Friday, February 22, 2008

The Worst is Yet to Come?

From the front page of today's New York Times:

Read it all here. This could affect me personally, so it's disturbing, not only because I do think the government should be involved when a major market like housing fails, to ensure social stability and cohesion. Owning one's own home has been a bedrock policy of successive administrations since WWII, and rightly so. Now the Administration says it isn't interested in helping out consumers who are underwater. They made bad choices, now they have to live with it, supposedly goes the thinking. But when so many people are or are going to be affected, I wonder if principle must give way to practicality. I doubt we can afford the social cost of potentially millions of people affected in this way. Believe it or not, I do tend to be a free-marketer; the housing market has failed from extra-market forces and because the market players - consumers, mostly - did not have full information to participate rationally in the market, which is a basic requirement for effective markets.

I also wonder if I may have to do something if my own house in Indianapolis has to go on the market.


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