Armchair quarterbacking aside, Americans are more concerned than ever with the state of our economy. Everyone seems to have an opinion, but few offer real solutions. My new book, "The United States of Bankruptcy" does, however, offer a plan that can save the economy right away.
First of all, I have mentioned Freddie and Fannie in the past, but don't forget Ginnie. The government committed $5 trillion off the balance sheet to prop up these abysmal failures that despite their guarantee have been reduced to worthless pink sheet stocks. The government has already borrowed over $150 billion to turn around and give it to them and this will be over a trillion dollars, at least in the foreseeable future, and Ginnie is a huge problem on the horizon. This policy is flat out wrong!
What should be done immediately is that a large portion of that same guarantee be redirected to afford all the citizens of this nation, rich and poor, the onetime option to consolidate and refinance ALL their debts. This one move will significantly reduce toxic loans - the horrifying loan guarantees coming home to roost - and reduce the cost of the debt that Americans already have. This would immediately increase disposable income in America by tens of billions and that means more spending, saving, and investing.
Why? The root cause of the housing, credit card, auto, student loan and other bad debts is Americans not being able to pay their bills. You can keep cutting limbs off the tree and buying up all the bad debt, but that costs hundreds of billions at a minimum. It is essential to help people afford the debt they owe and, thus, get to the root of the problem. This doesn't require minting or borrowing more money; they are already in debt and managing this is increasingly becoming worse or has already imploded and virtually destroying their lives. [more...]
Posts
No comments:
Post a Comment