Everybody in Washington, it seems, thinks that "something" has to be done about the mortgage mess. Which means that just about everybody in Washington is ready to make a bad situastion considerably worse. Here's the Register's editorial on the subject. Two things in particular. A bailout, even in the form of money for local governments to buy foreclosed properties, will delay the housing market reaching its true bottom, which is the first condition for correction. And any program is bound to end up subsidizing people who never should have bought houses that expensive to begin with -- at the expense of people who were more prudent and didn't get into trouble.
Unfortunately, in politics, the bias is always toward government action, even if (or perhaps especially if?) it will make matters worse. Incidentally, I snagged the "action bias" term from this column by Shankar Vedantam, who writes the Dept. of Human Behavior columns, which are almost always pretty interesting, at the WaPo. Another illustration was a study of soccer goalies on penalty kicks. An Israeli economist's study of 276 kicks showed that staying in the middle was the best bet for the goalie in a situation that inherently favors the kickers. Yet the goalies dived to one side or the other 93% of the time.