I am going to chime in and say that I too feel that the get-rich-quick schemes are taking over the traditional values and morals in this country. Slowly, product and value creation is moving to countries like China, India, Brazil. US is becoming a speculators best dream. I mean, look at it: scandal after scandal, bubble after bubble. The quick dissemination of information (internet, press, phone, e-mail, etc) is making the spread of the schemes even faster, lower transaction costs are helping too.
As for the house as the cornerstone of American dream, I am skeptical about that. I came to the US almost 15 years ago and was impressed when I found out from some friends that their house purchased, say, 22 years ago, has appreciated, say 3 times in price. Wow, imagine that.
Thinking about that lately, I have arrived at the conclusion that a house is a necessity, and not an investment. In fact, it is a poor investment, appreciating far slower than other assets you can find (e.g., the stock market, or a good small business). At the same time, this so called investment, the house, is financed by a liability, a mortgage, which costs 5-6% today, and in the past has cost as much as 10-12%. So why acquire an asset+liability combo where the asset appreciates at 4-5% while the liability costs 5-6% (I know there are deductions and such, but still)? This is probably the biggest thing puzzling me about America (a bit sarcastic, of course). I am c'mon, just how much is that "Dream" embedded in the people's psyches for them to make such a poor investment decision year after year, generation after generation.
Which brings us to the issue of foreclosures. Because owning of the house is embedded in the American fibre as such an important milestone, and bigger is considered better", we are seeing the problems in housing today.
IMHO it is smart for the US government to offer the mortgage interest deduction and the various other assistance programs (downpayment assistance, this assitance, that assistance) to help people buy a place they call home. That's fine. But when that fuels a speculative bubble, I think something has gone wrong. Tax code, incentives, etc - all of these have contributed to that. I don't even have a solution to how this can be fixed.
Another value that owning a house adds to the society is that an average American household is a poor saver. So paying a fixed rate mortgage down and slowly realizing the equity of the house is one way that people are able to save. Compare that to Asians, especially the Japanese, who are awesome savers. Now - which is better? I don't know. Look at the depressed Japanese stock markets over 15-20 years, where the savings rate has created too much capital, not enough opportunity. I think the Japanese could learn a lesson or two from the American's to spend a little money. C'mon, get a few credit cards, go on a shopping spree, add to Japanese consumption, and by that, to the world consumption. Help the American consumer carry the load a bit. American's could learn some from the Japanese to save well.
I come from a society where people buy a house and probably 2 or 3 generations end up living there. Typically, the house is purchased w/ cash, and that makes the purchase difficult. So the prices are much-much lower. That is all changing. I think people in my home country and the neighboring countries are slowly learning the "American way". Asset bubbles coming all over the world.
Here in US, buying a house is a different story. Despite what the realtors here might say: it is an emotional decision, it is the biggest financial decision in your life, etc, I believe the buy-sell rate is pretty high (if you want to know what the biggest decision in one's life is - I would say, marriage). I would think that on average, a house is probably owned around 7 years. Big, emotional decision? Sure. But 7 years, c'mon, that's hardly anything. Got a better job? Move up. Got a kid or two? Move up. Job in another city? Move on. Divorce? Sell the house, start renting again. And now, with the the recent asset bubble, you have the drive-by-night flippers and what-nots, so the transaction count went through the roof.
I think the US is headed for a couple (maybe 3, 4 5) years of very tough economic situation. I easily see the housing prices down 40, 50% from the highs, if not in the entire country, perhaps in some harder-hit regions. The problem is, the other big asset class, the equities, are also going to be fairly hard-hit. So it is going to be very, very tough for the speculatively-minded, quick-rich schemers to find the next asset class to bubble up.
Hopefully, this serves as a good lesson for the country as a whole. Perhaps some speculators get burned, and some well-meaning people who decided to get into the speculation business learn (expensive) lessons. Was it worth it? I don't know. But I am a firm believer in Darwinism.