A sound analysis. Would that well-intentioned (or politically greedy) members of Congress pay more heed to such considerations before they enact a bailout of folks who borrow more money than they can pay back.

Here's an idea. The Congress could force lenders to defaulting subprime mortgage borrowers to restructure the loans, provided that the borrowers agree to give up their mortgage interest deduction for federal income tax purposes until the subsidy is repaid in full.