And as the housing market continues to be vulnerable, deep caution greets any proposal that might pass on higher borrowing costs to consumers. (WSJ – Fannie and Freddie)
“We’re lowering borrowing costs!” venal politicians shout from the stump.
“No,” retorts anyone with a fundamental understanding of basic economics, “you’re just spreading the cost around.”
So the government forces apartment dwellers, renters, and those who own their homes outright to subsidize home buyers. This masks the true cost of buying a home and distorts the market, resulting in a bubble. Fannie and Freddie can keep lending standards low because these insurers know they will not bear the brunt in a collapse--Uncle Sam will. Another market distortion.
We need just the opposite of what our politicians are peddling
Each consumer must bear the cost of what he or she consumes, and we must also be allowed to face the consequences, good or bad, of our decisions. That goes for homebuyers, mortgage companies, and mortgage insurers. This will inject sanity into the marketplace.
Some cry that ordinary people will no longer be able to afford a home if the government shuts down Fannie and Freddie and stops picking everyone’s pockets for the benefit of the few. I say balderdash! Private companies will step in and back those who can provide evidence of financial stability. Some people will no longer be able to buy a home, but those are the people who should not be buying anyway, as evidenced by events of the past five years.
And what place is it of government to say owning a home is more noble than renting?
