Resident Fellow Desmond Lachman

Missing from her article is the fact that the deterioration in the US housing market appears to be gathering considerable pace as evidenced by an accelerating rate of price decline, an escalating pace of foreclosures and a rising rate of unsold housing inventories.

Similarly, no mention was made of the fact that the US economy is simultaneously being hit by massive international oil and food price shocks, which will more than nullify the temporary fiscal stimulus package.

We can only pray that these shocks do not push the US into a prolonged recession that will further intensify the credit crisis once the temporary tax rebate plan fades. However, we should do so in the full knowledge that the historical international experience with housing and credit market busts would point in a very different direction.

Desmond Lachman is a resident fellow at AEI.