I'll will repeat what I said three weeks ago. Providing immediate liquidity to families across America will do more good, more quickly and more fairly than anything now being considered.
It is more and more understood that the world economies, including our own, teater at the edge of financial meltdown and global depression. And yet, official attention from world leaders remains fixated on trying to push a string. They keep trying to do more of the same that has already proven to be ineffective. Attention is locked, lazer-like on financial markets; yet those markets are not responding to the various incentives being proferred. Why?
Because there are two potentially devastating problems and the proposed remedies are directed to only one of them. The potential global depression has been, and continues to be under recogized. It is now ready to overwhelm any financial meltdown prevention move attempted. Lenders will continue to be unresponsive to moves to give them more ability to lend without action that also makes potential borrowers more credit worthy. Therein lies the trouble with trying to push a string. As the real economy worsens, the average borrower is likely to become more risky.
Households need to be RELIEVED of their debt obligations in order to make the purchases that will fuel economic activity. The most immediate, effective and needed relief would be to stop foreclosures prosecutions, place a moratorium on mortgage payments and begin re-negotiating interest rate reductions.
Failure to provide immediate debt relief to households will not only make financial remedies impotent but wil almost certainly lead to a global depression. And, as was witnessed this week, the clock is ticking.
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