Subprime crisis: A Solution Suggested By Martin Feldstein

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"There has to be something out there that makes a bit of sense."

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You want to know what's happening but you get lost in the sea of relative 'what I thinks'. 

This is what I feel about the solutions popping up to solve the Mortgage Crisis.  There are so many people claiming to have 'the' answer. 

Truth be told, It gives me a headache reading their sea of proposals; picking out those that are tarnished with self and those that are objective and genuinely aiming to help.

The sub prime crisis has been a tragedy for many (more on this below).  There has to be something out there that makes a bit of sense.

My uncle would gleefully tell me, 'Oh ian you don't have to carry the world on your shoulders, that's not your problem.' 

But  it is, you see. 

First, this is cousin of my livelihood. Second, it breaks my heart to see this happen again if we don't learn from this tragedy. Third, as a citizen of this country it kind of makes sense to know what's happening.  I mean it's nothing big really, Bear Sterns stock just plummeted to $4.81 today.  Their stock was $84 last Wednesday.  The stock's 52 week price high was at  $159.36.  They are the fifth biggest investment house in the nation alongside the likes of JP Morgan Chase, Lehman Bros.  They were bought by JP Morgan Chase Today for $236.2 million; 'the price represents roughly 1 percent of what the investment bank was worth 16 days ago.'

And the most heart-breaking of all: the lives of the $14,000 employees, many of which are part-owners of the company,retirement and savings deeply affected if not completely erased.

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"The reality is that I can't escape the sub-prime mess."

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And it all stemmed from the Sub-prime mess.  We over-extended ourselves.  We over extended the people.  We built a house on sea sand.

The reality is that I can't escape the sub-prime mess. 

I was part of the problem.  I should've known better and for that I am deeply sorry.  How I wish this will never happen again. 

And for the people, do your research, it's not as hard as you think.  It makes it doubly hard for us when you come to us with minds already made up.  Do ask questions, be open to other ideas but ultimately you will decide on what you think is the best option. 

Your responsibility is to learn and understand as much as you can, be forewarned that you will hear things that you don't want to hear but it is imperative that you still consider it.  Take a few days off and then decide.  It will make a world of difference I promise you.

As to the first point I raised.
I've been scanning some proposals about the sub-prime mess.  So far this has made the most sense for me. 

It was written by Martin Feldstein, chairman of the Council of Economic Advisers under President Reagan, is a professor at Harvard and a member of The Wall Street Journal's board of contributors.
Here's an excerpt:

               "The federal government would lend each participant 20% of that
individual's current mortgage, with a 15-year payback period and an adjustable interest rate based on what the government pays on two-year Treasury debt (now just 1.6%). The loan proceeds would immediately reduce the borrower's primary mortgage, cutting interest and principal payments by 20%. Participation in the program would be voluntary and participants could prepay the government loan at any time."

Here's the complete article originally published by Wall Street Journal:Martin Feldstein