The editor of CityA.M., Allister Heath, is right on the money this morning in his editorial. They need to fix their site so with a bit of googling it can be found. I recommend you all read it in its entirety but here is the most important part of it:
The role of US politicians in creating this crisis has been scandalously under-reported: well-meaning, progressive policies to increase home ownership rates, especially among the poor, were the second most important reason for the credit crunch (the first was excessively loose monetary policy by central banks).
As Russell Roberts of George Mason University has shown, the rot started in 1992. Congress convinced Fannie Mae and Freddie Mac, the quasi-government agencies that underpin the US mortgage market, to boost their purchases of mortgages going to low income Americans.
I would add that Gordon Brown is complicit in our economic downfall as well with his constant bolstering of the property market in the UK. His initiatives such as key worker loans and buy-to-let mortgages are market manipulation. Whether he introduced these misguided policies out of the goodness of his heart or with an eye on political endorsements from the Daily Mail “house prices are everything” crowd I’ll leave as an exercise for the reader…
UPDATE: 16:40 Eric Falkenstein makes a similar point.
UPDATE: 2008-10-20 15:00 The Washington Post agrees.
