GET A GRIP. The editorial board of the Chicago Tribune makes sensible observations. First, they note that the all-time high and the all-time low prices are probably not the best indicators of value.
Our hunch is that some of the current stark devaluing of loan portfolios and asset-backed securities is at least a little over the top. But in selling panics as in hurricanes, some people are content just to live to see another day. Once capital markets reprice the true value of those instruments, and holders of lousy debt admit as much, disruptions like Monday's will subside.
They assign responsibility, reasonably accurately.

The feds are letting the bulk of the consequences fall where they should: on those companies and their stockholders, who had taken the risks of ownership. Main Street customers and account holders should feel few if any repercussions (beyond, of course, Monday's scare).

Bear Stearns, Fannie and Freddie had grown too big for Washington to let fail -- the latter two because Washington itself had, over the decades, given them too much protection from market forces. But the sooner executives of other companies realize that taxpayers won't save them from their bad decisions, the better. Example: Automakers hoping that taxpayers will rescue them from their prior overreliance on gas guzzlers now have little reason to think that an administration willing to let Lehman Brothers go bankrupt wants to ship gazillions of taxpayer dollars to Detroit.

I'll have more on that federal involvement in mortgage assurance in a day or two. Let the car-makers eat Escalades.

Lastly, they suggest the long run is the revenge of the squares.

Seven days ago, this page urged the Bush administration in a headline to "Bail out of future bailouts." The key passage: "It's reckless to let Washington provide implicit support to private companies. Once this deal [Fannie and Freddie] has worked itself out, the government needs to make an orderly withdrawal from the business of mortgage lending."

That's heresy to those who believe, for example, that it's more important for every American to own a home than for him or her to have the certifiable ability to gradually pay for it. The bursting of the housing bubble spatters us all: Qualifying for a mortgage or other loan now will mean proving we're borrowing within our means to repay.

We'll all see fewer TV ads for "no-documentation" and other gimmicky lending schemes -- occasionally smart options, but usually geared to consumers living beyond their means.

Of course, if so many loan outfits hadn't made money so ridiculously easy to buy -- because that's what borrowing really is: buying today's money with tomorrow's income -- our capital markets would be healthier today. And many Americans wouldn't be staring down the barrel at so much debt.

I know where some reasonably-priced older houses are on offer, for those who think better of the McMansion.

I've located some more technical material to bring to your attention, although the pennant races might distract me.

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