Is the mortgage modification program making things worse? An article in the New York Times gives voice to fears that by encouraging homeowners to stay in homes that they cannot really afford, Obama's Making Home Affordable program is actually increasing the agony of homeowners, who pour money down the rat hole of their mortgage rather than recognizing the loss and starting over.
1,500 words and 19 paragraphs later, McArdle comes up with an answer to her dilemma.
So to answer the question I posed at the beginning: there's not much evidence that the current scheme of mortgage modification is making things worse. But there's also not much evidence that any differently designed system would have made things any better. We may have to look for other ways to ease the pain of those whose houses are more than they can afford.
McArdle recommends faster short sales to deal with the bursting bubble economy. It is left to RW and JoshinHB in comments to explain conservative banking principles to the economic conservatives, to their blank disbelief. McArdle's post adds little except the knowledge that she very much wants the housing problems to go away so she can buy a house.
UPDATE: A commenter tells McArdle to do her research--new guidelines for short sales are already in place.