There is no way to avoid the huge burst and 50%+ price correction. There was a bubble, it is exploding, and somebody will pay for it. The only question is: Who?
Possible answers:
The right answer, of course, is that all of them will chip in.
As long as the taxpayers’ share is small, I am fine with it. And that share will be small, insignificant compared to the size of the bubble. The government needs budget money for its own pet projects. There is no way they are going to waste it to help average greedy homeowners or greedier investors. Moreover, the government does not have nearly enough money to bail everyone out, so they can’t do that, even if they really wanted to.
Thus, any government activity will end up redistributing responsibility one way or another. In the worst case, they will drug the process for a couple of years longer. But nobody can change the net outcome.
The more noise there is around housing issue, the worse the panic is going to be. And panic is the one thing that can quickly bring the prices down and below reasonable levels. Every time a politician with a grave face talks about housing crisis, I just feel the panic growing nationwide…
