He sees brewing public anger at the lack of jobs, or specifically "jobs, housing, and the rich" and thinks the economy is the verge of taking a big leg down without more action.
It's not surprising that he'd focus on sentiment like this. After all, his book Animal Spirits is all about the effect of sentiment and psychology on the markets.
He doesn't favor a homebuyers tax credit, but he does favor a massive bailout for the state and local governments.
Why more state & local spending? Because they're closer to the people than the federal government, and thus less centralized.
Wilbur Ross, naturally, is challenging Shiller on this point, arguing instead that government should be boosting businesses, rather than governments.
Read more: http://www.businessinsider.com/robert-shiller-cnbc-september-15-2010-9#ixzz0zbhuZSb6
Disclosure: No Positions