The Only Idea That Makes Any Sense

There may be a bailout plan that both Liberals and Conservatives could live with....

For the past week I have found myself wondering why nobody has been talking about saving the credit markets by means of making good on delinquent mortgages. This seems such an obvious fix, and I was gratified to see the idea written up by Jonathan G.S. Koppell and William N. Goetzmann ("The Trickle-Up Bailout") in today's Washington Post. I would think it an easier sell to Conservatives for the taxpayers to loan money to private citizens with real property as the collateral, as opposed to merely throwing freshly printed dollars at bad paper.

But there are two enormous additional benefits to the idea that are not mentioned in the article. First, by slowing or stopping the rate at which homes are being vacated, property values in American communities will stop hemorrhaging and perhaps even recover to some extent. Second, by taking action to prevent wide-scale homelessness and destitution as a result of the mortgage crisis, America would not only be in concordance with our fundamental sense of humaneness, but will also spare itself untold further costs, which I also have not heard considered in the ongoing debates.

A worker without a home is unlikely to hold his or her job for long and we will see unemployment costs rise. Families without anywhere to go will need shelter. Children dispossessed of their homes, with unemployed or severely financially distressed parents, need free school lunches, medical services, and, it is likely, more educational and psychological/emotional support from society at large.

Bail out Wall Street alone, and our next crisis will be a scenario reminiscent of the depths of the Great Depression, complete with caravans, shanty-towns and mass hunger. Loan money to homeowners, and not only are the taxpayers more likely to see some return on their money but we will avert to a huge extent the costs that nobody is talking about. And just maybe feel a lot better about our collective character as well.