What caused the Housing Bubble? 1.) The Fed kept interest rates way too low/printed money. 2.) Washington, DC encouraged home-buying by implicitly promising to bail out Fannie and Freddie (which they did) and by letting Fannie and Freddie buy up huge amounts of mortgages.
The
exact same mistakes are being made again to re-inflate it:
http://www.cnbc.com/id/44269404"
"President Obama's administration is weighing proposals to strengthen the housing market.
One proposal would allow millions of homeowners with government-backed mortgages to refinance them at today?s lower interest rates, about 4 percent, according to two people briefed on the administration?s discussions who asked not to be identified because they were not allowed to talk about the information.
A wave of refinancing could be a strong stimulus to the economy, because it would lower consumers? mortgage bills right away and allow them to spend elsewhere. But such a sweeping change could face opposition from the regulator who oversees Fannie Mae and Freddie Mac, and from investors in government-backed mortgage bonds.
Administration officials said on Wednesday that they were weighing a range of proposals, including changes to its previous refinancing programs to increase the number of homeowners taking part. They are also working on a home rental program that would try to shore up housing prices by preventing hundreds of thousands of foreclosed homes from flooding the market. "
ARE THEY FRICKEN SERIOUS!!!!!
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