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My question on Krugman's blog: "Do you think that if all the people in the US whose houses are underwater were to simply walk that would lower the debt burden enough to get us out of our current slump, and if so, why aren't you advocating for it?"
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The debt must be payed down or abolished. But if everyone walks out of their homes, the increased supply of homes would bring housing prices down further, pushing more home owners under water.
 
Yes it would, but I didn't ask what it would do to housing prices, I asked what it would do to unemployment.
 
Thanks for the clarification. Your question is "What would happen to unemployment if all the people in the US whose houses are underwater were to simply walk away?"

It's a great question. So I sent it to Professor Steve Keen in Australia. And I'm going to ask Cullen Roche, who writes the wonderful blog pragcap.com.

Mr. Keen is on Facebook, so I'll let you know if he writes back to me. And I'll tag you when I ask Cullen Roche in G+.
 
If everyone with an underwater mortgage walked away from the home, you would likely see a cascading failure of the banking system and a freeze to all lending.
 
But the government wont allow the big banks to fail, so wouldn't we be adding more debt by bailing them out?
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