It's not often that I highlight material from the same blog more than once over the course of a few days or weeks. But then again, there are not too many commentators who are as thoughtful and insightful as Charles Hugh Smith, author of Survival+ and publisher of Of Two Minds blog, a long-time favorite of mine. Last time around, he gave us a no-holds barred assessment of the so-called recovery. In "The Root of the Housing Bubble Remains Unchanged," he suggests, among other things, that for many people, there's little to gain -- and lots to lose -- from pursuing the traditional American dream.
Banks and Wall Street profited immensely from millions of unqualified home buyers reaching out for the simulacrum of middle class "ownership."
The fundamental root of the housing bubble--the collusion of the Central State and banks to extend home ownership to millions of citizens who did not qualify for that burden-- remains firmly in place.
The Federal government continues to pour tens of billions of dollars into this "home ownership should be for everyone" project via subsidies to Fannie Mae (FNM), Freddie Mac (FRE) and FHA. Mortgage lenders have been delighted to write mortgages in our completely nationalized market in which the government backs literally 99% of all mortgages and the Federal Reserve bought $1.2 trillion in mortgages that no sane private investor would touch.
Fannie Mae seeks $8.4 billion from government after loss: Fannie Mae, the largest U.S. residential mortgage funds provider, on Monday asked the government for an additional $8.4 billion after the company lost $13.1 billion in the first quarter.