Housing crash

Paul Krugman has a column today laying the blame for the sub-prime mortgage fiasco on a lack of regulation. Strangely unmentioned, however, is that the government subsidizes housing and encourages people to buy through the mortgage deduction. But since in his worldview the government only does good (except if GWB is at the helm) and problems tend to stem from insufficient, rather than excessive levels of government intervention, this market distortion is totally unremarked upon.