Here are 5 questions about the US economy that I would love for the new administration to answer directly:
1. Do you agree that for a large number of people, walking away from their home and being foreclosed upon is to their financial advantage ?
(In many cases they will be able to rent an equivalent or better home at a far lower price than even the most generously re-negotiated mortgage!)
2. Do you support the idea that an average, middle-income American family should be able to afford the average home in their neighborhood ?
(If so, you should be cheering on house price declines, not trying to prevent them.)
3. Do you feel that America needs to save more and consume less ?
(If yes, why not increase interest rates to reward savers and punish debtors ?)
4. What specific steps will you take to curb the immense moral hazards created by the indiscriminate bailing out of financial and auto companies ?
(Or will future MBA students be taught to “go all in”, since the government will always backstop them if they get large enough ?)
5. You promised to not raise taxes for most of us. Isn’t deficit spending and the resulting inflation simply another way of taxation ?
(Is it not better to get Paul Volcker in as the new Treasury Secretary with the simple mandate - design a set of incentives that will reward the sorts of behavior we would like to see in the future, and punish the ones that we dont ?)
(Image credit: mike9alive, original image here licensed under Creative Commons)
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