How would you fix the economy?

By Prieur du Plessis, on April 2nd, 2009 posted in: Investment, Markets, Money

The Business Section of the St Peterburg Times asked readers for ideas on “How Would You Fix the Economy?”. This was the “best” idea:

Dear Mr President

Patriotic retirement

There are about 40 million people over 50 in the work force; pay them $1 million apiece severance with stipulations:

(1) They leave their jobs. Forty million job openings – Unemployment fixed.
(2) They buy NEW American cars. Forty million cars ordered – Auto industry fixed.
(3) They either buy a house or pay off their mortgage – Housing crisis fixed.

Remember: Cheaper than giving away the taxpayers’ money to rich people!

[PduP: But this solution will cost a total of $40 trillion - a bit more than the $12 trillion that has already been committed to the various bailout initiatives!]

Source: St Peterburg Times, February 8, 2009.

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What?

April 2, 2009 at 8:42 am

Yeah, great use of $40 TRILLION! Seriously, is anyone taught math anymore?

Tom

April 2, 2009 at 11:18 am

Little problem with this solution: It would cost 40 trillion dollars. Just my 2 cents.
Tom

Jeff Wieler

April 2, 2009 at 9:09 pm

My idea to fix the economy borrows from FDR’s concept of recalling all the monetary gold and gold-backed currency. The biggest single economic problem is from the various flavors of mortgage derivatives. Nobody can adequately value them because they aren’t pools of individual mortgages, but instead are artificial constructs that nobody really understands.

I would “recall” all mortgage-backed securities, unwind them, then redistribute the individual mortgages in proportion to what was submitted. Once we got to the point where each individual mortgage had an individual owner, figuring out probable performance and, therefore, their value would be relatively simple, instead of being part of something that only 3 dozen (discredited) Wall Street rocket scientists understand.

Christian

April 3, 2009 at 10:28 pm

I’m no economist, but if someone can *actually* explain to me how spending money we don’t have is supposed to make us prosperous, I’m willing to listen. Until then, it would be nice for our leaders to stop making themselves look like idiots, talking about consumer spending on giant homes and new cars as if it’s some noble pursuit that betters the world.