Das Bailöut

I am a card-carrying member of the Cult of Dave Ramsey (financial peace be upon him). I first drank the fiscally responsible kool-aid back before I was married to my lovely and gracious wife - though it sadly didn't "take" until just recently.

Sigh.

Nevertheless, I find his principles to be reasonably Biblical (though I confess to a greater love for Crown Financial) and eminently practical - plus, he's stinkin' funny.

I was very interested to read what he has to say about the current economic crisis, and what he thought of the bailout; having just read his Common Sense Fix, I have to say - Dave Ramsey for President!

...actually, I'd like to start campaigning now for Palin/Ramsey 2012. Any takers?

Anyway, his Common Sense Fix is probably the best that I've read, the more so in that it is eminently simple (in the true spirit of KISS - the principle, not the über-lame '70's has-been bubble-gum kiddie glam rock band that could barely string together four coherent chords to save their heavily cosmetically-enhanced hides and haven't yet figured out that puberty was a very geologically long time ago for them - long live Iron Maiden) and actually fiscally responsible. The text of the Fix is as follows:

Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three steps:



Common Sense Plan.



I. INSURANCE

A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.



B. In order for a company to accept the government-backed insurance, they must do two things:



1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.

a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.

b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives.

2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.



C. This backstop will cost less than $50 billion—a small fraction of the current proposal.



II. MARK TO MARKET

A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.



B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.



III. CAPITAL GAINS TAX

A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.



B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to stand up, speak out, and fix this mess.

Ramsey's urging people to contact their Representatives and Senators and copy-and-paste this Common Sense Fix in messages to them. I have just done so, and urge both of my readers to do the same.

I am Mike Macon, and I approve this message.