Government Caused the Housing Boom and the Crash

The housing bubble and housing collapse were because of government intervention into the free markets. The government created the credit bubble by establishing FED, FDIC, Fannie, Freddie etc. These are government interventions to the free markets.

http://kondratieffwinter.blogspot.com/2010/02/government-intervention-makes-it-worse.html

If there were no FED, credit bubble would not happen. The market would self regulate. Without Fannie, Freddie, nobody in his right mind would give out 30 years mortgages to people who cannot afford closing costs!

Without FDIC, people would be investigating banks in detail. Nobody would trust his money to a bank if the bank took any risky action. Nobody would tolerate banks play the derivatives market. There would be a new breed of banks that only keep your cash and may, just maybe invest in pristine government bonds. Now banks are invested in junk debt and FDIC is broke.

It would be a whole new world without booms and busts, but only slow and steady, stable growth. 70% of America would not have to work to sustain the life style of the other 30% that basically lives off of interest, wall street and paper trade. Those people would have been educated in other professions that create real value and average quality of life would go higher for all of us.

The fix is to slowly get the government out of the economy. It is not government's job to fix the economy. The best they can do is to not touch it! Free markets is the way to go.