Posts Tagged 'Housing crisis'

4.1M Blogs on WordPress

Holy cow!  I just read that there are 4.1 million blogs on WordPress.  We at Brokenspines are just one of 4.1M.  If a tree falls in a wood…

Not that anyone noticed, but we have addressed the “too big to fail” dilema of Fannie and Freddie on Brokenspines.  Well, as of last Sunday, it’s official – we the taxpayers of the good ol US of A are now the proud owners of Fannie Mae and Freddie Mac, like it or not.  But who is talking about it?  Obama?  McCain?  Last (and least) Bush?  Nope.  Not a peep.

The United States is very good at capital allocation – except in this situation.  Chairman Greenspan, in all his wisdom, left the housing market alone, letting market forces dictate where the capital should flow.  Alas, because they were proped up with implicit guarantees, Fannie and Freddie got too much capital – rather they lent too much.  So, instead of capital flowing to things like plant and equipment (that actually produce economic value) Fannie and Freddie allowed (in fact encouraged) capital to pile up in housing.

Anyone who owns a house knows that they’re money pits (funny movie from the 80s).  I’m about to pay $6K for a new roof (F#*$$!&*$).  Houses are not good investments.  You have to furnish, decorate, repair and maintain them.  Now Americans are looking at 25-40% depreciation in housing prices. 

It’s alarming.  But, who amongst our elected officials is talking about it?  The silence is deafening.


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