You know how when the doctor says "This is gonna hurt...

...it's gonna hurt.? Well this is gonna hoit.

Paulson Urges Action on Housing Crisis

By MARTIN CRUTSINGER AP Economics Writer

WASHINGTON (AP) -- Treasury Secretary Henry Paulson called Tuesday for an aggressive response to deal with an unfolding housing crisis that he said presents a significant risk to the economy.

In the administration's most detailed reaction to the steepest housing slump in 16 years, Paulson said that government and the financial industry should provide immediate help for homeowners trying to refinance current mortgages before they reset at much higher rates.

He also called for an overhaul of laws and regulations governing mortgage lending to halt abusive practices that contributed to the current crisis.

"Let me be clear, despite strong economic fundamentals, the housing decline is still unfolding and I view it as the most significant current risk to our economy," Paulson said in a speech delivered at Georgetown University's law school. "The longer housing prices remain stagnant or fall, the greater the penalty to our future economic growth."

"The greater the penalty..." We're not talking a five minute major for slashing. We're talking a possible terminal velocity downturn in the economy BECAUSE the "house as ATM" act has dried up and in the future no one will have those cash "reserves" to go out and buy stuff which is what really drives this economy (we stopped being a manufacturing based economy a long time ago, during the Paleolithic era).

Let's see what the suits will do next to "bail" each other out. After all, just because they create a fund to offset the housing crisis doesn't mean no one's getting paid.