Last week, discussing the Obama administration's plan to help homeowners avoid foreclosure by encouraging lenders to renegotiate mortgage terms, Treasury Secretary Timothy Geithner said "it is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets." Can "we" really do both? To the extent that Geithner et al. "arrest the damaging spiral in our housing markets"—i.e., stop home prices from falling—housing will be less affordable than it would otherwise be. Maybe he just wants to make housing more affordable for people who already have homes but are having trouble making their mortgage payments, as opposed to people who are in the market for housing. But that raises the question of why one group should be favored over the other.
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