Every generation needs a new revolution.

- Thomas Jefferson

Bubble Boys

Cheap and easy money was the economic engine that fueled the rapid rise in housing, which gave us an economic boom as bubble. Always trying to prop up the economy, the Federal Reserve is doing what it can to bring back cheap money; and, the economic stimulus package is designed to make it easier again:

One of the plan's proposals would temporarily raise loan limits for the two government sponsored enterprises (GSEs), which buy up pools of residential mortgages in the secondary market. That could kick start sluggish residential real estate markets in high cost areas that have suffered through the liquidity squeeze that started last summer. [Read]

Markets, free or otherwise, always correct. Dealing with the correction can be postponed, but it only exacerbates problems. This is the way politicians deal with problems, push them out into the future so they are left for someone else. Our ridiculous national debt is a huge monster of a problem but it is not dealt with in any way, even as carrying costs soar. This is just another problem they are attempting to push into the future, unwilling to accept they cannot control the "free" markets.

Do not underestimate the ability of government to ignore problems and make them worse, as long as they do not have to deal with them in the present. The political class is doing anything they can think of to re-inflate the bubble, because a bubble is pretty when it is rising and there are no systemic problems that need to be addressed.

Bernanke, Bush and the other Bubble Boys are doing everything they can to give you a nice bubble again. Unfortunately for them, markets always correct.

posted at 16:19:08 on 01/30/08 by clearpolitics - Category: Economics - [Permalink]

Previous | Next

Comments

No comments yet

Add Comments

This item is closed, it's not possible to add new comments to it or to vote on it

Navigation

Please visit our sponsors: Moneyspot.com

Please visit our sponsors: Spreadware.com

The Gross National Debt