Bottom-Up Economic Fix

I think the following approach would be much more palatable.

  1. Change the accounting rules from present value to rolling average, as many others have suggested. This will relieve the immediate liquidity crisis.

  2. Offer a 25% (max $100,000) cash subsidy for home purchase and federally guaranteed mortgages to all U.S. servicemen (and widows/orphans of the same) who served in active duty at any time after 9/11/2001. Eligibility should extend to all honorably serving in the GWOT now or in the future, thus providing a new recruiting benefit. This will artificially raise housing prices and reduce foreclosures, raising the value of mortgage backed securities. It will address the problem from the bottom up instead of from the top down.

  3. Extend eligibility to other services (such as injured police/fire/rescue) if needed to further increase demand.

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