My Solution to the Global Economic Crisis
Yesterday (Thursday, October 9
th)
Tom Sullivan said on his show that no matter how many trillions of dollars are put into turning the economy around, it is not going to change until people start buying and selling houses- and lenders start loaning. This struck a cord with me.
He also said that part of the 800 billion dollar bail out plan allowed for the purchase of real estate.
So – I say- gov’t starts a company- like a “car max” for houses.
At Car Max, they will buy any car- for a fair, but low blue book value.
In this company- the gov’t would buy any house- for a fair, but low appraised value. This will empty the real estate market of all of the foreclosures and short sales on the market. A certain percentage of the home sellers would choose to just sell their house to the gov’t because it is easier and faster than conventional methods. (For the same reason that some people sell their cars to Car Max- even though theoretically they could get a higher price on the private market.)

The result is the people who sold their houses would be able to buy new ones. Builders would start building again- money would start flowing.

The first thing this will do, before it is even in motion, the mere talk, and idea that the foreclosures might be "gone" will get all of the investors that have been "thinking" about buying them, or waiting for lower prices, waiting for whatever reason- they are going to go out there and start buying. This is fantastic. This will clean out the "junk" in the real estate market. Also- for all those people who are possibly going to foreclose because they cannot sell their house- here they go- a buyer- they will not foreclose. This will help the market, as well as individuals. Banks that have these foreclosure properties will have an influx of cash, more money to lend- infusing liquidity into the market.
The gov’t would buy low and sell high, just like Car Max. In some cases, they would hold on to the properties for a period of time. Some would be fixed up and put out back on the market, still others would be rentals for a few years, and not sold until the market had completely turned around.

The government does not force anyone to do anything, it does not favor anyone- in the same way that Car Max works. The government does not sell the houses it buys below market value- it sells for a fair market value- it makes money on this deal. First come, first serve, until the money is gone.
Each home the gov’t buys would require three separate home appraisals, to ensure a fair price. This will increase business for home appraisers.
Homes that are put back on the market will be sold by local real estate companies, increasing their business - as well as local mortgage brokers, title companies, and home
stagers.
Homes that are rented out will be taken care of by local property management companies, increasing their business.
Homes that are not sold for a period of time will be cared for by local security companies, increasing their business.
Homes that require repair will be repaired by local contractors, increasing their business.
These are some of the businesses that have suffered the most with the economy, and will be helped directly. Of course, all of these people would have more money to spend on Christmas gifts.... the trickle effect will help everyone.

With my idea, there will be a finite amount amount of money set aside for investment in the project. Every county will hire a team to take care of the business in their county. Those hired should be good business people, with a proven track record that they know how to turn a profit. This program should be treated like a business. (Those hired will realize that their jobs are not going to exist forever- as this program will not exist forever- there is no government retirement program with this kind of government job.) The amount of money for each countywill be determined by the amount of foreclosures, the reduction of house values, and the amount of unemployment. These three factors will determine the percentages. Greater amounts of money will be sent to those areas hit hardest- but some money will be sent to all counties. Some of the houses purchased, as I mentioned, will be "fixed up" and sold again. The money made on the sale of these homes will then be more money that can be used for the purchase of more homes.
The taxpayers, like Car Max, will make money. We are buying low, and selling high. In some cases, we will sell higher because a little money was put into the house. In some cases, it will be simply because the house
wasn’t sold until the market starts to turn around.
The sellers on the market who are having to compete with foreclosures will be far better off to not have them on the market.
Is this plan incredibly expensive? Clearly. This would not be a small part of the 800 billion, it would have to be a significant portion of it, for it to be effective.
A plan like this is very visible to the average citizen. They see the lack of bank owned properties in
their own neighborhoods, they see houses selling, their friend that worked for a title company is no longer
layed-off. Some other plans mentioned by politicians are not ones where we (the average person) don't see anything happening. My plan will help to increase consumer confidence faster
because of this.

In no way does this program encourage people to NOT pay their mortgages. It is fair, and available to all, (first come first serve) whether their house is worth $70,000 or $700,000. The taxpayer makes out, because in the long run, real estate is a good investment, which is what we, as taxpayers, would be doing. We would be investing in real estate.

I really think money will start flowing right away. This plan does not unfairly “bail out” anyone, any company or any institution. If a company fails, others will take their place, and hopefully learn from their mistakes. (I realize that large companies like
AIG perhaps “needed” to be “bailed- out”- for all of our sakes, but I would stop further bailouts.)
I think the gov’t could also start buying up some of the good deals on the stock market, and keeping those as good investments, slowly selling them after the market has stabilized. Again- the taxpayer will make a profit, and we will have a wealthier nation as a result. There will be money for the baby boomers' social security, money for tax decreases.
On Friday I e-mailed the White House and McCain- this Morning, (Sunday)- I just called the McCain campaign and left a message. Do you think they will call me back??? :)