There's a lot of jive-talking going on with all the news and finance punditry about how to solve the current economic crisis.
1) How do we solve the housing crisis?
2) How do we make the banks solvent again?
3) How do we convince people to buy crap they don't need again?
The problem with these questions, though, is that they assume that they have answers. We'd like to think that if we lock a bunch of folks from Harvard and MIT in the same room, they'll exit the room with an answer. Sadly, much like the career arc of Mr. Mister post-1987, some problems don't have happy or easy resolutions. You can have the best pilot in the fleet flying your plane, but if you lose a wing, you're going down.
Federal and state governments can choose to make private problems public, but they cannot wave a magic wand and make them go away. They can pay 10 times more than the market will pay for toxic MBS, but they cannot give the toxic MBS value. Sometimes, problems are serious because they have no solution. We have to adapt to a new reality. And that's ok. It might turn out to be a good thing.
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