There Will Be Mortgage Blood

An Idea That’ll Make No One Very Happy (Which Is Why It’s Good)

By now we are all eminently aware of our nation’s mortgage crisis. Lenders over-lent, buyers over-bought, and state-of-the-art hedging ensured nobody would ever be held accountable.

But four years on, economists estimate that underwater mortgages are subtracting a full percent from GDP growth–out of two–while entrenching abysmal new norms of unemployment.

So how does it end? As a financial industry friend counseled, “If someone asks when markets will recover, say, ‘A year for stocks, two for the economy, and three years for real estate.’ And if that doesn’t pan out, tell them …