One word I never see in the press coverage of the housing crisis is “speculator.” Whether it is yet another silly economist’s op-ed* or a front-page story, the press talks about distressed homeowners, not the people with second and third homes that make up at least one fifth of troubled borrowers.

[*UPDATE: oops–I meant to say “economist’s silly op-ed, not silly economist’s op-ed. I meant to denounce the content, not the people.

I do stand by my denunciation of the content. The borrowers are not a collection of innocent victims who deserve to be bailed out at others’ expense. I understand very well that if these were old-fashioned loans, not securitized loans, then the lender might do a more discriminating job of deciding whether to do a workout. But to say that “justice” is on the side of the borrowers is baloneous.]

The large speculative component poses a problem. If you don’t bail out speculators, then the mortgage securities will remain illiquid, because the securities will include some loans that are guaranteed by government and some loans that are not, because they went to speculators. If you do bail out speculators, then the “justice” (to borrow from the title of the silly op-ed) of the bailout is really questionable.

The persistent failure to take into account housing speculators makes it very difficult for me to have any confidence that either the press or the policymakers have a handle on what is going on.