HOUSING QUESTION….I have a question related to the bailout bill that maybe some economist can answer. Here it is:
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Much of the grassroots on both left and right feels that if we’re going to bail out the fat cats on Wall Street, we should also bail out homeowners. This seems only fair, and there are various proposals floating around for doing this.
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Economists seem to unanimously believe that housing is still overpriced and needs to be allowed to drop to its natural level, the sooner the better.
These two desires are in tension, aren’t they? If we prop up homeowners with bad loans, we prop up home prices at the same time, don’t we? Is there an answer to this dilemma? Or am I just missing something?