As good as it gets

There is a scene in the movie, As Good As It Gets, where the psycologically-challenged character, Martin Udall, played by Jack Nicholson tells the gay character, Simon Bishop, played by Greg Kinnear, I'm drowning here and you're describing the water.
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Some may say that my recent posts on the economy is just that, describing the water. So, this time, I want to try to convey possible policy options that are available to the economic managers. To avoid any voodoo economics the views will be derived from real economists as opposed to pseudo economists.

It is clear, by now, that the Malaysian government is fully aware of the imminent economic challenges. The so-called stabilisation plan comprising a series of expected announcements by the new Minister of Finance I will be rolled out some time today.

It may not have escaped the notice of many that the phrase stabilisation plan is an interesting one. The U.S. legislation that was recently enacted to combat the financial crisis is called, the Emergency Economic Stabilization Plan of 2008. Given that the Malaysian economy is not in the midst of a crisis, the choice of phrase is open for Freudian interpretations.

Nouriel Roubini, the New York University professor of economics has recently listed some measures that, he believes, ALL governments need to implement to stem the coming economic challenges. It is worth listing out for consideration. Not all may apply to the Malaysian economy, of course. Here's part of the list:

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First, interest rate cuts of at least 150 basis points on average globally.

Second, a temporary blanket guarantee of all deposits in financial institutions.

Third, a massive and unlimited provision of liquidity to solvent financial institutions.

Fourth, massive direct government fiscal stimulus that includes public works, infrastructure spending, unemployment benefits, tax rebates to lower income-income households and provision of grants to cash-strapped local governments.

Fifth, agreement between creditor countries running current account surpluses and debtor countries running current account deficits to maintain an orderly financing of deficits and a recycling of creditors' surpluses to avoid disorderly adjustment of such imbalances.