Fixing the Economy - 'Trickle UP"

Everyone seems to have an opinion, so here's mine (and it costs a lot less than $700b U.S.)

Step 1: Take about $260B and invest in US bonds - something safe. We'll spend it gradually - later.

Step 2: Focus on the sub-prime loans. Let's skip the discussion about the greed, etc., that causes the loans to be made. The point is that there are people who have loans that they can't afford. The normal rule of thumb is 28% to 30% of your income should be spent on housing (including mortgage, taxes, etc.). For people with sub-prime loans, figure out what 30% of their income is. That's the amount of the loan that they're required to pay for their mortgage - set up at today's rate as a 30 year fixed rate mortgage. The difference between the % that they can pay, and the amount currently owed on the sub-prime will be paid MONTHLY for the next 30 years, out of the $260B invested in bonds.

Step 3: The holders of the currently-worthless paper can't sell it. They'll get paid, but only over 30 years. Too bad.

Step 4. This will probably solve the problem for 80% of the sub-prime loans; the rest will default anyway. That's life, but it's better than buying off greedy people who knew they wouldn't be helpd accountable.