Melonie
11-29-2008, 03:56 PM
And you indirectly raise an even more important question : What was the government doing in the mortgage business in the first place ?
'well intentioned' social engineering at the (indirect) expense of the US taxpayer ... i.e. substituting the implied guarantee of the US gov'ts credit rating (via Fannie and Freddie) to provide below market subsidized interest rates for 'risky' borrowers, whose own credit ratings would have rendered loan approval impossible or would have at least resulted in an interest rate being offered that was commesurate with the loan's elevated risk of default. Well guess what taxpayers, it's now time to make good on those guarantees !
I make this prediction: Obama will try harder than Bush ever did or could.
When the government 'tries harder' that's reason to worry. The perennial problem is that the gov't starts out with supposedly 'well intentioned' reasons for meddling in the economy. In the process the gov't creates moral hazards and free market distortions. The private sector then adapts to take advantage of those moral hazards and free market distortions. And you wind up with a real world economic situation which is far different than that which the gov't meddlers originally intended.
Obama has already gone on record advocating more such moral hazards and free market distortions be created.
'well intentioned' social engineering at the (indirect) expense of the US taxpayer ... i.e. substituting the implied guarantee of the US gov'ts credit rating (via Fannie and Freddie) to provide below market subsidized interest rates for 'risky' borrowers, whose own credit ratings would have rendered loan approval impossible or would have at least resulted in an interest rate being offered that was commesurate with the loan's elevated risk of default. Well guess what taxpayers, it's now time to make good on those guarantees !
I make this prediction: Obama will try harder than Bush ever did or could.
When the government 'tries harder' that's reason to worry. The perennial problem is that the gov't starts out with supposedly 'well intentioned' reasons for meddling in the economy. In the process the gov't creates moral hazards and free market distortions. The private sector then adapts to take advantage of those moral hazards and free market distortions. And you wind up with a real world economic situation which is far different than that which the gov't meddlers originally intended.
Obama has already gone on record advocating more such moral hazards and free market distortions be created.