And this comment is coming from a lifelong Republican, Southern, redneck.

Not so much what he says …. more in how he says it.

I sure hope he works out. But he is a politician, after all. We’ll see.

A country can only reduce the debt when it is cashflow positive.

Given China has a few hundred billion in trade surplus each year, and use that to buy treasure note, you can’t be cash flow positive with that white elephane untouched.

Have a lower mortgage rate will help the cash flow a little bit, but if China does not own these mortgage, you are just internally adjusting the cash flow, with no impact to the country’s cash flow.

What we need is for Chinese import to drop in price like oil, so we will have a trade surplus with China, like we have now with some gulf states at 50 dollar oil. Once that is acomplished, everything else just flow through.

The problem right now is that the 300% debt are coming due. Unless we can push back their due date, we have no time to turn around our cash flow and reduce the debt loan to 150%. Having a 100 year bond would do that, but it needs to be like 2 trillion dollars to make an impact.

Can you please email me, its provided on this comment.

I would like your opinion on an alternative to stimulate housing instead of the govt meddling with rates to 4.5% and buying up loans from GSE’s..

Its such a bad idea and they are digging this country into a debt ridden hole.

Why not tweak the tax code for investors from a 1031 deferrement to a 5 YR qualification primary residence like exemption?

http://www.urbandigs.com/2008/12/instead_of_meddline_w_rates_wh.html

GRANT THE PRIMARY TAX CAPITAL GAINS EXEMPTION BENEFIT TO INVESTORS AND CHANGE THE QUALIFICATION TERMS SO THAT THE PROPERTY PURCHASED BY THE INVESTOR MUST BE HELD FOR A MINIMUM PERIOD OF 5 YEARS

Thoughts? As an alternative to help the hoousing supply problem without the unintended consequences of govt meddling, moral hazard, taking on more risky assets, and trying to convince people to buy for the wrong reasons, like 4.5% rates.

The debt maturity structure of the US is too short, and runs the risk of not being able to roll it over if the crisis deepens. Best to lengthen maturities when invited to do so, not when you have to.