McCain Says he Would Fire SEC Chairman Chris Cox

[tw]

Appreciate a problem created (in part) by Fannie and Freddie. Their intent was to make it easier to buy homes. In theory, a better mortgage meant a home owner could afford the home he otherwise could not afford. What that theory ignored is free market principles. Lower interest rates, etc only cause home prices to increase. These games to make homes more affordable only caused housing prices to skyrocket to something between 20% and 40% excessive.

We need home prices to drop back to 'free market' prices. Prices not distorted by government interference. But that means many homeowners owe more to the bank than the value of their house. That means disruptions (massive craters) in the housing market and building industry.

So we will apply more government welfare to the problem? Unfortunately the problem gets more complex. Nobody really knows what will and will not work better. So we are doing what is politically correct. We are throwing more money at the problem.

Homeowners need no government assistance if the free market is not distorted. But we distorted the market to make politicians look better. To get back to a free market - homes bought and sold without government assistance - means homeowners must suffer now for the easy money of decades earlier. Fannie and Freddie were created to provide government welfare to those who need a mortgage. How much backbone do politicians have to phase out Freddie and Fannie completely? Probably none. And yet that is the only solution to, for example, housing prices that are too high due to government 'free money' games.