Bail Out Main Street

I think I am in the majority when I say I am fed up (no pun intended) with the government giving handouts to failing businesses. All this printing of money we don't have will eventually bite us in the ass when it comes to the value of the dollar. I understand that FNMA and FHLMC (I refuse to call them by their better known pseudo-acronyms) had to be helped out or else the global economy might collapse, and it makes sense for the government to help them since they were federally spawned out of the Great Depression. Now it seems any large company that had a bad year can ask for an 11-figure cookie, then ask for a glass of milk when it doesn't satiate them.

Many people are asking “How did this happen?” The short answer is ‘greed.’ Don’t get me wrong, greed is the fuel that capitalism runs on, but when greed and short sightedness bump uglies, then you get debacles like our current mortgage crisis. Here’s how it happened. The price of homes was rising on a mathematical J-curve for no reason other than people kept paying successively ridiculous prices.
Q: How were people able to do this? A: Sub-prime lending.
Basically, it was a case of one-upsmanship. In order to generate short-term revenue and entice investors, one lender would decide to give a particular loan that no one would have considered 10 years ago. Brokers from other companies would complain they were losing all their business to the company doing the crazy loan. So, all the other lenders were forced to offer the same crazy loan to ever more unqualified borrowers. This went back and forth until Cletis the slack-jawed yokel, with no job and a credit score of 43 was signing a $450,000, 50-year loan with variable interest and yearly balloon payments. Then, to everyone’s surprise, foreclosure rates went through the roof and nobody got paid. Come on, no one saw the glass ceiling? Really?!
Let’s do the numbers, shall we? In 2008, the U.S. government approved over $900 billion dollars to shore up failing lenders. Now the money is going towards enraging things like securing the salaries and bonuses of CEOs running these floundering companies.
Here’s one idea: There are approximately 112 million households in the U.S. and roughly 69% of them are homeowners. That means that instead of flushing billions down the toilet, the government could have given each homeowner ~$11,700 to use toward their mortgage and avoid foreclosure. This money could be given as a handout or as a loan with a very low interest rate (0 – 5%) on a sliding scale based on income. People would not be allowed to spend it on anything other than their mortgage and people without homes could be given a similar amount to put towards a down payment or in a down payment savings account depending on their credit. This way, foreclosures would stop and the lenders would still get the money and everyone would benefit. Maybe I’m naïve, but tell me that wouldn’t bolster the economy.