Baby Boomer Peace

A simple solution to help solve our economic woes

It’s been a while since I brought up the 2 percent solution. A solution that will save and jumpstart the American economy. 

Anyone who has studied economics knows that economies do well when people spend money. People spend money when they feel confident about their lives. During this recession only a minority of the population is spending money for things that are not necessities.

Americans just don’t feel confident spending money they don’t have by using credit cards and they certainly do not want to deplete what hard-earned savings they have. Countless polls and studies suggest that a large majority of Americans are not confident about their future.

We Americans need a reason to wake up in peace. I don’t have the specific number, but it is pretty common knowledge that the vast majority of real estate in this country is underwater. Mortgagees wake up with that black cloud in their heads and they go to bed at night with that little black cloud. They are struggling to make big payments on something that is basically worthless.

Without a silver lining on the horizon it may feel that they won’t hit breakeven for a very long time. Peace is what is needed. Peace that leads to confidence that leads to experimentation, entrepreneurial pursuits or just a feeling of relief and a sense of renewed vigor.

If the government would just sit down with the financial sector and propose that every mortgage in the United States is given the option to modify their loan to 2 percent interest-only for the next 10 years, this country would take off.

Homeowners would know they have 10 years to renew and reinvigorate their lives. Those who have employment opportunities in a different place but cannot take advantage of them due to the inability to sell their homes could now keep their homes and rent them out with a slight cash flow.

Under this proposal it should be offered to those who have perfect credit as well as to those one day away from foreclosure. The banks and government should not look to anyone having to qualify. If you owe $1 million on your mortgage and your home is worth $700,000, too bad. Live with it.

If you owe $1 million, you owe $1 million, but hopefully at 2 percent interest-only you won’t walk. But, if you don’t pay on time then no more short sales and no more loan modifications. If you don’t pay, then four months later it belongs to the bank. Period.

I’ll let your own imaginations and intelligence calculate the benefits that this would bring to the country. Oddly enough the financial sector would become solid again with losses cut to a fraction of the current rate. But, one of the most positive jolts to the economy would be homebuilders building again as no one will want to sell their homes with such low mortgage payments.

We all know that when builders are building, the economy is flying high. Rising home values are also a natural byproduct that comes with confidence and spending. And finally, once that money starts speeding up, the government starts getting a chunk of every one of those fast moving dollars.

It’s a simple solution and I sure know that baby boomers, those who have been hit so hard by this recession, would go to bed at night without that little black cloud anymore. Peace and prosperity. That’s what we want, that’s what we all need and want. There has to be at least one person in a position of power that can run with this. Darrell Issa, are you listening?