re:
http://www.huffingtonpost.com/2008/10/04/for-bailout-to-work-housi_n_131898.html
What we're seeing is a simultaneous bursting of the real estate bubble with contraction of the money supply. On the latter, see, for example:
http://seekingalpha.com/article/58199-money-supply-growth-it-s-much-worse-than-that
The two processes are mutually-reinforcing. Yes, a vicious cycle. This is a DEFLATIONARY crisis.
The crux of the solution is monetary stimulus: expansion of the money supply--along with re-regulation of the finance industry.
The US has been here before, with the Great Crash of 1929 and the onset of the Great Depression. It took a few years for the Federal Government to get the right economists, the right laws, and the right approach in place.
This time, I think the (New) New Deal can be put into place much more quickly. Perhaps right after Inauguration Day in January.
Steve
Read the Article at HuffingtonPost
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1 comment:
Steve:
I agree. My greatest concern with the "Bailout" is that it doesn't seem focused on the longer, harder path that I think will actually work and that I feel the problem should be attacked from the bottom up, not the top down.
I honestly had not thought about the current situation in deflationary terms, something which seems like a V-8 moment now that you have brought it up.
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