Discuss the first installment of this week's Dust-Up

It's to bad David doesn't understand economics, then maybe his arguments would make senese. It's our current policies of pushing home ownership that is making home ownership even more unaffordable. Furthermore, you can't mandate affordabilty. Not everyone is going to own a home.

Aviking @ 12:14 PM PDT, Oct 14, 2008

The choke point for affordable housing is at the local level. A developer seeking to build new homes must spend years, or sometimes decades, fighting NIMBYs and environmental extremists. What might start out as 1000 units gets scaled back to 500 if they get built at all. In this environment, subsidies to home buyers poured gasoline on the fire and simply bid up prices on a restricted supply of homes.

HB Freddie @ 12:09 PM PDT, Oct 14, 2008

Abolishing the mortgage interest deduction is a point of agreement. So, let's focus on that. "Buy off" current home owners, who bought the house counting on this deduction. For example, allow double the interest deduction for the next five years, after which the deduction disappears completely. This would have temporary effects of bringing people into the housing market, creating a temporary significant economic stimulus, and reducing the toxicity of existing subprime loans. In five years, the government can pay off the debt with the extra taxes it collects from abolishing the deduction.

Eric @ 9:21 AM PDT, Oct 14, 2008

While the pundits hem and haw about how we got into the mess, the fact remains, housing prices have been artificially supported and inflated at a rate that far exceeds the average Americans income. Why did this happen? The commission based income of realtors, lenders, and the interest income on the secondary market depended on it. Had the market kept pace with income and permitted Americans to buy a home within their means, mortgage loans wouldn't have needed to be creative to acheive ownership.

JenAZ @ 8:19 AM PDT, Oct 14, 2008

All "different policy mistakes as the root causes" aside, what if people bought houses WITHIN their means and actually payed their mortgage payments? Would we be in this mess?

Mary @ 7:47 AM PDT, Oct 14, 2008

And, to continue the point: We are suckered into believing its better to pay MORE for something. Why do we believe its better to pay more? Do we howl about maintaining high gas prices, high food prices or high medical costs? Since when is cheap housing bad?

Robert Constant @ 5:07 AM PDT, Oct 14, 2008

We the people have been duped into thinking high home values are good for us. You'd be better off byying a 100k home that never goes up in value than buying a 500k home that appreciates. Do the math. The extra 400k could earn more in the bank, and your taxes, insurance and interest payments would be much less.

Robert Constant @ 5:05 AM PDT, Oct 14, 2008

Already I pay for some government employee's retirement before I pay into my retirement fund because I work for myself. Most of the time there has been nothing left to put away for retirement for myself. Now I'm asked to pay for someone else's mortgage too. I waited 57 years to buy a home. I already pay for lunch for other people's kids, schooling for other people's kids. Why pretend this is anything less than a socialist country?

Bill Sardi @ 8:25 PM PDT, Oct 13, 2008

I agree with David that the problem isn't so much corruption or greed, as it is a series of bad policy choices -- e.g., the ill-considered mortgage interest deduction that he discusses. One could add lack of regulation to that list.

Ed @ 7:54 PM PDT, Oct 13, 2008

We are furious with our crooked politicians and the bankers/wall street that are in bed with them. They made a fortune creating this mess - knowing full well that this was the only outcome possible. I am a democrat and calling for the immediate resignation of Boxer, Feinstein, Pelosi, Frank, and Dodd. Our politicians have foresaken us and they need to go.

Fred @ 4:18 PM PDT, Oct 13, 2008