If soooo many people are failing to pay their creditors, then the $300-$800 wage-earners will receive from the stimulus package plans floating around will just be signed over to the owners of their debt to keep the repo man at bay. It’s not going to boost retailers, it’s just going to disappear into the maw of lenders.
In other words, rebates are going to function like an inefficient bailout of foolish lenders. I know they are selling these plans as the opposite of a bailout, but that’s what will happen. Rebates checks really only buy a fractional FU (1 month instead of six) and will target tons of people who don’t need the money but won’t spend it given the looming threat of recession/depression.
Perhaps the Feds moves can swing consumer sentiment as they seem to have done so in world markets, but if I am staring down a huge increase in mortgage payments and get only one month’s reprieve, I wouldn’t feel too uplifted in the end. Hopefully looser money will keep lenders in a non-foreclosing mood for a spell (ya. right.).
Time to invade Switzerland? The stacks of gold teeth from WWII will pay for the reconstruction, I am sure.
Perhaps the best thing to do is actually something Hillary has suggested (HATE to admit it) – a forced moratorium on foreclosure. I think that this alone will rapidly help people in dire straights get their affairs reasonably in order without rewarding stupidity of lenders and borrowers. I think the rebate check money would be better spent financing this and paying down our national debt.
Not that I won’t cash my rebate check.
😉
I also think that capping the amount an individual mortgage rate can climb in a calendar year is another good method for slowing the descent: de-linking mortgage rates from LIBOR, etc. in a manner that both ensures reasonable profit for lenders and opportunity for borrowers over their heads to make their way back on top of things honorably.
If anyone needs to flee their debt permanently, I’ve got several excellent escape routes planned for myself that I am willing to share. Places they can’t find you that are both reasonably secure and extremely inexpensive.. Don’t really know why I aint there yet myself.. too many loved ones here I guess…
