The 2011 Economic Policy Forum held in Jackson Hole, WY, featured several distinguished speakers. Most notable among them was the head of the International Monetary Fund (IMF), Christine Lagarde.
In her speech, her first since replacing the disgraced Dominique Strauss-Kahn, she addressed the world economy and unveiled her strategy for rescuing both America and Europe from faltering economies.
After her plan for Europe, she addressed the U.S.
She began by incorrectly stating that, “A fair amount has been done to restore financial sector health,” but also notes that, “house price declines continue to weaken household balance sheets.”
She then went on to say that she believes the cure with America lies in, “Credible decisions on future consolidation—involving both revenue and expenditure—create space for policies that support growth and jobs today.”
However, the truly revealing moment was when she encouraged American politicians to be more intrusive in regards to the housing market:
“[Halt] the downward spiral of foreclosures, falling house prices and deteriorating household spending. This could involve more aggressive principal reduction programs for homeowners,stronger intervention by the government [emphasis added] housing finance agencies, or steps to help homeowners take advantage of the low interest rate environment.”