Now that a globally coordinated bailout appears to have rescued the world’s banking system (for now), attention turns to the real problem: housing. Until we stop house prices from cratering, the banks won’t lend and the economy won’t recover. So far, all manner of solutions have been proposed, including:
- Buying mortgages. A drop in the bucket. Also unfortunately just delays the inevitable: the government can’t buy every mortgage, and many hopeowners just can’t afford to live in the houses they bought–at least not until the prices drop a lot more.
- Restructuring mortgages. Ditto.
- Seizing houses and then renting them back to former homeowners at lower “market rate.” Turns banks into landlords, which isn’t what banks do. Won’t stop the prices from those houses from dropping.
- Demolish houses to reduce supply. Don’t laugh. It’s actually one of the better ideas out there. The (de)construction would create jobs, and the demolishment would reduce inventory and blight.
There are many other ideas out there–all, in our opinion, equally problematic. We suspect that the only cures to the housing market woes are:
But! We don’t want to be dismissive. And we do want to make sure we’ve considered all the ideas out there, good and bad. So we need your help!
Please post ideas and links to ideas in the comments below. When possible, please explain why you think an idea will or won’t work. Let’s make sure we’ve considered everything.
We’ll then wrap up all the ideas in a comprehensive post…and then send it to Hank Paulson and Ben Bernanke. Do your part for your country. Help us solve the housing crisis!
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