Any Levers Left?

It is unclear what response, if any, will right the U.S. economy. Chairman of the Federal Reserve, Ben Bernanke, gave a speech today calling for "a vigorous response" to the mortgage crisis and suggested reinvigorating government-sponsored enterprises, like Fannie Mae and Freddie Mac, with increased regulation and possibly writing down the principal on home mortgages. Treasury Secretary Henry Paulson said in a speech yesterday, "Let me be clear: I oppose any bailout." It appears policy makers, officials, and economists still cannot agree on appropriate solutions to the mortgage crisis.

Snapshot asks, what policy will get the U.S. economy out of its current slump and not threaten long run growth?

Bloomberg - U.S. Stocks Fall on Bernanke Plan
Ben Bernanke - Reducing Preventable Mortgage Foreclosures
Morgan Stanley - If Monetary Policy Can’t Do the Job, Then What?
David Greenlaw - Leveraged Losses: Lessons from the Mortgage Market Meltdown
Henry Paulson - U.S. Housing and Mortgage Market Update before the National Association of Business Economists