What Would My Plan Be?

OK -- so I am against this stimulus plan. It seems to me not to be an immediate injection of money into the economy but an appropriations bill, a wish list of projects. To me, it seems this plan will simply be a repeat of the Japanese attempts to overcome their economic downturn of the early 1990s -- with the same lack of results.

But everyone is afraid of doing nothing following the myth of the Great Depression. It seems to me that what caused the Depression is the opposite of what ii happening now. Following the Crash, the Federal Reserve followed a tight money policy, contracting the money supply and letting banks fail. The exact opposite is going on now. The Fed is dropping money from airplanes and doing everything possible to keep banks from failing.

The real problem now seems to be debt -- we have too much of it. And the answer is not more debt. We need to work on getting out of debt.

So what do I propose doing? There needs to be a short term and a long term view.

Short term, things should be focused on helping those who have lost their jobs. So first concentrate on money for medical and unemployment.

Second, we need to do something about debt. Change the bankruptcy laws to allow residential mortgages to be reduced to fair market value in bankruptcy (such a proposal has been made by Senator Durbin). To the extent needed, change laws to ease renegotiation of properties underlying mortgage backed securities.

Third, to the extent needed to get some direct government projects into the mix, pick a number of immediately available infrastructure repair projects. Things already planned but for which money has not yet been appropriated. Limit it to power grid and transportation repairs. The crisis began with the construction industry, so do something on that industry now.

Anyway, those are my ideas. We will instead get a huge appropriations bill.