The Citi deal

Part of the big Citibank bailout (by the way, did you notice the White House said it “didn’t know anything about weekend rescue talks? Entirely believable, unfortunately) calls for the government to buy “toxic mortgages.” So, now we — the taxpayer — are back to buying bad mortgage instruments? Let’s recap. The initial big bailout bill was to be used mostly for buying up “toxic mortgages.” But when the Treasury Department experts got a look at things, they realized that was an unworkable solution, so they started buying stakes in banks instead. That led to uncertainty (a nice way of saying “calamity” in stock market-speak) in the market because the feds were sending the signal that they really didn’t know what they were doing. The Citibank bailout — a partial return to Plan A — has cheered the market, which is up 300 points at midmorning.

And we haven’t even figured out yet whether the taxpayers are now on the hook for the $400 million Citi is paying the New York Mets.

Bailouts and the economy defy explanation by mere mortals.

Which is why my colleague, Preston Wright, has formulated his own economic plan. I’ll let him tell it:

Yes, this is a real solution. It’s kind of like daylight savings.

Extend the number of days in a month to 42.

That way, everyone paid every two weeks would suddenly get an extra paycheck per month to pay off debt and mortgages.

Financial institutions would take the brunt of it because it would be like refinancing all loans, yet people would suddenly have extra cash to spend, save and pay back debt.

The economy would be jump-started because everyone would feel like they had gotten a 50% raise.

If I follow this correctly — a dubious assumption at best — we’d still have 12 months in the year, thus adding 84 to our year. Under this plan, the first day of summer could also be New Year’s Day at least once.

  • Except most loans the interest is calculated on the days and not month, so while we have another pay check, the interest charges go up. Of course this would eat up some of the extra pay.

    So the financial institutions do make out a little better also.

  • Preston Wright

    Yeah, I agree the idea is half-baked, but the point is this: find some eay to give a mortgage holiday to people.

    Yes, the banks would get the money back in the end from higher interest — they’d actually make a little more. But the point here is to make the consumers feel richer so they start paying and spending.

    No bail-out plan is convincing you or I to buy more holiday gifts, but this might do it if I didn’t have to make a mortgage payment in December.

    A lot of people are 1 mortgage payment away from foreclosure — give them some extra time to catch up.

  • Bonnie

    think the mortgage holiday is a winning idea…should have been in place already to stimulate holiday spending…

  • Andy Ferron

    I like Preston’s solution. A little breathing room would do wonders for most homeowners and hopefully provide a silver lining to the economy. And daylight saving time has worked out pretty well for everyone, right?

    I do love the New York Mets, but really? Forget Citi Field, how about Foreclosure Field? Bailout Ballpark? I think bringing a copy of your tax return should get you a free hot dog.

  • my initial thought upon hearing about Citibank’s potential bankrupcy was, Yipee! this will cancel out the small fortune’s worth of debt I have stored up on my trusty Citi-card… right?