Joseph Stiglitz lends his Nobel clout to the notion that the government is doing more harm than good by over-managing the housing crisis. "Government policies to support the housing market not only have failed to fix the problem, but are prolonging the deleveraging process and creating the conditions for Japanese-style malaise," he writes in the Guardian.
With the government managing the mortgage markets, we get "distorted interest rates" and "official guarantees" that "encourage continued investment in real estate, when what the economy needs is investment in, say, technology and clean energy." Enough already. "What is needed is a quick write-down of the value of the mortgages. Banks will have to recognize the losses and, if necessary, find the additional capital to meet reserve requirements." Click here for a similar sentiment.