Stopping the wasting disease

For a while I was swayed by the idea of going ahead with foreclosures but keeping people in their homes as renters. And I hesitate to disagree with Dean Baker on economics issue, but isn't there also a "cost" to homeowners in the surrounding area? Sure the foreclosed are allowed to stay in their homes (where maybe they'll be willing to keep up appearances and mow the lawn), but doesn't the act of foreclosure further drive down housing values in the area. Yes, I realize that a burst housing bubble means more realistic housing prices, but the combination of an uncertain employment outlook and further declines in home values is not going to do much to end the recession. Nor will the blow to these peoples' credit ratings. Nothing is free. Also, it seems to me that only the (former) homeowner is punished, not the bank which will continue to receive rents.

Further, Baker seems intent on punishing "bankers and their shareholders," but, first, most of the home loans aren't owned by "banks" but by all manner of financial institutions, and second, the crash of housing prices does cost all of us, as we're seeing in vivid technicolor these days.

Yes, it's complicated and messy, but initial views on Obama's housing proposal sound mainly positive.