ADVICE FOR THE NEXT PRESIDENT: Fire Paulson, Bernanke and Spend Like Mad

Fire Paulson, Bernanke, and Spend Like Mad: Advice for the Next President
Posted Oct 08, 2008 02:41pm EDT by Aaron Task in Newsmakers, Recession
Related: ^DJI, ^GSPC, ^IXIC, DIA, SPY

Other than John McCain's proposal to buy bad mortgages, last night's presidential debate contained scant few new ideas for dealing with the worsening crisis in housing and the financial markets.

Both candidates need to start moving beyond their stump speeches -- and quickly, says RGE Monitor chairman Nouriel Roubini, whose forecasts about the credit cycle to date have been frighteningly accurate.

In the accompanying video, the NYU economics professor ticks off a number of suggestions for whoever wins the election:

* Replace Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke. "We need a clean slate to restore confidence," he says, suggesting market participants have lost faith in current regulators.
* Start a $300 billion government works program focused on repairing and expanding our infrastructure. Yes, a new New Deal.
* Create a blanket guarantee for all bank deposits. Even with the FDIC raising its insurance limit to $250,000, there's still $2 trillion of uninsured assets in American banks and that money is moving overseas to places like Ireland, which have granted blanket guarantees.
* Revise the $700 billion bailout plan (or TARP) so that it just doesn't buy toxic mortgage securities but directly helps recapitalize the banks.

For the record, Roubini isn't officially advising any policymakers right now. But he is attending the IMF meeting this weekend and almost certainly will be giving "informal" advice to any and all takers.