by Joshua Zambrano

Created on: November 11, 2008

The essence of what went wrong with the housing market can be seen in Alan Greenspan's recent concessions that a lifetime of economic thinking was flawed. So what was this fundamental flaw? In thinking that deregulation would result in corporations doing what is best for their constituents according to the famous 'invisible hand theory.

Unfortunately, this thinking has proven flawed across multiple economic spectrums. It has resulted in the growth of

free trade, which until the last 40 years had been long absent from America's regular economic policy, resulting in outsourcing as American jobs and vital industries go overseas, and the empowerment of other nations, including communist and fascist dictatorships, at the cost of America's power and independence.

It has resulted in the 'trickle-down economics which produce a monetary distribution biased towards the rich and corporations, rather than towards the poor and blue-collar workers. This in turn means high pay rates for CEOs, money that could instead be spent on hiring more workers or buying equipment and facilities for the company - and thus American companies are hampered by exorbitantly paid CEOs, making them less competitive than their foreign counterparts.

And last but not least, this mistaken pro-regulation mindset has resulted in deregulation of numerous industries - including the housing industry. Our government has not done enough to stop predatory lending by setting home interest rate caps or providing protections to prevent homeowners from being interminably strung along on payment plans they can never pay off, as their payments go largely towards the mounting accrued interest.

So how can we fix all of this? There is now a glut of unsold homes on the market which is projected to last months if not years, driving down home prices and weakening the house-building industry. At threat of a recession, American consumers are withdrawing from the stock market and our entire economy is collapsing. What can be done?

Simple. Fix the root problems of course. To do this, we must restore consumer confidence in the housing industry and one's ability to buy homes or begin a payment plan to accomplish such without being cheated. We must get rid of the glut of homes on the market, returning them to their rightful owners. We must cap home interest rates and stop predatory lenders in their tracks through tighter regulations.

It is also vital that we communicate to the American public the necessity of wise budget management

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