Thursday, March 22, 2007

The housing bubble pops

So, the housing bubble is popping and a lot of people are howling. Lenders are losing money or even going out of business because they made questionable loans. Borrowers are being foreclosed on because they took out questionable loans. Flippers are taking a bath as the value of their investments goes down. And through all that gnashing of teeth and cries of pain, many bloggers are asking: What should the government do?

That question is probably the easiest to answer of all time: nothing.

Things are working exactly as they should. People who made bad decisions are facing the consequences. People who got greedy are reaping the fruits of that greed. Let them learn their lessons. It's the only way to make sure this kind of thing doesn't happen again for another generation. Try to regulate this problem out of existence and the herd will just find another investment, or loopholes in the regulations to create the same conditions.