Dave

As for the other… yeah, I think you’re right. In many ways the financial system was exploited for the gain of a relative few. The packaging and reselling of mortgages which led to a sweatshop mentality for cranking out mortgages was destined to fail. There was no way for that not to fail… Previously, Republicans pushed for deregulation and won, then Demoncrats pushed for relaxed lending practices which eroded the remaining ‘in-house’ regulations existing within many lending institutions and won. The packaged mortgages are treated as gold and the only governing body left with merit were the bond raters who were clueless.

With this set-up, who can be surprised at the run-up and collapse?

You’re also spot on that a full generation of PhD candidates will feed on these events.

In either case or any case, I just don’t believe you can borrow your way out of debt. Joe Sangl says “first rule of holes is to stop digging”. So the government – whose only source of income is our income – can’t borrow generations of debt into the future to stabilize our current economy. To me, the logic flow simply does not support it. My can’t do this with my small wallet, what makes someone think it will work with our big wallet? I really don’t know.

To truly fix the economy one must find what makes it go. If we want to increase jobs then let’s find/help the segment that actually employs the most people – small business. If we want to help the housing market then let’s allow tax credits for everyone who can afford to buy a home rather than just the first time buyers who may not be the most qualified buyers in the first place. If we want a free flow of cash to support industry then let’s incentivize investment and savings rather than encouraging folks to buy new cars with more debt when so clearly the debt/purchase model has failed… mortgage defaults and gridlocked credit markets anyone??

Government does not make the economy go and with so many of these dollars going to local governments it is a recipe for sustained disaster. Even CNN questioned this in a recent story on West Virgina’s plan for $21MM earmarked for a highway called corridor H… it is a peacemeal highway system that has been on the books since the 40s that sucks up ever dollar the state throws at it but has virtually zero traffic and connects nothing to nothing. So we’ll hire a few folks to move dirt and when the money runs out we’ll have accomplished 6mos of employment and some reorganized asphalt… and then we’re right back where we started….

Rather, I’d suggest small business tax credits equal to that same $21MM for any net job created in 2009. These jobs would be sustainable jobs because small business owners operate with a greater since of accountability than does a politcian… a small business owner wants to feed his/her family whereas a politican wants to be re-elected.

Ok, enough of my rant… I could go on but that’s not the point. The point was to provide a response to your question and I trust I’ve done so. That doesn’t mean you have to agree with my response… there’s plenty of room for many good answers and I’d truly welcome you or anyone else to share thiers.

Thanks for your question, I hope you’ll visit and comment again!
Dave