It’s ridiculous for media and government alike to now talk about, “solving” the credit crisis. It’s here- and worse is coming- why ? Because markets are now reacting to the economic Tsunami which has started- massive cuts in consumer and business spending- perhaps three (3) trillion dollars may not be spent, which ordinarily would have. This is an “unstoppable” financial Tsunami where the ONLY thing we can do now is better prepare ourselves for it. How? First, take all measures, both in private industry and government- to keep people in jobs and create more jobs- including government hiring millions of people for much needed infrastructure repair. Next, take tax credits for companies to keep people on the payroll. Secondly, the government should now sponsor massive bond funding to enable home owners to remain in their homes (one hardly mentioned idea is to extend loans (for a period of five years) from the average of 30 year amortization to 50, 60 year mortgages to lower payments but keep loans performing), and 5 year mortgages amortized over 50-60 years to help people buy their first new homes- a combined approach to stabilize home prices. The third step is to keep the banks liquid and cash flowing, which the government has begun.
Where do we get the money? Massive cuts in the Iraq war effort must pay for part of it and massive borrowing from the government, not higher taxes.
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