So lest break down this bail out....is it good or bad

You know that Merrill Lynch was sitting with $30 billion tied up in sub-prime loans in the housing market. They get what they deserve for doing that, and I am sure we agree on that right? Those houses didn't become worthless all of a sudden because those people couldn't sell their bonds. Since they couldn't sell them, they basically gave them away for 22 cents on the dollar. Now do you think all those houses lost 80% of their value underneath that deal? No, they didn't, so they gave them away for 22 cents on the dollar or about $6 billion total because there was no market for them. it is true that Nobody wants to buy sub-prime bonds because they are non performing.  They basically suck... They're junk bonds. But at 22 cents on the dollar, it's a bargain because even if you foreclosed on every one of the houses in there, you'd probably get $20 billion back out of $30 billion, and so the company that bought those for $6 billion got a deal! But there's no market for them. That's where these companies are stuck. They can't sell this stuff, but accounting-wise, they've had to mark it down to market and it's frozen the marketplace.

If we change that one rule and don't force them to mark down to market value and just let them hold on to all the stuff, and say just on sub-primes for this period of time you can change that rule -- a temporary change -- that'll free the market up. It's seized right now; it's frozen. This will thaw it out and get it going again. He says that'll solve 60%!!

That one accounting rule is what made Merrill Lynch sell out. That one accounting rule is what's driving other ones into the dirt. Would you rather let them change their accounting rule or loan them $700 billion for us to buyout their bad paper?

I'd rather them work their own issues than have us bail them out with $700 billion of our tax dollars.

I don't like giving them any money or any help with my tax dollars. But I'd rather see that than have a whole meltdown.

What we need to do is take the FHA insurance program and extend it across these sub-primes that are defaulting? What that means is that you and I are guaranteeing the lender that they're not going to lose as much or any money on those mortgages. Now I don't like guaranteeing them, but I like it better than buying them. In other words, instead of $700 billion in tax-payer debt going out there to bail out these companies, just extend the insurance out. You could probably do that for less than $40 billion. It's like a 95% savings!

If the government insured those mortgages, they would then be marketable. And could sell them. And the companies would stay afloat. And we, the people, don't have to get into the mortgage business. Now we're going to get in there a little bit because of the insurance on those getting foreclosed on. But foreclosures aren't causing this. This is being caused because these companies are frozen and seized up. We can do that without going into debt $700 billion.

It is also important to understand that the bailout that is currently being talked about is not the only measure that is being taken to stabilize the economy.  Even locally, Kansas City's Planning and Development Department will receive $7.3 million from the U.S. Department of Housing and Urban Development to stabilize neighborhoods hit by foreclosures and subprime mortgages.

In a release late Friday, the city said the money is part of $46.2 million Missouri will get from HUD to counteract the effect of foreclosures and subprime mortgages.

To stabilize and encourage investment, state and local governments are allowed to buy homes and properties, rehabilitate or demolish abandoned properties, offer down-payment assistance to low- and moderate-income home buyers and create land banks to assemble, manage and dispose of vacant land, the city said in the release.

The money is expected to be available in the next 30 to 90 days, after which the city will have 18 months to use the money.

David Van Noy Jr   |   www.davidvannoyjr.com   |  816-536-SOLD   |   davidv@prukc.com