Hillary is finally dropping the pretense of being any sort of economic moderate. With her call for government-mandated measures concerning housing markets, as noted in the Wall Street Journal's piece on the front page of its December 4 edition this past week, she has unveiled her true socialist colors.
Calling for
"a 90-day moratorium on foreclosures and a five-year freeze on adjustable mortgage rates,"
according to the Journal piece, Hillary leaves no doubt that she's willing to ride roughshod over market dynamics.
Let's consider the existing housing market. No servicer who believes they can keep a homeowner in their home is going to wantonly foreclose. It's simply too expensive to pull that trigger capriciously.
Regarding adjustable rate mortgages, since when has any governmental agency been better at estimating risk than markets? Don't you think, by now, the market is going to exact higher prices on adjustable rate loans anyway?
Not to mention, most lenders are likely to eschew them for marginal buyers.
As with other Democratic legislators, Hillary mistakenly views a small slice of subprime defaults as the same thing as a general mortgage industry crisis. It's not.
Sure, her plan will play well to the lower-income crowd which Hillary wants to elevate to victim status. But, in truth, these are adults who chose to take on mortgage debt. Nobody put a gun to their heads when these people elected to borrow beyond their means to repay debt.
If government, including the Bush administration, and all Democratic Presidential candidates, would simply let the markets do their job, whatever costs should be borne, and lessons learned, will be delivered by markets in the next 6-12 months.
However, the last thing we need is for Presidential candidates to begin architecting rules for capital markets when they don't, as in Hillary's case, even understand the functions of our market economy to begin with.
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