BillCust

Proposal to Correct Resource Misallocation in the Housing/Lending Sector

Gibberish aside, the difficulty on its implementation, as Malkiel failed to explain, would be on preventing fraud. In other words, how can all the parties (bank/lender, borrower, marginal home buyers, gov't) somehow not further distort reality - so how would you get their interest aligned?

The borrower wants the highest possible selling price, ok. The banks too. The government is neutralized in your scheme by legislation. And the rest of the power balance is the marginal home buyer, who wants the lowest possible price. It could theoretically work if this balance holds. Chances are, they don't - or they still take more than one year, as you said, to balance themselves out. Plenty of risk in your strategy but I trust your logic.

Miracle: Bush To Part The Bankrupt Sea

So assuming 150k loan balance, about 80k people will be 12 Billion US$ of new mortgages per annum. The troubled portion of the subprime (with high LTV and at least 50% payment increase) within a year is 500 Billion US$.

Plus the usual finelining like no 95LTV for this and that borrower, definitely only owner occ- and primary home, etc will be enough to just guarantee that less than the meager $12 B "bailout" will be deployable. Plus the other filter that they're likely to use: geography , loan limit, and income, which will cut out the FL, CA, NV, MA, and AZ loans making up 90+% of the blowups right now.

This Horowitz guy isn't looking out for his investors.