The US's Missing Housing Policy - Credit Slips
From Adam Levitin:
Once upon a time, the US had a housing policy. It was focused on increasing homeownership. It might have been a misguided policy or at least a policy taken too far, but it was a policy and everyone understood that. It meant that programs were designed to work toward that goal.
Today, 4 years into a housing crisis, we still have no housing policy. There's no plan to clean up the legacy of the housing bubble and no plan to build the future of housing finance. This sad state reflects a singular failure of political leadership. It also reflects a deeply fragmented housing finance world in which no one is in a position to call the shots.
This is true. And there seems to be no inclination to develop one. But I would say this is because the policy of expanding home ownership (starting in 1935) was not really developed by legislators or bureaucrats. It was invented by the real estate industry. That is, it was never really a public policy to begin with. It was a massive subsidy program aimed at the financial and real estate development industries. It was premised on having all of us go deeply into debt to benefit those industries. And now there is so much debt, private and public, that the economy is strangling on it. So...where do we go from here?
My vote: forgive massive amounts of debt. Write down mortgages, credit card debt, and student loan debt by about 25%.