Mortgage Recovery

How many generations in Ireland since people were evicted en masse from their households. How long since they took the rooms or room that was a young child’s whole universe, their solace, protection, playground and sanctuary of love from them and cast them and their fretting parents to chance. How melodramatic you might say! Really. Are we really looking at this type of thinking again.

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Here is Something we should do now!

 

Mortgage Recovery    

Government will instruct banks they own (and that are indebted to them) that all mortgages (one mortgage per person) will be reduced by 30%. The numbers involved will be approximately €20 billion of the mortgages in the country. This reduction will apply to all mortgages (except second third properties etc.). This will be a redirection of already borrowed monies from the troika into the productive economy. It will allow citizens have approximately €300 per month every month for the remainder of their mortgages averaging over ten years. This will act as an ongoing stimulus to the domestic economy. For a sense of fairness anyone renting a property will receive the passed on savings and this will be strongly policed and enforced. Banks may suffer on cash flow it will not be affected in terms of its balance sheet. The government are shareholders in the banks and have already indebted themselves to the troika to borrow this money and much more on top of that. The monies may be recouped by the banks in the commercial markets in time bythe government offering the money as a loan from themselves that they will buy an equity shareholding which the will forego on point of sale. This allows the banks to retain their balance sheet, it means in essence, that monies already borrowed by and being taken from the taxpayer to repay same by government will be taken out of banks that will not lend into a depressed domestic economy and given to the agents and actors or citizens within that economy and so create a long-term sustainability for the banks. 

 

In response to some pre-empted responses….

The notion of moral hazard is a) lying in shatters from bank bailout and NAMA; and b) pertains to the risk of people investing again…in other words how worried are we about people rushing into properties with a view to having debt written off again, any time soon (of course, this would also be seen as a one off amnesty etc); and c) ethically we must concede that tribunals have told us that, unfortunately politicians and builders knowingly and unknowingly conspired so that persons had no choice but to emigrate or buy a house to raise their families in this country at exorbitant rates. 

This all may require a bit of ingenuity – but minor compared to NAMA!

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~ by Francis Denehy on March 21, 2013.

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