Throughout the housing crisis, we have heard demands from spokesmen for desperate homeowners, banks, and investors for every variety of government bailout. But there is one group from whom the nation has not heard: the millions of Americans who, like me, had nothing to do with the crisis, who entered into mortgage contracts they could meet or who refused to buy at exorbitant prices, but who will be forced to pay the bills for these bailouts. If we had a spokesman, this is what I wish he would say.

"Dear Struggling Borrowers and Lenders,

"Every day, the government is offering a new intervention for your sake: to protect the borrowers among you from foreclosure, to protect banks and investors from ruinous losses, and to protect all of you who bought houses during the boom from declining home values.

"The government is allowing taxpayer-backed, trouble-ridden Fannie Mae and Freddie Mac to add even more risky subprime loans to their trillion-dollar portfolios while holding even less cash in reserve. It is 'guaranteeing' more and more risky mortgages with taxpayer money through the Federal Housing Administration (FHA). Through the Federal Reserve, it is continuing to inflate the currency to give cheap money to struggling banks. And it is floating several proposals to allow courts to slash valid mortgage contracts, assaulting the sanctity of contract.

"All of this is profoundly unfair to those of us who will pay the price for your bailout.

"It is universally recognized that when you invest in stocks, you are taking a risk--and just as you deserve the profits if the investment goes well, so you must accept the losses if it doesn't.

"The same holds true for real estate. Whether you are an investment bank holding mortgage-backed securities, a borrower with an adjustable-rate mortgage facing foreclosure, or an 'underwater homeowner' who owes more than your home is worth, the essence of your situation is the same: you chose to enter into a real estate transaction that has gone bad. And just as you had every right to any gains that might have ensued--so you must bear full responsibility for your losses.

"Taking responsibility does not necessarily mean resigning yourself to foreclosure or to huge, irreversible write-downs. You should do everything possible to make the best of the situation by making voluntary offers to other market participants. A borrower can seek refinancing, a bank with a large mortgage portfolio can try to find a buyer, lenders and borrowers can renegotiate loan terms that are cheaper than foreclosure. But what is intolerable is to force us to bail you out--which is exactly what the government is doing more by the day.

"Your representatives blithely ignore the injustice of their bailout schemes, claiming that the health of the entire financial system is at stake--just as they did with Long-Term Capital Management in the '90s and Savings and Loans in the '80s. But if the financial system ever does need these bouts on government life support, it is only because of decades' worth of government interventions that have radically distorted private investments and camouflaged and shifted risks. To unwind these uneconomic policies and practices will be disruptive. But it is the only way to restore genuine financial health.

"The question we face today is: Do we let the market function, penalizing primarily those who made bad investments--or do we unfairly foist damage on those who did nothing to cause it, while gifting boom-era borrowers and lenders with propped-up housing prices, lower mortgages, and easy credit?

"There is no conflict between individual responsibility and a functioning housing market; to the contrary, the second requires the first. If we let the market function, home values would fall to some market bottom, new buyers would eagerly seize on lower home prices, borrowing from lenders who would have learned to lend rationally--and mortgage-backed securities would be valued accordingly.

"The bailout policy, on the other hand, is creating indefinite uncertainty about home values and mortgage-backed securities, exposing taxpayers to trillions of dollars in future risks, further devaluing our savings through inflation, encouraging more irresponsible behavior in the future, and creating destructive new government interventions that destroy the vital protection of contracts.

"Clearly, the just and the American solution is for all of us to tell the government that we will take responsibility for our decisions, and that no one has the right to make anyone else pay for his mistakes."

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