Letters: Real estate bubble

Published: Saturday, July 13 2013 12:00 a.m. MDT

Mark Weisbrot asserts that it was not government that got us into our economic difficulties, but the private sector ("Can free enterprise be the key to boost the economy?" July 7). He cites the real estate bubble as the foundation of the problem.

He must be more honest about how that bubble started. As Thomas Sowell makes clear in "The Housing Boom and Bust," the governments 1977 interference in trying to spread home ownership to people who truly could not afford it was the fundamental cause of the bubble.

Lenders were compelled to give loans to people who could not qualify under prevailing standards. Borrowers desired those loans under an assumption that, with government backing, they could live better than they had been living. To spread the risk, the financial community started pooling sub-prime loans into packages that could be sold to willing risk takers.

By these practices, markets got corrupted. But assuredly the fundamental source of the problem was bipartisan political interests being exercised in an unrealistic, dreamy fashion.

Even now the dreams of ObamaCare, Solyndra and the other crony-capitalist government investments to try to deal with the Great Recession have further corrupted markets in a way that will not yield the cure that the Weisbrots of the world dream of.

John Nagel

Holladay

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