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The housing market continues to be a primary source of weakness in the real economy as well as in the financial markets, and we have seen marked slowdowns in consumer spending, business investment and the labor market. Credit markets will take some time to unfreeze.

—Ben Bernanke

We need to get financial institutions recapitalized, but that’s going to be difficult to do unless we stop falling house prices. The government is basically the mortgage market at the moment and so why not use that power?

—Glenn Hubbard

The average home price to annual rent multiple for the last 20 years is 15 times annual rents.

 ”There were always those who told us that taxes couldn’t be cut until spending was reduced,” the President [Reagan] said in his first month in office. ”Well, you know, we can lecture our children about extravagance until we run out of voice and breath. Or we can cure their extravagance by simply reducing their allowance.” Are we to believe that it never occurred to him the children would plunge into debt?

The large lesson is simply this: President Reagan thought it was possible to weaken American government without weakening American influence. It is not possible.

…The seeming economic collapse of the 1980’s has not been the result of ”imperial overstretch” but of internal, somewhat conspiratorial politics.

—DP Moynihan, Debunking the Myth of Decline: NYT, 19 June 1988

I am not aware that the Treasury Department presented any evidence on auctions that have been successful when they are used for assets that are so heterogeneous

—William Poole, former president of the Federal Reserve Bank of St. Louis.

Even if it was adequate before, it’s not adequate now. If you delay and create uncertainty, the amount of money you have to put up goes up.

—Frederic Mishkin, former Federal Reserve governor

White House Overhauling Rescue Plan
By EDMUND L. ANDREWS and MARK LANDLER
Published: October 12, 2008
A new plan to inject capital into banks raises questions about whether officials squandered time selling an earlier bailout approach.

Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown.

—Dominique Strauss-Kahn, managing director, International Monetary Fund

We are looking at our entire system of guarantees and we can imagine new measures to enlarge access to our system of guarantees. We imagine being even more open in the question of what’s legitimate.

—Jean-Claude Trichet

European Leaders Agree to Inject Cash Into Banks
By DAVID JOLLY and KATRIN BENNHOLD
Published: October 13, 2008
European countries, led by Germany and France, pledged to take equity stakes in distressed banks and to guarantee lending for periods up to five years.