thegipples/fc

From the page: "Instead of paying unemployment benefits to workers who have lost their jobs, it pays companies to keep workers on payroll, but working reduced hours. In a typical case, a company may reduce hours by 20 percent. The government picks up 60 percent of the lost wages that would be implied by this cut. The company picks up 20 percent, and the worker incurs a loss of 20 percent of this 20 percent, or 4 percent. This means that a worker may work 4 days a week rather than 5, and get a 4 percent reduction in their take home pay; probably not a bad deal in most workers' eyes.

In short, there is a simple mechanism to reduce the misery associated with the downturn, if those who make economic policy are prepared to take it."

From the page: "If Fannie and Freddie incurred large losses on mortgages purchased subsequent to their takeover, it would imply that they overpaid banks for these mortgages. Whether or not this was a deliberate policy, it means that Fannie and Freddie were subsidizing the banks in much the same way as TARP was supposed to do when the plan was initially proposed to Congress."

From the page: "Americans want their government to create jobs through spending on public works, investments in alternative energy or skills training for the jobless.

They also want the deficit to come down. And most are ready to hand the bill to the wealthy.

A Bloomberg National Poll conducted Dec. 3-7 shows two- thirds of Americans favor taxing the rich to reduce the deficit."

From the page: "If the government pays for a mortgage modification where the homeowner is still paying more for the mortgage than they would for rent, then the bank gets a big gift from the government, but the homeowner is still coming out behind.

In some cases the government may pay enough to buy down principle that the homeowner is no longer underwater, but the bulk of this money is a gift to the bank, not the homeowner. If a homeowner is $100,000 underwater and the government pays the bank $50,000 to write the loan down to the current value of the house, then the bank has pocketed $50,000, while the homeowner is essentially left breaking even. This is very generous to the bank, but homeowners have nothing to show in this story."

From the page: "It is important to recognize that imposing pay restrictions as a condition of receiving TARP money and other special assistance is not interference with the market. Giving these banks money is interference with the market. The marketâ€s assessment at this moment of crisis was that these firms were bankrupt, which would have left most of their executives unemployed. The government chose to over-ride the market by giving the banks the money they needed to survive. The government could have imposed whatever conditions it chose for receiving this money."

From the page: "We could have told them to run around Wall Street naked, to walk on hot coals, to wear stupid looking hats, the choice was shutting down their banks and looking for new jobs.

Instead, we just handed them the cash, no questions asked. Now the banks are bigger and badder than ever and paying out big bonuses, just like before. As things stand, they will be an even bigger drain on the economy in the years ahead than they were in the years leading up to crash."

From the page: "Suppose that this work-share program reduced the number of people who lose their jobs involuntarily by 20 percent, or 400,000 workers per month. This would have the same effect to our job count as adding 400,000 additional new jobs. If this rate could actually be maintained over a full year, then it would imply that the economy would generate nearly five million new jobs."