Does anyone in Washington pay attention to what has come before?
This week we learned the administration plans to strengthen the housing market. By maybe making it easier for millions of homeowners to refinance their mortgages at todayís low rates. Homeowners who have government-backed mortgages.
Bureaucrats are also looking into programs to encourage people to rent foreclosed or nearly foreclosed homes. Hoping this will shore-up housing prices.
A few questions: How did we get into the ginormous mess with housing? We got into it because Government interfered with the market. (Read about it in Gretchen Morgansonís new book Reckless Endangerment.)
No, greed by mortgage lenders was not the cause. It was the effect. The Carter administration decided minorities and poor people were not getting enough mortgages. It ordered banks to loosen lending standards. That is called interfering in the market. Bureaucrats Ė not banks - deciding who should get mortgages.
The Clinton administration broadened the program. The Bush administration added to it. Government forced banks to make bad loans. Forced them. It protected them through the Fannie and Freddie agencies. Fannie and Freddie lined the pockets of the politicians to keep this madness going. Barney Frank, Chris Dodd and others took the money and duly protected the circus.
It was massive interference in the market. For the sake of the happy ending. That is, that anyone who could make a thumbprint could qualify for a mortgage. What joy.
The happy ending has been a disaster. It nearly brought down the financial structure of the western world.
You might think the politicians learned a lesson from this debacle. Right. The administration wants to tamper with the market once more. Left alone, the market will gradually clear itself of foreclosed properties. Left alone, the market will decide who ought to get a mortgage and who should not. It will decide who should pay more and who should pay less. It wonít seem fair to some. And they will push politicians to make it more ďfairĒ.
They feel it is only fair that anyone who wants a mortgage should get one. The cruel, nasty market says not everyone deserves one. People who save up a down payment deserve one. People who donít, donít. †People who buy houses they can afford deserve one. People who buy houses beyond their means do not. People who save and pay their bills and live within their means deserve mortgages. People who squander and donít pay their bills do not.
We used to laugh at communist governments for not allowing people in the market to decide things. The commies tried to figure out what products people should buy. They controlled markets. The results were disastrous. They ran short of what people wanted. They created surpluses of what people disdained. Not enough bread. Too many hobnailed boots.
We used to laugh at socialist governments for interfering in the healthcare market. They run short of the orthopods and cancer docs people want and need. They create too many other docs. When you need a new hip you wait two years. For dandruff they will see you this afternoon.
Today we should laugh at our politicians and bureaucrats messing around in markets. Although the laughing is painful. Through subsidies, penalties and dictates, they tell us what cars to buy. What energy products we should or should not buy. They distort the higher education market with grants, loans, subsidies. They screw up elementary and high school education market with their interference. And soon they will totally distort the healthcare market with government interference.
That is, after they mess around with the housing market again. Someone describes lunacy as doing the same thing over and over while expecting a different result. Right.††††††††††
From Tom ... as in Morgan.††††††††††††††††††
For more columns and for Tomís radio shows and new TV shows (and to write to Tom): tomasinmorgan.com.