Dear Comrade Obama,
Last week, I learned about yet another (soon to be failed) plan to fix the housing market. Like all plans before it, this one will only serve to waste government funds and instill false hope. I thought I would write to you with my own plan. Let’s call it the Kuppy Plan.
I must say that I am proud of the Kuppy Plan—not because it is original (it’s been tried for millennia) but because it is simple. More importantly, I feel confident that it will work. Here are the basics of my plan.
1. DON’T DO ANYTHING!
2. Stop bailing these people out! Just stop it already!!
3 Stop using public money to keep people in homes they cannot afford.
4 Let housing prices naturally drop to levels where they are affordable.
5 Let people who were prudent like myself buy homes at bargains.
You see, for years, I felt home prices were too high. I rented and watched people make paper fortunes on homes they owned with no money down. I watched people continually extract equity to buy stuff they didn’t need. I watched people live outside their means and pile out debt. Now it’s time that they learned some lessons. You are teaching the wrong lesson.
I have been patiently saving and waiting for prices to revert to something more normal. I want to own a home. I do not like debt. I want to pay cash for my home. I want to be a good homeowner. If prices drop enough, I might even buy a few extra as an investment. That would let banks unload their unsold inventory and re-liquefy their balance sheets. If more people like me are able to buy homes, it would fix the housing problem in this country. It would fix it fast. Those who overpaid for their homes could short sell them, and then rent from me. Banks would have to raise some more capital, but they’ve already started that process. Everyone would win.
I realize that this is a painful process. It is hard to tell someone that they have a mortgage problem. However, it needs to happen. I’ve told friends that they had drinking problems and I’ve told friends that they had gambling problems. Now it’s time for you as our president to lead and tell these people they have a mortgage problem. You wouldn’t lend money to someone with a gambling problem. Why are you simply giving money to people with a mortgage problem? Do you want the lesson of your administration to be that the prudent will always bail out the irresponsible?
I don’t know how long the Kuppy Plan would take to work. My guess is it might take a few years—but it would eventually achieve its stated goal. Those who can actually afford various properties will now be the owners of those properties. More importantly, those properties will be financed responsibly.
I know it is the mantra of your presidency to always appear to be doing something—even when it’s counterproductive. If you tell people that they can modify their loan if it’s delinquent by a certain number of months, everyone will just stop paying their mortgage. The banking industry is slowly recovering from the recent collapse. Do you want to initiate a new banking crisis?
It’s time for the Kuppy Plan.