On Sep 23, 2008, at 11:06 PM, Julio Huato wrote:
> The principle is what matters to me. The idea of helping regular
> people deal with their problems and having the good effects of that
> trickle up, if at all, rather than the other way around.
Since your plan has little chance of adoption under the present political circs, let's talk utopias for a moment. Your scheme would help out debtors, but not really change the institutional structure or the preposterous fetishization of homeownership - in fact, it'd reinforce the latter. A bailout of the financial institutions with lots of strings attached (remember I said this was utopian) at least offers the possibility of creating new instituions - public and/or regulated-like-a-utility private. If the gov gets warrants on the bailees, it could make some money, and even become a voting shareholder. And if restrictions were placed on the kinds of mortgages that Freddie or Fannie or their descendants could purchase (e.g., not more than x% above the previous sale price), it might be possible to put a damper on speculative price increases in the future. And as a condition of participation in a bailout, banks could be required to offer relief to distressed debtors.
Doug