jhaus

Barron's Plan to Save the Economy - For Just $200B?

Ex the moral-hazard issue, this plan would work. However, there is another, equally effective way which solves a large portion of this moral hazard...

Rather than subsidize mortgages taken on by subprime borrowers, incentivize investors to purchase these homes through an expanded rent subsidy program which will keep the current owners in the homes, but will guarantee a portion of the rental income stream to keep the investors and banks solvent.

Here's the better plan to save the economy:
www.nnnrent.com/2008/1.../

Obama Is Bad for the Economy - Barron's

In Jim McTague's next piece, he will be advocating the gas tax holiday. In two points, Mr. McTague's salacious and partisan argument is easily debunked: (1) Individuals are generally not taxed on business income, only distributed income, hence the Obama plan (which calls for reductions in corporate tax rates) would encourage business reinvestment. (2) The US is a popular destination for foreign investment due to the relative transparency and accountability required by the law here. Increasing capital gains taxes to the rates which existed under Reagan would certainly curtail short-term investments (those lasting less than 12 months) in the US to some extent...heck if investors had Obama's incentives to hold those mortgage securities longer, maybe we could've avoided the whole credit mess we're currently in the middle of?

There is clearly no perfect policy, however, I find it hard to believe that we can't do any better than the past eight years.