Monday, March 17, 2008

Downshifting the Economy.

Downshifting the Economy.
I am very confused. Before the subprime mortgage fiasco hit, the economy was apparently booming. So what changed? Higher Interest rates kicked in, monthly payments went up, and a chain reaction has begun in which many economic indicators seem to be going from bad too worse.

My question is, are the bankers and the financially elite so loathsome of the little people that rather than do the obvious thing, which is suspend interest payments for a while, they would rather see the whole world spin into economic turmoil?

Rather than have people walking away from their obligations, why not just extend their present favorable monthly payment situation for a few more years? If the economy was doing fine with people paying what they were paying, why upset the delicate balance that precariously existed?

Apparently a chain reaction is occuring, one that could have been avoided by the bankers simply agreeing that it is more important that people keep paying what they were paying versus standing strong on interest charges that couldn't be paid.

Factor in the increasing grip credit card interest rates are having on all consumers and it is clear that what ails the world's economy is the elites fascination with trying to extract too much profit from borrowed money. Either the people on top are evil, stupid, or just too afraid to say what I am saying.

I would pass a law that caps the toal credit card interest a consumer pays at 50% of what was borrowed, and this would be retroactive for all zombie debt and all borrowing since the year 2000. The affect would be instantaneous, people would suddenly see their debt begin to reduce to a more afforable level.

As for the subprime mortgage debacle that is currently going on, the solution there is just as simple. Extend the terms that allowed people to get into the home for the next few years. Have the homeowners sign a note that they agree to give the bank 10% to 20% of the home sales price whenever the home is sold. But in the meantime those that continue to pay get to stay where they are. Eventually, property values will go back up and at some point in the future the home will be sellable at both a profit for the homeowner and the bank that will get a percentage at the time of sale.