There will be growth in the global economy in 2009. Even in the United States, I think in the second half, I think you're going to see little signs of recovery. The global economy was smashed, as was the U.S. economy, by the financial crisis. If the new administration just gets a few things right, or stops making mistakes--by the law of averages, we're due for some good decisions from Washington--the basic strengths will start to come through.
For example, one of the things that the Obama administration could get rid of is this strange accounting rule called mark-to-market, which has devastated bank balance sheets.
If a bank makes a loan now, it knows it's going to have to take a hit to its capital because it knows that, even if the principal is being paid, the interest is being paid. Banks, if they have to sell it tomorrow--which they won't--but regulators come in and say, "If you had to sell the loan tomorrow, what price would you get?" They'd have to take a write-down on it, which is crazy. If we had had that rule in the early 1990s, during the banking crisis, we'd have destroyed most major commercial banks in the United States.
So get rid of mark-to-market, and that way, banks can rebuild their balance sheets.
The other thing, which I think the administration will do--it's right up their alley, it's government activism--is get the housing market revived, by either having the housing market or Fannie Mae and Freddie Mac go to banks and say, "We'll buy your mortgages--any mortgages you write with 4.5% to 5% fixed interest rate, long term." Rates are low for mortgages, but banks aren't making the loans. But if they know they can sell the mortgages to Fannie and Freddie, or to the Federal Reserve, they'll start writing those loans again and get the housing market moving again.
So a couple of basic things like that would go a long way and would get things moving.
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