Metaphorical fire, that is.
Harvard economist Martin Feldstein sees the forest for the trees in the housing debacle. In the NYT he states:
I cannot agree with those who say we should just let house prices continue to fall until they stop by themselves. Although some forest fires are allowed to burn out naturally, no one lets those fires continue to burn when they threaten residential neighborhoods. The fall in house prices is not just a decline in wealth but a decline that depresses consumer spending, making the economy weaker and the loss of jobs much greater. We all have a stake in preventing that.
And his prescription? Taxpayers shoring up homeowners bailing on their mortgages. You know, more of the same:
But for political reasons, both the Obama administration and Republican leaders in Congress have resisted the only real solution: permanently reducing the mortgage debt hanging over America. The resistance is understandable. Voters don’t want their tax dollars used to help some homeowners who could afford to pay their mortgages but choose not to because they can default instead, and simply walk away. And voters don’t want to provide any more help to the banks that made loans that have gone sour.
The track record of government intervention in the housing market ain’t so hot. But what do I know, I’m not a Harvard economist. The problem, sir, is the lack of taxpayer money to do this. The money would again be pulled out of the magic Treasury hat and would do us more harm in the long run, shoring up bad money with printed-out-of-thin-air. And as soon as that government program expired, as all government programs do, then the housing market would end up in the same boat. Until boatloads of people who didn’t somehow qualify started claiming to be part of the 99% and demanding their fair share.
Here’s a thought: if the beneficient government program were to never end–everyone would be rescued from their mortgage–then why doesn’t the government just print even more money and buy all the houses across the land? If the government owned it all, no one could be evicted, right? No one would lose a home to foreclosure? And then people could spend freely on their wants rather than needs: Iphone4s, organic salmon. Paradise.
Just sayin’. But what do I know, I’m not a Harvard economist.