'Trickle Up' theory for economic woes

Here's a radical thought: Let's try implementing the Trickle Up theory of economics.

We took the Trickle Down theory out for a spin and it has proved to be an unmitigated disaster. I read, over and over and over again, that the key to solving this financial crisis is to relieve the banks, finance and insurance companies from the effects of the "toxic" mortgage backed financial "products" that they themselves created, to squeeze a little extra virtual profit out of a basic loan. A mortgage is a very basic, understandable product - a home and the real estate it occupies is the collateral for the loan. Somehow, the financial world turned this simplicity into something that no one understands and which is credited with endangering the world economy.

The foundation of a mortgage loan is the value of a home and the promise of the homeowner to repay the loan. Let's shore up the foundation by helping the homeowner to manage those loan payments. No bailout needed. Allow homeowners to renegotiate the terms of their mortgages to a manageable monthly payment. That will take the "toxicity" out of the foundation. The financial system will take a hit commensurate with the virtual profits that they created by slicing and dicing simple loans to sell and resell again. These profits were all virtual, anyway.

The mortgage holder and the homeowner will both suffer a loss from the very real depreciation in value of the property used as collateral; but not enough to bring down the economy of the world. The taxpayers won't have to go, hat in hand, to other countries to ask them to finance our economic recovery. The captains of the financial industry will have real assets for valuation of loans and the imaginative "products" and "instruments" they have created.

Mike Kennedy

Lisle