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Krugman: Fed mortgage rate help is a good idea

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Mortgage rates have dropped a lot in recent weeks, which is a good thing. But there’s still a huge spread between mortgage rates and rates on federal debt....

The persistence of the spread offers one opportunity for quick economic stimulus: declare that Fannie and Freddie are backed by full faith and credit, and if that doesn’t work, have the Treasury borrow on their behalf. This can bring mortgage rates down by more than 100 basis points. By itself, that’s not nearly enough to turn the economy around, but it could really help the economic recovery package.

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