It's odd to watch the ethos of public affairs these days. Everyone seems to agree that mistakes were made in the past. People lived beyond their means. The boom created nutty financial arrangements in which people with no money and no jobs and no prospect of paying were able to enter into massive credit obligations lasting decades. Everyone seems to understand that there is something wrong here.
Where the split occurs is what to do about it. The party in power is under the belief that the way to fix a problem is to continue the practices that caused the problem in the first place, and delay for as long as possible the correction that must take place. On the other side are people who believe that reality needs to reassert itself, and the sooner the better.
Take note that I'm not talking about the need for blood in the streets or for lives to be shattered. I'm talking about moving to a different neighborhood, possibly renting rather than "owning," and generally downscaling. Is that really too much to ask? Not really, so the question appears: why is the government not insisting on this? I think the answer comes down to the banks and institutions that continue to hold bad assets. They don't want them repriced because that would be liquidation, and they are powerful enough to concoct policies that prevent that, for now.
Read it all here