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There are no easy answers to the continuing saga of home loan defaults – which forecasters predict to be on the rise next quarter, there are no easy answers. The spiraling cycle of home loan defaults, which then leads to a further decrease in property values, is prompting some folks in high places to talk about more government intervention. Fans of free market forces disagree with that approach, citing the current conditions as a natural correction: "This is what happens when people make imprudent decisions," said Peter J. Wallison, a Reagan-era Treasury official now at the AEI (BusinessWeek, 11/28). Wallison and others with a hands-free economic philosophy argue that the only thing the government can do is continue to lower interest rates. As much as I love lower interest rates, and as much as I argued with all my friends who decided to pick up deceptively low-interest mortgages a few years ago, it seems like it’s just closing your eyes and hoping for the best to imagine that lower Fed rates will magically repair the cascading damage home loan defaults will cause.
About this poster:
Posted by:
vwalker
(female, late-30s)
(Posted 12/3/07)
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Home Loan Defaults -- No easy end in sight
