Wednesday, April 02, 2008

A "New Deal" for stopping the foreclosure crisis?

I am going to give Holman Jenkins of the Wall Street Journal the benefit of the doubt. I am going to assume that his column is a Johnny-come-lately attempt at April Fool's Day humor, or some sort of Swiftian farce.

In his column, Mr. Jenkins suggests that a way to get us out of this housing slump is destroy a good number of the vacant homes that have suffered foreclosure - to decrease supply in an attempt to increase demand, and thereby stop the free-fall of the prices of houses for sale.

If he is truly serious, then Holman Jenkins is a frickin' moron. If he thinks his idea is original, then he best go back to the drawing board. Franklin Roosevelt and his New Deal "brain trust" tried the same thing during the Great Depression. In an attempt to help farmers by raising the price of food, the U.S. government - our government - dumped thousands of gallons of milk down the drain; slaughtered thousands of pigs, cows, and other livestock; and allowed grain to rot in the silos. It was thought that destroying this supply of food would raise demand, and therefore raise prices. Perhaps in the short run, getting more money for what they had left to sell might help the farmers, but what about the consumers? If people are hurting financially, what sense does it make to make food even more expensive? The same can be said for housing.

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