Meanwhile, a savvy piece on the housing market in the op-ed pages of the Wall Street Journal today offers
How many more steroid injections can the economy take?
Yet instead of helping poorer households, lower interest rates actually disadvantaged them.
"For most low-income households," Mr. Jenkins wrote, "homeownership proved a bad bet, even in a rising market...Their capital gains were subpar or nonexistent even if they managed to hold onto their houses for a decade." Mortgage costs ate up their gains, the author reasons, and worse, tied them to subpar neighborhoods with bad schools and bad job prospects.
As for bailing out the hundreds of thousands of homeowners facing foreclosure, those who should have known better and those who didn't, Mr. Jenkins has a thoughtful if radical notion for the government on how to use our tax money.
"...buy up houses at foreclosure auctions and demolish them," he writes, "especially in neighborhoods likely never to recover." Doing so, according to Mr. Jenkins, would "nip in the bud the blighted, suburban slums of the future." That would be a harsh diet indeed, but at least it is one without artificial ingredients.
