Principal reductions are the cornerstone for a recovering economy. With a significant reduction in home prices, the majority of homeowners are underwater. Negative equity is the driving force for defaults. Underwater homeowners do not feel they have any buying power so they will not spend as much. Reducing the principal on a loan will give these struggling homeowners a better sense of security. It present a "win-win" situation for all involved. It is the best way to give our economy the boost it needs in order to rocket out of this recession. It just makes good economic sense.