Gee, That Was Easy!

New York City--After the US took a page from Gordon Brown's book and decided to spend $250 billion of the funds originally allocated to buy bad securities and instead inject them directly into banks as an equity stake, the market gods appear to be happy.  Markets soared yesterday (when the bond markets were closed for the Columbus Day holiday) and were quiet today. 

Does this mean the financial crisis is over?  As Yogi Berra said, it's hard to make predictions,  especially about the future.  And the answer is probably not yet.  But clearly the Brown strategy (also pressed by Senator Charles Schumer and others here) seems to have worked far better than the original Fed/Treasury plan to calm markets and has at least provided breathing room to consider the impact on the real economy of the financial crisis and what we can do about it. 

In this regard, investing in clean infrastructure should be a key part of the stimulus package Congress is now considering.  So should keeping people in their homes, not only becaue of the potential impact of large scale evictions and foreclosures on financial markets but also because of their toll on neighborhoods and families.  As we have suggested before and as Senator Obama urged in his speech on the economy yesterday, the only way to resolve the housing crisis over the long term is to replace unsustainable loans with sustainable ones--and in the interim, people acting in good faith, should not be evicted from their homes.