From New York Daily News columnist Errol Louis:
But [Rick] Santelli and his self-righteous followers are like people who, seeing a neighbor's house on fire, cross their arms and urge the fire department to do nothing, pointing out that the flaming building was poorly constructed and owned by an irresponsible S.O.B. who smoked in bed.
All of that might be true. But it's probably best addressed after we make sure the whole block doesn't burn down.
Right now, an estimated 8.3 million homeowners are underwater, meaning their homes are valued at less than the amount owed on their mortgages.
It might come as news to those millions of struggling souls to learn that a reporter from CNBC…considered some, all or most of them selfish fools deserving no help from the government.
Here, the fire metaphor is undermined by the water. Is it really a contagious conflagration when a loan-purchased asset loses value? Despite every politician's best efforts, I still don't see it. (And to dispense with a little straw here, I don't consider those "underwater" homeowners as "selfish fools," even if some are demanding my money for their unfortunate decisions/timing.) If I buy a house for $600,000 (which I won't), and it's now worth $500,000, what does that have to do with me being able to make my mortgage payments?
The best asset-devaluation-as-wildfire argument might be that so much of the economy has been tied to the buying, selling, financing, and construction of homes that the sharp contraction in all that activity is wreaking economic havoc. That may well be true, but any bubble, when inflated large enough, begins to gobble up portions of the economy, which then suffer when the bubble is burst. The problem is, do the efforts to piece the bubble back together create new artificial/irrational inflation-pockets while unproductively soaking up tax dollars that could be better spent elsewhere?
Speaking of housing prices (and people who think the housing market needs goosing from the federal government), this recent Robert J. Samuleson op-ed contained a tasty tidbit:
Here's a little-known fact: Housing may be more affordable now than at any recent time, thanks to lower prices and falling mortgage rates (now about 5 percent). The National Association of Realtors has an "affordability index" that estimates the family income needed to buy a median-price house, assuming a 20 percent down payment and monthly mortgage payments equal to 25 percent of income. Affordability is now the highest since the index's start in 1970.
In related news, the White House has just released its "Making Home Affordable" plan.