Stimulus Economic
Written by Paul Zannucci on 9:23 PMLots of suggestions have floated regarding alternatives to President Obama's stimulus package, but nothing yet has shown any creativity. Why not look at at a solution that costs nothing and goes straight to the heart of the matter?
Many lower primates, Stimulus Economic, are tossing around their favorite targets for the government's cash cannon. They are even showing up on the morning news shows to pitch their plans. They want to create jobs that work on America's infrastructure. They want to send money to the banks. They want tax breaks, tax incentives, handouts and general fiscal merriment. What they don't want is anything creative.
Where's the change?
The problem with job creation plans is that the government doesn't have enough money to create enough jobs. The problem, or one of them, with give-aways and spending is that the government can't possibly spend enough. There simply is no way to jump in, wave your credit card around and solve the problem. In a falling $77 trillion economy, you just can't do it.
But there may be another way.
Essentially, we fully control Fannie/Freddie now. Why not say that interest rates will be 4 percent for the next 6 months and that refinancing requires no qualifications (you have a loan, anyway, and this just makes you more likely to pay)?
This does several things. One, it rescues a lot of banks and mortgage companies who get to charge their fees, not to mention lawyers and appraisers and such. It stimulates new home sales, etc.
But here is the big thing: they are talking about a $500 tax rebate. But look at what happens if you refinance your mortgage, which comes in, on average, at about $150,000. If your original mortgage was at 6%, you now have an additional $200 per month, or thereabouts, to spend. That's $2400 per year. That's significant money that could go into the economy with nothing but a setting of mortgage interest rates. It saves homes; it saves mortgage companies; it frees tons of cash.
Granted, this takes investor money, but mortgage refinance money is good money, and with the continued uncertainty in the stock market, it is a lot better money than most.
Come on, Stimulus Economic. Think harder.
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