I have been sent this link by 2 friends that do not know each other, but know me very well. Jeffrey Miron makes some amazing points.
- The implicit backing of the federal government for Freddie and Fannie encouraged them to take on far more risk than a free market would have allowed.
- "Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending."
- "The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government."
- "If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen."
- "Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents."
Read the article. He makes many more points that fill in the blanks, but I figured 5 was a good synopsis.
No comments:
Post a Comment