Real Estate Bailout or Blow Up?

Reason Magazine thinks the gov’t should stay out of the current correction in the market.

“What is happening with real estate lending now is not unlike the dot-com bust. America survived that bubble. Then, as now, actual income-production became secondary to complicated financial constructs which obscured the underlying business. If there ever was a business. Recall that Enron invented entire energy-trading markets that ultimately dealt in nothing….

The correct federal response to this should be, “Too bad. You broke it, you bought it.” Let the Realtors, bankers, Wall Street sharpies, and—yes—the borrowers fight it out amongst themselves. Somewhere there is a market-clearing price for these assets.”