Friday, November 23, 2012

Joe Weisenthal — Several Top Economists Privately Told Obama That He Screwed Up The Recovery In One Major Way

A number of economists privately told Obama that his recovery policies were weak in one key area: They didn't do enough to address the mountain of homeowner debt.
Business Insider
Several Top Economists Privately Told Obama That He Screwed Up The Recovery In One Major Way
Joe Weisenthal


Anonymous said...

There is no mechanism that would allow the economy to easily replace the combined loss of between $1 trillion and 1.2 trillion in demand that would be predicted from the collapse of the housing bubble. Dean Baker

Not so. A universal bailout of the population, including equal amounts to non-debtors, would have quickly fixed things in nominal terms. And if the bailout was combined with a ban on further credit creation and metered to just replace existing credit as it is repaid then the universal bailout could be both large and without significant price inflation risk.

Tom Hickey said...

The mortgages have ended up on the govt books anyway. Should have put the banks into resolution as Bill Black said. After all, it is the law.

Then the govt should have restructured the loans based on ability to pay. Crisis solved.

Anonymous said...

What good does having those mortgages on the government's books do if the government does not mark down the principal? And what good does it do non-debtors who have been cheated by negative real interest rates? A universal bailout would fix everyone from the bottom up including the banks and state and local governments. It is unrealistic to expect prices to decline without a lot of pain and it is unjust too since the population was driven into debt. The alternative was to be priced out of the market by those who did borrow. Let's replace the banks' temporary money (credit) will full legal tender and convert the population's debt to equity. Surely the population deserves it, since they or their ancestors, not the credit cartel, built this country.

Ralph Musgrave said...

I agree with frlbane: debt jubilees, or anything of that nature are a nonsense. As frlbane says, a straightforward boost for the entire economy fixes the recession and unemployment.

As to anyone or institution which has borrowed or loaned too much, that's their problem. There is no reason why those who have lived within their means should bail them out.