Wednesday, April 02, 2008

Billions of mortgages subsidized 

Good news: $4.3 million coming to Minnesota to help with the mortgage crisis. As this cool dynamic map will show you, the problem in Minnesota is worse than almost any other state in the union. (Coolest of all, it will give you data by zip code!)

Bad news: The money goes for additional "mortgage counselors". Tell me who is in a bad mortgage right now that is just waiting to work out their problems but frustrated by a busy signal?

Instead, it will be Marquette Bank that gives out some bridge money for borrowers who need some cash to get through a work-out of their loans.

It would be interesting to watch political reaction to Holman Jenkins idea of supporting house prices by reducing supply. Would Marquette get praise for funding demolition teams?
Knocking down surplus homes would be the most efficient and equitable way to spend taxpayer dollars. It can proceed experimentally. It can be turned off quickly when the need evaporates. It would not be a lesson to Americans that housing debt is not real debt and need not be repaid. It wouldn't benefit the most irresponsible lenders and borrowers at the expense of responsible ones. The housing market would still have to hit bottom, but the bottom would be higher (and sooner).
I'm not advocating that as the best plan, but it's the most interesting paragraph I read today.

UPDATE: Captain Ed gets it. I'm reminded of all the criticism of US aid to developing economies being mostly about hiring U.S. consultants to offer advice rather than giving money to the poor in those countries. (And yes, I say that as having been one of those consultants.)

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