The political football called the financial crisis has been thrown around now for many months. Fortunately, a congressional commission on the financial crisis has studied this. A member of this commission is Peter Wallison. He gave an interview with the WSJ. That interview is embedded in this blog.
One thing he leaves out is the fact that when the sale of lower priced housing is facilitated by Government intervention, it creates a ripple effect up the value chain. When you have a buyer for your house, you can sell and buy a larger and more expensive house for yourself. This false demand creates a false market which eventually will crash.
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