By Arnold Kling
One prominent proposal comes from Glenn Hubbard and Christopher Mayer.
In support of their mortgage subsidy idea, Brad DeLong writes,
I am, however, gobsmacked to see Glenn Hubbard proposing it.
What has me gobsmacked is that DeLong, who usually has the good sense to dispute Hubbard, fails to do so in this case.
The Washington Post quotes me stating the obvious.
“The problem with subsidizing mortgages is you’re subsidizing people getting into debt. You’re putting people into houses with no equity,” said Arnold Kling, a former economist at both the Federal Reserve and Freddie Mac. “The goal should be getting people to own homes on a sound basis.”
Among the many problems with the Hubbard-Mayer idea is that trying to prop up home prices is crazy when so much overbuilding has taken place and so many housing units are unoccupied. We need another two or three years of record low housing construction to get rid of the overhang.