Summers Time

Let me say upfront that I was and am an ardent President Obama supporter. But I have been very disappointed that we are not hearing enough about the housing crisis. I have a personal interest as our home has been on the market for months. We are not in foreclosure, thank goodness. But we have had to move to another state for family reasons. We are renting in our new state and still paying our mortgage on our home that is up for sale in our old state. Needless to say we are struggling. I was so hopeful that President Obama would attack this housing crisis immediately with passion and determination. I have not seen it and I am very dismayed. Housing is at the root of this economic decline. I am no economist but surely there are brilliant economic minds that can come up with a plan to try to straighten out this housing mess. Reduce interest rates to 4 or 4.5% - buy up the bad loans - do something - NOW!!! I want to see some urgency in the Obama Administration on housing. In my humble opinion this is the core issue which must be dealt with immediately. HOUSING should be the PRIORITY issue in any stimulus package!

The only way to support the dollar is to back it with nuclear weapons or other military hardware. Say China agrees to buy another trillion fresh off the printing press: we collateralize it with a couple nukes, a sub or two and maybe an aircraft carrier. If the dollar sinks below a certain level they would have the option to choose the collateral over another refinance. The dollar stays on top so long as our weapons retain their take it or leave it value. As any loan shark can tell you it is dangerous to lend money to someone with more mustle than you have. It makes it hard to use scare tactics to insure repayment. The world is full of dollars and not eager to get more without some serious arm twisting. We are making an offer they want to refuse but won't until the rest of the world economy shows signs of recovery. We print; they buy or else.

At the moment the U.S. Dollar is gaining streght because it's main competitors in the world stage the Yen, the Euro, and the Yuan are for different reasons unwilling, or unable to replace the U.S. Dollar. It is in my opinion a given that it is not in the best interest of the major economies in the world to simply "dump" their enormous U.S. Dollar reserves (China, Japan, Singapore, South Korea, etc) for it would prove cathastrophic to their own economies.
As we stand today, the U.S. Dollar therefore get's a reprive due to it's special status as the worl'd reserve currency. The reprive however is not to be interpreted to be a printing permit for the Fed to just monetize it's debt away.
The U.S. Dollar will be devalued in time, but it's devaluation will be controlled, and gradual as to not to produce too much disruption to our bankers, the Asian economies.
This event will change in my opinion the face of our worl'd economy. How will Asian econonomies react to the enormous pressure that incredibly large U.S. deficits will have on the U.S. Dollar Vs. their self interest of keeping the U.S. Dollar high to continue to export their produsts to us their best costumer is what keeps a lot of Economist up at night, because no one knows the answer..... And in this answer lies the future of our country.

Summers is right to worry and rest assured his worries will become reality. Finally an article that questions the sanity of trying to cure an illness caused by excessive debt with more debt!