Dubious 'assets' have to be liquidated, but this of necessity must be a piecemeal process, else we risk a gigantic deflationary spiral.
The fact that this nation is wildly overbuilt is apodeictic. The realty analyses in the article seem spot on to me, perhaps even too generous as to the estimate of recovery time in that industry.
The simplest way to restart the economic engine -- which, of course, will not occur -- is to suspend, indefinitely, any and all regulations, taxes and fees which operate against the creation of new jobs by the private sector. Atop this, add an enormous tax on outsourcing jobs to other nations.
Point #6, particularly, has occurred in this nation previously. Its first cousin, appraisers being in bed with lenders (S&Ls in this case, not investment banks) was the fuel added to the fire that produced the S&L meltdown in the '80s. Appraisers and raters must be kept at a long arm's length away from lenders. This is twice; if we cannot learn this lesson, might as well not bother with the rest of it; the boom-bust NEXT time will be the end of the game.
This is why I think your wish that we step back from the edge is just wishful hoping. I don't think we can do what has to be done in this regard until a genuine crisis forces us, de facto or de jure, to deregulate. Deregulate includes a legal system that is bloated, too quick to accept lawsuits, and too slow to resolve them, as well as a regulatory system that just makes it impossible to do much of anything without a nightmare of paper and oversight.
A couple of other demographic notes that never seem to be accounted for in looking at how the nation's housing supply is going to trend in the next years: 1. That big population bubble, aka the Baby Boomers, is going to burst over the next 10 years or so. As the boomers start dying off, many will leave homes that, quite literally, no one wants. The family will not want them and they will not be able to be sold. This adds millions more units to supply over the next decade or so, not to mention millions of tons of used stuff (furniture, artwork, dishes, cars, etc.) out there to be disposed of somehow. 2. Young people starting out, and other adult children, are not going to have the financial means (jobs) to start their own households. There will be many more multigenerational households (which is not a bad thing, but which does not sop up housing supply like individual homes does). 3. The recent trend toward having more than one home also will end except for the quite rich. Snowbird homes in Florida, forgetaboutit. Beach houses, no. 4. As the next generation looks at housing, fewer are getting married and actually forming families. Economic hard times will decrease the number of children people have. Single parents, for example, will share McMansion rentals instead of having their own home. 5. Without plentiful jobs, immigration (especially illegal) will slow down. Again, fewer people to use housing inventory.
If the government is determined to spend billions in bailouts, take that money and instead use it to "fund" massive across-the-board tax cuts.
Instead of the piddling stuff it's doing, the government could completely reset housing values, in a manner of speaking, in a fair and relatively safe way by quadrupling the home mortgage interest deduction for every homeowner who is current on his mortgage for that tax year.
This would immediately, effectively and proportionately reduce the homeowner's monthly cost of housing without an individualized loan modification blah blah blah. And it would not reduce principal on paper (for the banks).
Sure, that would be "expensive." But it would work, so at least the billions the guvmint spent would not be down the drain.
>>tricky proposition to accomplish.
Navigation with a spinning moral compass is always “tricky”.
Smoke, mirrors, and mountainous pyramids of Bovine Fecal Material are more useful for hiding behind than building upon.