Giving a blood transfusion to a dying economic patient, jump starting the dead battery of the economy, and delivering a federal backstop to stop wild financial baseballs from injuring spectators have all had one objective so far: propping up housing prices. This is also identified as stabilizing the housing market, and is designed to assist the banks.

In fact, every thing the government has performed so far to “fix the economy” continues to be for the benefit of the banks. From the Federal Reserve (in fact not a part of the government but close enough) delivering new “windows” at which banks can trade bad assets for good, to the Treasury shoveling $350 billion at numerous banks, all of it has helped monetary institutions.

The issue, based on the banks, is that mortgage securities have fallen in value. If the value of these securities’ underlying assets, mortgages on residential houses, might be propped up, then the difficulty would disappear, regardless of the reality that the individuals who own the properties would still be unable to pay them.

The challenge just isn’t the reality that a lot of people had been sold mortgages that they would in no way be able to pay back. The difficulty is that the prices of houses collapsed from the artificially high levels of 2005-2006. Mortgage businesses had been unable to flip the homes that went into foreclosure as a result of poor lending decisions.

If the banks could only get home values back to levels observed during the bubble, the mortgage securities would not be underwater anymore. In reality, the Ponzi scheme could pick up steam once more, if home values would just go back up to levels that had been grossly inflated to start with. Then far more securities might be sold to additional unsuspecting investors.

This strategy of helping the banks applies to President Obama’s foreclosure bailout package, recently unleashed upon the housing marketplace. The program is created to assist homeowners lower their monthly mortgage payments to avoid foreclosure, as well as hide the steep declines in home costs across the country.

In effect, people are being asked to ignore the fact that their property has fallen in price in exchange for the government stepping in and helping lower their monthly housing bill. No foreclosure, no forced sale of the property, and no inconvenient sheriff sale or appraisal to ascertain the value of the residence will support hide the accurate value of a house.

The question no one seems to be asking is if homeowners will probably be willing to keep paying something every single month for a home which is deeply into negative equity, even with government assistance. Needless to say, some will, but other people will be willing to let the house go by way of foreclosure and rent for several years.

This may, the truth is, be a superior strategy to dispose of a really inflated home — fight the foreclosure, get a short sale or a deed in lieu, and rent for a few years although saving money for a down payment on a vastly more affordable property. President Obama’s mortgage strategy attempts to convince individuals to accept becoming locked into a lower payment although still overpaying for their house.

It can be unfortunate but not really surprising to see one more foreclosure relief program put forward by the government where the main purpose would be to hide a much-needed correction in home values. Instead of addressing the issue and lowering mortgage balances, the strategy tries to solve the symptom of the problem and hide a true valuation of property prices.