Friday, April 11, 2008

The Feds are "Helping" Again

The local market is sitting on an 18-month backlog of houses, much of the country is far worse, and Congress and the White House propose to "fix" this by giving another $6 billion to homebuilders. What do you suppose they will do with that money? Build more houses, of course, thus further deflating the market. Let's not forget either that most of those large homebuilders had in-house mortgage shops that wrote those subprime and alt-A loans that fueled this mess, pocketing substantial profits in the process. Wow, let's reward bad behavior and exacerbate the problem in one shot. If the Feds wanted to throw money away, they could have paid homebuilders simply not to build until the market absorbed some of the inventory. Instead, we're getting what may be the worst possible response.


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