Calculated Risk picks up on an important, valuable trend: Market interventionists no longer disguise their goal of propping up excessive real estate prices.
Rep. Barney Frank (D-Massachusetts) leads the cheer with this explanation of why it's good that Federal Housing Administration is intentionally guaranteeing bad loans: "I don't think it's a bad thing that the bad loans occurred. It was an effort to keep prices from falling too fast. That's a policy."
Sadly, the evidence is as clear in their actions as it is in their words. From CR's wrapup:
The FHA insuring "bad loans" for buyers with a high probability of default.
The first-time home buyer tax credit (the FTHB makes no sense from any other economic perspective).
Delaying foreclosures, first with moratoriums and then with "trial modifications".
We could probably include the Fed buying GSE MBS to lower mortgage rates, and other policies like increasing the "conforming loan" limit to $729,750 in high cost states.
Intentionally encouraging loans with high default rates (insured at taxpayer expense), and the FTHB tax credit (especially allowing buyers to use the credit as a down payment) have stimulated demand. And delaying foreclosures has restricted supply.
This has had the desired effect of pushing up asset prices, especially at the low end.
It is "a policy", but is it a good policy?
You may have your own answer to that rhetorical question. But at least Frank and other inflationists are describing the policy overtly, without pettifogging about working families and how foreclosures hurt neighborhoods. They just want to keep real estate prices up. It goes no deeper than that.
As noted the other day, real estate life support is more than just a soaking of taxpayers. It's an actual class war, with a clear set of beneficiaries (homeowners, and in particular "homeowners" with heavy debt loads) and a clear set of victims (home buyers). I don't have a lot of confidence in home buyers as a group capable of getting a political voice. But at least the argument is out in the open.