The Washington Post told readers that "many economists believe the economy will continue to suffer as long as the pace of foreclosures keeps home prices from stabilizing." Well, economists with names, who knew enough to about the housing market to recognize an $8 trillion housing bubble (okay, maybe just this one), believe that house prices will continue to fall until the bubble deflates. The government can play useful role by trying to keep prices from overshooting on the downside. It will just be throwing away taxpayer dollars if it tries to stabilize house prices at bubble-inflated levels. It would be a big step forward if missing the housing bubble was not the main criterion to be quoted as an expert on housing in the Washington Post.
--Dean Baker
