by Calculated Risk on 9/19/2010 07:25:00 AM

Let me start with an excerpt from Chirs Mayer and Todd Sinai's piece in Sept 2005: Bubble Trouble? Not Likely

Chicken Littles have squawked that the sky -- or the ceiling -- is about to fall on the housing market. ... Yet basic economic logic suggests that this apparent evidence of a bubble is anything but. Even in the highest-price cities, housing is, at most, slightly more expensive than average.

And from Glenn Hubbard on Face the Nation in August, 2005

I don't think we're likely to see a large nominal price collapse, that is largely falling house prices, but I think we'll see much slower rates of growth in house prices after 2005.

Since I was one of those "Chicken Littles", I'm curious how those views on housing worked out?

And now Glenn Hubbard and Chris Mayer recycle the poorly conceived Morgan Stanley proposal: How Underwater Mortgages Can Float the Economy

[W]e propose a new program through which the federal government would direct the public and quasi-public entities that guarantee mortgages — Fannie Mae, Freddie Mac, Ginnie Mae, the Department of Veterans Affairs loan-guarantee program and the Federal Housing Administration — to make it far easier and quicker for homeowners to refinance.

This program would be simple: the agencies would direct loan servicers — the middlemen who monitor and report loan payments — to send a short application to all eligible borrowers promising to allow them to refinance with minimal paperwork. Servicers would receive a fixed fee for each mortgage they refinanced, which would be rolled into the mortgage to eliminate costs to taxpayers.

At least they mention the existing refinance programs already in place (that was an improvement on MS)!

But the rest of Tom Lawler's criticism still holds: “Slam-Dunk” Stimulus? MS = Missing Something!!!!