Where is the Money Coming from?

So I am reading through the WSJ.com online today and upon hearing that congress passed the housing bill, I am left wondering is this really a good thing? Wasn't the problems of the past two years from the fact that money was made easy which was a consequence of the bursting stock bubble. Couldn't one say that if money were not so easy over the past five years, housing would have corrected like normal in the early part of this decade, many homes foreclosed today may not even exist (as the builders would not build based on lower demand) and the average American would be in much better shape financially as they were saving instead of using their home as an ATM card?

In the end, this just argues for more garbage out of the US Economy over the foreseeable future. It is once again another policy mistake - one that will probably inflate credit again, create speculation again in housing (why has that occurred to start with?) and push today's problems down the road. So I guess the story is this. Short term, not a bad deal for housing. Long terms, very bad for the US economy and the US Greenback.

Over the short term, the foreclosure rate should slow. With the economy weak, and hung over as the president said of Wall Street the other day, it is inevitable that people will not be able to meet bills in certain circumstances. At the same time, taking some foreclosures out of key areas (read condo's) could help a local market stabilize. While this is not formal intervention, the US Government just became real estate owners in a more formal sense - $300 billion worth actually. Interestingly, my own housing models were actually stabilizing somewhat so if you push this much money into a stable market, does that mean housing actually accelerates and reinflates? Now that would be interseting if possible.

Long term, this once again shows that if people make a mistake, the US government will come out of the treasury with 2 hands full of money for the person who is in trouble. This encourages risk taking and perhaps this country needs some of that now, it does not need it in the long run. It needs measured risk taking - putting $300b into an asset will raise its value, regardless of the current state of an economy. Add to this the fact that this package will be probably paid for by running the printing press at the treasury and you have....wait for it....wait for it...JAPAN, 1992.

The bottom line is simple here. Let people fail. When they fail, they learn and do not repeat the mistake. If you don't let people fail, you create the last five years and the last 2 which have been particularly painful from a trading perspective. Overall, call me a short term bull on the US but longer term...I think there might be other opportunities out there.