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First and foremost we shouldn't be forgetting who is really being aided by housing price supports, all that toxicity of unsustainable debt in in the mortgage/banking industry is being diluted by these governmental efforts at helping their buddies on Wall Street. Yes, the folks who bought too much house or got into a unrealistic payment situation are not to be pitied for their circumstance but on the other hand their situation isn't the reason for the government dollars shoring them up either. All scams that require the governments assistance are basically the payoff for the campaign money received by the pols, housing price supports are simply the payoff to the mortgage/banking industry for their political support. This time they have covered their collective rears by implicating the majority of the worlds economy, we don't have much choice but to go slow and hope that time may eventually erode the worst aspects of their crimes.
When we look at the laws that aid big business it should be obvious that they have some real power in the judicial process, trucking companies are allowed to operate in an environment that has some dubious safety regulations, chemical companies, automobile manufacturing, shipping, aviation and many other enterprises routinely lobby for their monetary interests through the special consideration of law. The mortgage industry and commercial banking interests are certainly beneficiaries of special consideration by those in DC, all kinds of scams that result in governmental underwriting of loans made by the greedy mortgage/banking industry have finally come home to roost.
When housing prices drop it won't be affecting just those folks who are directly subsidized by the present state of affairs, trillions of dollars of "value" will be washed down the drain, crashing 401K's, drastically reduced pension fund values, and banks that will go down in a resounding thud. Of course this will eventually result in the beginning of a real turnaround in the economy, but we need to decide if we'll simply jump off the cliff or make an attempt to slide down and thereby save our collective behinds from the worst ravages of this reversal of fortune.
This is a time to really think things all the way through, I would caution anyone who thinks there is an easy way out, or that we can subdivide the pain between those who deserve it and those who don't. That mortgage money is spread around the world, it's in our future for retirement, it's in the bank vault down the block from you, it is in the investments that our cities and state governments rely on for future sustainment. This isn't about deciding the punishment for a few, it's a really really big spread and the impact of any action will be felt far from the housing market. We have come to a real difficult point and the way in which we decide to deal with the reality of such a huge scam will forever determine the history of America and it's culture of consumerism. Slow down and think, if we do it'll be for the best. Solutions aren't always in the immediate view but at the least we can think and talk about it, no one will come out of this with out some kind of injury, but we can surely determine our own role in creating our own solutions.
I'm not necessarily disagreeing with you, but would point out that a glut of foreclosures in an area has a ripple effect, dragging down values for people who are keeping up. I think this is as much a part of foreclosure assistance plans as aid to those directly affected.
Home values are still inflated because of all the artificial support that is being provided for the market. This makes homes a bad investment by definition.
The values will have to drop. It's more a question of how fast and how soon. I tend to think it's better to let it happen, but there is that saying -- when you owe the bank a little money, you're in trouble, but when you owe the bank a lot of money, the bank's in trouble. And collectively, homeowners owe the banks a lot of money no longer backed up by home values, so the banks are in big trouble. All this artificial support for the market is to help the banks, not homeowners, because the banks were stupid enough to lend out way too much money to people who couldn't afford to repay them. It does a homeowner no good to keep him in a house he ultimately can't afford, and that's what we're doing. The homeowners would be better off letting go.
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