About $2,300 per American
About $6,000 per U.S. household
The tally for all the various rescue measures launched by U.S. authorities this year runs to about $1.8 trillion. The $1.8 trillion is equal to:
About $6,000 per American
About $15,500 per U.S. household
Who will pay that back? Tax payers. But wait! We don’t all pay taxes.
As the chart above illustrates, in 2006, the percentage of U.S. tax payers who had a zero tax liability was 32%. That leaves 68% of us to pay back the 1.8 Trillion in debt, which changes the numbers.
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My favorite economist, Mark Dotzour from the Texas A and M Real Estate Research Center in College Station has some thoughts on the mortgage mess.
DOTZOUR: STEP ONE, RECHARTER FRANNIE
COLLEGE STATION (Real Estate Center) – As long as the federal government continues to indicate they are willing to redraw the promises contained in mortgage loans, investors will be wary of buying more mortgage bonds. Hence the interest rates on mortgages will stay higher than normal. That’s how the Real Estate Center’s Chief Economist Dr. Mark Dotzour sees the recent government takeover of Fannie Mae and Freddie Mac.
“Fannie and Freddie were doing a great job of providing low cost mortgages to a large majority of American families for three decades of the 20th Centrury. Somewhere in recent years, they lost track of their mission and morphed into the largest mortgage bond speculators on the planet,” said Dotzour. “They did this by veering away from their mission of ‘packaging mortgages’ into the risky waters of keeping mortgages and hoping they hold their value. That bet has completely failed, and now they become a part of the problem and not a part of the solution to the housing market.”
Dotzour outlines what he thinks should be done.
BACK TO ORIGINAL PURPOSE“First, they (Fannie and Freddie) should be re-chartered to their original purpose of serving as a conduit for mortgages. They shouldn’t be in the business of holding mortgages as investments.
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