From television specials to newspaper editorials, the media are pushing the idea that current economic problems were caused by the market and that only the government can rescue us.And then the government got involved and everything went to hell in a hand basket. The government seems to be expert at taking good things and screwing them up. The housing/mortgage collapse is merely the latest example of government incompetence.
What was lacking in the housing market, they say, was government regulation of the market's "greed." That makes great moral melodrama, but it turns the facts upside down.
It was precisely government intervention which turned a thriving industry into a basket case.
An economist specializing in financial markets gave a glimpse of the history of housing markets when he said: "Lending money to American homebuyers had been one of the least risky and most profitable businesses a bank could engage in for nearly a century."
With the stimulus bill signed the problem may only get worse as it may end up rewarding those homeowners that got in over their heads because they bought a house that was way too big for their wallets. The homeowners that did things right and stayed within their means will be the ones footing the bill for the rest. Do Congress and President Obama really think that by subsidizing foolish choices made by the first group of homeowners that the problem will go away? Or will they merely be delaying the inevitable foreclosures while making the rest of us pay for it? Either way we and our kids and their kids will be paying for this example of government largess for the next few generations.