Jon Smirl

A Self-Serving Non-Solution to Negative Equity in America

Forget all of these complicated bail-out plans. If the government really wants to help a simple solution with no moral hazard is to allow the deduction of 150%-200% of interest PAID (not accrued) on pre-existing loans for a limited amount of time. This would incentivize people to continue making their payments and give the market a chance to stabilize. Several years of inflation will erase a lot of negative equity.

It is trivially simple for the government to implement a plan like this.