This article from the Desert Dispatch get's it right.
"The only answer is for the government to get out of the way and let the market self-correct."
And another good point:
"A problem caused by easy money is not going to be “solved” by more easy money, as the Bush administration signs stimulus legislation that increases the conforming-loan limit so that buyers in high-priced markets can get lower rates for higher mortgages. The Wall Street Journal reports that the effect may be minimal given that banks can be expected to charge higher fees on these higher-risk loans, and “lower rates won't be of much help to homeowners interested in refinancing if their house is now worth less than the size of their mortgage.” "
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