Greenspan Suggesting Cash Infusion For Mortgage Crisis

Former Federal Reserve Chairman Alan Greenspan seemed to suggest today that a direct cash infusion might be the best solution to the mortgage crisis.

"Cash is available and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this," Greenspan prattled on ABC's "This Week."

This seems to be interpretted that Greenspan is suggesting a tax cut or something of the sort as opposed to fixing home prices or interest rates.

Greenspan also sees the very real possibility of 1970's-style stagflation on the horizon - a condition marked by a BIZARRE combination of economic growth stagnation and high inflation.

Basically the problem is - if you're going to manipulate the ecomony and the markets at all, you need to make specific interventions.

Basically the only tools the Fed has available to it are nuclear in scale. If the economy is freaked out over 9/11, the ONLY thing you can do is pump in these massive amounts of money at the highest levels of the banking system. Since everyone was already freaked the f*ck out over Enron, Worldcomm, and other stock scandals, all the new money started going not towards capital investments, but real estate. It formed a bubble JUST like the Dot-Com's and now the real estate bubble is bursting, and looking to do even MORE collateral damage than the Dot-Com implosion.

No - if you see a problem that has formed due to lack of oversight or just plain stupidity and you want to lessen the burden on common folk, you need to DIRECTLY address the problem.

Don't pump all this money into the broader economy and trigger off $10/gallon milk, $12/gallon gas and all that mess - put the money DIRECTLY where it is needed.

Yes, if the government had the SLIGHTEST bit of intestinal fortitute, they would lend EVERYONE enough to pay off their current mortgages at 6.5% for 40 YEARS.

Period.

End of story.

THAT would fix the problem.

Case closed ...