outtafavr

Rethinking Fannie, Freddie and Mortgages

This is an excellent article. The author is a very brave man. In discussing the reason for Fannie/Freddie's existence, he refers to housing being subsidized by taxpayers. There's more to it than that. The GSEs were used to manufacture a hot economy. So many jobs were created in the process of building and selling all those houses. This was all done with cheap money borrowed by the government in disguise as GSEs, blazing a $10 trillion path to nowhere. For 70 years everyone was fooled. The giant "DEAD END" sign is now visible to many, including David Merkel.

Allowing the GSEs to fail would cause immense pain to the economy and our financial system. Short term pain would turn into long term gain and result in a much more rapid return to prosperity and overall financial health. This society could never be courageous enough to cause any pain for itself. The GSEs, the government, and the economy, all being one in the same, are destined to die a very slow agonizing death.