http://www.americanprogress.org/issues/2008/02/homeowners.htmlBy David M. Abromowitz
February 28, 2008
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Imagine if President Bush, standing in New Orleans a few weeks after hurricane Katrina, had said to the nation: “It’s terrible that a disaster just washed away tens of thousands of homes, but my administration and economic advisers believe in the market and the market alone. Any direct government help is a bailout. Let’s just wait until the invisible hand of the market rebuilds this community.”
Most Americans would have found such rigid ideological indifference appalling in the face of the human tragedy caused by a natural disaster. Yet today—with millions of homes already lost to foreclosure and perhaps 2 million more families possibly being swept out of their homes in 2008—the Bush administration labels efforts to help communities drowning under a sudden deluge of foreclosed and abandoned property a “bailout.”
Treasury Secretary Henry Paulson says he is sticking to a Hoover-esque reliance on the marketplace to work itself out. President Bush threatens to veto any legislation that includes much-needed government action to help the housing market regain stability.
The foreclosure epidemic is a man-made disaster. Rapid unprecedented deflation in home prices in hundreds of communities around the country is not a natural result of benign market forces, but rather has it roots in a culture of underregulation that allowed largely unsupervised subprime mortgage brokers and lenders to take over the home finance market.