Is this a painful lesson the government has learned about not meddling where they don’t belong? Do we really think they’ve learned anything? Quite honestly, if the United States government cannot even control their own spending and their own balance sheets, it’s no wonder their interference with the housing market and the banking industry by “bailing out” the banks would wind up causing further anguish and problems. Who is suffering yet again and paying for other’s mistakes is, as usual the American citizens.
Good intentions are, well, just that. However, when it comes to the American people and truly helping them in a weakened economy it didn’t take a rocket scientist to realize these government bailouts to the big banks was a bad idea. Then creating a federal backed “program” to help homeowners that were struggling with their mortgages was a noble gesture, but a poorly executed plan.
As quoted in an article recently published by CNBC, as sales languish and prices continue to fall, Sam Zell, the head of Equity Group Investments and numerous other ventures, pinned the blame on policies that refused to allow market forces to take hold. “Rather than let the elements of the business world take care of the problems, we basically stopped the process of creating market clearing,” Zell said in a CNBC interview. “Had we allowed the market to clear without trying to stop reality…we would have a healthy housing market today.”
Since the financial crisis began in 2008, President Barack Obama has continually tried to regulate and stimulate the problem away. Most prominently, the administration implemented the Home Affordable Modification Program, theoretically aimed at helping as many as four million distressed homeowners refinance their mortgages at affordable terms. However, the program has reached only about one-fourth its original goal. Then, in his state of the union address, Obama pledged to expand the efforts to include even those buyers whose mortgages are not owned by government-sponsored enterprises Fannie Mae or Freddie Mac.
“It’s putting off facing up to reality,” Zell said in describing the efforts to halt foreclosures. “The longer we avoid clearing the longer we’re going to be living with this problem.”
