Clinton Fairy Tales On The Mortgage Crisis

The previous post reports that Factcheck.org has found Clinton’s attack on Obama for not having the same plan as her for helping homeowners in danger of foreclosure to be misleading. There’s a good reason that Obama has not proposed the same plan as Clinton’s: It is a terrible plan. Two economists reviewed the plan for The New Republic. They begin:

Senator Hillary Clinton presents herself as a policy expert and declares her readiness to govern from “day one.” But her recent prescriptions for the housing market should cause doubts for thoughtful observers.

They review the plan in detail and find many faults. They note, “Senator Clinton’s proposal might appeal to homeowners with adjustable rate mortgages scheduled for a rate increase. But, as with most offers that look too good to be true, this one comes with many problems.” The article concludes:

Senator Clinton’s policy amounts to a command-and-control approach to economic policy in which the government announces prices and tells suppliers what to produce. Undertaking such an intervention can only raise interest rates on mortgages (and maybe other interest rates as well) as markets attempt to incorporate risk premiums to cope with possible future interventions. Promising the American people that you can fix things by just lowering their interest rates is dishonest, a fairy tale that won’t come true.

Clinton’s tendency to go overboard in using big government solutions even when not appropriate or effective is a commonly seen difference between her and Obama, which I previously reviewed here.

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1 Comment

  1. 1
    Wayne says:

    Yet another case where Hillary shows that in her opinion, there is no problem so big or so small that a little government intervention can’t make it worse on a grand scale, while providing limited relief.

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