A large number of politicians are now on record as stating Fannie and Freddie are "Too big to fail" because it would ruin liquidity in the housing market.
Excuse me?
Personally, I think they are too big to survive. We have what, 5 trillion dollars in bad loans tied up in these monstrous companies. 5 TRILLION! WTF!
It's ridiculous to think that the housing market will dry up if these agencies are treated as the morally and financially bankrupt institutions that they are. No, what will really happen is that there will be another rapid transfer of wealth. But this transfer will be away from the wealthy and into the hands of people that can afford to purchases houses at reasonable prices.
Frankly it's also insulting to the ingenuity and entreprenuerial spirit of Americans as well. Let Fannie and Freddie die on the vine. A very large number of small, fast-moving people and companies will fill void very quickly. And that would be a good thing.
Sunday, July 13, 2008
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