News from Washington D.C. has people baffled, worried and angry.
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.
His argument is persuasive and has me rethinking the bailout (cough) I mean rescue.
But abandoning the goal of “home ownership independent of ability to pay” is a prescription easily given by a Harvard economist but not from local politicians. Politicians don’t have the courage to ask people to revise their expectations as Miron suggests. But what if they did?
Is it possible that growth pressures combined with the financial crisis could spawn a local movement supportive of density in and around single family neighborhoods?
Will the crisis push environmentalists, developers and housing advocates closer together? Or will the crisis between Main Street and Wall Street add fuel to the fire of our own local class worries about housing and growth? Could this mean a rematch between the ghosts of Forward Thrust and Lesser Seattle?