Peter Linneman, Real estate Professor at the Wharton School wrote a thoughtful look at the aftermath of the real estate bust “The Storm is Over, the Wreckage Remains”  – read the entire article here.

a few notable excerpts:

Unfortunately, the government is trying to cure things it can’t cure. The government is trying to [give] what is not theirs to give. Salvation is not theirs to give, but they’re trying to give salvation. If you had no money in your home, and you thought you would flip it in six months for 100% profit — and then prices fell 20% — salvation [for that business decision] is not the government’s to give. They shouldn’t do it. And the more they try to do it, the more harm than good they’re doing.

My view is that [what] government [officials] should have done but didn’t [was to] admit that they are also human beings. Milton Friedman was a professor of mine and he used to say that when you listen to people talk about the government, if you change the word government to omnipotent deity, the meaning of most sentences would be unchanged. You hear people say the government should help delinquent borrowers. What they really are saying is an omnipotent deity should come in and save them. They’re just human beings. They have no more information than we do. They have no more expertise than we do.

The thing that distinguishes us from Zimbabwe, Russia and Venezuela, is that prior to September 1, 2008, you had a fair idea that if a company couldn’t pay its debts, it would go into bankruptcy and the process would work out. You had a fair idea that if a bank couldn’t collect its loans, it would be taken over by the FDIC and liquidated.

What was the best way to raise money prior to September 1 last year? You went to Wall Street. You made a pitch to investors and you tried to convince them. What’s the best way to make money today? Lose a lot of money and then go to Washington with your political power and try to raise money. That can’t be good because I don’t know who is politically powerful enough. So they’ve ruined the playing field. People do not play games if they don’t know the rules. That’s why Zimbabwe, Venezuela and Russia have weaker economies — nobody knows the rules. I don’t even have to like the rules. You and I play games all the time that we think have stupid rules. But as long as we know the rules, we’ll play.

We don’t need more regulations. We just need to enforce the regulations we have. We have regulations that date back to the 1930s that say no federally insured depository can exist unless it can demonstrate safety and soundness. And we pay regulators — we have paid regulators — to enforce that. I think they missed. I’m not even blaming them. Remember, the burden of proof is you don’t get a government insured deposit license unless you can demonstrate safety and soundness. It’s pretty obvious they weren’t safe and sound. Again, they are human beings on the regulating side as well.