Edward Leamer, Economics and Management Professor at UCLA offers an alternative to the Paulson plan here. Please read it.
Leamer advises using a fraction of the Treasury money to actually buy the houses that are clogging the market rather than the mortgages that serve to bail out the financial institutions on Wall Street. He also contends that there is not a credit crunch and that the economy is fine other than the housing industry. $700 trillion will buy 2.3 million homes at an average price of $300,000, far more than is necessary. This will help out homeowners and stabilize the market rather than bail out Paulson’s Wall Street cronies.
Leamer is concerned that there is no details on how the Treasury will utilize the money, yet they were asking for unlimited authority to execute the ‘plan’. He is suspect of the ’emergency’.
The draconian insertion of the government into the financial institutions may be an albatross on the economy for decades to come.
The only reason I can think to solve the problem at the Wall Street level is that there it is focused and easier to address, rather than create an infrastructure to buy houses all over the country.
Another alternative suggested by others is for the government to simply insure the mortgages, which would surely elevate their market valuations, rather than actually by them.
I believe that the urgency of the situation is real, and that this crisis atmosphere has been used to eliminate debate and carefully considered options. Perhaps those House members who held up the passage of the plan are the real heroes.
Recent Comments