The Bailout Has Been Tried...And Failed..Twice

The Japanese tried a similar real estate induced bailout in the 1990's. The result was a lost decade. A decade with no economic growth since there was an artificial support for overpriced real estate.

Earlier, FDR attempted to intervene and turned a recession into a depression.

From Dan Mitchel at NRO:

The bailout repeats the mistakes Japan made in the 1990s. There are several historical episodes that indicate the dangers of government intervention to prop up a bubble. Japan faced a similar situation at the end of the 1980s, with real estate prices rising to absurd levels. The bubble then burst, but rather than let market forces operate, Japanese politicians sought to prop up both insolvent institution and asset prices. This interfered with the orderly reallocation of labor and capital, created considerable uncertainty, and contributed to a "lost decade" of economic stagnation. Another worrisome parallel is what happened during the 1930s. Policy mistakes such as protectionism (Hoover), higher tax rates (Hoover and Roosevelt), increased government spending (Hoover and Roosevelt), and increased intervention (Hoover and Roosevelt), helped turn a stock-market correction into the Great Depression.