only trust makes the economy grow

...and real trust comes only from good stewardship.

ABC news: Bernanke urges more action to stem home foreclosure crisis

A rising tide of late mortgage payments and home foreclosures poses considerable dangers to the national economy, Federal Reserve Chairman Ben Bernanke warned anew Monday as he urged Congress to take additional steps to alleviate the problems.

Anyone should have been able to see this coming - after "reforming" the bankruptcy laws, the next step is obviously to overextend credit, until we have a bunch of people with more debt than they'll ever be able to repay. Then newly indentured people committing suicide creates the sort of spectacle that makes people afraid to invest, and the economy shrinks up.

Then we remember why we limited liability in the first place.

Yeah - we had bankruptcy laws for consumers for pretty much the same reasons we have limited liability corporations.

And it's funny, too, because moral hazard is all anyone talked about when it was time to push bankruptcy reform. Everyone had a story about the person who maliciously and fraudulently abused bankruptcy law. But nobody ever wanted to talk about moral hazard on the part of the corporations. Of course it was logical to assume even then that what would happen next would involve lots and lots of moral hazard - someone, somewhere, was going to start extending loans to people who could not possibly repay, possibly with lots of fine print that the borrower could not understand.

Hillary's position on foreclosure, from Businessweek:

Clinton offered a series of measures intended to show just what she'd do to bring an end to the crisis were she in the White House. The package is in keeping with her campaign's focus on core issues of importance to the stretched working- and middle-class voters, the group with whom she is doing best....

...Clinton's opponent for the Democratic nomination, Senator Barack Obama (D-Ill.), has backed congressional bills that would help stabilize housing prices by providing federal guarantees for mortgages that are renegotiated to better reflect current housing prices, but has not argued for a government role in buying up mortgages that are larger than the value of the underlying home.