Transcripts

"Commentary"-How Best to Avoid a Recession

JEFF YASTINE: Tonight's commentator says a recession can be avoided, but it's going to take some work. She's Alice Rivlin, senior fellow at the Brookings Institution and former vice chair of the Federal Reserve.

ALICE RIVLIN, SENIOR FELLOW, THE BROOKINGS INST.: Economic forecasts for the New Year range from optimistic to downright scary. But the recession of 2008 need not happen. The challenge is to keep a fundamentally productive economy growing while we absorb excess houses, fix the home mortgage market and unwind some dumb financial investments. The government and the Federal Reserve can't do that alone. It will take the collective efforts of many people.

Big financial institutions will have to grab the liquidity offered by central banks and keep credit flowing to worthy borrowers. Risk-averse investors will have to recover their nerve, while retaining a sensible residue of caution and get back in the game. Rating agencies will have to restore their credibility. Housing lenders will have to work with distressed borrowers and community groups to keep families in their homes and contain the contagion of foreclosures. Businesses will have to find new profit opportunities in a turbulent world of changing technology and a weak dollar. The reliable American consumer will have to hang in there and political candidates will have to stop sniping at each other long enough to prove that they can face up to problems and work across party lines to keep America productive. And oh, yes, it will take some luck. Maybe we can appeal to Santa Claus for that. I’m Alice Rivlin.