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Subprime is only one part of the problem leading to recession , but it is just beginning, and it is a social problem as well as an economic problem.  The credit system is at the heart of the economy, which is going to cause the entire economy to slow down.

Not only that, but banks have holes in their balance sheets, and don't know how secure they are. 

Interestingly, he points out the best bang for the buck for a stimulus package would simply be to increase employment insurance.

The other major damage is going to be to local and state tax rolls as property values fall. 

The idea of encouraging more spending versus more savings is probably the wrong approach. 

"Alan Greenspan has made a career out of making convoluted statements about the real consequence of his monetary policies at the Fed. In vintage Greenspan doublespeak, the former Fed Chairman blatantly lies about not only his support of the Bush Tax cuts but also his direct contribution to the real estate and credit bubble that is now exploding all around us. His most egregious lie is to suggest that he tried to prevent the bubble by raising rates but was hampered by capital inflows as a "result of the end of the cold war." What he fails to mention is that it was his dropping of the Fed Funds rate to 1% that facilitated this credit expansion, and the fact that he tried to raise it later in 2005 in the face of an inverting yield curve is meaningless, not to mention that his theory about foreigns savings being at fault for the rise in liquidity directly contradicts the fact that the Fed's massive liquidity surge enabled capital inflows to be used for credit expansion. Without a loose monetary policy (i.e. low rates) it wouldn't make a difference what foreigners wanted to do with

Peter Schiff has been laying this all out for awhile, why does anyone act as if the current US economic situation is a surprise?