The subprime mess is definitely not a small matter but at least according to this analysis (HT: Mises.org blog)theUSgovernmentisonlymakingthemattersworsebyintervening:
Without question, the Bush administration’s mortgage rescue plan will exacerbate, not alleviate, the problems in the housing market. As the plan will sharply reduce the ability of new buyers to make purchases, it really amounts to a stay of execution and not a pardon.
Most homes temporarily saved from foreclosure will continue to depreciate as new buyers fail to qualify for loans. As a result, lenders will be on the hook for more losses than had the foreclosures taken place sooner. Of course, as these chickens will likely come home to roost after the next election, that’s a trade-off incumbent politicians will happily make.
Seems to make much sense to me (there’s of course more to it than I quoted here) and nicely reveals how little bureaucrats and politicians seem to care about really fixing problemsforthegood instead of giving the look of doing something,anything that the average voter might think is a good idea, to solve the problem for now. The result of havinga seriously underreadandanti-reason presidentandadministration can definitely be expensive for the American public.
Update: I guess I might add it is more than likely that a government lead by Democrats would have settled for even worse intervention so in that respect W may be almost a decent deal after all.