The major changes in the structure and management of monetary policy announced on Dec. 16 excited the stock market, at least temporarily. But these changes hardly reduce the need for strong fiscal policy support to stop the downward spiral in the housing sector and to limit the depth and duration of the very serious economic recession that’s well underway at this time.
We’re still counting on a very large fiscal stimulus package — around $600 billion — early in the Obama Administration. To be effective, such a package must include strong measures to stimulate home buying and to limit home mortgage foreclosures.
The first priority should be a large and temporary tax credit for all home buyers, along the lines of the provision recommended by the “Fix Housing First” coalition spearheaded by NAHB.