Footnote to the preceding, maybe it is that simple after all

According to Mark Zandi, chief economist at Moody's Economy.com, about 12 million US homeowners - nearly one in six - are "under water." That is, they owe more on their mortgages than their house is worth.

That compares to a figure of about 6.6 million at the end of 2007 and 3 million at the end of 2006.

"At the root it's 'the' problem," said Zandi. "If you're going to put your finger on the one thing that's gotten us into this fiasco, it's the fact that millions of homeowners are under water on their homes." ...

In a slowing economy, it doesn't take much to push an underwater mortgage into default.

"When you're under water and you have some kind of hit to your income or some kind of unintended expense, that's when you default. And so now we've got this noxious mix of millions of people under water and quickly rising unemployment," Zandi said. ...

While the U.S. government has focused its rescue on banks, it has done little to help individuals who are struggling to pay their mortgages, apart from the HOPE NOW program, which has facilitated a few hundred thousand mortgage restructurings.

This is despite the fact that nearly a third of homes purchased over the last six years - and nearly half of those purchased over the last three years - now have negative equity.

Steve Berg, a managing director at research firm LPS Applied Analytics, said mortgages originated in 2008 were on par or trending worse than those originated last year or in 2006.

In other words, it's getting worse. And instead of addressing "'the' problem," the government is shoveling money at the banks. Which thus remains a pretty fair indication of what and who is regarded as important.