I was typing this up as a post on another blog and I figured I would post it here too.
Every further dime spent on propping up housing is probably a dollar down the drain tomorrow. The thing which I think escapes most analysts of the situation is that there isn't a single asset for sale today that isn't over priced. Real price discovery needs to occur across the board. A massive deleveraging, on an unimaginable and very painful scale must occur before our economy can function with any semblance of normal. The Irish are finally looking at their bankers to take some losses. That needs to happen here in the US and Europe as well. US Debt holders around the world are going to have to take in the back pocket too. We're paying China something like $340 billion a year in interest, and that number is probably also low considering how much debt we've floated in the last 2 years.
Its time to face the music. You can't just put it on the rich to pick up the tab. 100% of the top 2-3% of earner's income is a drop in the ocean. The rich are going to have to pay a lot more. The middle class is going to have to pay more, the poor are going to have to get by with fewer entitlements. The military is going to have to get better at stretching a dollar, the Federal government is going to have to cut a gigantic portion of it workforece and expenses. From my experience as a contractor, you could cut 1/3 of the Federal government's staff and still have plenty of waste to go around. The loopholes that allow businesses to pay little to no tax are going to have to be closed.