Under Water

It's been my contention since it was passed by congress in 2009 that the economic stimulus was far too small. As a result, the economy wasn't provided a full tank of fuel to repair itself, and, by all indications, growth is starting stall. According to NY Times columnist Thomas Friedman, the anemic stimulus package combined with under water mortgages could well be to blame for any "double dip" recession:

When people are so under water, they find it hard to move to take new jobs, they find it hard to borrow or raise cash for education or start-ups, and banks become even more cautious about lending. Until we as a country figure out how to divvy up these losses on housing and let these markets clear and move on, they will be a serious drag on employment.

Indeed, this mortgage mess just feeds the three other big problems undermining U.S. job growth today: weak aggregate demand, structural impediments and an epidemic of uncertainty about what the future holds for everything from health care to the rate of taxation to Social Security and Medicare spending to the availability of credit to the general direction of the economy — the sum of which has people holding back and thus undermining the government’s stimulus.

Sigh.