US Government considering paying people's mortgages

[Viper1]

superchunk said:

NJ5 said:
superchunk are you really suggesting the US government should buy all the troubled loans at the same time? Do you have any idea how much money that would cost? It's several trillions of troubled debt which banks created.

It's not really true that regulation prevents banks from creating further trouble. There are even reports of Morgan Stanley repackaging some of those bad loans into financial products of the highest rating (for some stupid pension fund managers to buy). Do you have any evidence of what you stated?

This is what I was suggesting...

Total Houses Owned (2008)	Average Price $	% of loans bought	Num of Bought	Est Gov Buy $
111,409,000	$200,000	3%	3,342,270	$668,454,000,000

Sources:

Total Houses owned: http://www.census.gov/hhes/www/housing/hvs/annual08/ann08t15.xls

Est of % homes needed to buy: http://www.census.gov/hhes/www/housing/hvs/annual08/ann08t5.xls
This 3% is more than triple the less than 1% change over the last year of homes lost.

Average Price: http://www.realtor.org/wps/wcm/connect/c39d96804e10820bb8d5ffec21680fb0/REL09Q1S.pdf?MOD=AJPERES&CACHEID=c39d96804e10820bb8d5ffec21680fb0

Summary:

As you can see for less than the first bail out the Government could have actually purchased the most undisireable loans. Instead they gave the money to the banks with too little oversight that allowed the banks to determine which houses to save. This was bad as the banks only saved those that have/had the best potential returns vs those with the most need.

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@TheRealMafoo

Clearly we disagree on this. Inaction was proven to not work with the GD. They chose to not give funds to banks and raise tariffs. Both were absolutley horrible actions that resulted in massive economic worldwide failure. It wasn't until tariffs were brought down and the banks that were left were released from Gold standard and the new rules for our banking system where unlimited funds can be pumped into the banks, then the situation began to improve. Granted, by then it had snowballed so badly it took massive government spending, a war, and massive rebuilding of infrastructure to bring about the economy.

They are now trying to curtail far worse conditions and far more money spent by spending now and saving the most important markets.

Could it have been done better and with better oversight, of course. Is it still better than nothing, definitely.

Are you trying to say that less than 1% of all mortgages were in any danger during this crisis?   I'd like to know where you received your number from and if it were that low how can that be considerd a crisis when the standard annual mortgage default rate is higher than 1% annually anyway.