Many of you may be familiar with Dave Ramsey's radio show. He's come up with a plan instead of the bailout which he thinks is a joke. Thoughts? http://www.daveramsey.com/etc/fed_b...ge_the_nations_future_10928.htmlc?ictid=sptlt Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three steps: Common Sense Plan. I. INSURANCE A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity. B. In order for a company to accept the government-backed insurance, they must do two things: 1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage. a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes. b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives. 2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs. C. This backstop will cost less than $50 billion—a small fraction of the current proposal. II. MARK TO MARKET A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate. B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing. III. CAPITAL GAINS TAX A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing. B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to stand up, speak out, and fix this mess.
Dave Ramsey is an unsophistocated idiot who doesn't understand finance. (Just kidding, I'd endorse this plan as written.)
I like the whole durn thing. The market will rocket with no capital gains tax. The best ideas always come from the people, not the special interests.
When I see things like 'elimination of the capital gains tax' as a solution for this problem, all I can think of is: Capital gains on stocks and in fact the stock markets in general have no direct bearing on the issue at hand. They are secondary issues, and it looks like this is a classic example of the type of scenario described in The Shock Doctrine, whereby reforms are pushed through [rquoter] ...not because they [are] democratically popular, but because they [are] pushed through while the citizens of these countries [are] in shock from disasters or upheavals. It is also claimed that these shocks are in some cases, such as the Falklands war, created with the intention of being able to push through these unpopular reforms in the wake of the crisis. [/rquoter]
Obama is in favor of removing the capital gains tax for start up investment.... And since I am starting one up.... DD
How the hell do they know how much it will cost? What if the housing market drops 20% next year? Another level of derivatives is not the answer. This could end up costing trillions not billions.
BTW who is she claiming created the Falklands as a cover for desired policies? Thatcher or the Argentines? I could not help thinking about the Shock Doctrine when they were pushing a $700 billion bail out, non-reviewability of the Secretary of the Treasury's decisions in courts or the elimination of all capital gains taxes etc. What scares me is to to see a lot of liberal economists who normally don't agree with Bush-Cheney saying that some bailout needs to be passed.
That particular sentence of his is very simplistic. I would think he was talking about APR mortgages less than 6%. That would lead to a slew of folks skipping mortgage payments to get that 6% fixed as their APRs are due to expire and get locked in at a higher rate. Generally APR loans are for a certain period of time and either balloon or go to a higher rate.
Lying? What he consistently tells his listeners is if they invest money over the long haul based on an average return in good diversified growth mutual funds their odds of having millions at retirement is better the with social insecurity. I sense a little bitterness in your tone here...and by the way who doesn't hate taxes, government services and social security? I could do a lot better with the money taken from my check the government can for sure.
Yep, I meant ARM. In one of those code breaker games I would have gotten full credit for the A and partial credit for the R.
The changing accounting rules is silly. A) you're sweeping the problem under the rug, b) everyone has already devalued these securities. the cat is out of the bag. that ship has sailed, the train has left the station.
