1. if you help housing, you create jobs,
Who is you?
2. and if you create jobs, you help the economy.
Aside from the fact there is no "you", the economy is in macro economic equilibrium. It doesn't need any help. If more employment is desired, there is one absolute truth governing that possibility : tax rate is proportional to unemployment rate.
3. if you allow people to refinance, regardless of whether they are underwater on their mortgage or not,
Then we'll have a replay of 2008.
that would really put a lot of money in the pockets of healthy homeowners
When people borrow to buy houses they become illiquid. There are no exceptions.
who will spend it,
There's no connection between GDP and housing. In fact, there's no connection between GDP and house construction. About all that can be said is that if conditions are right so that GDP is rising, then usually house building is rising. It's like GW. CO2 increase and temperature increase are correlated because they're caused by the same agent, but one doesn't cause the other.
4. allow homeowners to move investment funds from their retirement account - without penalty or taxation - to pay down mortgages
What happens when they retire? Government would have to pay. Assuming that would be ok, one is encouraging the transfer of funds from the productive sector to the unproductive sector. Houses are a cold loss. They don't add value. That's why it's acceptable to depreciate them against ordinary income.
Have you ever seen an NFL game where an aerial shot of the host city shows a lot of fancy expensive downtown glass and steel tower buildings? One thinks, "look at all that wealth". The wealth of it all is ZERO. When one comprehends this assertion, one can be considered to have advanced in the understanding of principles of economics. This principle is way beyond this small minded individual who seeks to tilt laws to benefit him. If allowed to do that, he'd end up reducing his benefit to zero. Fitting.
5. reduction in debt would reduce monthly payments and simultaneously increase disposable income.
This claim says that one can get something for nothing. The only way to get more of everything is to provide incentives for people to produce them, NOT to increase the ability for people to consume them. This is the basic error behind Keynesian economics. Add to the power to consume and less is produced while add to the power to produce and more is produced at the equilibrium level of consumption(You can eat all you can).
6. getting banks to lower principal, as well as what he calls a 'Mortgage Mulligan plan' that would be available to all healthy homeowners and not just those Fannie Mae of Freddie Mac financing.
I smell the Community Reinvestment Act here where unqualified borrowers are hiked into the "American Dream" at the cost of destabilizing the financial system. |
