That's another fine mess you've got me into

There's been a lot of wittering on the subject of the expected housing market crash with various people running around claiming the world is about to end and others offering ever more stupid solutions. The first thing is to define the problem:

"Credit is getting harder to obtain and as a result many people's largest asset will decline in value"

This obviously leads to various follow on problems from struggling to pay the mortgage to negative equity. These problems may be tragic but they are inevitable, when a bubble bursts people lose money. It's not as if there has been no warning, everyone who bothered to look at the odd newspaper couldn't help but be aware that the housing boom would eventually become unsustainable. If you mortgage to the hilt when there is cheap credit then only a small increase in price, (and at the moment credit is still fairly cheap historically), will fuck your finances quicker than handing them over to the badger that supposedly runs our economy.

We have known for some time that house prices were so far ahead of earnings, (especially after the One Eyed Goblin King got his hands on your pay packet), that those entering the market were doing so on the wing and prayer of cheap credit. It was worth their while doing so because they knew that the market, despite having shot beyond any rational valuation, was still rising. At such a time it becomes a rational policy to buy overvalued goods because they're going to become more overvalued and therefore you can win out. However, because such overvaluing is subject to serious downgrading from minor shocks, (the US sub prime debacle wasn't in and of itself such a disaster, it was the loss of confidence in the system as a result that has caused the credit crunch), these gamblers are now set to lose their shirts.

That's the way things work in every bubble from the South Seas onwards, (and I'm sure before then as well), and predictably, like Cnut our Lords and Masters are trying to hold back the tide.
Their plan has so many flaws it has similar qualities to Tracy Emin's "art", (got I hate the puerile shit she produces). If the government offer too little for the securities the banks wont be interested, if they offer too much then the taxpayer takes the hit, (not that they're averse to that situation), and if they get the price right on the button then we all lose money anyway because of the costs of administering it. It's another, "Things are fucked up lets do something, anything!!!" situation which will only make matters worse by wasting our money.

Still it's not all bad news, there will come a time when house prices come back down to sane levels, my generation, (loosely speaking), will have some hope of affording one and we wont have to hear any more bollocks about affordable housing quotas.