A Brady Plan for America
Published by MartinVarsavsky.net in General with No Comments
What is creating the financial panic that is unfolding as I write, what is causing the shares of all financial institutions to collaps, is the simple fact that Wall Street does not know the extent of the damage to the quality of the mortgages that financial institutions own. As Morgan Stanley and Goldman Sachs follow Merrill Lynch, Bear Stearns and Lehman Brothers on a path to extinction that will cost the US economy dearly, isn´t it time that the US government really intervenes? What the US government has to do is a Brady Plan on itself. What worked for Latin America in the 80s can work now for America itself. It simply entails guaranteeing the majority of the principal and interest from those mortgages. And what was fantastic about the Brady plan is that the guarantee cost nothing to the US Treasury then. And, in my view, the same would be true now. Most of the mortgages in the States will be repaid over the next decades.