And I disagree, I think you're showing a lack of understanding as to the macro level economy, because the time of Keynes has come and gone. We've interfered in **** like this before and it has only made things worse. By doing exactly what you're suggesting we turned a Mexican collapse (which was also the fault of our interference in the market) into a major Asian financial crisis that not only brought down a number of developing economies which are home to over a billion people, but also brought down Japan, a shock from which they still have not recovered.
You cannot reasonably expect good things to happen when you subsidize bad behavior over good behavior. I keep hearing about these "victims" of predatory lending, I still haven't heard a single explanation as to why these people are somehow so incompetent that they can't even be held accountable for finding out what the conditions of a major loan they've taken out are, or whether they can possibly be expected to be able to pay the loan off. I'm not worried about helping them some of them out though, if there was a way to help them out without market implications. The issue is that there are market implications to bailing these people out from their irresponsible lending.
Where does the money go? When you send someone "assistance" to pay their mortgage, where does that money go? It goes directly into the hands of the lender. Defaults are an essential check in debt markets, as it's the ONLY reason that they don't lend an infinite amount of money to everyone. When you bail someone out of defaulting on that loan, what you are in fact doing is subsidizing the practice of lending that person more than s/he can afford. And so the question becomes who do you care about more, the dude right now who's losing his home, or the 6 people who will lose their homes in the future because you chose to not let the market do its work and sweep all of the irresponsible lenders out in a wave of bankruptcies.
I really have absolutely no idea how someone who's informed on economic issues can possibly think we should interfere with this, let alone say that if someone holds a position that's actually consistent with economic theory they're reflecting a lack of economic knowledge. McCain's shown more knowledge than either Obama or Clinton, not to mention the Bush administration on this issue, because he's the only one who's suggested an approach that is actually viable in the long run, your plan and their plans of interference are about putting off the problem for a few years until it comes back even worse, he's about letting people sleep in the beds they've made - "subsidizing" (by straying from the norm of bailing out people who screw up their beds) better bed making (which, if you follow the metaphor, is a good thing).
