Admittedly, I am getting a little jaded with the constant housing mess news, however this is probably the only way to fundamentally affect behavior. Pain, and a constant reminder of that pain, in some cases, can be a very positive thing.

David Frum wrote an interesting piece for Marketplace Money about how the current mortgage turmoil may actually be a good thing for this country. I completely agree, and go a little further saying that it is probably a great thing. Here is an audio plug-in of the commentary, and I have included the transcript below as well.

Marketplace Money episode: Wednesday June 25, 2008
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David Frum: These are tough times for American homeowners. Many borrowers are defaulting on their mortgages. Others are facing sharp drops in the value of their houses. The larger mortgage market is in crisis.

I don't want to speak of this crisis cold-bloodedly, but markets are cold-blooded things and there's a reason why market watchers often call downturns "corrections."

At the peak of the housing boom, mortgage debt as a share of household assets had risen to an all-time peak of over 40 percent. The equity Americans held in their own homes had dropped below 50 percent, an unprecedented low.

Those trends are going into reverse. Hard-pressed homeowners are selling their houses and taking their losses. Lenders are taking their losses too, writing off mortgages on an enormous scale.

As a result, the United States will soon be a little poorer than it used to be, but also probably much less indebted.

Debt -- leverage as they call it in business school -- is a powerful tool for maximizing profits. It is also a dangerous tool that can maximize losses. When businesses pull back after a shock, they call it de-leveraging. What we may be seeing now is a massive de-leveraging of the consumer economy.

I'll hazard a prediction: In 2009 and 2010, we will see home equity rise again. We will see mortgage debt as a share of household assets decline. And as Americans realize that they can no longer count on their houses and stock portfolios to grow automatically, we may begin to see a rise in savings rates, which had tumbled almost to zero.

We've been warned for years that Americans need to save more, borrow less and work longer into life. The shock of 2008 may at last transform those warnings into welcome changes of behavior. If so, this mortgage crisis may be a blessing in disguise.
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It's almost like the alarm clock finally goes off. A dream ends where the financial industry can get big rewards with little risk, and our homes can be one big renewable HELOC because short term values always rise. To make the pain greater, the media, and the fact that financial news is now part of our everyday culture, flipped the alarm switch to extra loud and all of a sudden we realize that we have one of those Boing Boing alarm clocks that hide.

Waking up and admitting there is a problem is the very first step to recovery. Most people will now think a little more when they probably make the largest purchasing decision of their lives and ask, can I really, I mean really afford these terms? If they don't think, maybe now the mortgage industry will be a little less eager to throw careful decision making to the dogs proceeding to recommend the highest commission product designed to be adversarial to the buyer ( or maybe the industry will change their commission structures to now incent their people to sell higher quality products ).

If all these changes fail to happen, maybe a larger percentage of decision makers out there will, like David Flume says, "realize that they can no longer count on their houses and stock portfolios to grow automatically" and maybe we will see a slight tilt to better decision making in all financial areas.

I know this is a little harsh, and I know like every situation there are the hard working innocents that get swallowed up too, but take a step back. Ask yourself what is good for this country? I find it hard to deny the need for a small change in our thought process. How about a little less excess, and maybe a little more conservatism.