The administration's announcement of a $75B program to aid troubled homeowners is a joke. It confirms my suspicion that the PTB do not want this problem solved, for whatever reason.

I have written repeatedly on this subject, and foresaw several months ago that the housing meltdown would not be stopped unless the government acted decisively. Banning foreclosures and forcing lenders to modify loans would be the minimum required.

The announced plan offers some help, but fails to address the most serious aspect of the crisis: mortgages that are underwater. Millions of homeowners are making payments on time, but are watching as their property values drop well under their loan values. The homeowner's payment portion toward equity are evaporating like the morning dew. They see the banksters being bailed out with billions, and wonder why some relief can't apply to them. The new program absurdly rules out assistance for any mortgage more then 5% underwater.

In essence, this is telling us that they don't want to fix the housing mess, that they are prepared to watch as millions decide to walk away from mortgages they can still afford because they can buy or rent comparable housing for half the cost or less.

One possible reason why the policy makers are reluctant to lean harder on lenders to renegotiate: Many major banks are still teetering close to failure, and writing down loan values impacts balance sheets. The other shoe of the banking crisis is yet to drop. However, the logic of this policy still escapes me; Banks can either take some losses now, or take higher losses later when the foreclosure pace accelerates. Soon a point will be reached where the meltdown spirals out of control. Maybe that is what is intended.

-Darkwave