Homeowner's Blog

More job stimulus legislation is needed to help displaced workers and perhaps more importantly, to prevent the recession from getting worse. How it is structured is less important than other priorities. Most government job stimulus programs are inherently inefficient, no matter what the delivery vehicle. So were the financial services firm bailouts by Presidents Bush and Obama, which have also created a moral hazard that must now be addressed. Senior financial services executives have effectively been rewarded for their bad decisions with bigger bonuses, while the firms' losses have been socialized to taxpayers, and their stockholders have suffered badly as well.

The government bailouts by both Presidents were necessary to prevent another Depression, and job stimulus programs are necessary until we get beyond the risk of a worsening recession. At this point the more important debate should not be about which job stimulus program will work better, but over which financial services reform legislation will be the most effective in preventing  senior financial services executives from taking further advantage of the current moral hazard. Once we've precluded the kinds of irresponsible decisions that caused the current economic crisis in the future, we will have prevented the need for both inefficient future financial services firm bailouts and job creation programs.