Feedback: Mortgage Crisis Still Needs New Ideas

Re: “Bachus Presses for Vote to End Loan-Mod Programs” Feb 25.

What is the impact of real estate to the overall economy and GDP? As of December 31 2010, the top five banks list about $1.5 trillion or more than 10% of the just released GDP.  If we add the Freddie/Fannie mortgage assets what then is the ratio of mortgages to GDP: 30%, 35%, or more?

It is not hard to understand why the government does not know what to do. It seems the Fed fully intends to leverage their balance sheet. Most nations in the world are enraged by the QE2, yet it goes on unabated. The story demonstrates the US central bank has lost all control of the economy. This is evident to the most obtuse sideliner.  Spending worked in the Thirties, but spending now has failed.

Given the sheer magnitude of the mortgage crisis, one thought is apparent; the entire existing track does not work. In the story is a quote, “To what extent should the federal government subsidize or be involved in promoting housing?”  This thought must go hand in hand with public discussions of the total size of our mortgage crisis. 
Washington is producing record volumes of laws, with complexity never imagined.  It seems, these laws are under attack even before the ink dries; health care, challenges to Dodd-Frank, etc. With the recent passage of the FDIC Deposit Insurance Assessment anger is so great that other challenges are possible. 

Capitalism and social justice do not have to be strange bedfellows. Americans should have a real chance at a home, stable job, affordable health care, solid and insured banks.  These are admirable goals worthy of reaching for.  But are these viable when the central bank is focused only shuffleboard economics?  What is needed are new titans with alternatives. 

Timothy Alexander
Managing Director
Triune
Los Angeles

 

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