Another $1.5 billion for the housing crisis

Bloomberg reports that, in a speech to be delivered today, President Obama will propose that another billion dollars or so be thrown at the nation's housing crisis in an attempt to forestall more foreclosures.

The president plans to announce today in Las Vegas $1.5 billion in funding for housing finance agencies in states where the average prices for homes have fallen more than 20 percent from their peak, according to an administration fact sheet.

The funds, from money earmarked for housing in the Troubled Asset Relief Program, will be provided for state programs such as those to assist unemployed homeowners and mortgage holders who owe more than their houses are worth, the fact sheet says.

While this is just a "drop in the bucket" as compared to other housing-related rescue efforts, it does just help to push the problems farther into the future by providing an artificial support to the market.

We are now a few years into the downside of the housing bubble and policymakers continue to believe that the fundamental problem is that housing prices are falling - not that they got too high in the first place and must now undergo a long, painful correction.

It seems that "extend and pretend" has now become a way of life.