Rick Lowe
Dr. Rodgers recently announced his remedy to save homes from foreclosure.
- "…reduce the Central Bank Prime Rate from 5.25 per cent to 2.25 per cent or lower,…"
- Banks "could reduce the principal on their troubled mortgages by 50 per cent,.."
- "…the Government should take immediate steps to establish a Foreclosure Trust Fund."… of $150 million.
Read his entire "plan" here… and here…
Admittedly times are difficult and families losing their homes must be devastated, but to suggest that reducing the Prime Lending rate to 2% would help save a home from foreclosure is mere political rhetoric. I wonder if he worked the sums? The Nassau Institute did. Go here… to see their piece from June 2011.
Secondly, to state that banks should reduce the principle of mortgages in default by 50% is reckless. Banks lent money to the borrowers in good faith, at market values, and besides banks here are not responsible for our economic woes.
And thirdly, government has no money to establish a Foreclosure Trust Fund. As Milton Friedman is reported to have said, government has no money, they must take it from the taxpayer one way or another - taxes and or debt etc.
Now if Dr. Rodgers wishes to establish a private fund to attempt his scheme, I say go for it.
It's always curious how so many of us justifiably take issue with government programmes, yet believe that we can design them and everything will work just fine. Freiderich Hayek called that sort of stuff The Fatal Conceit. Specifically he said:
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design."
What is said at election time in an attempt to gain political power should be filtered through the finest of mesh.
Hard times like this is when families need to come together to best see how they can help each other. Sometimes forclosure is the only option. Other people have been lucky enough to move in with their family members and rent their home so keep the payments current.
Even with his scheme, Dr. Rodgers laments, "You can't save all of the mortgages. Some of them are going to go down because people have no jobs and no monies at all."
I'm not in favour of taking tax dollars from Bahamian's so people in the political class can decide who they want to give it to. They want to appear to be helping with other peoples money. Heck that's easy.
I would prefer the private sector, people with like minds to Dr. Rodgers, risk some of their money to be altristic with. Who knows, I might even make a donation.
