Christian

Bernanke's Message Can't Be Any Clearer

I think the housing issues are essentially fixed (tongue in cheek) - people have begun to stop buying homes as speculative investments, lenders have staved off (for the most part) loaning $$$ unscrupulously, and the never-ending debt trail known as home equity loans to finance a way-of-life is coming to an end.

What is ailing the "industry" now is the consequences of these poisons. The ailing effects like massive inventory, drop off in sales, and people up to their arses in debt. To try and "cure" these consequences and not reinforce the proper loan processes is just as many people have said: you're giving a drug to a rehabilitating addict.

The Fed needs to guide the lenders (okay, the banks - lord knows where the mortgages have gone beyond that) on what it can do and what it can't do to work out this mess. It's going to get far worse in the coming years, but throwing money at the problem isn't the solution - that's just a "get out of free" ticket for those that just need to go to jail.

Hearing things like "principal write-down" makes me wonder why I stopped house shopping in the fall of 2006, deeming the market too expensive. I should have just purchased that overpriced home back then. The Fed would have my back, forgiven the price I paid - voila! "principal write-down", and I'll end up owning just the same amount had I purchased the house now, a year-and-a-half later.... except I would have lived in it since.

You sign on the bottom line - you're liable for it. Loan sharks of yore had a more colorful way of dealing with people that didn't pay up.