I love how Minyanville always seems to have great ideas that no one has tried yet.
Even today, we're building new homes at an annual rate of 500,000. Builders on average earn about $50,000 a home in gross profit. So why not pay them not to build? If the government gave the builders a subsidy of $50,000 to not build (up to 500,000 homes) it would allow the builders to maintain their infrastructure without actually having to build anything. Additionally, the government could punish builders who build anyway by taxing new homes $50,000.
This would surely hurt employment in the building trade, but it would only be needed for 12 to 18 months or so. And the most it would cost would be $25 billion - a lot less than $700 billion.
This is what I would like to call a "bedrock solution." Instead of buying the distressed debt the government would instead raise the value of the collateral that the debt is based on. In fact maybe a housing authority can be created to buy the distressed properties as well to get them off of the market.
Then the government can use them as subsidised housing for renters or as inventory for home buyers. This idea costs far less then $700 billion and helps "Main Street" at the same time. I think turning Uncle Sam into a landlord may be an easier sell then a Wall Street Bailout.
No comments:
Post a Comment