Blackeyebart

The Debt Conundrum, Part 2

The trouble with allowing the housing market to work through a situation where more than 40% of mortgages are upside down is that it maximises the costs. The market is bound to overshoot - hence the debate on averages- and as the market overshoots trillions of capital dollars are wiped out. This is bad public policy.

Much better for the Government to regulate interest rates down to say 3% for five years on existing mortgages. This would give home owners a reason to hold. They have to live somewhere.

While mortgage holders would scream blue murder they would on average be much better off. (Do the maths yourself, if you doubt that statement.)

I know that many of these mortgages have been sliced and diced but solving the resulting financial problems is the reason we pay those bankers all that money.

It wont happen but. This administration only adopts programs that bankers like.