Now I am no Paul Krugman, or Donald Boudreaux - I have a mere B.S. in Econ, but here is what I see happening in the mortgage market, that no stimulus package will help.

What we have out there is all these small lenders and mortgage brokers, that have NO incentive to NOT loan money. That is: what do they care of your credit rating or ability to pay? The truth is, these guys are just placing loans with a bigger lender, who is then packaging up that loan with 100 other loans, and selling them to the highest bidder. So what does your loan officer care if you EVER pay your loan? They don’t.

Next - and I am no advocate of higher taxes I can tell you that - but the idea of making the last GWB tax cuts perrmanent as an economic stimulus makes no sense. Someone in fact could make a case that it was those tax cuts that fueled this real estate bubble.

With corporate America making no profits, and the investor class with a bunch of new money in their hands, there was only one place to turn to dispose of all that new cash: real estate. (Sure, there are more investment opportunities, but every upper middle-class person with a few new dollars thinks they understand real estate - they thought that in the 80’s too).

So they trolled places like Idaho for cheap deals, and drove up prices to monstrous levels. Average home buyers (non-investors) now had to pay more for real estate, have not seen corresponding growth in real income, and got supposedly cheap loans they couldn’t really afford. Combine that with the practices of mortgage lenders today, and Voila! Housing bubble.

Stimulus package? Hmmm. I am somewhere between George W. Bush and Fred Thompson (I’d link Fred, but his website sucks - no interactivity, nothing on his status on the stimulus package) on this one. Sure, I’d like to see an $800 check. But that will hardly make or break me - it doesn’t even make the house payment for a month. So big deal. That’s why I am leaning towards the do-nothing approach advocated by Thompson (and probably the George Mason crew as well, though I am sure they’d like to see those GWB tax cuts permanent and won’t admit that all that extra money in the hands of the people - which is a good thing - found it’s way into a “market” that isn’t really a market - that being real estate. [Real Estate being dominated by powerful institutions and laws that insure it isn’t actually controlled by the ‘invisible hand’]).