Should Big Oil give up tax breaks — or get cuts?

If variable-rate mortgages are the main cause of the economic distress we're facing now, why doesn't the government simply lower the rates that those mortgages are based on and then let the variable mortgages reset lower to the levels they were at when people could afford their payments?
— John M., Levittown, Pa.

There are number of people in Congress who have been proposing this approach since defaults and foreclosures began rising over a year ago.  At this writing, Sheila Bair, the chairwoman of the Federal Deposit Insurance Corp. — the fund that backs bank deposits — is still pressing for a large-scale effort to modify loans to include monthly payments homeowners can afford. In recent weeks, there have been reports that Bair and the Treasury were close to a deal to put $50 billion of the government lender bailout package toward this effort.

It seems like a simple idea. But even with aggressive government intervention, it’s unlikely that all homeowners would be helped. One reason is that some of the loans that were sold during the peak few years of the mortgage bubble were unsustainable from the very first month. The initial payments on these loans were set so low that you could pay it each month for 100 years, and you still wouldn’t pay off the balance. Why would anyone approve such a loan? Because Wall Street kept shuffling these hot potatoes into huge mortgage pools and selling them to investors who — like the homeowners who borrowed the money — didn’t bother to read the fine print.

In some so-called “pay option” adjustable laons, where you can choose from several payments each month, the difference between the lowest payment and what is needed to actually pay off the loan is simply added to the principal. So even if you’re “making your payments” the loan just gets bigger.

Finally, there are millions of homeowners — by one estimate as many as one in five — who are paying a mortgage that’s bigger than their house is worth. That means the lender — or group of investors who bought pieces of that hot-potato mortgage pool — will have to agree to give up some of the money they were counting on when they bought the investment. If you buy a CD from a bank, you wouldn’t exactly be thrilled if the banker came back and said: “Gee, we’re really sorry, but we made a lot of bad loans and we just don’t have the money. Would you mind taking 50 cents on the dollar?”

Take that conversation and multiply it by the thousands of investors in each mortgage pool containing your individual mortgage. How do you get all of those folks to agree to take less than they loaned? Now multiply that number by the holders of the hundreds of mortgages in that mortgage pool.

So far, efforts to unscramble this egg have relied on the voluntary efforts of lenders and investors. It hasn’t worked. Until a viable plan can be found, foreclosures will keep rising, house prices will keep falling and the economy will have a very hard time finding a bottom.

I've heard some rumors that the dollar will be replaced by the amero, and the dollar value will be like nothing. Is it that true?
— Samuel P., Hickory, N.C.

No, Sam. That’s not true.

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