The 4.5% Solution

Again, Professors R. Glenn Hubbard and Christopher Mayer of the Columbia University Graduate School of Business have reiterated their idea for putting a floor under housing stock price declines, avoiding foreclosures, and for enabling consumers who refinance to increase their consumption. We've written about this idea for some time in previous posts, and it sounds as if something like it might be forthcoming.

This would be a much bolder move than the much-ballyhooed but largely symbolic easing announced yesterday. To paraphrase Alan Blinder, "A for effort by the Fed, but an Incomplete for results."

Given that the lateness of the calendar, we're a little concerned about the ability of the Congress,the Bush and incoming Obama administrations to agree on the Hubbard-Mayer plan, but there's always hope.

Here is the link again:
http://www4.gsb.columbia.edu/realestate/research/housingcrisis/mortgagemarket