Trovena Weblog

A Homeowner and Economic Stimulus Package That Will Work

While there are many problems with the different stimulus packages proposed, the two biggest are, 1) complexity and 2) congress is selecting winners and losers.  As can be expected, the more complex packages will have a higher likelihood of failure.  In addition, when congress selects winners and losers, the loser will feel cheated and there is a real risk that congress will select the wrong winners, or least effective winners, to solve the problem.

Solving the home mortgage and banking crisis requires a simple plan; and I have such a plan!

The U.S. Government should allow everyone to refinance his or her real estate loan at 4.25%, for up to 30 years, interest only.  In addition, all new purchases with an acceptable down payment could also receive the 4.25% interest rate.  This plan should be available to all owners and buyers of real estate except large commercial properties.

Advantage 1: It does not cost the taxpayer money!  The current 30-year U.S. Treasury rate is 3.56%.  That means the government borrows for 3.56% and lends for 4.25%.  The government makes money!

Here's how silly the Dow Jones is...

On November 20, 2008, the Dow Jones Industrial Average (DJIA) closed at 7,552.29.  To date, that remains that closing low in the market through this current bear market.

 

During the past two days, the market has made serious threats at setting a new closing low.  The DJIA closed at 7,552.60 yesterday, less than a half a point above the previous low!  And today, the index spent most of the day trading negative, before somehow finishing the day in positive territory.

 

It was a MAJOR test of the lows, as the technical analysts would say.  It is a major resistance level, which, if breached… look out below!

There’s one small problem with this.