Well, davelj, at last you have some realism in your outlook. And I’ll even agree with you that there is money to be made in some of the flavors of mortgage-backed securities for sale out there now. But the only reason is that the money will come from the government. Without government money pouring into the housing market, the CDOs and MBSs etc out there would mostly still be overpriced.
You draw a comparison between the current govt intervention and the Marshall Plan. I think the differences are bigger than the similarities. Enormous amounts of Europe’s physical capital was destroyed or neglected during WW2. There was still a lot left, and there was a large educated population with institutional capital like education, a tradition of law, etc. What was needed was the plugging of certain gaps, mostly filled by simply supplying specific missing equipment or financing specific needed construction projects.
To draw my own exaggerated analogy, consider a car plant producing Toyota Camrys very efficiently. (Europe before WW2.) Then remove all the welding equipment in the plant. (WW2) The plant produces nothing of any high value or worth. (Europe right after WW2.) Now give the plant welding equipment and help them install it. (Marshall Plan.) Result is a highly productive plant once again. (Europe after Marshall Plan.) Lot of oversimplifications, but you get the idea.
Our current economic problem is not that our capacity to shop or buy more houses or build more retail is devastated unnecessarily by some external force, and we just need to restore it through the power of govt spending. Instead our problem was that were were shopping too much, and buying too many houses, and building too many retail stores… What we need is to reduce incentives for people to do those things, and increase the incentives to produce the world’s most efficient, reliable cars and power plants, and electronics, and….
Funneling money into mortgage lending and housing etc does nothing except delay and divert from what we need to do. Extended unemployment benefits are what we need, not govt money to perpetuate some house price levitation.
