50 year mortgages in order to purchase their ancestral lands from the wealthy British aristocrats their forefathers had paid rent to for centuries. Many of those mortgages were still in existence (although not being paid since about 1928 for political as well as economic reasons) until 1938, when (as part of his widely misunderstood policy of "appeasement" to former colonies and enemies, btw) Neville Chamberlain finally settled for 10 cents on the dollar.

The point of this example is to show that even the most impoverished Irish farmer could and did afford to make mortgage payments if they were spread over enough years, and the interest rate was low enough. There is no reason American workers cannot do the same, so long as they have jobs.

Nick Kelly

Wes Clark could still secure America as a national security candidate.

It seems to me that there's a much simpler approach and one without any new gimmicks. The bail out plan that was passed does have a clause to prevent, or at try to prevent, banks for profiting from the sale of the bad debts. If that is enforced the government will be buying a lot of mortgages at a discount since banks have written down billions in mortgages. Therefore, if, for example, the government buys a mortgage at 50 cents on the dollar that mortgage could be rewritten for the homeowner at 60 cents on the dollar with a fixed rate. That would keep a lot of people in their homes. It would also protect other homeowners by keeping neighborhoods from being overrun by vacant homes, that will kill property values faster than anything.

Barry
Our departure point is the present, our goal is the future... it is for us to determine.

It's my understanding that (under the current bailout for banks) the banks are going to want something more like 90 cents on the dollar, which also complies with the no-profit provision. That would mean that the government could not reasonably re-sell those to homeowners at an affordable price without further discounting that price. So, the taxpayers would end up helping to pay for the McMansions.

MAYBE, it can be administered the way your example suggests, but I don't think that sort of discounting will be at all well received by the banking community - and they will be right back asking for more bailout money.

Nick Kelly

Wes Clark could still secure America as a national security candidate.

have to pay for something that isn't there?  If the value isn't there, then, well, it's just not there.  The only people who should be eating it are the fat cats at the top; the lenders and insurance companies that drooled all over themselves to rake it in based on a false construct of value to begin with.

Look, these homeowners were set up to fail.  What the big guys weren't betting on was the decrease in value of the assets.

So - let them eat cake, and their own losses, I say.  Re-value across the board.

It's a terrible law, and I say the voters should (generally) not vote for anyone who supported it. Then, perhaps we will have a more responsible set of political leaders who will penalize those fat cats somehow.

Nor should we pass another one that would just extend the same stupid sort of bailout to yet more people, no matter how much more deserving they may be. We need to help them asap. No question. But in doing so, we should protect the taxpayers, the value of the dollar, and those like yourself, who had the good sense and ability to purchase a long-term asset within your long-term means.

Nick Kelly

Wes Clark could still secure America as a national security candidate.

and go from there. That's what seems just in this scenario. Let everyone take the same hit - with the fat cats losing based on their inflated worth; they took the risk, they could afford to. The homeowners that got pressured or deluded into buying above their actual means (or the ones who bought on ARMs and were planning a re-fi about now; given the rules of the game I'd say that was prudent - all things being equal) lose a percentage of future value based on the depressed value (loss) at this point in time.  Get the financial aid now, lose it later.  

I don't care if I'm rewarded for being sensible. I just care that we get out of this mess without more people ending up out of their homes and sleeping in the underpasses. Or needing another government safety net. One way or another it's going to cost the taxpayer - whether in loss of value to homes in neighborhoods struck by foreclosure blight, the cost of special services to homeless needing aid, worst cast scenarios present themselves that are too horrible to contemplate.

I think we tend to look at these people as numbers, as statistics. And we forget that we could very easily be in their shoes. If we're just going to shake our fingers at them while we toss their bedding to the street, that's not doing anyone any good. Especially our own souls.

It's beyond the money. Heck, in the amounts that are being tossed around, I suspect that the money, the cold hard cash - doesn't even really exist. It's all just on paper.

It's time for us to show what is the best of us. Somehow though, I think there's just going to be more division, more blame game and finger pointing, and lots more soul destroying negativity and self-righteousness tossed around in some misguided attempt at a utilitarian solution. And I'm not talking about Wall Street or Congress. I'm talking about us.

I must be missing part of what you mean when you say "eliminate the false valuation". That does not sound the same to me as "lose a percentage of future value" via getting "the financial aid now" and losing "it later".

Are you saying that somehow the Federal government would become the owner of a percentage of the real estate? So far, at least, that's the only way I can figure for your "get it now, lose it later" scenario to work. Sorry for being so dense, but my naive notion is that the future benefits of 'eliminating the false valuation' would all accrue to the property owner(s), and (therefore) none of those would necessarily accrue to the Federal government.

Nick Kelly

Wes Clark could still secure America as a national security candidate.

...for any homeowners "bailed out"

No f-ing way someone with shitty credit should have their mortage replaced with a 5% fixed when people with perfect credit could barely get that with a 15 year fixed.

No way someone should have a $200,000 loss wiped off the books paid for by the other 80% and then be in a position to pocket the profits when the market rebounds.

Several ways of imposing penalties:

1) Government can impose tax on future profits from real estate sales of those accepting bailouts. Can't do a 100% tax because you have to give people substantial incentive to make a profit as well by holding onto their homes. The tax would represent a Federal 'ownership' position on these bailouts.

2) Those accepting bailouts should never again be able to buy a house without putting at least 20% down

3) No home equity loans ever again for people accepting a bailout

4) Perhaps that accepting bailouts have the retirement threshold of Social Security increased say 3 years so that to decrease the weight on Social Security that is coming...they've got time to adjust

5) Walk away from the mortage and the difference is taxed with collection enforced

====

And instead of penalizing and bad-mouthing people for making capital gains, how about giving a "tax free" holiday for people willing to come in and buy securities at this point?

Although I think you mean, paid for by the taxpayers (not "the other 80%").

IF, some Federal agency were to be empowered to take those actions, I would recommend that (where needed and merited) they also be empowered to offer longer term mortgages at full (un-written off) value as well. Perhaps these would include slightly higher interest rates, or maybe a rate that adjusts upwards and/or downwards fairly if and when the borrower's ability to service debt changes through factors beyond their control.

Personally, I have no problem with your tax free holiday idea, so long as it disappears whenever the market is above some predetermined level at the end of the preceding trading day. In other words - we could use it to help create a market floor.

Nick Kelly

Wes Clark could still secure America as a national security candidate.

Would have be to be set up for only long term holding (1+ years) of securities purchases at this 'crisis' time with probably some cap for profit before taxation kicks back in.

Nick Kelly

Wes Clark could still secure America as a national security candidate.

When I say "eliminate" I mean across the board.  I mean no one becomes the owner of it - I mean it ceases to exist.  The only entity taking ownership of anything would be the lender who pushed a mortgage based on the inflated value.  

The government buys out the mortgage based on the current value of the house.

The homeowner receives a 'bailout' only in the sense that the monthly payments are re-engineered at a fixed rate based on their ability to pay.

Any profit from a future sale of the property for this owner, would be deducted up to the value of the false inflated value that has been lost by the lender. Say I purchased a house two years ago for 200K on an ARM, planning to re-fi after three years to a fixed rate, prior to the ARM kicking in.  But now we have a collapse of the market.  So I cannot re-fi based on the original value of the house, because the value has dropped to 100K.  So the govt steps in, and buys out the mortgage from the lender based on todays value.  And now I'm paying my mortgage based on that value.

I'm out 100K, and my lender is out 100K plus interest.

In 20 years, my mortgage is paid, and I put the house up for sale.  It's now worth 300K and I get that asking price.  I receive 100K which is the value of the property I paid for in my 'bailout.'  My lender receives 100K, (which is what they also lost in actual value) and interest based on the value of the original ARM I signed on for when this whole mess started, however there would have to be a cap as a 30 yr ARM would have certainly ballooned to a large fortune.  That final bit would come from the remaining 100K from the sale, and anything left would go in my pocket.

Any profit OVER this value would be divided to interest penalites and the homeowners pocket.  

The government would certainly be entitled to management fees for the life of the 'bailout' loan, but not to necessarily profit from this.

I hope that makes some sense.

all "ahah" for me. Thanks, dorma.

Nick Kelly

Wes Clark could still secure America as a national security candidate.

;-) 

Rather simplistic, but I'm not a finance major.  Or even minor.  I'm just a lowly family business bookkeeper.  And could be I'm missing one of those high-falutin' confusion causin' financier fancy things.

From a script coming to a third grade classroom near you!  (Hey, I told you it's simplistic.)

October 2006

Potential Homeowner: Hi - I want to buy a house. I want to spend 150K.

Lender: Well, here - why don't you buy this house...it's 200K, but you can go ahead and take this cool payment option, it's called and ARM.  You can re-fi in two years to a fixed rate, but for now, we can get you in there with a lower down!

Potential Homeowner: OK!  Cool.  We'll do that then.

August 2008

Homeowner: Hi! It's time for me to re-fi before my ARM kicks in. 

Lender: Well, slight problem.  The value of your house is currently only 100K.  So, er, sorry about that.

Homeowner: Crap on a stick - what am I gonna do now!  When that ARM kicks in a couple of months, I'm not gonna be able to afford it.  I had no way to see this huge decrease in value coming!  This totally sux.

Lender: Well, you could try to sell. But you'll still lose.  Yeah.  You're kinda screwed.  Maybe your kids could be models or something.

October 2008

Beleagured Homeowner: This is really bad.  My property is only worth 100K, but I still owe 200K plus this huge new interest.  Woe is me!

Government: Hi!  I'm the US Government.  I know we basically suck, expecially lately.  Yes, we had plenty to do with getting you into this mess, but I think we can get you out of it.

Lender: Wait just a gosh darned second there, US Government!  Just what have you got up your sleeve now!  We want our money, and if we're not getting that, we're just gonna take the damn property.  Sure, it's only worth half as much as we originally put out for, but we prefer to cut off our nose to spite our face, if ya know what we mean.  And we know you do.

Beleagured Homeowner: I say we see what they're offering. 

Government: OK.  Here's the deal.  Lender, you put up 200K so Homeowner could become homeowner.  You set up this deal with this ARM, and told homeowner to re-fi in a couple of years to fixed rate.  Seemed like a good idea at the time.  But none of us counted on the sudden loss of value of the property.  So, here's what we're gonna do.  Since this property is now worth only 100K, we're just gonna re-engineer this mortgage at that price.

Beleagured Homeowner: Are you telling me that I'm out future value of my property by 100K?

Government: Yes, Homeowner.

Lender: And are you telling me I'm out 100K that I forked over in the first place - along with the adjustable rate interest, etc?

Government: Yes, indeed I am Lender.

Lender and Beleaguered Homeowner: Wow, Government, you suck even more than we thought!

Government: At least you're both in agreement over something.  Here's how it's gonna work.  Here lender.  Here's a payment of 100K.  It's what the home is now worth.  Deal with it.

Lender: Argh!  You totally suck!

Government: You gotta give to receive.  Just settle down, I'm not done.  Here Homeowner, here's your new mortgage.  You're going to pay a monthly payment for a property currently worth 100K, and interest/finance fees to us in the amount of the current ARM rate.

Beleagured Homeowner: Uh...OK.  Whew!

Lender: (Stomps feet and whines.)

Government: Stop whimpering. OK.  I'm getting this interest at the current ARM rate.  You want it.

Lender: Sniff.  Whimper.  OK.

Government: Allright.  It's going over here, and will be forwarded to you quarterly.  Now, Homeowner.  Come see us when you want to sell this property.

September 2028

Recovered Homeowner: Hi!  Remember me?  I'm paid up to you guys, and just found out my property is worth 300K!  The kids are grown up, and we'd like to get out of this big old house and into something smaller.

Government: Excellent.  OK. 

November 2028

Recovered Homeowner: Hi!  Guess what?  We just got 300K for our property!

Government: Great!  That's good news. Hey, lender!

Lender: (Crawls out from hole.)  Yeeeeeeeessssss?

Government: Here's that 100K you lost a few years back.  You know, in that speculative gesture on that property? 

Lender: It's about stinkin' time. What about all the interest?

Government: And here's some cash for that too.

Lender: OK.  Grumble.  I hate you.  I wish you'd just go away and let me do what I want.

Government: Fat chance you greedy bastard. 

Recovered Homeowner: Wow!  OK - now we can go ahead and get a smaller place for our retirement, and have a few extra bucks for our retirement!  Hooray!

It doesn't really do us any good to throw these people out on the streets. They f'd up. No doubt. And they should be penalized for it. You didn't f up and you should be rewarded for it. Somewhere between throwing them out on the streets and rewarding them there should be a solution. Is it more than they "deserve"? Could be. But we don't want to cut off our noses to spite our faces. Let's not take a bunch of people who made one giant mistake (egged on by a bunch of unscrupulous *&**('s who belong in jail) and financially ruin them such that they're no longer productive members of society. That doesn't help anyone. There's an answer somewhere in between.

We learn. We change. That's progress. If we don't do that, well, we're GWB.

The beneficiaries of these revised mortgages need to be on the hook as far as paying taxes on any future profit on real estate sale(s) in the future until that spread+interest is covered. For those that walk, no approval of future mortages unless they put 25% down (with their own money, not as a 2nd lien).

==============

Here are some comments from BusinessWeek website:

Rob C

Oct 8, 2008 7:24 PM GMT
Unbelievable ⿿ we who work hard to pay off a house by making many sacrifices now get to reward those who overstepped their bounds by taking on too much debt and credit risk. I can⿿t help but wonder what repercussions McCain will see because of this, both from his opponents and those who are picking up the tab for his ⿿good idea⿿ who just want to be treated fairly.
Steve G

Oct 8, 2008 7:09 PM GMT
In regards to my above comment, this would be rewarding bad behavior. There needs to be a penalty for people who let greed be their guide when making financial decisions.
Juggler314

Oct 8, 2008 7:08 PM GMT
This plan is utter BS. I am in the middle class, have not bought property because I could not afford it (even though sure I could have done a 0% down loan had I wanted to). Now I'm going to be punished for not taking advantage of what I could have. If the government is going to do this they should hand me 100K so I can make a downpayment on a decent apartment here in NYC

****

At recent press conference with Bush, Pelosi, and Frank:

http://nbc.com/Saturday_Night_Live/video/clips/c-span-bailout/727521/

That's what Hillary and Wes suggested. This really isn't all that different an idea. HOLC was about helping homeowners.

that if any solution can be traced back to anyone who isn't Obama, it's just bad.  

Ideas coming from the GOP/McCain?  Particularly awful, a ruse, bad bad bad, don't even bother to mention it.

And from Hillary?  Crap, we don't even dare speak her name. 

No.  There's no solution if it isn't the Obama solution.  And until the campaign figures out how to put his name on it, there's no point in even wishing.

Not that there's two nickels left to rub together anywhere it seems.  But hey! According to Pelosi, we're all gonna be getting those sweet $600 checks again.  I wonder if they'll bounce?

leaves a lot of bodies in its wake.

and put people to work. We all benefit from the infrastructure. If it creates green jobs in the process, so our energy costs go down, all the better. Cities all over America need to put in light rail and other modes of public transportation. Getting people out of their cars will give them an economic stimulus.

we've been battling around our failing public transit system for years now.  Money for re-engineering infrastructure?  Oh, wow.  It's a terrific idea.  But it's not gonna happen here.  Shoot, we can't even seem to get bike lanes.  Honestly, the bike lanes still allow for parked cars - which effectively means - no bike lane really. 

We seem to be having a hard enough time just keeping our streets free of potholes and getting the kids a reasonable facsimile of an education in the public schools (that Annanberg Challenge - yeah - whatever.  Not so much.)

Money here is being closely guarded for the 2016 Olympics, don't cha know.  And the TIF fund?  Don't ask.  It's all very hush-hush.

City actually is resorting to some pretty hilarious car-towing practices to shore up some revenue.  Almost 200 cars towed from the Bucktown neighborhood last weekend, on a Sunday morning, starting at 4AM.  Said it was for the "safety of the runners in the Bucktown 5K."  Which is fine.  Except they neglected to tell the people living in Bucktown.

At approximately $180 per car, that's a nice chunk of change for the city coffers.  

So I love the idea.  I completely agree.  But it's not happening.  And I don't see it happening.  My feeling is that major metropolitan areas are crumbling, and just holding their own.   

but it should.

SPIEGEL ONLINE
SPIEGEL ONLINE
04/10/2008 06:23 PM
CURRENCY WOES
Crashing the Party of Icelandic Prosperity

By Alexander Jung and Christoph Pauly

For years, Iceland has been respected for its unmatchable standards of living. But recent global economic turmoil has thrown the island nation's currency off the cliff. The hedge funds are closing in and the government is looking for ways to fight off the predators.

Reykjavik, Iceland: No other country in the world has been as negatively affected by the global financial crisis.
Iceland, island of extremes. In no other place on Earth do people live longer. No other country has a higher literacy rate. And no place utilizes geothermal power as much to heat houses and even sidewalks.

But Icelanders would be more than happy to relinquish the latest superlative they've attained: No other country in the world has been as negatively affected by the current financial crisis as Iceland, and this has resulted in an unprecedented fall in the value of the Icelandic krona.

Since the beginning of the year, the krona has dropped more than 20 percent against the euro, the rate of inflation has skyrocketed to almost 9 percent, and the OMX Icelandic stock index has lost a quarter of its value.

David Oddsson, chairman of the Icelandic Central Bank's board of governors and a former prime minister, rages against the "unscrupulous dealers" from abroad who are trying to break down the Icelandic financial system with speculative attacks. Prime Minister Geir Haarde also angrily suspects that hedge funds are the culprits and that they have been driven by profiteers to spread lies about an alleged banking crisis.

Haarde is intent on keeping that from happening and he is sounding the counterattack instead. He is studying his options, he announces somewhat nebulously. He will only go so far as to reveal that it will come as a big surprise, like a bear trap snapping shut.

That said, Icelanders should be careful not to let the local bears be the first to spring the traps. For a few years now, the country's three most important banks -- Kaupthing, Glitnir and Landsbanki -- have been playing in the major leagues of big money and specializing in so-called "carry trades." In these transactions, investors borrow money in countries with low interest rates, such as Japan, and invest the borrowed money in countries offering better rates of return, such as Iceland. This game with the so-called "cod bonds," named after the fish closely associated with Iceland's economy, worked fantastically until the financial crisis hit and the risk became no longer manageable.

At the same time, the banks proceeded in a spectacularly clever way by betting against their own currency. To hedge their high debts in foreign currencies, they sold their kronur in complicated futures transactions and made a lot of money when they lost value. In fact, it was billion-krona deals that caused chaos even for this small country's balance of payments. Since 2004, the foreign debt has grown fourfold.

The crash of the Icelandic krona in 2008.
These kinds of unstable rates are just the ones to magically attract the hedge funds. Operating on the assumption that at some point Icelandic banks will no longer be able to pay their debts, they gamble using so-called "credit default swaps" (CDS). These swaps, which have been a part of the international speculation world for several years, are actually financial vehicles that allow lenders to safeguard their credit.

There is currently over $45 trillion (€28.4 trillion) in credit insurance floating on the global market. "This is a totally unregulated market hanging like a Damocles sword over the financial system," warns George Soros, himself the former king of speculation.

Icelanders will assure you that their economy is really as fit as a fiddle, and it is true that the country does produce a tidy budget surplus. Owing to cheap hydroelectric power, for example, aluminium processing companies from all over the world line up to set up shop here. "Fears of a meltdown in my subarctic homeland are vastly overblown," wrote Hannes Holmsteinn Gissurarson, professor of political theory at the University of Iceland and a board member of the Central Bank of Iceland, in a recent op-ed piece for the Wall Street Journal.

Nevertheless, such assurances are hardly enough to support the krona. To shore up the currency, the Bank of Iceland has raised interest rates to 15 percent, and markets are already betting that that figure will climb to 20 percent. As the next step in the "bear hunt," as Prime Minister Haarde has called his recovery strategy, the central bank might directly intervene in the market and buy up kronur on a grand scale. "An intervention," said Stefan Bielmeier, an analyst with Deutsche Bank, "wouldn't cause any major problems for Iceland's central bank."

At the same time, though, controls on the flow of capital abroad rarely promise success. "That will at best stabilize the situation for the short term," said Raffaella Tenconi, a London-based analyst for Dresdner Kleinwort, the investment arm of Dresdner Bank, "but it will only intensify the long-term problems."

Tenconi assumes that either Iceland's banks will be reorganized or that the Icelanders will abandon their own currency in favor of adopting the more stable euro.

"In the event of a fundamental banking crisis," Tenconi adds, "the large central banks can just print more money." If they did, though, the Icelandic kronur would no longer be accepted abroad.

URL:

* http://www.spiegel.de/international/business/0,1518,546623,00.html

We learn. We change. That's progress. If we don't do that, well, we're GWB.