LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Fortuna Silver: An Incredible Value Play
By: Dave Kranzler, Mining Stock Journal

COT Gold, Silver and US Dollar Index Report - December 13, 2019
By: GoldSeek.com

Beware Gold-Stock Downside
By: Adam Hamilton, CPA, Zeal Research

Japanification, Deflation and Backwardation in Gold & Silver and Base Metals
By: Darryl Robert Schoon

Precious Metals Update Video: Gold has found a home here
By: Ira Epstein

Asian Metals Market Update: Dec-13-2019
By: Chintan Karnani, Insignia Consultants

As The Financial System Melts Down Gold And Silver Will Soar
By: Dave Kranzler

Blowing Bubbles for Fun and Profit
By: Gary Christenson, The Deviant Investor

A Missing Motive
By: Ted Butler

When Will GDX Break-out?
By: Jordan Roy-Byrne CMT, MFTA

 
Search

GoldSeek Web

 
Let the Housing Market Normalize!

By: Dr. Ron Paul, U.S. Congressman


-- Posted Monday, 23 August 2010 | Digg This ArticleDigg It! | | Source: GoldSeek.com

Recently there have been some encouraging signs that Congress is finally willing to admit what should have been evident two years ago.   Even after a $150 billion bailout, Fannie Mae and Freddie Mac are still bankrupt and should be abolished.  Indeed Rep. Barney Frank, a longtime champion of Fannie and Freddie has made a few statements alluding to this and I have signed on to a letter asking him to clarify his remarks and hold hearings on this topic.  There seems to be a growing consensus in favor of abolishing Fannie and Freddie.  This is the good news.

The bad news is that instead of simply returning to the free market, Fannie and Freddie will probably be replaced with something equally damaging, and at this point we can only guess what that will be.  One possibility is that instead of these two giant Government Sponsored Enterprises (GSEs) the government will deputize thousands of smaller banks to do the same thing – that is to securitize mortgages with taxpayer guarantees to encourage lending that otherwise would not happen.  In other words, there will be a myriad of smaller Fannies and Freddies, and government involvement will reach even deeper into the financial sector. 

Fannie and Freddie, and thus the taxpayer, has an alarming $5 trillion exposure to the mortgage market.  To some, spreading out this risk might seem tempting, and a smart thing to do.  But the fact remains that if a bank expects to lose money on a loan, so will the taxpayers.  Playing around with structures and definitions will still not deal with the root problem – government meddling in the housing market, playing fast and loose with our tax dollars, and central planning by the Federal Reserve.

Banks have complex risk assessment strategies in place that help them forecast if a particular loan will make them any money or not.  If they expect to make money, they will approve the loan.  If they have doubts, sometimes they will ask for a co-signer to improve their odds.  You might do this willingly for a friend or a relative if you didn’t mind losing some money on their behalf, but current government policies essentially force taxpayers to become cosigners for risky borrowers that are complete strangers, who the banks have already determined to be bad risks.  Taxpayers have no choice in the matter because politicians decided a few decades ago that dangling homeownership in front of more people seemed like a good way to garner votes.

That was sold to voters as a compassionate gesture to the poor and beneficial to society as a whole.  After all, how could giving more Americans an ownership stake in society be bad?  The combined policies of loose credit and government backing increased the demand for housing and drove prices sky high.  When the housing market heated up to the breaking point everything came crashing down.  Those suddenly facing foreclosure saw the reality of government compassion.  Truly, when government offers you a gift, you should eye it with great suspicion.

Another tragedy is that many job seekers are now tethered to their locations because of upside down loan obligations.  It takes a lot of effort with their bank and damage to their credit scores to figure out how to get out and move to a place where there are jobs.  Will the government now be seeking ways to subsidize renters in some way because of this lack of mobility?  Some think so.

My hope is that for the long term stability and health of the economy, the government will extricate itself from the market altogether and let it normalize.  My fear is that in its usual misguided efforts at solving one crisis, it will create a thousand others.


-- Posted Monday, 23 August 2010 | Digg This Article | Source: GoldSeek.com

- Visit Congressman Ron Paul's Web Site




 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.