I recently heard a radio commentary by an “expert” on the housing market. I use quotes, because experts are so often wrong; witness the financial collapse of 2008. However, in this case, I’m in agreement with his conclusions.

This commentator (I didn’t catch his name as I tuned in late) stated that he anticipated that the housing real estate marked wouldn’t recover for about ten years due to the excessive supply relative to demand, and the smaller number of qualified buyers in these tough economic times. Makes sense, doesn’t it? He also cited the ill-conceived meddling of the government in 2008 in providing potential buyers with stimulus funds which inevitably give a short-term jolt to the market but just delays the true recovery. This makes sense too. But sense doesn’t run government; votes do. And what better way to buy votes than to give something to someone for free—even if you don’t have it? We’ve been doing it for years. Just look at the Fanny Mae and Freddie Mac debacle that arguably started the whole mess.

For those of you who still are unclear as to what these cute-sounding companies are and how they figured in the falling star of our economy, I direct you here to Kevin Hassett’s clear and relatively brief summary of events. In essence, the government encouraged these behemoths of the mortgage industry to make risky loans to people that otherwise couldn’t afford them and back-stopped the lenders with government assurances. In essence, they functioned outside the true marketplace and commanded such a large part of the mortgage industry that the inevitable failure was catastrophic. What still amazes me is how Senator Chris Dodd, one of the most prominent protectors of this corrupt program, and former House Banking Committee Chairman Barney Frank, the man who claimed that Fanny and Freddie were still sound investments as their bows pointed to the heavens like land-based Titanics, are still in power. In a sane world they’d be run out of town on a rail. (As an aside, Dodd, Obama and Hillary Clinton all protected Fannie and Freddie and received beaucoup contibutions in return.)

In the end, the most sobering aspect of the whole sordid affair is the fact that they still are in power, and it speaks to the corruption of the electorate. Lord Acton once said “power corrupts, and absolute power corrupts absolutely.” The same can be said of money, when it’s divorced from solid values.


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