Source: Miz Duke

As everyone knows the only thing wrong with America right now, is the lagging economy. If we could only boost our economy and increase our GDP we’d be able to unleash prosperity on everyone.  So building on the resounding success of its “cash for clunkers” program, the Obama administration just announced a cash for junkers or “we buy ugly houses” program. Since the median home price is about 10 times that of a median priced car, the government will offer 10 times the rebate for the purchase of a new home.  Other than that, the “cash for junkers” program is identical to the preceding program:

• If you “trade-in” your old home, you’ll get $35,000 towards the purchase of a brand new one
• If you had a jumbo-mortgage or your house was over 5,000 square feet, you qualify for $45,000
• You must have owned the home for at least 1 year to prevent misuse of these funds
• The “trade-in” house must be bulldozed and the debris shipped off to China
• If your house is worth more than the rebate amount, you’re out of luck!

The government has earmarked $20 billion for this program and it estimates that the sales of 500,000 homes will cannibalized this year from future sales numbers. Wait, did I say cannibalize? My apologies, I meant to say that the demand for 500,000 new homes would be created.  The total effect will be to boost the economy by $100 billion dollars or nearly 0.7%! Since the destruction of the existing houses doesn’t count in GDP numbers it’s a net positive result!

The GDP is a number that calculates the amount of services and goods produces without the effects of taxation, so the negative effect of an extra $20 Billion burden on the taxpayers (or their unborn grandchildren) isn’t a part of the calculation either. So you see, it’s a win-win situation for everyone!

What’s that? Who do I mean by everyone? I mean the administration and the small sub-section of the population who own sub-$35,000 homes who are able to go out and get $125,000 mortgages. Now I’m not sure whether these are low-income families or rich slumlords, but that discussion is merely an academic argument.

Not only that, but demolishing the existing homes would help reduce the old inventory thats casting a dark shadow over the entire real estate industry.  So this we buy ugly houses program would really help the economy’s green shoots sprout in to a young sapling.  What’s that you say? We need job and income growth to actually boost the economy. No, that was the old economy.  This time it’s different!