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Fixing Housing

It’s finally begun to sink in—we’re realizing that there will be no quick solution to emerging from this economic morass. And at the root of our problems is the still desperately sick housing market, which bumps along bottom, seized by rising foreclosure rates in many markets.

By Jonathan D. Miller | Updated on August 09, 2010

It’s finally begun to sink in—we’re realizing that there will be no quick solution to emerging from this economic morass. And at the root of our problems is the still desperately sick housing market, which bumps along bottom, seized by rising foreclosure rates in many markets. Indeed, three years ago this summer, the economic slide and financial market collapse began with the first inklings of the subprime mess.

Housing represents all that’s gone wrong—overleveraging, overbuilding, lack of underwriting discipline, under regulation, and the ensuing requirement for massive government bailouts. If you could breathe you could get a mortgage and buyers at every income strata took advantage, counting on ever rising values to give cover. Politicians of every stripe were eager to talk up the American Dream—using ample tax incentives as well as Fannie Mae and Freddie Mac to fuel home buying and backstop what turned into egregious lending practices. In the wake of inflating housing prices, we all eagerly transformed our nests into nest eggs, and now those shattered nest eggs offer little financial security today, especially as companies reduce or eliminate pensions with states and municipal governments readying their axes on public employee benefits.

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