Let the Markets Fail
Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.
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So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.
Well, the "someone" who ought to pay for this mess is Barney Frank, disgraced Congressman from Massachusetts who, oddly, is never held accountable for his many execrable acts of bad faith against the United States. I expect the voters in his district will return him to Congress in November, proving they are idiots.


