Torture versus collateral damage; the bigger evil?

[motorfirebox]

Are housing prices bubbling again? Maybe in Phoenix, but surely not in Detroit or Chicago.

Actually...

Home prices rising is not a bad thing, but it's not an indicator of economic health for those who aren't already well off. Renting a home is an economic burden, not an investment; home prices rising while median wages fall is how you continue to widen the already-growing wealth gap. The trickle of construction jobs derived from private equity scooping up these devalued homes doesn't go any significant distance towards reversing that.

None of that exists in a vacuum though. It is, after all, government policy to maintain very low interest rates to boost borrowing and there are many policies specifically designed to boost the housing sector.

Sure. But a high-risk mortgage in default is just a high-risk mortgage in default. It only becomes an economy-wrecking problem when the finance industry and the ratings agencies conspire to fraudulently make that high-risk mortgage appear low-risk, thereby attracting significant investment.

Stuff

I'm not arguing that government oversight is a magic tonic that will always fix everything. I'm arguing against the idea that private investment is a magic tonic that will always fix everything.