The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid.

Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.

As the economy again sputters and potential buyers flee — July housing sales sank 26 percent from July 2009 — there is a growing sense of exhaustion with government intervention. Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.

When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.

“Housing needs to go back to reasonable levels,” said Anthony B. Sanders, a professor of real estate finance at George Mason University. “If we keep trying to stimulate the market, that’s the definition of insanity.”

The further the market descends, however, the more miserable one group — important both politically and economically — will be: the tens of millions of homeowners who have already seen their home values drop an average of 30 percent.

The poorer these owners feel, the less likely they will indulge in the sort of consumer spending the economy needs to recover. If they see an identical house down the street going for half what they owe, the temptation to default might be irresistible. That could make the market’s current malaise seem minor.

Fresh worries Tuesday about the health of European banks sent stocks lower in the U.S.

The Dow Jones industrial average fell about 50 points in early morning trading to kick off the start of the holiday-shortened week. Broader markets also fell.

European markets all fell Tuesday after reports said the continent's major banks have more potentially risky government debt on their books than was disclosed during stress tests earlier this year. The banks could be forced to raise more money to protect against potential losses, while also facing more fees from regulators.

The dollar strengthened against the euro and investors bought U.S. Treasurys on the new European bank concerns.

Stocks worldwide dropped during the spring because of worries that mounting government debt in Europe would hurt banks' ability to lend and stunt an economic recovery on the continent. That, in turn, would drag down a global rebound.

Investors could be taking their cues from overseas because there are few domestic economic reports due out this week that could sway traders. A barrage of mostly better-than-anticipated economic data sent stocks sharply higher last week. The reports helped push major indexes to their first winning week in a month.

President Barack Obama will call on Congress to pass new tax breaks that would allow businesses to write off 100 percent of their new capital investments through 2011, the latest in a series of proposals the White House is rolling out in hopes of showing action on the economy ahead of the November elections.

An administration official said the tax breaks would save businesses $200 billion over two years, allowing companies to have more cash on hand. The president will outline the proposal during a speech on the economy in Cleveland Wednesday.

Amid an uptick in unemployment to 9.6 percent, and polls showing that the November election could be dismal for Democrats, Obama has promised to propose new steps to stimulate the economy. In addition to the business investment tax breaks, he will also call for a $50 billion infrastructure investment and a permanent expansion of research and development tax credits for companies.

The proposals would requires congressional approval, which is highly uncertain given Washington's partisan atmosphere.

"The White House is missing the big picture. None of its plans address the two big problems that are hurting our economy: excessive government spending, and the uncertainty that their policies....are creating for small businesses," House Minority Leader John Boehner said.

Concerns over adding to the mounting federal deficit could also keep some Democratic lawmakers from approving new spending so close to the midterm elections. And even if legislators could pass some of the proposals in the short window between their return to Capitol Hill in mid-September and the elections, it's unlikely the efforts would significantly stimulate the economy by November.

Stimulus measures enacted in 2008 and 2009 allowed businesses to depreciate 50 percent of their capital investments. A separate small business bill the White House is urging the Senate to pass would extend that tax break through the end of this year.

The U.S. Securities and Exchange Commission (SEC) has seen a surge in tip-offs concerning alleged corporate fraud as the Financial Reforms Act offers millions of dollars in bounty payments to whistleblowers, the Wall Street Journal said.

Whistleblowers who provide "original information" about large frauds could net as much as 30 percent of the penalties and recovered funds collected by the SEC under the Dodd-Frank financial reforms act.

"We have gotten some very high-quality tips," SEC official Stephen Cohen told the Journal.

The whistleblower program aims to get timely information from insiders close to a fraud and based on which the agency would pursue cases against the offenders, the Journal said.

"The goal is not just to get more tips; we want to get more high-quality tips," Cohen told the paper.

SEC could not immediately be reached for comment by Reuters outside regular U.S. business hours.

A vast wave of kids are headed for college right about now -- and a vast backwash of parents are trying to figure out how to pay for it. Is it worth it?

My instinct: no. I think college is the latest of the great bubbles. (Full disclosure: I've been saying the same about China for years. See Sept. 1, 2005, column.)

I just think people are going to get sick of the appalling cost, the questionable returns (how many Class of 2010 graduates have jobs?) and the increasingly bizarre admissions decisions. (Princeton economists Thomas Espenshade and Alexandria Radford recently showed that elite schools actually discriminate against ROTC and 4-H club members.)

So naturally, on the general theory that capitalism is more efficient that socialism, I've always been interested in Apollo Group Inc. /quotes/comstock/15*!apol/quotes/nls/apol (APOL 45.06, -0.32, -0.71%) , owner of the for-profit University of Phoenix.

Maybe that's also why Apollo has been under such fierce attack during the Obama administration. But, according to the Hulbert Financial Digest, the stock has two advisory supporters, both of which have respectable records.

http://www.marketwatch.com/story/will-phoenix-rise-from-college-bubble-2010-09-06?reflink=MW_news_stmp