Bond markets have been buzzing lately about a Morgan Stanley proposal to loosen the mortgage-underwriting standards of government-owned Fannie Mae and Freddie Mac to encourage more refinancing and reduce monthly mortgage payments of homeowners. Morgan Stanley economist David Greenlaw says that could put $46 billion in the pockets of consumers.
He calls it "slam-dunk stimulus."
It is, in fact, such a slam-dunk stimulus that lax mortgage-underwriting standards stimulated us right into the current recession. HINT: the cure for drug addiction is not TAKE MOAR. Also, the underlying problem with your pyramid scheme is NOT that people stopped investing enough money in it.
Fortunately, the Treasury has already promised not to do it, although they didn’t give the real reason of HOW STUPID DO YOU THINK WE ARE?