Sunday, December 21, 2008
The Next Move
Brad DeLong links to a post from the Baseline Scenario on the Glen Hubbard article in the WSJ. The Hubbard plan is basically two plans: 1 part freddie/fannie nationalization, 1 part Bailie Mae. The plan is to reduce mortgage rates to 4.5% for everyone, new home buyers and those who want to refinance. Basically, we are going to subsidize housing to get us out of the mess that we got into in large part because housing was generously subsidized. I tend to think a better way of bringing housing supply and demand into balance would be to increase immigration, both skilled and unskilled, massively. Unskilled immigration might be a difficult sell, though, we could always re-encourage illegal immigration by returning to more lax enforcement. However, increasing skilled immigration shouldn't be as tough a sale.