SubscribeLet’s End The Housing Crisis Here And Now … A Modest Proposal For How To Spend The $700BN
October 7, 2008
Even us “glass half-full” types have to admit the news these days is bad. Any day Congress passes a $700BN and has to tag on only another couple billion or so of Christmas ornaments to get it passed, well, on that day, you know things were urgent, and they had to act fast. Wooden arrow manufacturers, Caribbean distillers, and certain other recipients of congressional largesse pork may be quite happy now, but hopefully the remaining $700BN will be spend actually trying to solve the problem.
And that’s where my modest proposal comes in.
Fundamentally, this crisis is about housing values, or more specifically about uncertainty around housing values. Behind most of the bankrupties, the bailouts, the CDO-thing-a-majiggies … lies a portfolio of mortgage loans whose value is … 3 cents on the dollar? A dime? A quarter? 47 cents? Nobody knows, and therein lies the problems.
Our fearless leaders have proposed spending the $700BN largely on buying these “non-performing assets.” By some financial wizardry, the exact same folks who could not determine the value of these assets in the private market, are about to get hired by Uncle Sam to determine these assets’ values on the taxpayer’s dime.
So here’s what we do instead: Let’s spend that $700BN buying not the mortgages, but the underlying homes themselves. Let’s say homes in the US have an average value of $200K. [Pause for my west and east coast readers to chuckle.] $700BN divided by $200K is … 3,500,000 (three million five hundred thousand.)
That’s right. With $700BN we could buy a couple of million homes. We’d start by buying, say, 75% of the inventory on the market right now. That should restore confidence in the market pretty quickly.
Presto! Problem solved.
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5 Responses to “Let’s End The Housing Crisis Here And Now … A Modest Proposal For How To Spend The $700BN”
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Kevin,
An excellent idea. Now, what would you pay for those homes? List price? 5% under? 25% under? Unfortunately, the value of a home on the market isn’t known until it sells, which then sets the market value for that home.
It’s the same problem they are having evaluating the value of those mortgage backed securities.
Zillow? David G — you around to chime in on this one?
[...] a Realtor must have a set of processes that bring about solution that can be mobilized quickly in order to head off the worst scenario possible: a totally dissatisfied [...]
Great idea, but what would happen to them once the Federal Gov’t bought them? Would the previous owners stay in them and maintain them? Who would maintain these houses?
Summary of new overview
to overcome housing problem
better than mortgage pledge law to the country
{ law of finace estate }
The statistics refer to the availability of 3 million vacant [empty} flat in the country for example egypte means if we estimate value of single flat around 30 thound egyption pound you will find us loosing 90 billion pound and not exploiting this matter .
The estate investment occupays more than 50% from the volum of total investment in the country . and inspite of that there is housing problem which represents the biggest resource of economical harm because it is an internal domestic service sector and a limited number of workers in single pledge and estate for a period of time wich will be later as burden on the national economy .
the objectives of the business paper are as follow :-
1 – To redesign the country .
2 – To redistrubute the population .
3 – To build the most strong social cell in the world .
4 – To build the most strong economical cell in the world .
despite in capitalism system we cosider the housing as a merchandise and as a service in socialism system as a service . in my opion as a necssity which could be flown down if it is available without definig the property or rent and should place housing sector and landkernation system in the service of production sector and the least financial refund from the production .
and the current rental systems are :-
1 – The old law { constant value , un limited period ] and although it is proper from the legal status and correct from religious status it has been failed because it is not suitable as a relation forever .
2 – The law which define rental agreement for a limited period and secondly the contract will be done at the end of contract .
therefore , I submit my thoughts to solve housing problem briefly as follow :-
every new renter should pay money as per specified pieces in the estate register to be paid to the owner a sum of money equal another rent of six moth at the end of rent contract for refurishing the flat .
1 – To prepare special record to each housing unit including the names of owners and renters and the numbers refers to the code of city ,area ,district ,street , building and flat number .
2- The ministry of housing proceed economical research to evoluate now rental value of square meter [ m2] to the housing unit and then this value is equivalent in material from wieght unites for three supply merchandise [ for example if rent of squree meter [2] two egyptian pound [ l .e] it is equivalent in material price / kilo of rice or half kilo of beans or kilo of sugar or rice becomes the value of the squre meter continouously ) in the condition that the ministry of housing will prepare on 1/1 & 1/7 yearly a notice to the value to the wieght of some articles .
3) The rental value to the housing units equal multiply flat area by the of an advertised squre meter .
4) Rent contract for the first period will be for five years and renewed yearly automatically unless if is in two cases the owner interest to sell the flat and (the renter should have the right of purchase prioty ) or if one of the sons age reasched 21 years and interested to marry .
5) It is should to the renter( old renters who follow the the old law only) to replace his flat with another renter without owner”s permission in the cndition that both of them as a second renter .
6) Occaionally old renting it will be under two rental relations in the condition that the higher rental value will be for the welfare of the onwer:-
a) rental relation between the owner and the renter .
b) legislation from the government to stipulate that rent value of housing unit for the coming five years zero and reaches to the quarter of rent value to similar flat in area according to suggested rent law and reaches to the half after another five years and to three quarters five years , it means that after 20 years the rental value will be equivlent will the housing unites in countries as per its area only .
7) For old rent the renter could rent the flat to the son of the owner or any person the owner agrees on him upon new rental value as asecond renter whereas the rental relation will be remained between the owner and renter according to to the last item .
9) For renting the flat in new cities which owing to government destination with instalements to pay the rental value to the housing fund in the condition that the owner will pay to the governmental destination the quarter of the flat value in this case the owner will stop paying the instalements .
10) To assume a monthly tax on the owners of estates as per flat area in case of non- allowance to sell it or rent it in only one exception ( one flat or housing unit ) to the owner without taxation and note that defining housing unit will be done only by the owner even if the owner considers all the building as a housing unit .
11) to assume a tax of minium limit of electricity consumption and water per specified pieces will be paid in case of reducing water and electricity consumption over this limit and to be completed to tax limits except employees working abroad and in case of the consumption of the resident either if he is owner or renter to big limitation from this limitation or its equivlent he pays nothing .
12) To give the owners of licened lands for buildings and construction which its construction will be completed in the old and new cities and after the five years and in case of non finishing construction a tax will be obligated on the owners of these buildings equal tax of non exploition of the floor area .
13)any owner of building has the right to release his building against similar or larger area of land in new cities or new areas completely with its fellows in addition to a good loan( without prfits) to be paid on instalements and renting the building for a period of ten years.
14) To establish an assemb;y in each new cloaness ( lates in old cities) social service consumption center with specified services and shares of assmbly should be distributed as per housing units in the clossness and profits should be distributed equally among residents of the clossness and housing fund and services of clossness from clossness from cleanliness and others .
15)to establish a fund for housing for constructing new housing or to give loans without benefites to whom is interested in construction or housing and its resources as follows :-
a) what the country approved for construting housing units .
b) a tax of non – occupation and a tax of the minimum limite of water and electricity and also lands .
c) insurance and its refund which the renter pays to the local conuncil .
d) to triple the profits of commercial centers which will be held on the different clossness .
e) value of renting the housing units will be rented in the new cities whenver we need to rent .
f) the value of renting the buildings its owners will release it after comprensating them with lands in new cities and giving them loans .
15)Perhaps an agreement could be occured between the owner and the renter which new renter will pay the cost of finishing the flat or its construction and to be deducted from the rent and also the owner could undertake the necessities of building for reconstruction or renwal or contracting with the companies and individuals with the warranty ( guarantee) of the house or the flat ( or aged and ever articles ) in condition that the pledging or its availability should be recorded in the estate registatator to the building or the flat and sales should not be done unless in two cases :
16)to pay compeletly value of pledging or the company approval or the indvidual approval which it has been contracted with it or equipments or appliances to be as national production .
The rules which business based on :
1) Islsm juduge concerning gold,s and catte,s charity for our god saying :” (you who believed in allah spend from the best which you gained and what we give you from the land and not follow its bad and don,t take it but to close your eyes and you have to know that god is grateful and rich) “ ( al – bakara 267 ) its means that the charity and expenditures be on all what human earned and if excceded his necessity .
2)The rent as legists is an agreement on the benefit , so they concentrated on the benefit and made compensation against that benefit and the rule of estimating wages and they said also that to transfer property from the owner to renter as a benefit and property from the owner to the renter as money and has been taken from god,s book in his saying “ three I am their foe on judjment day man gave by me and denied that and man sold freely and ate his value and man hired one and got from him all what he wants and didn,t give him his wage” and made benefit based on to pay the wage to male wage and benefit as a rule to estimate the wages .
and the owner who hires bbenefit called renter and other party called renter and contracted thing called hier and exchange against benefit called wage and whenever contract become correct the hirer will have the benefit and approved to the renter to own wages because it is compensation .
3) So the hirer should fulfil benefit to the unit which has hired . If he rented home he should be resident and hirer should hire with the same money with more or less because cashing the rented place took place of cashing to the utilities that it could be release it and arrange its contractand because it is possible cntract with the capital with increasing or decreasing shouldn, t fulfill more than that utility and shouldn,t make it store .
4)If the contract with compensation was renting and the purchase to the housing unit having it behaving it as the other behavior and also the renter is having the utility which he has with rent and it is allowed to hire rented housing unitl if it is cash because cashing the housing unit during rent because it is cashing the utilities as asign to allow conducting it and the contract will be allowed .
the conclusion :
The business paper achieves the maxiumum ambitious to solve housing problem and it the only one to solve all housing problems and effects related harems of housing problem and almost it is the only one acts good overview to solve housing problem and at least solve 40% generally from the country problem and the people .
I am ready to send business papers completely ( as book was named “ end of housing problem now” to any government and I can male discusion about it .
Engineer : nabil mohsen ali salem .
E mail : nma642003 @Yahoo .com .cu
Tel : 002- 010-3636233——– 002-02-8339691
Adress: Egypt – Cairo –– old cairo – 9 el deer