It's Time to Bailout Homeowners

So many problems with this idea, I hardly know where to start.

1. A program like this would cost the US gov't about $4 trillion. That money can be obtained by doing one of two things - raising our taxes or printing the money and causing inflation to explode. Which would be your choice?

2. A program like that would not "restore equity" to homeowners. It is not interest rates, which are laughably low even now, but property values, that determine equity positions. If you decreed that every loan in the US were now at 3%, that would not restore any property's ridiculously inflated previous "value"

3. Creditworthy homeowners that have equity are already refinancing in droves. So this program would be for a) non credit-worthy borrowers or b) those with no equity, meaning that the US government would now be holding millions of fixed-rate notes that are worth less than face value. This is a good idea?

4. There is no provision or authority in the Constitution for the government to do this. It would absolutely be struck down.

5. All economies are based on consumers. The problem is that the US consumer was financing his spending by borrowing the money instead of earning it first. Until that changes, no plan will help. Your idea makes the problem WORSE, not better.

6. Even if this program were not unconstitutional, which it is, or destructive, which it also is, it's impossible. Every homeowner in America would apply for this loan. To WHOM? The DMV? There is ZERO federal apparatus to administer a program of this scope. Think, just for a second, about how many loan officers, processors, and underwriters you'd have to hire, and how fast, in order to even start this. Think of how many MILLION workers would be fired as every mortgage loan job in the US dried up, along with all the support staff.

7. It would be cheaper, and much faster, for the government to just hire everyone in the US at $55,000 a year and pay them to do nothing. Yes, the economy would immediately collapse, but since that's where you're headed with this anyway, wouldn't it be a lot faster and easier if you didn't have to produce your W2s in the meantime?

I strongly, strongly recommend some reading on basic economic theory before making proposals of this kind.

Maybe we need to get you in that board room with the entire economic team. However, at least the housing market has been showing signs of picking up. Looks like people are starting to buy again.