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Immortally Stupid
Kevin D. Williamson once wrote that when the government does stupid, it does immortally stupid. In a concerted effort to prove him right, the government is cranking up its sub-prime mortgage machine again. According to The Washington Post:
In 2019, there is more government-backed housing debt than at any other point in U.S. history, according to data from the Urban Institute. Taxpayers are shouldering much of the risk, while a growing number of homeowners face debt payments that amount to nearly half of their monthly income, a threshold many experts consider too steep.
Roughly 30 percent of the loans Fannie Mae guaranteed last year exceeded this level,… At the FHA, 57 percent of the loans it insured breached the high-risk echelon,…
As the great American philosopher, Ron White, once said, “You can’t fix stupid.”
Published in General
Not again. 🤦♂️
And this drives up housing prices, because getting a larger loan is easier, which drives up prices..
Which is probably the point and who this policy is sponsored by.
The point of government interventions in the housing market appears to be to drive up demand and limit supply, thereby causing prices to soar.
Policies that drive up demand:
Policies that limit supply:
It seems we learned nothing from the 2008 crash.
Perhaps the permanent staff of the FHA and Fannie Mae learned 2008 very well and want the economy to crash before the 2020 election.
I mean, it worked in 2008, didn’t it?
Time to option up.
For the banks it worked out alright.
Notice that the local governments’ policies are offsetting federal government’s policies, and put the federal treasury at risk (National money pit). The left hand clearly doesn’t know what the right hand is doing, or maybe it does and takes full advantage.
Doesn’t the left’s entire schtick amount to “it’ll work this time”?
Because of a Ricochet bug, a post on 20th-century housing policy that I tried to post earlier is only up today, making today Housing Thursday, I guess!
The immortal — even immoral — stupidity has been underway since at least 1934, when the National Housing Act created the FHA.
It probably worked out well for people off-loading extra real-estate, too.
I wonder if I’ll have enough cash on hand to buy after the next crash.
You may not have to worry about it. After the crash President Hillary-clone will see to it that private property and ‘excessive’ wealth are historical concepts.
The problem is someone somewhere decided “The American Dream” must include owning your own single family home. Because many individuals had (and still do have) that definition in mind, it made sense for politicians to cater to them as a voting block. Throw in this thing called The Depression, and you can see why the FHA would be created.
Fast forward to the modern period, then add a racial imbalance in home ownership and the seeds of a crisis are planted (sub-prime mortgages and the housing bubble).
I don’t think it’s a case of not learning from the past. I think it’s a case of “We’re gonna keep trying it until we get it right.”
That someone was Woodrow Wilson’s Labor Department — out of fear, upon witnessing the Russian Revolution, that any American not also a homeowner would turn communist.
The government creates problems every time it ignores the rule of law requirement that people be treated equally under the law. In this case, they’ve created terrible financial issues by granting special privileges to homeowners and to the poor. The tradition goes back at least to 1619 when the first slaves were brought to our shores, and we still haven’t learned.