|Bracing against the wind|
Thursday, November 13, 2008
If the government had *bought houses* from people with bad mortgages, and then *rented* them back to them at rates they could afford, we would see a) an immediate improvement in mortgage-backed securities markets and b) people getting to stay in their houses and c) the government would own real estate assets - which would appreciate eventually and could then be sold at break even say over the next 20 years.
Some quick math. Average home price of depreciated and foreclosed assets: $110000. TARP: 700 billion. Total number of homes that could be purchased: 6 million. Total number of bad-asset homes 4 million.
In other words, the government could buy *all* the mortgages ... for less than the TARP total, and still have money left over.
Instead, Paulson (who should be fired), bought *stock* in banks. Who used the money to pay for CEO's yachts (7.4 billion approx in additional distressed firm bonuses paid due to government intervention).
These are the *same* banks who couldn't be trusted.... and he trusted them. He's an idiot and should be sacked.
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