Gloom and Doom

I've met Bill Jamieson a few times and like the guy. I agree with most of his writings. But I was horrified when I read today's offering.

Bill has a "five point plan to avoid meltdown".

"First, the Fed must continue with interest rate cuts"

But Bill, it's artificially low interest rates that have caused the problem.

"Second, the Fed needs to be active on a day-to-day basis, not only in providing liquidity but in removing specific blockages in the credit system. One area it should tackle is tweaking the rules on mark-to-market accounting: recording the price or value of a security on the basis of its current value."

In other words, pretend that assets have values unconnected to what people are willing to pay for them.

"Third, the administration must press ahead with plans for government mortgage guarantees to cauterise the rise in foreclosures. A proposal from Chris Dodd, the Democratic chairman of the Senate banking committee, and Barney Frank, his counterpart on the House financial services committee, would involve lenders slashing the size of the mortgage to reflect the lower value of the home and the issue of a new loan guaranteed by the Federal Housing Association."

Jeez! Bring back Karl Marx.

Who's going to provide mortgage finance when the government can decide that debts be arbitrarily reduced whenever it feels like it?

"Fourth, an early priority of the new administration should be a further, larger package of tax cuts and spending increases equivalent to some 2% of GDP."

Aargh! Keynes lives!

Tax cuts yes, but there needs to be massive cuts in government spending. Let's make a modest but important start in the UK by cutting MP's salaries to the national average wage with no added expenses.

"And fifth, America and the world need leadership to see through this crisis. This requires more than the platitudes on offer from President George Bush last Friday"

Indeed. But America had its chance with Ron Paul. What did Scotland on Sunday have to say about him?

We are all doomed, I tell ye...