If the Government is going to spray £75 billion quids' worth of petrol on the embers of the economy, they could at least do it in a way that stands the best chance of achieving something. Here's an idea.
Offer people the chance to sell a stake of up to 50% or £75k, in their house, whichever is the smaller. This can only go towards reducing their mortgage, so you have to be a borrower. The money goes straight to the bank or building society. This would
seriously reduce the burden on your family, both in terms of the total amount you have to repay, and your monthly liabilities.
Now you can spend money, because a big burden has been lifted and you have a lot more monthly disposable income. You might even be able to borrow a bit to buy a new car, for instance, because you have headroom for repayments and the bank knows you can afford
it. This relieves pressure on businesses, who see money rolling through their accounts once more, and don't have to lay off people. This restores confidence.
If the average stake costs £50k, this would help 1.5 million people; it might even stem the tide of repossessions. The Government gets a cast-iron secure asset, because it only took a maximum stake of 50%, and properties probably won't drop another 50%.
The taxpayer gets repaid either when the house is sold, or when the part-homeowner decides to buy out the Government stake, perhaps when the economy has properly recovered.
We even have the mechanism to administer this - Northern Rock, B&B, RBS and Lloyds, all of whom know how to handle the admin burden of registering the Government's part-ownership of the properties - and the other banks could join in (for free) if they are
feeling left out.
Of course, the money still ends up with the banks (in the form of mortgage repayments) and therefore is available to lend on, in the same way as the proposed mechanism of buying gilts and corporate bonds does - it's just that the money has been put to good
use, at the coal face, first, and made a real difference. We could probably even afford to raise interest rates again and get interest money back into the pockets of savers to spend, since we would have made a bigger difference to peoples' borrowing burden
through QE than it would cost in interest charges.
This might sound like a mad idea, but we've tried lots of other mad things; why not try this one?