“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.
Joseph E. Stiglitz: A Better Way to Fix the US Housing Crisis
A sure sign of a dysfunctional market economy is the persistence of unemployment. In the United States today, one out of six workers who would like a full-time job can’t find one. It is an economy with huge unmet needs and yet vast idle resources.
The housing market is another US anomaly: there are hundreds of thousands of homeless people (more than 1.5 million Americans spent at least one night in a shelter in 2009), while hundreds of thousands of houses sit vacant.
Indeed, the foreclosure rate is increasing. Two million Americans lost their homes in 2008, and 2.8 million more in 2009, but the numbers are expected to be even higher in 2010. Financial markets performed dismally – well-performing, “rational” markets do not lend to people who cannot or will not repay – and yet those running these markets were rewarded as if they were financial geniuses.
None of this is news. What is news is the Obama administration’s reluctant and belated recognition that its efforts to get the housing and mortgage markets working again have largely failed. Curiously, there is a growing consensus on both the left and the right that the government will have to continue propping up the housing market for the foreseeable future. This stance is perplexing and possibly dangerous.
Dean Baker: The Wholly Fallible Ben Bernanke
Many have noted the resemblance between the Federal Reserve Board and the Catholic church. Both have long traditions of secret convocations: meetings of the open market committee and the College of Cardinals. Both have a revered leader: the chairman of the board of governors and the pope. And both have claims to infallibility.
OK, it is only the pope who can explicitly claim infallibility. In the case of the Fed chair, infallibility is bestowed by the business reporters and politicians who treat every word from the reigning Fed chair as a priceless pearl of wisdom.
This aura of infallibility is especially painful in the current economic situation when error seems to be the new religion of the Fed. Just to remind everyone – since so much denial has dominated the debate – the only reason that we are facing near double-digit unemployment and the worst economic calamity in 70 years is that the Fed was out to lunch in combating the housing bubble.
Hey, President Obama, over here! There’s still a housing crisis. Yoo Hooo
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