Today, the president will unveil his proposal to deal with the mortgage/housing crisis. At least from the initial reports, my first take is: it’s not enough. And that seems to be the general problem with the way in which the Administration is handling the economic collapse.

   Things to consider:

• 1.4 trillion–that’s TRILLION–in household wealth went poof just in the fourth quarter of 2008. In one quarter.
• We are looking at trying to plug a hole of $3 trillion–that’s trillion–in economic activity over three years.
• The trade deficit declined–and that’s only because people here have no money to spend and economic activity is so much slower so we are using less energy (read: lower oil imports).
• The New York Times reports today: "Privately owned housing starts in January fell 16.8 percent from December, to an annual rate of 466,000. That was their lowest pace since at least 1959."

   If you match that up with a $787 billion stimulus plan and the mortgage/housing rescue plan, it’s too puny. The first problem is that we are dealing with big numbers–people see "$787 billion" and think "wow." But, that number is actually money that will spent over a number of years and the overall cost is factored in all the way to 2019!!! It’s not going to make more than a blip in the overall GDP–maybe a point this year and a point next year…but the economy SHRANK by 5 percent, on an annual basis, in the fourth quarter of 2008. There is a huge hole to plug.

   And as for the mortgage crisis: $75 billion (the number the president will apparently unveil) really will only scratch the surface if you consider that, as David Leonhardt points out, at least $500 billion in mortgages are "underwater". As Leonhardt points out:

But the Obama approach also brings risks. The administration is betting that few of those 10 million underwater homeowners will walk away. (A year from now, the number will about 15 million, Moody’s Economy.com projects.) If they begin to abandon their homes in large numbers, however, they will aggravate the housing bust and the financial crisis — and probably force the administration to come up with a new, much larger housing bailout down the road.

   I have a friend who bought a home for $300K–a reasonable investment given her income and certainly not a McMansion–and that home is now worth $75,000. She’s going to just walk away from it–no choice.

   I’m the camp that believes that we can’t mess around here. We need to increase the stimulus dramatically–like right away–without stupid tax cuts that are pretty low on the stimulus meter, nationalize the major banks (we will end up doing this anyway, and I’m going to wager that, come April, when the banks report their earnings, it will be bloody) and move a massive wage inflation campaign–call it quaintly "unionize America…nothing else will work.

   Or another way of looking at this: if we don’t do it, the next decade will be lost.