The common sense fix

From Dave Ramsey's Website, but with the input of a group of financial guru's.


The Common Sense Fix

Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following threestep Common Sense Plan.

I. INSURANCE
a. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.

b. In order for a company to accept the government-backed insurance, they must do two things:
1. Rewrite any mortgage that is more than three months delinquent to a
6% fixed-rate mortgage.

a. Roll all back payments with no late fees or legal costs into the
balance. This brings homeowners current and allows them a
chance to keep their homes.

b. Cancel all prepayment penalties to encourage refinancing or
the sale of the property to pay off the bad loan. In the event of
foreclosure or short sale, the borrower will not be held liable
for any deficit balance. FHA does this now, and that
encourages mortgage companies to go the extra mile while
working with the borrower—again limiting foreclosures and
ruined lives.

2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and
executive team members as long as the company holds these
government-insured bonds/mortgages. This keeps underperforming
executives from being paid when they don’t do their jobs.

c. This backstop will cost less than $50 billion—a small fraction of the current proposal.

II. MARK TO MARKET
a. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.

b. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.

III. CAPITAL GAINS TAX
a. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate liquidity in the markets. Again, this costs the taxpayer nothing.

b. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down.

This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to stand up, speak out, and fix this mess.

Go to his website at www.daveramsey.com and send it to your representatives. It is a hell of a lot better than having the taxpayers on the hook for $700 billion.

Free Governor Palin

I am jumping on the the bandwagon to free Sarah Palin. Senator McCain's campaign has to let the person he picked to be his running mate face the MSM and take all questions posed to her. These little interviews that she is doing with Couric, Gibson and Hannity are doing nothing to show the country why he had the confidence and faith in her to begin with. She is intelligent and capable of handling anything that a reporter on the stump can throw at her.

Let Sarah speak!

McCain part deux

If you listen to Barney Frank and all of his buddies on the left side of the aisle, the $700 billion bailout package that failed to pass the house yesterday was a done deal until John McCain stuck his nose into the issue. So therefore, it is because of McCain that the stock market dropped 778 points at the closing bell yesterday.

Truth be told, there was never a deal that was reached. The so called "deal" was done behind closed doors without a single republican represented during the discussions. There were precisely 4, count them 4 republicans in support of the "done deal" bill on Friday. John McCain was able to get the republicans to the table. Once there was some actual give and take on the bill there were 64 republicans on board.

How many votes did Senator Obama bring to the table...oh, that's right, zero. according to his people, he never picked up the phone to gain support for the bill.

By the way, without a bill in place the Dow Jones was up today by 485 points. Not everything it lost yesterday, or over the last several weeks, but it was up.

Just a little perspective. Let the free markets work.

McCain

I think there has been a misunderstanding on what John McCain's job and/or position was on this bailout of the financial institutions. When Senator Harry Reid called McCain back to Washington saying that he was the only person who could get the bill passed, he should have been more careful of what he wished.

Harry Reid wanted John McCain to come to Washington to give his blessing to the Paulson/Bush/democrat approved pork filled bill that would have cost the tax payers somewhere in the area of one trillion dollars. Well, John McCain had a plan of his own. After much arguing under a Senator Obama led meeting (showing he was way over his head), John McCain backed the house republican plan led by John Boehnor for a free market plan - not a bailout - of the financial markets.

Basically, the dems of the house and senate kept the republicans out of any negotiations regarding the bailout. They thought they had the upper hand with the President and Paulson. All they needed was John McCain to put the deal through. This deal, by the way, had 20% of the 700 billion going to ACORN. ACORN is a "community organization that Barack Obama used to work with and continues to support. They are under investigation concerning voter fraud. Why would any bill for bailing out Wall Street have a provision for funding this far-left organization?

I don't know why President Bush is putting his name on this horrible policy, but I am thankful that Senator McCain had the guts to stand against this bailout and give Boehnor and the house a chance to fix the mess on Wall Street (although I personally think that we should let the markets fall or rise where they may).

What started...

all of the fuss in the financial sector?

Click here.