Former US Federal Reserve chairman Alan Greenspan has suggested a startling short-term fix for US home owners teetering on the brink of defaulting on their sub-prime mortgages; give them cash.
Greenspan says that instead of the government and bank sponsored sub-prime rescue plan announced last week, which involves deferring mortgage payments for distressed home owners, it would be better to simply give them the cash they need to make their payments.
“Instead of, in effect, taxing financial institutions and giving the funds to the home owners, we’d be far better off, as far as the future structure of our financial markets are concerned, to do it with cash. Do it out in the open. Do it cleanly and with transparency, not by hidden processes,” Greenspan says.
The markets are in a generally benevolent mood today, with the S&P/ASX200 up 0.7% on yesterday’s close to 6223.2 and the Australian dollar trading at US86c at 12.45pm.
And the stellar performance new car sales have enjoyed this year continued in November, with the 89,906 new cars sold representing an increase of 1.1% on October and 10.1% on November 2006.