Saturday, April 25, 2009

Barney Frank and the housing mess

This is rather interesting:

Here is the transcript:
I think we have an excessive degree of concern right now about home ownership and its role in the economy. Obviously, speculation is never a good thing. But those who argue that housing prices are now at the point of a bubble seem to me to missing a very important point. Unlike previous examples we have had, where substantial excessive inflation of prices later caused some problems, we are talking here about an entity — home ownership, homes — where there is not the degree of leverage we have seen elsewhere. This is not the dot-com situation; we have problems with people having invested in business plans for which there was no reality. People building fiber-optic cable for which there was no need. Homes that are occupied may see an ebb and flow in the price at a certain percentage level, but you’re not going to see the collapse that you see when people talk about a bubble. And so, those of us on our committee in particular, will continue to push for home ownership.
This video is highlighted over at Hot Air, which goes on to contrast this with Frank's more recent utterances in which he seeks to blame the housing crisis on the political right. That isn't my main concern, however, as a politician's mendacity should come as a surprise to no one.

The larger point is how utterly clueless Frank is, something that again shouldn't be terribly surprising. After all, virtually all of Frank's adult life has been spent in politics. He has never worked in the housing industry in any capacity, nor does he have an economics background that would perhaps allow him to better decipher the industry's gyrations. This makes him like quite a few of his House colleagues, few of whom have any experience with the industries they are charged with providing oversight on.

While cluelessness and ignorance are to be expected, the real problems arise when this is combined with arrogance and power. Refusing to let his lack of expertise be an obstacle, Frank -- along with other House members -- busied themselves setting policies for an industry they plainly didn't understand. While Frank has tried to defend himself by claiming that he actually favored increasing the country's rental housing stock, what he fails to understand is that promotion of home ownership or rental housing simply isn't his job.

The only real experts on housing are the millions of individual actors that operate in the marketplace. Those are the people we should be trusting, not politicians.

Update: Also see this bit about emerging shenanigans in government-led interventions in the financial sector. This isn't about Barney Frank, Democrats or Republicans. It's far more systemic than that.

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