… and I and my Cap …: BI’s Weisenthal on the F&F Move

December 2009
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By John M.

After the shocking Christmas eve announcement on increased US government support for the big GSEs it looks inevitable that the housing market will be socialized for the foreseeable future. Among other things, this puts Agency Debt on an equal footing with Treasury Debt, making it impossible for the OMB to continue denying that agencies aren’t sovereign American obligations. The good folks at ClusterStock look deep into a lot of the other aspects of this huge story.

This entry is filed under Bailouts, Bubble Horror Stories, Credit Contraction, Housing Bubble, Mortgage Banking, NY Fed H.4.1 Updates, Politics, Systemic Risk. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

twist says:

December 27th, 2009 at 8:28 am

John-

This is the most important statement in the article:

They would also continue distortions in the marketplace leading to who knows what unintended consequences. Finally these steps would do nothing to deleverage the housing finance system, a key step in returning it to any degree of normality.

If only the government would allow market forces to work. Sure, interest rates would be high- but that encourages private money again. Home prices would fall to compensate. Affordable housing would be achieved and the housing market would start working again.

Of course, that’s bad news for lenders, but they are toast anyway.

Igor says “1929″ and I can’t say he’s wrong.

Housing Doom

“He who defends everything defends nothing.” – Frederick the Great

… and I and my Cap …: BI’s Weisenthal on the F&F Move