Charging Down the Road to Serfdom

While we would hope that some politician besides Ron Paul would read The Road to Serfdom by Frederik Hayek we are not holding our breath. The New York Sun has the best analysis of the expropriation of Fannie Mae and Freddie Mac of anyone. The Sun makes a fascinating—and to my mind accurate—point when they say:

What the federal regulators acknowledge they are objecting to in actuality was not the companies' recklessness with capital but their care with it. "Freddie Mac and Fannie Mae, in order to try to build capital, have continued to raise prices and tighten credit standards," Mr. Lockhart said. And what exactly is wrong with that? Had that been done a few years ago, there might be fewer foreclosures now. Mr. Paulson, the nation's newly crowned chief mortgage lender, even announced plans to expand the companies' portfolios of mortgage-backed securities through the end of 2009 — taking on even more risk.

Essentially what the government is doing is taking over Fannie and Freddie so they can offer more loans at cheaper prices and thereby entice more unqualified people to take on housing loans which they cannot afford and make taxpayers take the risk for all of this. Meanwhile, they've set the gold standard of government expropriation of firms that it deems appropriate. Hugo Chavez would be proud.