The U.S. government should provide an economic stimulus package of between $400 and $500 billion before the current administration ends in January, according to former Clinton adviser Nouriel Roubini.
Right now it’s pretty obvious that the U.S. is entering a recession, Roubini told a Bloomberg conference, one that will be the worst in five decades.
Roubini says that the only way to get through it is by increasing government spending on roads, bridges, and other infrastructure.
“We need a huge plan, $300 billion is not going to be enough,” Roubini says. “I think we’re going to need a plan of $400 billion to $500 billion.”
“If we don’t do that fiscal stimulus today, three months from now, six months from now, the collapse of the real economy is going to be so severe that anything we’re doing today to recapitalize the financial system is going to be undone,” Roubini says.
Barney Frank, Chairman of the House Financial Services Committee, agrees with Roubini’s assessment.
"Until we can get a stimulus package passed, I will be very nervous," Frank said after a recent meeting of business leaders.
Frank, who played a major role in crafting the $700 billion U.S. financial bailout plan, predicted the new stimulus, whatever form it takes, would focus on easing fears about lending and investing.
Frank described the psychological problems brought on by the current financial crisis as “even worse than the real problem."
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