Friday, February 20, 2009

Ed Glaeser on the Housing Plan

The housing plan that President Obama revealed on Wednesday, like the stimulus
, was presented as a single solution to a potload of problems. The plan is being promoted as a far-reaching intervention that will ease the suffering of delinquent homeowners, keep Fannie Mae and Freddie Mac solvent, bolster declining housing prices and rationalize the mortgage renegotiation process. If the plan were actually a serious attempt to fix every problem in the housing market, it would be much more of a mess. As it is, it certainly has its flaws, but its great virtue is that it doesn’t try to fix everything. Instead, it is aimed at two problems already squarely in the government’s lap...

Many Americans understandably feel that this policy is rewarding people who took too many risks. Still, given the extreme solutions to the housing mess that have recently been put forth, I think that we are getting off cheap...

The plan is moderate, and in today’s atmosphere, I view moderation as a triumph. Yet we should at least be aware of its shortcomings...

Still, by focusing on two problems instead of trying to fix everything, the plan avoided many of the greatest policy pitfalls. It could have been much worse.

read the entire essay

My thoughts: "It could have been much worse." This passes for economic analysis? Has the threshold been lowered that much? Are taxpayers supposed to be relieved? This is insanity.
It a policy is bad, it needs to be opposed. Period. End of discussion. This so-called "housing plan" is rewarding people for making dumb decisions. These people are not homeowners; they are home occupiers. "A family earning less than $44,000 a year has a $213,000 mortgage on a $190,000 house. By any reasonable standard, this family cannot afford that house." Really, why is that the problem of taxpayers? These people, borrowers and lenders, made bad decisions that they should have to bear the financial pain of that bad decision. Government theft is not a solution to economic problems. Ever.

No comments: