Often times in an effort to "solve" a problem, especially an economic problem there is a tendancy to initiate to over react because the problem is complex. As a result there are things in life and economics known as "unintended consequences" which I have written on extensively.
Unintended consequences are more problematic as the complexity of an issue increases. Therefore, interventionist policies tend to exascerbate a problem by magnifying the effects associated with unintended consequences.
Stated differently I once had reconstructive knee surgery and was in a full length leg cast. My girlfriend decided to cut my big toe-nail even though there was nothing wrong other than it was bothering her and therefore she would help me because obviously if it were bothering her it most certainly must be really troubling me. She ended up cutting the nail too short in which the nail became ingrown and infected, resulting in me going to the doctor to have the toe nail removed. This resulted in an unintended consequence due to intervening into something that would have worked itself out if left alone.
The current real estate market is no different fromt the big toe, because the real estate and construction business affects approximately 60 percent of the economy. solution to the problem is extremely simple, but the problem is that most people and most certainly the politicians cannot permit a perceived problem to correct itself.
The government needs to stop "helping" because they have done nothing but extend the length of time of the real estate down turn, created instability and uncertainty, exascerbated the valuation problems and generally increased the recovery time.
Prices can only improve with and increase in "demand". Demand can only increase if there are jobs and jobs can only be created by increasing the number of new business start-ups. Start-up companies account for 70 percent of new job creation. In order to have more start-ups there needs to be more "private" capital available with tax rates established for the next 25 years. In other words, for all of this to occur there needs to be "CERTAINTY" in the future.
Unfortunately, there is NONE of this occuring now. In fact, there is so much uncertainty that investors are not investing, businesses are not hiring or expanding and entrepreneurs are spending all their time and money trying to raise money, but to no avail. Some times the best help is the help you don't get!
JUST LET MARKET FORCES WORK. After all if you have a headache do you cut your head off?