Politicians are first and foremost interested in perpetuating their own privileged status. They have many tools at their disposal and few scruples about using them.

In the early 1980's the savings and loans were bankrupt in all but name. They were paying Volcker style 15-20% for their deposits and their loans were earning less than 10%. They went to Congress and said, roughly, "You can close us down and pay off our depositors. It'll cost $50 billion." Congress said, "Is there a Plan B?" Of course there was. The S&Ls got their long-coveted permission to write commercial property development loans on the theory that those were so profitable they could earn their way out of the hole. In fairness, Congress probably insisted that they not come back in THAT Congress. The S&Ls kept the bargain. They were able to keep the ball rolling for maybe another five years or so and weren't totally tanked until 1989. Of course the cost then was closer to a quarter trillion. Trivia question: who's the last man standing of the Keating Five?

Now we have the sophists of affordable housing in action. First of all there isn't REALLY an affordable housing crisis. Market forces fix that. People double up, or more. Children stay home, particularly in California where their parents' homes have Prop 13 tax breaks. The real problem happens at the bottom of the ladder. When the Moscone Center was being planned people said, "Demolish all that cheap housing and you'll have people sleeping in the streets." The cheap old hotels were knocked down and people who might have slept there now use my doorway. Housing is made affordable, cheap, by two market forces: depreciation and size. My wife and I, both college educated white collar workers, live with our 11 year old son in a four room 1906 earthquake cottage in North Beach which we affectionately call "the hovel".

For far too long my wife, however, has aspired to a three bedroom, two bath place which is three times larger and would cost four times as much. She demands that given our "needs" as a family, isn't it reasonable that we should have such a place? I can only reply that while it might be a reasonable aspiration, we don't have the money. That response may end us up in divorce court, but not bankruptcy court.

What really requires patience, however, is that we live a couple blocks from the new Bay Street projects. They were featured in Urban Land. This is "affordable housing" developed by Bridge Housing. Nobody ever asked us if we would like to live there. There was no neighborhood notice posted to solicit prospective tenants. Yet it was oversubscribed. I grant that I might not choose to live there. The buildings are nice, but the tenants often shoot and stab each other. I know that every time I buy a taxable item, pay a parking ticket, or even a business license fee, I'm helping some folks live in a manner to which I might, if I allowed myself, aspire. I'm not supposed to mind.

As for the subprime mess, it's just another pyramid scheme, like the S&L mess. The loose lending standards pumped up demand, and with limited supply, prices. Lots of folks made money writing the mortgage wallpaper. Presumably lots of politicians got campaign contributions. The wallpaper will probably cost the public a trillion or so this time.