Paul Krugman says, The Government’s Job Is to Create Jobs

Nobel Prize winning economist Paul Krugman also backs the idea. In his latest New York Time column, Krugman says “the federal government could provide jobs by … providing jobs,” in much the same way the New Deal put Americans to work during the Great Depression.The President is also taking aim at the lingering housing problems by putting added pressure on lenders to finish modifying more home loans to troubled borrowers.Almost 651,000 loan revisions have been started through the administration’s $75 billion Home Affordable Modification Program, but too few are being converted to permanent repayment plans says the White House.But do the modifications really help? Aaron and Henry point out, data already shows that the modification just postpone defaults and foreclosures. A better solution would be for banks to take a hit on the mortgages, by modifying the principle owed on the mortgage.It’s not what banks want to do but it may be a necessary evil.

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