[quote=patientrenter]
Banks would be perfectly happy with a solution that dropped house prices and forgave debts, as long as they got bailed out. But notice how the primary effort has actually been to pour truly vast amounts into more cheap and easy (<5% rate, 3.5% down, tax credits...) loans to buy homes - to keep the prices high. That's for voters.[/quote]
What you're conveniently ignoring is the fact that the overwhelming majority of Americans OPPOSED the bailouts of the banks last fall, and the majority of Americans OPPOSED the bailouts of the auto industry. Yet, the bailouts went through anyway. Why ? Because the banks and the corporations are given priority over the citizens. And I disagree with you on why the Feds are handing out cheap loans as well. They're not doing it for the voters, as Bernanke is immune to voter reaction. Rather, they're doing it to stop a deflationary cycle which would destroy some of the largest US banks, while at the same time hoping to prop up the value of MBS.
