Sure I think that more government involvement is appropriate than you do, but that doesn't mean I want it to be coercive.

This is where the perception gap comes in. By definition, EVERY government involvement in anything is coercive at the bottom. Maybe not violently so, but coercive nevertheless. That's what governments ARE. Coercion is inherent in the very concept.

Governments are a mechanism for taking the moral right of self-defense and placing under the rule of law. Everything added beyond that starts becoming counterproductive.

Any "Fannie Mae-like" agency, at its root, will operate by drawing on funds from taxpayers, i.e. funds that would have been used otherwise than whatever the government decided was worth loaning money to/investing in.

Obviously, if someone is using the government as a "lender of last resort," it probably isn't the world's greatest investment. A government agency will tend to pump capital into places where the private sector would not. Insulating the market from normal corrections just makes things worse down the road. Examples that come to mind include insulating the banking industry from failure, and using tax-subsidized insurance to allow people to build in areas no private company would insure.

In terms of competion, a "business investment" government agency which has an infinite supply of taxpayer money backing it will be competing with private investors and banks that have to get a return to survive. Sooner or later, the private sector bails out. Try and find full-up insurance on the open market for someone eligible for Medicare.

As time goes on, each "correction" of natural market forces needs another, and then another, and then another. Constantly adding "governors" to the machinery, or sphere after sphere to the Copernican system. Bringing rabbits into Australia seemed like a great idea at the time. Look at how our health care ended up after the government forced health insurance into the employer's arena.

If you look through history, most things that have been sold as abuses of the free market system have had, at bottom, some government involvement in the creation of that abuse, usually with the enthusiastic approval of the business doing the abusing. How many "monopolies" exist because regulations forbid someone else from entering the market?

The worst part is, as long as its a given that it is right and proper for the government to "run" the economy, it will ratchet further and further toward micromanagement, through the European model, and eventually to the Soviet one.

You have written lots of paragraphs on supporting a "reasonable" level of regulation, and expressed the opinion that we may have gone too far.

Okay, where is the first place we should cut back on this?