Will the Massive Government Bailout for Distressed Homeowners Really Work?

“A New Deal-style bailout would be a disaster,” says Josh Hendrickson of The Everyday Economist. But isn’t it supposed to help the poor distressed homeowner who didn’t know what he was getting into?

The Subprime Bailout

James Pethokoukis from U.S. News Capital Commerce has an excellent piece on the Housing Market Failure and proposed government bailout.

 

He asks the question “should the government step in?” and receives insightful answers from such stellar bloggers as Russell Roberts, of Café  Hayek, Dean Baker of Beat the Press and  Donald Luskin of The Conspiracy to Keep You Poor and Stupid Blog.

Here are some of their straight answers.

Daniel Mitchell of the Cato Institute states, “ the current turmoil in credit markets, particularly housing, is not a sign of market failure.  Instead, it is a sign that markets work.”

 

I agree.

 

There’s more from Craig Newmark of Newmark’s Door.

 

“We should evaluate proposals to deal with the subprime problem in two ways: how much they reduce the chance of the problem repeating and how much they decrease the economic damage from the current problem.  On the first criterion, a massive bailout of borrowers or lenders simply fails.  And on the second criterion, a bailout is also unhelpful.”

 

But it’s Josh Hendrickson, author of the Everyday Economist blog who hits the nail on the head.    "A New Deal-style bailout would be a disaster,” he says.

 

Amen.

 

Read more Should Feds Fix the Housing Market ‘Failure’?

 

 

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