Flame — HabitableZone

Flame » in reply to What we have just witnessed is the final triumph of Reaganomics,

No.
TB — (archived)

What you are looking at is the end result of a government and political philosophy that believes that market forces should have nothing to do with whether or not someone should own a home. This isn't about "not enough regulations," or regulations at all. Reasonable regulations are fine in the banking industry, and in cases of transparency, essential.

This is about subsidies, real and implied, and over sixty years of semi-socializing the home loan industry.

You are looking at the inevitable end result when government inserts itself and tax money into the marketplace, and allows people to make crappy economic decisions with impunity.

In a free market system, Fannie Mae and Freddie Mac would never have existed. The idea of banks and other loaning agencies being able to dump money on bad risks because they were "backed by the Federal government" would never have arisen.

The inevitable corruption that infects any human endeavor would have been isolated in companies, not settled inside a nation-wide financial construct that absorbed much of the industry's finances.

Now we have this panicked rescue mission--pouring more government control on the problem. As I write this, politicians are scrambling to get a piece of the loot, or to make sure they gain more political power.

Will it work? For a while. Kind of the way drinking seawater works at first.

I'm sorry, but people blaming this on capitalism or free-market economics are, to be blunt, ignorant on this subject, willfully or otherwise.

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