Economic Stimulus Told Ya So, Again

On December 12, 2008, more than three years ago I (and a few others) suggested mortgage refinancing as an economic stimulus for Main Streeters. And I suggested it again in February 2009, and yet again several other times over the years.

Guess what the big-shot economist are suggesting now. Read the Washington Post, By promoting mortgage refinancing, Obama could win big, which notes:

"From 2001 to 2003, Glenn Hubbard served as President George W. Bush’s chief economist. Today, he’s dean of Columbia University’s School of Business and one of Mitt Romney’s top economic advisers. But right now, the candidate who could most benefit from his advice is President Obama.

Hubbard is an advocate for using Fannie Mae and Freddie Mac to set off a nationwide wave of mortgage refinancing. In a paper co-authored with Columbia economist Christopher Mayer, Hubbard estimates that more than 75 percent of the homeowners with 30-year mortgages backed by Fannie or Freddie are paying interest rates higher than 5 percent. But for the past two years, interest rates have been closer to 4 percent. That means tens of millions of Americans are paying more than they need to every single month. . .

The effect on the economy would be twofold: First, the refinancings would act like a high-powered tax cut for those homeowners who took advantage of them. As Hubbard and Mayer write, 'Empirical evidence suggests that consumers spend a larger portion of permanent increases in income than temporary increases.' And as these refinancings would lower payments, they’re as permanent as you can get in government policy. Second, it would make the Fed’s efforts to keep interest rates low more effective in stimulating the economy."

Better late than never I suppose, but is it too late for Obama?