PrintFebruary 27, 2008
The Home Equity Partnership
Let us suppose that the mortgage meltdown has about finished melting and that some sort of recovery will shortly begin. The Federal Reserve Board has aggressively reduced interest rates from the 5.25 to 3.0 percent. And the seized-up interbank loan market appears to have eased, with the LIBOR 3-month interbank rate now close to the fed funds rate.That means that the real-estate problem is solved, and that we can all relax, right?Maybe that's our liberal friends, authors of the current mortgage subsidy edifice, can relax. But not conservatives.The problem with the real-estate market is that it forces ordinary people to use far too much leverage. Americans are mostly pretty conservative about their finances. But for many Americans the only way that they can afford a home is by accepting a very risky proposition, borrowing 80 percent or more of the purchase price of their home.It was not always thus. Before the Great Depression Americans seldom...(Read Full Article)
