To do nothing is sometimes a good remedy

In a crisis, leaders 'do something'. Thus, in the Great Depression, we passed laws making it hard to lower wages, which when aggregate prices were falling about 33%, meant wages had to rise in real terms. It helps current union members, but hurts everyone else. The only people favoring these laws are those too ignorant to grasp the inconsistency, those who are merely rationalizing (if subconsciously) their deeper desire for egalitarian redistribution (though this usually helps insiders), or if one of the Officially Designated Victim Groups, self-interest.

In today's WSJ, they note that Federal Deposit Insurance Corp. Chairman Sheila Bair suggested the government give banks a financial incentive to turn troubled loans into more-affordable mortgages. Under the proposal, the government would share in any future losses on the new loans with lenders. If there is anyone who does not have a claim of victimhood, it is someone who got a mortgage they could not pay, with little money down, who now wants to be subsidized so that they have no loss (with a loss, they walk away as US banking laws mean you can default on your mortgage and not worry about the bank coming after your other wealth such as savings; ie these are non-recourse loans). The effect is then to subsidize those who behaved most recklessly, who have the least skin in the game, and increases the number of zombie properties that are not maintained because the 'owner' has abandoned the property, and the lenders are forced to go threw a costly and lengthy process before they take hold of the property, fix it up and sell it at a market-clearing price.

Trying to subsidize X means, necessarily, you tax ~X. Further, it then creates incentives for people to game these new incentives. The key is to have many small groups, so you can parade various people from these groups so every week you can bring out the most sympathetic individual within the group who mentions how legislation allowed them to avoid the poorhouse or achieve their dreams. The net effects are complex, subtle, and spread around enough that it is usually impossible to statistically prove they caused any effect, like legislating that the government given me one million dollars: to prove that it makes others worse off looking at aggregate data is empirically impossible. My personal characteristics are such that my victimhood status is pretty much near the bottom of the vanguard's list of politically attractive groups to subsidize, so I see these actions as basically more things they have magnanimously decided I should pay for--though not directly. I can see why intellectual mandarins, the super rich, the super poor, and muck-raking community activists find these actions good, because it increases their power and status.

Note that in climate discussions, the presumption on the Left is that increasing man's footprint is bad, and while certain areas may benefit, the net effect is bad because our meddling are unnatural. Thus, even though my state (Minnesota) may benefit some from Global Warming, the cost to other areas is a bad trade. No one would suggest adding chemicals to wetlands to 'improve' their pH, or introduce new flora to improve the diodiversity, is a great way to save the environment, rather the objective is highly conservative: conserve energy, growth, and stop development. In the economy, however, Washington's footprint is considered an obvious corrective to an anarchic suboptimality, because we know legislation has the public welfare at heart, in contrast to the individuals making decisions on their own, who are driven by self-interest. Every problem invites a new top down solution, as if top-down meddling in the form of encouraging home ownership was not a large, if not the singular prime mover, of the crisis we are in. The economy is very complex system, just like the climate or the environment. The biosystems and the environment, are too complex for top down intervention; the economy, however, needs top down solutions NOW.

So we have screaming that we need to help homeowners to keep them in their housing; we also need to make housing more affordable. We address the high rates of medical spending by giving more state-insurance and tax subsidization of medical expenditures. We address the high costs of college by giving more subsidies and tax breaks on education spending. Did it ever occur to these geniuses that less intervention might be a solution, as opposed to more? Lowering the subsidies, eliminating tax breaks on targeted spending?

A neighbor down the street abandoned his house in my nice neighborhood, and its landscape was not maintained for months, creating an eyesore. The 'owner' also removed many of the nicer fixtures: marble counters, everything valuable you could take out. This tactic is only encouraged by giving defaulters more power, and this is a deadweight loss for society.