The political risks of targeted mortgage subsidies | Keith Hennessey

How to fix a problem that at its root was enabled by bad government economic policy? Typical with Democrats is to deploy even more bad bad economic policy. This creation of winners and losers is plainly stupid for anyone that takes the time to think of the costs and consequences. This writer considers the political costs but there are real very explicit and implicit costs to an economy if governments indulge in rewarding and supporting economic failure....

Mortgage refinancing policies are quite hard to do at scale. If recent history is a guide, this program may help a few tens of thousands of homeowners. That’s a trivial macroeconomic impact. Even if it does help 900,000 homeowners, the effects will be small enough that they won’t show up on most macro forecasts. Its greater benefit may be political: it creates another talking point for the President.

So, if there is a problem, then government uses its club to fix it.... irrespective of its cost. In this case, its just for campaigning purposes for a socialist President.

The political risks of targeted mortgage subsidies | Keith Hennessey