Larry Kudlow complements his CNBC colleague Rick Santelli's rant against the Obama mortgage plan with some straight from the shoulder advice that incorporates free market solutions instead of what he terms "a thinly disguised entitlement program" that has 92% of homeowners subsidizing the rest.
It's a great article that shows how Obama's plan won't solve a thing - "throwing good money after bad" says the economist. And he quotes a study showing how the free market is already bringing the housing market back in California:
Writing on his Carpe Diem blog, University of Michigan professor Mark Perry notes that while California home prices dropped 41% in 2008, home sales in the state jumped 85%. It now looks like 2008 sales for single-family houses will exceed levels reached in 2007.
What's more, the unsold-inventory index for existing single-family detached homes in December 2008 was 5.6 months, compared with 13.4 months for the year-ago period. And the median number of days it took to sell a single-family home dropped to 46.1 in December 2008, compared with 66.7 in December 2007.
So inventories are dropping, the number of days to sell a home is falling, and sales are rising in the wake of lower prices.
If the government really wants to help, instead of bailing out irresponsible mortgage-holders, it should support new and younger families who want to buy starter homes and begin to climb the ladder of prosperity.
All this is free-market economics 101. And I say, let free markets work.
And I say, listen to Lawrence Kudlow.
Hat Tip: Ed Lasky