Harvard Professor Calling For New Bankruptcy Bill And Tax Cuts to Stop Deep Recession
Many of you may be wondering why I put a blog with Deep Recession in the title in the good news category. Well actually, to me, it is good news because the depth of the liquidity problem that this country is facing is finally coming to light. If I were to say something similar it wouldn't be news worthy. However, when a Harvard Professor, who was a former Treasury Secretary, mentions the words Deep Recession, it is newsworthy, until the next celebrity takes steroids or becomes pregnant or something else news-worthy.
Interestingly, Mr. Lawrence Summers, who now is an investment fund manager, is calling for the government to consider a $50 billion dollar to $75 billion dollar tax cut and spending package. In his opinion, this will help stave off a deep recession. While not going as far to say that it will stave off a recession, I believe his words were carefully chosen because he has read the handwriting on the wall. He also stated that, in his opinion, there is a more than 50% chance the U.S. would experience a recession. Can this guy walk the fence or what? You can see why he was once considered a fiscal hawk among Clinton Democrats.
Mr. Summers went on to say that slow-growth is a near certainty. I think that anyone living in Southwest Florida knows this to be a fact. We all know someone who is either out of work or hurting financially because of the slow housing market. Lastly, Mr. Summers stated that even a mild recession will hurt the middle class. The average family of four will lose approximately $4,000 to $5,000 in income each year, and the government will experience a deficit in the approximate amount of $100 billion. I believe the amount was strategically left open. My question is: Is the expected deficit the total amount or the amount per year. Hmmm.
I'm glad Mr. Summers is speaking out on the issue and gathering media attention. I'm also glad that Mr. Summers mentioned the bankruptcy bill that is floating around in Congress. If passed more people will be able to save their homes, in my opinion, than by any other plan. Remember, bankruptcy is a financial planning tool. Freezing interest rates is an absolute joke that will only prolong a person's problem. Bankruptcy provides a solution to individuals short term problems and provides the individual with a road map for financial success in the future.
