I don't know or understand all the nuts and bolts of the housing/financial crisis, but I understand enough of it to pose what I think is a good question.

Putting aside the issue of whether the gov't should be involved here at all (they shouldn't), look at where they've put the money. It is all in buying POS notes, injecting liquidity, and other esoterica.

What if they had used the money to buy the actual real estate? A property is in foreclosure? The gov't chartered corp would pay off the note to the bank, take title to the property, and throw the tenants out.

This would have let the air out of the financial balloon a lot slower, it would take properties off the market and preserve values for those that remain, and the taxpayers would have something to show for their investments.

If prospective buyers wanted the gov't properties they could buy them later for what ther gov't paid.

This is to simple not to have a major flaw. Tell me what the flaw is.

WW

 

Government funded and directed entities got us into this mess by forcing banks to make loans with very high risk borrowers. Further government intervention to prop up highly inflated real estate prices in the hope of helping a minority of citizens at the cost of the majority is poor practice and amounts to rewarding bad behavior, both by the citizens and by the government.
The only real solution is to let the prices continue to fall, with defaults, and write offs until a reasonable market price is reached in free markets for the assets in question.
The situation is very much the same in the stock market. Buyers are not coming into a market that is threatened with intervention, rising tax rates, government manipulation and poor management.

At this point the most useful help we could get would be a massive reduction in government spending, which would direct more capital to the private sector and a massive reduction in corporate and private taxation, which would empower the free markets to regain upward momentum.

Allowing government to spend without restraint has put every man, woman and child in this country into debt to the tune of about $400,000 dollars. We, as a country are awash in debt, and more is not going to help. There is a finite amount of capital available and we have reached or exceeded the limit.

 

SHACK! BULLSEYE! Perfect mushoom cloud rangeing round! Sadly, I do not believe those currently running the show will follow your suggestions. P.T. Barnham comes to mind as I watch the speeches...