This time from Arnold Kling:
Let me make some remarks that are sufficiently flip to assure Tyler that I should never be president.
- Firms are laying off workers that they probably should have laid off months ago, and they should not hesitate to do so.
- It is ok for consumers to cut back on their spending; they should not feel they need to go out and spend to “help the economy.”
- Many home buyers are defaulting on their loans, which results in foreclosures, and government should not interfere with that process.
- In many parts of the country, it makes sense for home builders to curtail activity until excess supplies of houses are absorbed.
- Auto companies need to renegotiate their obligations to retired workers or go into bankruptcy and let the courts sort it out.
- State and local governments need to renegotiate their obligations to retired workers or put the matter before legislative bodies and make hard choices.
- Banks that are definitely insolvent need to be merged with healthy banks or closed by the FDIC.
- Banks that are possibly insolvent, depending on the value of illiquid securities, need to be placed under close regulatory supervision.
- New activity by Freddie Mac or Fannie Mae should be frozen. If banks don’t want to make mortgage loans, then teenagers don’t want to flirt.
- The Treasury does not know what it is doing with its $700 billion in spending authority, so it should stop doing it.
Once the various excesses have been eliminated from the system and markets are back in balance–especially housing–we’ll be fine.