Credit Where Credit Is Due

Ron Paul is considered by many to be a flake (myself included at times). But he was 100% right about one thing, folks. The fellow totally predicted the housing/financial crisis. Here is a portion of his direct testimony before the House Financial Services Committee on September 10th, 2003 (forewarning us on the destructive consequences that an unchecked Fannie and Freddie would eventually level on the U.S. economy)............: "Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges granted to Fannie and Freddie have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

Despite the long-term damage to the economy inflicted by the government's interference in the housing market, the government's policy of diverting capital to other uses creates a short-term boom in housing. Like all artificially-created bubbles, the boom in housing prices cannot last forever. When housing prices fall, homeowners will experience difficulty as their equity is wiped out. Furthermore, the holders of the mortgage debt will also have a loss. These losses will be greater than they would have otherwise been had government policy not actively encouraged over-investment in housing."............I ask you, folks. Compare this testimony of Mr. Paul's to that of dullards like Barney Frank and Maxine Waters (circa the same time) and tell me, who's the real flake now?