I agree with your comments. The true cost of the government tax credits for home buyers is now coming into focus. Just ended in April, they caused the 33% drop in new home sales in May.
And what happened to the auto industry, after government stimulus there? Why a big drop in new car sales of course.
The free market MUST be allowed to find it’s own equilibrium.
You’d think the lessons would be learned by now...
If some big banks failed , the federal government could have honored FDIC, the failed banks would have to be sold for pennies. Lending would be cut back except for those with great credit, worse than now. It would be ugly.
The US is so dependent on government economic stimulus now, primarily Bush and Obama, that significant cuts in spending would crash the current economy. And tax increases would be demanded politically to go with the spending cuts to make things worse (actually consumption taxes make the most sense, investment taxes make the least sense) .
There is no good way out of this. It’s like a alcoholic drinking quarts of vodka every day, going dry brings on DTs, possibly coma and death. So on Intervention the parents buy their kids more booze, “What is the alternative?? “ they aways ask. The answer is ‘pain’ and ‘more pain’.