A listener pointed me to this paper published by Darrell Issa, a Republican congressman from California.  It’s about the housing crisis and it is the best explanation that you will ever read on the subject.  Don’t be scared by the footnotes.  Don’t be scared by the length.  Read it because you need to know what got us into this crisis, so that we are not doomed to repeat the mistakes that got us here.  Read it to find out that our current economic woes are really “Bush’s fault.”

Meanwhile, Barack Obama has currently pumped over a trillion dollars into the housing market to keep it artificially a float.  What happens when the government pulls out? 

Rather than pursuing policies that would restore the U.S. housing market to firm footing, the Obama Administration has pumped over $1.5 trillion into the housing market to artificially prop up prices. This stealthy stimulus, which is completely separate from the $787 billion boondoggle passed by Democrats last year, has been used to buy up Fannie and Freddie mortgage‐backed securities, Fannie and Freddie corporate debt, and Fannie and Freddie preferred equity.  When this government housing stimulus is inevitably withdrawn, we may yet have a double‐dip in housing prices, bringing the market dangerously close to negative equity.

The moral of Issa’s story is that government, not Wall Street or evil banks, but government policies are what lead us to our current financial crisis, and half-assed government solutions from Barack Obama aren’t going to lead us out of it.