Using mortgages as a welfare program turned out to be long-lasting poison.  [R]ather than the much-noted “double dip,” the housing crisis is actually in an alarmingly steady, though masked, free fall. – IBD

IBD Editorials

EXCERPTS:

The collapse of residential real estate prices just officially exceeded the scale of the Great Depression’s housing crisis.

Home prices have fallen by 33%, according to Standard & Poor’s Case-Shiller data, since the housing market began its long, hard collapse in 2006 — with a further decline expected in the months ahead.

During the Depression, by comparison, prices fell 31%.

Even when the current decline hits bottom, Capital Economics senior economist Paul Dales warned in a Fox News interview Wednesday, there’s unlikely to be “any significant or sustained rises.” Rather, he said, we’ll probably see “a couple years of pretty much no recovery whatsoever.”

After the Republican-controlled 104th Congress forced welfare reform down an eager-to-be-re-elected President Bill Clinton’s throat in 1996, it wasn’t long before liberal Democrats made housing a new avenue for wealth redistribution, bullying banks to give mortgages to people with rotten credit histories.

About 40% of the mortgages that Fannie and Freddie bought in 2005-2007 were subprime,” or just one step above subprime.

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